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Notes to Accounts of Kalyani Steels Ltd.

Mar 31, 2022

Foreign currency term loans :

i) From MUFG Bank, Ltd. Singapore

External Commercial Borrowing (ECB) Term Loan balance outstanding, USD 25,000,000/-, repayable in ten equal quarterly instalments, repayment commencing from December 29, 2023, carrying interest at three months USD LIBOR plus 90 bps p.a. payable quarterly.

ii) The Company has utilized the borrowings for the purpose for which they are obtained.

Details of security

Above Foreign Currency Term Loan is secured by First Pari-passu Charge on the Movable Fixed Assets of the Company i.e. hypothecation of the entire Plant and Machineries, machinery spares, tools and accessories and other movable accessories both present and future, ranking pari-passu with charges created and / or to be created in favour of Banks / Financial Institutions for their term / foreign currency loans. The Company has registered all required charges with Registrar of Companies.

A Contingent liabilities

( '' in Million)

Particulars

March 31, 2022

March 31, 2021

i

Claims against the Company not acknowledged as debts

83.47

1.98

ii

Customs duty, excise duty and service tax - matter under appeal

32.57

32.57

iii

Income tax matters under appeal

15.78

15.78

iv

Iron ore supplier - rate difference claim - disputed

255.20

255.20

v

Reimbursement for Forest Development Tax on Iron Ore claimed by supplier

33.49

33.49

vi

Forest Development Tax / Fees1

550.42

386.67

vii

Others

1.53

1.53

Total

972.46

727.22

B) Gratuity

The Company has formed "Kalyani Steels Limited Employees Group Gratuity cum Life Assurance Scheme" to manage the gratuity obligations. The joint operation at Hospet Steels Limited has formed "Hospet Steels Employees Gratuity Trust" to manage its gratuity obligations. The money contributed by the Company to the fund to finance the liabilities of the plan has to be invested. The trustees of the plan have outsourced the investment management of the fund to an insurance company - Life Insurance Corporation of India. Every permanent employee is entitled to a benefit as per policy of the Company of the last drawn salary for each completed year of service in line with the Payment of Gratuity Act, 1972. The same is payable at the time of separation from the Company or retirement, whichever is earlier. The benefits vest after five years of continuous service. There is no compulsion on the part of the Company to fully pre fund the liability of the Plan. The Company''s philosophy is to fund the benefits based on its own liquidity as well as level of under funding of the plan.

VI) The Company expects to contribute '' 11.02 Million to the gratuity fund in the next year.

C) Superannuation plan

The Company and its Joint Operation has formed "Kalyani Steels Limited Officers Superannuation Scheme" and "Hospet Steels Limited Employees Superannuation Trust" respectively to manage its superannuation scheme through Life Insurance Corporation of India. Contributions are made at 15% of basic salary for employees covered under the superannuation scheme. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expense recognized during the period towards defined contribution plan is '' 10.96 Million (March 31, 2021 : '' 6.26 Million).

D) Risk Exposure

Through its defined benefit plan, the Company is exposed to a number of risks, the most significant of which are detailed below :

Asset Volatility : All plan assets for gratuity and superannuation are maintained in a trust managed by a public sector insurer viz. LIC of India. LIC has a sovereign guarantee and has been providing consistent and competitive returns over the years. The company has opted for a traditional fund wherein all assets are invested primarily in risk averse markets. The company has no control over the management of funds but this option provides a high level of safety for the total corpus. A single account is maintained for both the investment and claim settlement and hence 100% liquidity is ensured. Also interest rate and inflation risk are taken care of.

Asset volatility risk for provident fund : The plan liabilities are calculated using a discount rate set with reference to bond yields; if plan assets underperform this yield, this will create a deficit. Most of the plan asset investment is in fixed income fund, manages interest rate risk with derivatives to minimise risk to an acceptable level. A portion of the funds are invested in equity securities and in alternative investments which have low correlation with equity securities. The equity securities are expected to earn a return in excess of the discount rate and contribute to the plan deficit. The Company has a risk management strategy where the aggregate amount of risk exposure on a portfolio level is maintained at a fixed range. Any deviations from the range are corrected by rebalancing the portfolio. The Company intends to maintain the above investment mix in the continuing years.

Changes in bond yields : A decrease in bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of plans'' bond holdings.

Life expectancy : This is particularly significant where inflationary increases result in higher sensitivity to changes in life expectancy.

Future salary increase and inflation risk : Since price inflation and salary growth are linked economically, they are combined for disclosure purposes. Rising salaries will often result in higher future defined benefit payments resulting in a higher present value of liabilities especially unexpected salary increases provided at management''s discretion may lead to uncertainties in estimating this increasing risk.

Asset-Liability mismatch risk : Risk arises if there is a mismatch in the duration of the assets relative to the liabilities. By matching duration with the defined benefit liabilities, the Company is successfully able to neutralize valuation swings caused by interest rate movements. The Company ensures that the investment positions are managed within an asset-liability matching (ALM) framework that has been developed to achieve long-term investments that are in line with the obligations under the employee benefit plans.

Level 1 : Level 1 hierarchy includes financial instruments measured using quoted prices.

Level 2 : The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.

Level 3 : If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.

ii) Valuation technique used to determine fair value

Specific valuation techniques used to value financial instruments include :

- The use of quoted market prices or dealer quotes for similar instruments.

- The fair value for preference shares is determined using discounted cash flow analysis (Baramati Speciality Steels Limited).

- The fair value for preference shares is determined using net asset value method (Lord Ganesha Minerals Private Limited).

- The fair value for compulsorily convertible debentures is determined using asset approach (replacement value method).

iii) Valuation process :

The finance department of the Company includes a team that performs the valuations of assets and liabilities required for financial reporting purposes. This team appoints external valuation experts whenever the need arises for Level 3 fair valuation. This team reports directly to the Chief Financial Officer (CFO). Discussions of valuation processes and results are held between the CFO and the valuation team at least once every year, in line with the Company''s annual reporting period.

iv) Fair value of financial assets and liabilities measured at amortized cost

The carrying amounts of such financial assets and liabilities are a reasonable approximation of their fair values.

Note 41 : Financial risk management

The Company is exposed to risks such as changes in foreign currency exchange rates and interest rates. A variety of practices are employed to manage these risks, including use of derivative instruments.

Derivative instruments are used only for risk management purposes and not for speculation. All foreign currency derivative instruments are entered into with major financial institutions. The Company''s credit exposure under these arrangements is limited to agreements with a positive fair value at the reporting date. Credit risk with respect to the counterparty is actively monitored.

Presented below is a description of the risks (market risk, credit risk and liquidity risk) together with a sensitivity analysis, performed annually, of each of these risks based on selected changes in market rates and prices. These analyses reflect management''s view of changes which are reasonably possible to occur over a one-year period.

I) 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 the market prices. The Company is exposed in the ordinary course of business to risks related to changes in foreign currency exchanges rates, commodity prices and interest rates.

A) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company is engaged in international trade and thereby exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD. Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities denominated in a currency that is not the Company''s functional currency (INR).

ii) Commodity Price risk :

The Company''s revenue is exposed to the market risk of price fluctuations related to the sale of its steel products. Market forces generally determine prices for the steel products sold by the Company. These prices may be influenced by factors such as supply and demand, production costs (including the cost of raw material inputs) and global and regional economic conditions and growth. Adverse changes in any of these factors may reduce the revenue that the Company earns from the sale of its steel products. The Company is also subject to fluctuations in prices for the purchase of iron ore, metallurgical coke, ferro alloys, scrap and other raw material inputs. Commodity Price Sensitivity :

The Company has a back to back pass through arrangements for volatility in raw material prices for most of the customers. The selling prices of steel and the prices of input raw material moves in the same direction. However in few cases there may be a lag effect in case of such pass through arrangements and might have some effect on the Company''s profit and equity.

II Liquidity Risk

Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, Company treasury maintains flexibility in funding by maintaining availability under committed credit lines. Management monitors rolling forecasts of the Company''s liquidity position and cash and cash equivalents on the basis of expected cash flows. In addition, the Company''s liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to meet these debt financing plans.

III Credit risk

The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and other financial instruments.

The balances with banks, loans given to employees and associated company, security deposits are subject to low credit risk since the counter-party has strong capacity to meet the obligations and where the risk of default is negligible or nil. Hence, no provision has been created for expected credit loss for credit risk arising from these financial assets.

A Trade receivables

Senior management is responsible for managing and analyzing the credit risk for each of their new clients before standard payment, delivery terms and conditions are offered. The Company assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal or external assessment. The utilization of credit limits is regularly monitored.

An impairment analysis is performed at each reporting date on an individual basis for all customers. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note 11.

Note 42 : Capital management

The Company''s objective when managing capital is to

• safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and

• maintain an optimal capital structure to reduce the cost of capital.

The Company determines the amount of capital required on the basis of annual operating plans and long-term product and other strategic investment plans. The funding requirements are met through equity, long term and short term borrowings. The Company''s policy is aimed at combination of short-term and long-term borrowings. The Company monitors the capital structure on the basis of total debt to equity ratio and maturity profile of the overall debt portfolio of the Company. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

Note 49 : The Code on Social Security, 2020 (''Code'') relating to employee benefits during employment and post-employment received Indian Parliament approval and Presidential assent in September, 2020. The Code has been published in the Gazette of India and subsequently on November 13, 2020 draft rules were published and invited for stakeholders suggestions. However, the date on which the Code will come into effect has not notified. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period of the Code becomes effective.

Note 50 : The Company has considered the possible effects that may result from COVID 19 in the preparation of these financial statements including the recoverability of carrying amounts of financial and non-financial assets. In developing the assumptions relating to the possible future uncertainties in the global economic conditions because of COVID 19, the Company has, at the date of approval of the financial statements, used internal and external sources of information and expects that the carrying amounts of the assets will be recovered and currently does not anticipate any material impact.

Note 51 : As per the information available with the company, no transactions have been entered with any company struck off under Section 248 of the Companies Act, 2013 or Section 560 of Companies Act, 1956 during the year.

Note 52 : The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

Note 53 : Previous year figures have been regrouped / reclassified wherever necessary to conform with current year''s classification / disclosure.

1

In response to a petition filed by the iron ore mine owners and purchasers (including the Company) contesting the levy of Forest Development Tax (FDT) on iron ore on the ground that the State does not have jurisdiction to legislate in the field of major minerals which is a central subject, the Honourable High Court of Karnataka vide its judgement dated December 3, 2015 directed refund of the entire amount of FDT collected by Karnataka State Government on sale of iron ore by private lease operators and National Mineral Development Corporation Limited (NMDC). The Karnataka State Government has filed an appeal before the Supreme Court of India ("SCI"). SCI has not granted stay on the judgement but stayed refund of FDT. The matter is yet to be heard by SCI. Based on merits of the case and supported by a legal opinion, the Company has not recognized provision for FDT of '' 550.42 Million as at March 31, 2022 ( '' 386.67 Million as at March 31, 2021) and treated it as a contingent liability.


Mar 31, 2018

Background

Kalyani Steels Limited (“the Company”) is a public limited company domiciled in India and incorporated in February, 1973 under the provisions of Companies Act, 1956. The equity shares of the Company are listed on two recognised stock exchanges in India i.e. BSE Limited (BSE) and National Stock Exchange of India Limited (NSE). The Company is primarily engaged in the business of manufacture and sale of Iron and Steel Products. The Company is an integrated manufacturer of diverse range of steel products with its manufacturing facility located at Hospet Works in Karnataka. The Registered Office of the Company is located at Mundhwa, Pune - 411036. The CIN of the Company is L27104MH1973PLC016350.

These separate financial statements for the year ended March 31, 2018 were approved by the Board of Directors and authorised for issue on May 18, 2018.

Nature and purpose of reserves :

i) General reserve :

Under the erstwhile Companies Act, 1956, a general reserve was created through an annual transfer of net profit at a specified percentage in accordance with applicable regulations. Consequent to the introduction of the Companies Act, 2013, the requirement to mandatory transfer a specified percentage of net profit to general reserve has been withdrawn. There is no movement in general reserve during the current and previous year.

ii) FVTOCI Equity investment reserve :

The Company has elected to recognise changes in the fair value of investment in compulsorily convertible debentures in other comprehensive income. These changes are accumulated within the FVTOCI investment reserve within equity. The Company will transfer amounts from the said reserve to retained earnings when the relevant debentures are de-recognised.

iii) Dividend distribution made and proposed :

Proposed dividend on equity shares is subject to approval of the shareholders of the Company at the annual general meeting and is not recognised as a liability (including taxes thereon) as at year end.

Foreign currency term loans :

i) From Bank of Baroda, London

External Commercial Borrowing (ECB) Term Loan balance outstanding USD 5,170,000/-, repayable in eight equal half yearly installments, repayment commenced from June 22, 2016, carrying interest at six months USD LIBOR plus 200 bps p.a. payable six monthly.

ii) From The Hongkong and Shanghai Banking Corporation Limited

External Commercial Borrowing (ECB) Term Loan balance outstanding USD 3,940,987/-, repayable in 19 quarterly installments, repayment commenced from September 30, 2014, carrying interest at three months USD LIBOR plus 225 bps p.a. payable quarterly.

Details of security

Above Foreign currency term loans are secured by first pari-passu charge on the immovable and movable assets of the Company i.e. mortgage of Company’s immovable properties consisting of land together with all buildings and structures thereon and all plant and machinery, attached to the earth or permanently fastened to anything attached to the earth, both present and future and hypothecation of whole of the movable property, plant and equipment of the Company, both present and future, ranking pari-passu with charges created and / or to be created in favour of Banks / Financial Institutions for their term / foreign currency loans. The foreign currency term loans are also secured by second pari-passu charge on the current assets of the Company consisting of stock of raw materials, stock in process, semi-finished and finished goods, bills receivables and book debts.

i) The Company has compiled this information based on the current information in its possession as at March 31, 2018, no supplier has intimated the Company about its status as Micro and Small Enterprises or its registration with the appropriate authority under the Micro, Small and Medium Enterprises Development Act, 2006 except as disclosed below.

ii) Trade payables are non-interest bearing and are generally settled on 7-180 days.

Goods and Services tax (GST) has been effective from July 1, 2017. Consequently excise duty, value added tax (VAT), service tax etc. have been replaced with GST. Until June 30, 2017, ‘Sale of products’ included the amount of excise duty recovered on sales. With effect from July 1, 2017, ‘Sale of products’ excludes the amount of GST recovered. Accordingly, ‘Revenue from operations’ for year ended March 31, 2018 are not comparable with those of the previous year.

B) Gratuity

The Company has formed “Kalyani Steels Limited Employees’ Group Gratuity cum Life Assurance Scheme” to manage the gratuity obligations. The joint operation at Hospet Steels Limited has formed “Hospet Steels Employees Gratuity Trust” to manage its gratuity obligations. The money contributed by the Company to the fund to finance the liabilities of the plan has to be invested. The trustees of the plan have outsourced the investment management of the fund to an insurance company - Life Insurance Corporation of India. Every permanent employee is entitled to a benefit equivalent to 15/30 days (as applicable) of the last drawn salary for each completed year of service in line with the Payment of Gratuity Act, 1972. The same is payable at the time of separation from the Company or retirement, whichever is earlier. The benefits vest after five years of continuous service. There is no compulsion on the part of the Company to fully pre-fund the liability of the Plan. The Company’s philosophy is to fund the benefits based on its own liquidity as well as level of under funding of the plan.

The above sensitivity analysis is based on a change in assumption while holding all other assumptions constant. In practice, this is unlikely to occur and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of defined benefit obligation calculated with the Projected Unit Credit Method at the end of the reporting period) has been applied while calculating the defined benefit liability recognised in the balance sheet.

The method and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

VI) The Company expects to contribute Rs. 14.76 Million to the gratuity fund in the next year.

C) Provident Fund

Defined Benefit : Provident fund for management employees is managed by the Company through the “Kalyani Steels Limited Non Bargainable Staff Provident Fund”, in line with the provisions of Provident Fund and Miscellaneous Provisions Act, 1952 as well as the relevant provisions of the Income Tax Act. The plan guarantees interest at the rate notified by the Provident Fund Authorities. The contribution by the employer and employee together with the interest accumulated thereon are payable to employees at the time of their separation from the Company or retirement, whichever is earlier. The benefits vest immediately on rendering of the services by the employee. The Company does not currently have any unfunded plans. There is no compulsion on the part of the Company to fully pre-fund the liability of the Plan. The Company fund the shortfall in the year in which it arises.

Defined contribution : The Company and its joint operation Hospet Steels Limited also has certain defined contribution plans. Contributions are made to provident fund in India for workers at the 12% of basic and dearness allowance as per regulations. The contributions are made to registered provident fund administered by the government. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expense recognised during the period towards defined contribution plan is Rs. 7.61 Million (March 31, 2017 : Rs. 7.55 Million).

D) Superannuation plan

The Company and its Joint Operation has formed “Kalyani Steels Limited Officers Superannuation Scheme” and “Hospet Steels Limited Employees Superannuation Trust” respectively to manage its superannuation scheme through Life Insurance Corporation of India. Contributions are made at 15% of basic salary for employees covered under the superannuation scheme. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expense recognised during the period towards defined contribution plan is Rs. 8.80 Million (March 31, 2017 Rs. 8.48 Million).

E) Risk Exposure

Through its defined benefit plan, the Company is exposed to a number of risks, the most significant of which are detailed below :

Asset Volatility : All plan assets for gratuity and superannuation are maintained in a trust managed by a public sector insurer viz. LIC of India. LIC has a sovereign guarantee and has been providing consistent and competitive returns over the years. The company has opted for a traditional fund wherein all assets are invested primarily in risk averse markets. The company has no control over the management of funds but this option provides a high level of safety for the total corpus. A single account is maintained for both the investment and claim settlement and hence 100% liquidity is ensured. Also interest rate and inflation risk are taken care of.

Asset volatility risk for provident fund : The plan liabilities are calculated using a discount rate set with reference to bond yields; if plan assets underperform this yield, this will create a deficit. Most of the plan asset investments is in fixed income fund, manages interest rate risk with derivatives, to minimise risk to an acceptable level. A portion of the funds are invested in equity securities and in alternative investments which have low correlation with equity securities. The equity securities are expected to earn a return in excess of the discount rate and contribute to the plan deficit. The Company has a risk management strategy where the aggregate amount of risk exposure on a portfolio level is maintained at a fixed range. Any deviations from the range are corrected by rebalancing the portfolio. The Company intends to maintain the above investment mix in the continuing years.

Changes in bond yields : A decrease in bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of plans’ bond holdings.

Life expectancy : This is particularly significant where inflationary increases result in higher sensitivity to changes in life expectancy.

Future salary increase and inflation risk : Since price inflation and salary growth are linked economically, they are combined for disclosure purposes. Rising salaries will often result in higher future defined benefit payments resulting in a higher present value of liabilities especially unexpected salary increases provided at management’s discretion may lead to uncertainties in estimating this increasing risk.

Asset-Liability mismatch risk : Risk arises if there is a mismatch in the duration of the assets relative to the liabilities. By matching duration with the defined benefit liabilities, the Company is successfully able to neutralise valuation swings caused by interest rate movements. The Company ensures that the investment positions are managed within an asset-liability matching (ALM) framework that has been developed to achieve long-term investments that are in line with the obligations under the employee benefit plans.

The principal place of business of the joint operation is India. The voting rights in the joint operation are 49.99% (March 31, 2017 : 49.99%, April 1, 2016 : 49.99%). The principal business is to act as a management company for strategic alliance arrangement between Kalyani Steels Limited and Mukand Limited.

Structured entities :

i) Kalyani Steels Limited Non Bargainable Staff Provident Fund

ii) Kalyani Steels Limited Officers’ Superannuation Scheme

iii) Kalyani Steels Limited Employees’ Group Gratuity cum Life Assurance Scheme

iv) Hospet Steels Employees Gratuity Trust

v) Hospet Steels Limited Employees Superannuation Trust

B) Other related parties with whom transactions have taken place during the year :

Entities under common control :

i) Bharat Forge Limited

ii) Saarloha Advanced Materials Private Limited (Formerly known as Kalyani Carpenter Special Steels Private Limited)

iii) Kalyani Investment Company Limited

Key Management Personnel :

i) Mr.B.N. Kalyani, Chairman, Promoter Non-Executive Director

ii) Mrs.Sunita B. Kalyani, Non-Executive Director

iii) Mr. Amit B. Kalyani, Non-Executive Director

iv) Mr.S.M. Kheny, Non-Executive Director

v) Mr.S.S. Vaidya, Independent Director

vi) Mr.B.B. Hattarki, Independent Director

vii) Mr.M.U. Takale, Independent Director

viii) Mr. Arun P. Pawar, Independent Director

ix) Mr.C.G. Patankar, Independent Director (till August 11, 2017)

x) Mr.Sachin K. Mandlik, Additional Independent Director (w.e.f. November 9, 2017)

xi) Mr.R.K. Goyal, Managing Director, Executive Director

Entities in which KMPs have significant influence :

i) Khaitan and Co.

ii) Kalyani Technologies Limited

iii) Dyna-K Automotive Stampings Private Limited

iv) SLR Metaliks Limited

v) Vish Steel LLP

IV) Terms and conditions for outstanding balances

Transactions relating to dividends were on the same terms and conditions that applied to other shareholders. The sale and purchase transactions were on the normal commercial terms and at market rates.

i) Fair value hierarchy :

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

Level 1 : Level 1 hierarchy includes financial instruments measured using quoted prices.

Level 2 : The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3 : If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

ii) Valuation technique used to determine fair value :

Specific valuation techniques used to value financial instruments include :

The use of quoted market prices or dealer quotes for similar instruments

-The fair value for preference shares is determined using discounted cash flow analysis (Baramati Speciality Steels Limited)

-The fair value for preference shares is determined using net asset value method (Lord Ganesha Minerals Private Limited)

-The fair value for compulsorily convertible debentures is determined using asset approach (replacement value method)

-The fair value of interest rate swaps is calculated using present value of estimated future cash flows based on observable yield curves

iii) Valuation process :

The finance department of the Company includes a team that performs the valuations of assets and liabilities required for financial reporting purposes. This team appoints external valuation experts whenever the need arises for level 3 fair valuation. This team reports directly to the Chief Financial Officer (CFO). Discussions of valuation processes and results are held between the CFO and the valuation team at least once every year, in line with the Company’s annual reporting period.

iv) Fair value of financial assets and liabilities measured at amortised cost :

The carrying amounts of such financial assets and liabilities are a reasonable approximation of their fair values.

The change by 100 bps does not have any material impact on value of investments in preference shares and compulsory convertible debentures Note 41 : Financial risk management

The Company is exposed to risks such as changes in foreign currency exchange rates and interest rates. A variety of practices are employed to manage these risks, including use of derivative instruments. Derivative instruments are used only for risk management purposes and not for speculation. All foreign currency derivative instruments are entered into with major financial institutions. The Company’s credit exposure under these arrangements is limited to agreements with a positive fair value at the reporting date. Credit risk with respect to the counterparty is actively monitored.

Presented below is a description of the risks (market risk, credit risk and liquidity risk) together with a sensitivity analysis, performed annually, of each of these risks based on selected changes in market rates and prices. These analyses reflect management’s view of changes which are reasonably possible to occur over a one-year period.

I) Market Risk

A) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company is engaged in international trade and thereby exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company’s functional currency (INR).

B) Interest risk

The Company has borrowings at variable interest rate. Profit or loss is sensitive to higher / lower interest expense from borrowings as a result of change in the interest rates. The following sensitivity analysis has been performed for non-current and current borrowings.

II Liquidity Risk

Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, Company treasury maintains flexibility in funding by maintaining availability under committed credit lines. Management monitors rolling forecasts of the Company’s liquidity position and cash and cash equivalents on the basis of expected cash flows. In addition, the Company’s liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to meet these debt financing plans.

III Credit risk

The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and other financial instruments. The balances with banks, loans given to employees and associated company, security deposits are subject to low credit risk since the counter-party has strong capacity to meet the obligations and where the risk of default is negligible or nil. Hence, no provision has been created for expected credit loss for credit risk arising from these financial assets.

A Trade receivables

Senior management is responsible for managing and analysing the credit risk for each of their new clients before standard payment, delivery terms and conditions are offered. The Company assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal or external assessment. The utilisation of credit limits is regularly monitored.

An impairment analysis is performed at each reporting date on an individual basis for all customers. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note 12.

Note 1 : Capital management

The Company’s objectives when managing capital are to :

Q safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and

Q maintain an optimal capital structure to reduce the cost of capital.

The Company determines the amount of capital required on the basis of annual operating plans and long-term product and other strategic investment plans. The funding requirements are met through equity, long term and short term borrowings. The Company’s policy is aimed at combination of short-term and long-term borrowings. The Company monitors the capital structure on the basis of total debt to equity ratio and maturity profile of the overall debt portfolio of the Company. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Total debt includes all long and short-term debts as disclosed in Notes 17 and 21 to the financial statements. The capital structure of the Company is as follows :

In order to achieve this overall objective, the Company’s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements.

Note 2 : Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Board of Directors has been identified as the chief operating decision maker.

The Company has organised its operating segments based on product groupings. These operating segments have been aggregated into one reportable business segment : ‘Forging and Engineering quality carbon and alloy steels’.

Revenues of approximately Rs. 4,625.53 Million (March 31, 2017 : Rs. 3,949.29 Million) are derived from a single customer. During the year, total revenues from sales to customers outside India for the year ended March 31, 2018 and March 31, 2017 was Rs. 584.03 Million and Rs. 201.19 Million respectively.

All non-current assets are in India.

Note 3 : Net debt reconciliation

This section sets out an analysis of net debt and the movements in net debt for the year ended March 31, 2018

Note 4 : First-time adoption

Transition to Ind AS

These separate financial statements, for the year ended March 31, 2018, are the first, the Company has prepared in accordance with Ind AS. For periods up to and including the year ended March 31, 2017, the Company prepared its financial statements in accordance with accounting standards notified under Section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (“Indian GAAP”). Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ended on March 31, 2018, together with the comparative period data as at and for the year ended March 31, 2017, as described in the summary of significant accounting policies. In preparing these financial statements, the Company’s opening balance sheet was prepared as at April 1, 2016, the Company’s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at April 1, 2016 and the financial statements as at and for the year ended March 31, 2017.

I) Exemptions availed

a) Deemed cost

Ind AS 101 permits a first time adopter to elect to continue with the carrying value for all of its property, plant and equipment and intangible assets as recognised in the financial statements as at the date of transition after making necessary adjustments for de-commissioning liabilities. Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value.

b) Designation of previously recognised financial instruments

Ind AS 101 allows an entity to designate investments in equity instruments at FVTOCI on the basis of facts and circumstances at the date of transition to Ind AS. The Company has elected to apply this exemption for its investment in debentures.

c) Leases

Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. Ind AS 101 provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind AS, except where the effect is expected to be not material. The Company has elected to apply this exemption for such contracts / arrangements.

d) Long-term foreign currency monetary items

Under previous GAAP, paragraph 46/46A of AS 11 ‘The Effects of Changes in Foreign Exchange Rates’, provided an alternative accounting treatment to companies with respect to exchange differences arising on restatement of long term foreign currency monetary items. Exchange differences on account of depreciable assets could be added / deducted from the cost of the depreciable asset, which would then be depreciated over the balance life of the asset. In other cases, the exchange difference could be accumulated in a foreign currency monetary item translation difference account and amortised over the balance period of such long term asset / liability. Ind AS 101 includes an optional exemption that allows a first-time adopter to continue the above accounting treatment in respect of the long-term foreign currency monetary items recognised in the financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period. The exemption under Ind AS 101 will not be available for long-term foreign currency monetary items recognised after this date. The Company has elected to apply this exemption for such items.

e) Investment in subsidiary and associate

The Company has elected to apply previous GAAP carrying amount for its investment in associate as deemed cost at the date of transition to Ind AS. The Company has elected to use fair value for its investment in subsidiary as deemed cost at the date of transition to Ind AS.

II) Exceptions applied

a) Estimates

The estimates at April 1, 2016 and at March 31, 2017 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies) apart from the following items where application of Indian GAAP did not require estimation :

- Impairment of financial assets based on expected credit loss model

- Investment in preference shares carried at FVTPL

- Investment in debentures carried at FVTOCI.

The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at April 1, 2016, the date of transition to Ind AS and as of March 31, 2017.

b) Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification and measurement of financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

III) Explanation of transition to Ind AS

An explanation of how the transition from Indian GAAP to Ind AS has affected the Company’s financial position, financial performance and cash flow is set out in the following tables and notes that accompany the tables. The reconciliation include -

- equity reconciliation as at April 1, 2016

- equity reconciliation as at March 31, 2017

- profit reconciliation for the year ended March 31, 2017, and

In the reconciliations mentioned above, certain reclassifications have been made from Indian GAAP financial information to align with Ind AS presentation.

IV) The transition did not have any material impact on the previously reported cash flows.

V) Notes to first-time adoption

1 Fair valuation of investments

Under the previous GAAP, investments in debentures and preference shares were classified as long-term investments based on the intended holding period and reliability. Long-term investments were carried at cost less provision for other than temporary decline in the value of such investments. Under Ind AS, these investments are required to be measured at fair value. Fair value changes with respect to investments in preference shares carried at FVTPL are taken through retained earnings as at the date of transition and subsequently in the statement of profit and loss for the year ended March31, 2017. This decreased retained earningsby ‘418.92 Million as at March31, 2017 (April 1, 2016 :’416.47 Million). Fair value changes with respect to investment in compulsory convertible debentures designated as at FVTOCI - equity investments reserve as at the date of transition and subsequently in the other comprehensive income for the year ended March 31, 2017. This increased other reserves by Rs. 230.15 Million as at March 31, 2017 (April 1, 2016 : Rs. 142.13 Million).

2 Fair value as deemed cost for investment in subsidiary

Ind AS 101 allows considering fair value as deemed cost for the Company’s investment in subsidiaries, associates and joint ventures. This choice is available for each investment individually. The deemed cost for investment in equity instruments of Lord Ganesha Minerals Private Limited (a subsidiary) is its fair value. Consequently, a total fair value adjustment amounting to Rs. 261.93 Million has been considered as on the transition date thereby leading to a decrease in retained earnings as on that date.

3 Joint operation

The Company’s composite Steel manufacturing facility at Ginigera is under a strategic alliance arrangement with a joint venture partner. The facility is managed by Hospet Steels Limited. The entire arrangement has been assessed as a joint operation. Under previous GAAP, Hospet Steels Limited was classified as a joint venture and accordingly accounted using proportionate consolidation method in the consolidated financial statements. Under Ind AS, the arrangement has been assessed as a joint operation and accordingly, the Company has recognised its share of revenue and expenses and assets and liabilities from joint operation in its separate financial statements. Further, the expenses incurred by the Company in the composite steel manufacturing process on behalf of other venture was presented as Job Work Sales under Revenue from Operations. Under Ind AS, the accounting for joint operation requires the Company to recognise only its share of expenses from the joint operation. Accordingly, the amount recharged to the joint venture partner, presented as revenue in the earlier GAAP, have been offset against the respective expense line items. Similarly, the expenses incurred by the other venture partner and recharged to the Company, presented as Job Work Charges under Other Expenses have been reclassified to the respective expense line items based on the nature of such expenses.

4 Revenue

Under Indian GAAP, revenue from sale of products was presented excluding excise duty. Under Ind AS, revenue from sale of products is presented inclusive of excise duty. Excise duty paid is presented on the face of the statement of profit and loss as part of expenses. This change has resulted in an increase in total revenue and total expenses for the year ended March 31, 2017 by Rs. 1,530.86 Million. There is no impact on total equity and profits.

5 Deferred Tax

Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. This has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP.

In addition, the various transitional adjustments lead to temporary differences. According to the accounting policies, the Company has to account for such differences. Deferred tax adjustments are recognised in correlation to the underlying transaction either in other equity or a separate component of equity.

6 Derivatives

Under Ind AS, the interest rate swaps have been marked to market and the impact has been recognised in the income statement. The total equity has increased by Rs. 4.08 Million as at March 31, 2017 (Decrease as on April 1, 2016 : Rs. 0.62 Million) and the total profit has increased by Rs. 4.70 Million as at March 31, 2017.

7 Defined Benefit Obligation

Both under Indian GAAP and Ind AS, the Company recognises cost related to its post employment defined benefit plan on an actuarial basis. However, under Indian GAAP, the entire cost, including actuarial gains and losses, are recognised in the Statement of Profit and Loss. Under Ind AS re-measurements, (comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on net defined benefit liability) are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through Other Comprehensive Income, net of taxes.

8 Other Comprehensive Income

Under Indian GAAP, there were no requirements to separately disclose “Other Comprehensive Income” (OCI) and hence, the Company had not presented other comprehensive income (OCI) separately. As such, items falling under OCI, net of taxes is disclosed. Hence, the Company has reconciled the profit under Indian GAAP to the profit as per Ind AS. Further, profit under Ind AS is reconciled to total comprehensive income as per Ind AS.

Note 5 : Previous year figures have been regrouped / reclassified wherever necessary to conform with current year’s classification / disclosure.


Mar 31, 2017

1 Terms / Rights attached to Shares :

Equity Shares :

The Company has only one class of Equity Shares having at par value of '' 5/- per share. Equity Shares are pari-passu in all respects and each shareholder is eligible for one vote per share held. The Company declares and pays dividend in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders at the ensuing Annual General Meeting.

In the event of liquidation of the Company, the equity shareholders are eligible to receive the remaining assets of the Company, after distribution of all preferential amounts, in proportion of their shareholding.

(b) The Company does not have any Holding Company. With effect from 1st October, 2015, the Company has subsidiary Company viz. Lord Ganesha Minerals Private Limited.

(c) Details of shareholders holding more than 5% Shares in the Company :

(d) The Company has not reserved any shares for issue under options and has not entered into any contracts / commitments for the sale of shares /disinvestment.

(e) During the period of five years immediately preceding the date of Balance Sheet, the Company has not issued any shares without payment being received in cash nor issued any bonus shares and no shares were bought back.

(f) The Company has not issued any securities, which are convertible into Equity / Preference Shares of the Company.

(g) The Board of Directors at their meeting held on 25th May, 2017, have recommended a dividend of Rs.5/- per Equity Share of Rs. 5/- each (100%) for the financial year ended 31st March, 2017, aggregating to Rs.218.265 Million on which Dividend Distribution Tax amounting to Rs.44.434 Million is payable.

2 Foreign Currency Term Loans :

From Bank of Baroda, London

(i) External Commercial Borrowing (ECB) Term Loan balance outstanding USD 1,015,650/- comprising of :

a) Facility A of USD 1,015,650/- repayable in six half yearly installments commencing from 24th month of initial drawdown i.e. repayment commenced from 22nd January, 2015 and;

b) Facility B repaid in full on 22nd October, 2016

Facility A carrying interest at 3 month USD LIBOR plus 250 bps p.a. payable six monthly.

(ii) External Commercial Borrowing (ECB) Term Loan balance outstanding USD 7,755,000/-, repayable in 8 equal half yearly installments i.e. repayment commenced from 22nd June, 2016, carrying interest at 6 month USD LIBOR plus 200 bps p.a. payable six monthly.

From The Hongkong and Shanghai Banking Corporation Limited

External Commercial Borrowing (ECB) Term Loan balance outstanding USD 7,881,975/-, repayable in 19 quarterly installments, repayment commenced from 30th September, 2014, carrying interest at 3 months USD LIBOR plus 225 bps p.a. payable quarterly.

Above Foreign Currency Term Loans are secured by First Pari-passu Charge on the Immovable and Movable Fixed Assets of the Company i.e. mortgage of Company''s immovable properties consisting of land together with all building and structures thereon and all plant and machinery, attached to the earth or permanently fastened to anything attached to the earth, both present and future and hypothecation of whole of the movable fixed assets / properties of the Company, including its movable plant and machinery, machinery spares, tools and accessories and other movable fixed assets, both present and future, ranking Pari-passu with charges created and / or to be created in favour of Banks / Financial Institutions for their term / foreign currency loans. The Foreign Currency Term Loans are also secured by Second Pari-passu charge on the Current Assets of the Company consisting of stock of raw materials, stocks in process, semi-finished and finished goods, bills receivables and book debts.

Note : 3

The Fund based and Non-Fund based Limits, sanctioned to the Company by the bankers, for meeting working capital requirements, are secured by First Pari-passu charge on the Current Assets of the Company consisting of stock of raw materials, stocks in process, semi-finished and finished goods, bills receivables and book debts.

Note 4

PROVIDENT FUND :

In case of certain employees, the Provident Fund contribution is made to Kalyani Steels Limited Provident Fund Trust. In terms of the guidance note issued by the Institute of Actuaries of India, the actuary has provided a valuation of Provident Fund liability based on the assumptions listed below and determined that there is shortfall as at 31st March, 2017. The assumptions used in determining the present value of obligation of the interest rate guarantee under deterministic approach are :

NOTE ''5'' : The Company has entered into agreements in the nature of lease / leave and license agreement with different lessors / licensors for the purpose of establishment of premises and accommodation of executives. These are generally in the nature of operating lease / leave and license and period of agreements is generally for one year and renewable / cancellable at the option of the lessee or lessor. In view of above there are no disclosures required as per Accounting Standard 19 "Leases" as prescribed by Companies (Accounting Standard) Rules, 2006.

Note ''6'' : Previous Year Figures : Previous year figures have been regrouped and reclassified wherever necessary to make them comparable with current period.


Mar 31, 2016

Necessary provisions are made for present obligations that arise out of past events prior to the Balance Sheet date entailing
future outflow of economic resources. Such provisions reflect best estimates based on available information.

1 (a) Terms / Rights attached to Shares : Equity Shares :

The Company has only one class of Equity Shares having at par value of Rs, 5/- per share. Equity Shares are pari-passu in all
respects and each shareholder is eligible for one vote per share held. The Company declares and pays dividend in Indian Rupees.
The dividend proposed by the Board of Directors is subject to the approval of the shareholders at the ensuing Annual General
Meeting.

In the event of liquidation of the Company, the equity shareholders are eligible to receive the remaining assets of the Company,
after distribution of all preferential amounts, in proportion of their shareholding.

(b) The Company does not have any Holding Company. With effect from 1st October, 2015, the Company has subsidiary Company viz.
Lord Ganesha Minerals Private Limited.

(c) Details of shareholders holding more than 5% Shares in the Company :

(d) The Company has not reserved any shares for issue under options and has not entered into any contracts / commitments for the
sale of shares /disinvestment.

(e) During the period of five years immediately preceding the date of Balance Sheet, the Company has not issued any shares
without payment being received in cash nor issued any bonus shares and no shares were bought back.

(f) The Company has not issued any securities, which are convertible into Equity / Preference Shares of the Company.

2 (a) Foreign Currency Term Loans : From Bank of Baroda, London

(i) External Commercial Borrowing (ECB) Term Loan balance outstanding USD 5,437,032/- comprising of :

a) Facility A of USD 3,049,390/- repayable in six half yearly instalments commencing from 24th month of initial drawdown i.e.
repayment commenced from 22nd January, 2015 and;

b) Facility B of USD 2,387,642/- repayable in four half yearly instalments commencing from 27th month of initial drawdown i.e.
repayment commenced from 22nd April, 2015.

Both Facility A and Facility B carrying interest at 3 month USD LIBOR plus 250 bps p.a. payable six monthly.

(ii) External Commercial Borrowing (ECB) Term Loan balance outstanding USD 10,340,000/-, repayable in 8 equal half yearly
instalments starting from 22nd June, 2016, carrying interest at 6 month USD LIBOR plus 200 bps p.a. payable six monthly.

From The Hongkong and Shanghai Banking Corporation Limited

External Commercial Borrowing (ECB) Term Loan balance outstanding USD 10,689,975/-, repayable in 19 quarterly instalments,
repayment commenced from 30th September, 2014, carrying interest at 3 months USD LIBOR plus 225 bps p.a. payable quarterly.

Above Foreign Currency Term Loans are secured by First Pari-passu Charge on the Immovable and Movable Fixed Assets of the Company
i.e. mortgage of Company''s immovable properties consisting of land together with all building and structures thereon and all
plant and machinery, attached to the earth or permanently fastened to anything attached to the earth, both present and future and
hypothecation of whole of the movable fixed assets / properties of the Company, including its movable plant and machinery,
machinery spares, tools and accessories and other movable fixed assets, both present and future, ranking Pari-passu with charges
created and / or to be created in favour of Banks / Financial Institutions for their term / foreign currency loans. The Foreign
Currency Term Loans are also secured by Second Pari-passu charge on the Current Assets of the Company consisting of stock of raw
materials, stocks in process, semi-finished and finished goods, bills receivables and book debts.

Note : 3 (a)

The Fund based and Non-Fund based Limits, sanctioned to the Company by the bankers, for meeting working capital requirements, are
secured by First Pari-passu charge on the Current Assets of the Company consisting of stock of raw materials, stocks in process,
semi-finished and finished goods, bills receivables and book debts.

PROVIDENT FUND :

In case of certain employees, the Provident Fund contribution is made to Kalyani Steels Limited Provident Fund Trust. In terms of
the guidance note issued by the Institute of Actuaries of India, the actuary has provided a valuation of Provident Fund liability
based on the assumptions listed below and determined that there is shortfall as at 31st March, 2016. The assumptions used in
determining the present value of obligation of the interest rate guarantee under deterministic approach are :

Notes :

4. There are no loans and advances in the nature of loans, to firms / companies in which directors are interested. * 2. No
repayment schedule. $ 3. Interest free.

NOTE ''5'' :

The Company has entered into agreements in the nature of lease / leave and license agreement with different lessors / licensors
for the purpose of establishment of premises and accommodation of executives. These are generally in the nature of operating
lease / leave and license and period of agreements is generally for one year and renewable / cancellable at the option of the
lessee or lessor. In view of above there are no disclosures required as per Accounting Standard - 19 ''Leases'' as prescribed by
Companies (Accounting Standard) Rules, 2006.

NOTE ''6'' : CSR Expenditure :

a) Corporate Social Responsibility (CSR), gross amount required to be spent by the Company during the year Rs, 24,223,508/-
includes unspent amount of Rs, 7,476,360/- for the previous year. (Previous Year Rs, 10,128,000/- )

NOTE ''7'' :

Previous Year Figures :

Previous year figures have been regrouped and reclassified wherever necessary to make them comparable with current period.


Mar 31, 2014

Note : 1 (a)

The Fund based and Non-Fund based Limits, sanctioned to the Company by the bankers, for meeting working capital requirements, are secured by First pari-passu charge on the Current Assets of the Company consisting of stock of raw materials, stocks in process, semi-finished and finished goods, bills receivables and book debts.

As at 31st As at 31st

March, 2014 March, 2013 NOTE ''2'' : CONTINGENT LIABILITIES : A. Contingent Liabilities not provided for in respect of :

a) Claims against the Company not acknowledged as debts 2,718,858 12,648,157

b) Excise & Service Tax Demands - Matter under dispute 29,483,533 19,143,760

c) Customers'' Bill Discounting 547,855,470 480,075,889

d) Iron Ore Supplier - Rate Difference Claim - Disputed 255,198,766 255,198,766

e) Reimbursement for Forest Development Tax on Iron Ore claimed by supplier 33,487,315 33,487,315

NOTE 3 :

Related party disclosures have been set out in a separate statement annexed to the Financial Statements. The related parties, as defined by Accounting Standard 18 ''Related Party Disclosures'' issued as prescribed by the Companies (Accounting Standard) Rules, 2006 in respect of which the disclosures have been made, have been identified on the basis of disclosures made by the key management persons and taken on record by the Board.

NOTE 4 :

Disclosures required as per Clause 32 of the Listing Agreement have been set out in a separate statement annexed to the Financial Statements.

NOTE 5 :

The Company has entered into agreements in the nature of lease / leave and license agreement with different lessors / licensors for the purpose of establishment of premises and accommodation of executives. These are generally in the nature of operating lease / leave and license and period of agreements is generally for one year and renewable / cancellable at the option of the lessee or lessor. In view of above there are no disclosures required as per Accounting Standard 19 ''Leases'' as prescribed by Companies (Accounting Standard) Rules, 2006.

NOTE 6 :

During the year, the Company has given a Donation of Rs. 1.50 Crore to a Political Party viz. Bharatiya Janata Party.

NOTE 7 :

Previous Year Figures :

Previous year figures have been regrouped and reclassified wherever necessary to make them comparable with current period.


Mar 31, 2013

Basis of preparation

These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. These financial statements have been prepared to comply in all material aspects with the accounting standards notified under Section 211(3C) [Companies (Accounting Standards) Rules, 2006, as amended] and the other relevant provisions of the Companies Act, 1956.

All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Revised Schedule VI to the Companies Act, 1956. Based on the nature of products and the time between the 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 - non current classification of assets and liabilities.

1 (a) Terms / Rights attached to Shares : Equity Shares :

The Company has only one class of Equity Shares having at par value of Rs. 5/- per share. Equity Shares are pari-passu in all respects and each shareholder is eligible for one vote per share held. The Company declares and pays dividend in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders at the ensuing Annual General Meeting.

In the event of liquidation of the Company, the equity shareholders are eligible to receive the remaining assets of the Company, after distribution of all preferential amounts, in proportion of their shareholding.

2 (a) Debentures :

The Company has issued the following Secured Non-Convertible Redeemable Debentures :

(i) 400 - 10.75% Secured Non-Convertible Redeemable Debentures (NCDs) (Nineteenth Series) of Rs. 1,000,000/- each, aggregating Rs. 400,000,000/- (Rupees Four Hundred Million only) were issued on private placement basis. In terms of the Debenture Trust Hypothecation Deed dated 15th December, 2009, NCDs were to be redeemed in three annual installments commencing from the end of fourth year from the date of allotment i.e. redeemable on 18th September, 2013 Rs. 333,333/- per debenture, on 18th September, 2014 Rs. 333,333/- per debenture and on 18th September, 2015 Rs. 333,334/- per debenture. However the Company has redeemed the NCDs in full on 30th March, 2013 and satisfaction of charge has been filed with Government of India, Ministry of Corporate Affairs, Maharashtra, Pune.

(ii) 550 - 12.50% Secured Non-Convertible Redeemable Debentures (NCDs) (Seventeenth Series) of Rs. 1,000,000/- each, aggregating Rs. 550,000,000/- (Rupees Five Hundred Fifty Million only) were issued on private placement basis, held by Life Insurance Corporation of India. In terms of the Debenture Trust Hypothecation Deed dated 8th April, 2009, NCDs are to be redeemed in three annual installments commencing from the end of third year from the date of allotment i.e. redeemable on 16th January, 2012 Rs. 333,333/- per debenture, on 16th January, 2013 Rs. 333,333/- per debenture and on 16th January, 2014 Rs. 333,334/- per debenture. The first and second redemption installment are already paid by the Company on their respective due dates as aforesaid.

2 (b) Rupee Term Loans :

(i) Bank of Baroda - Repaid in full on 23rd January, 2013 and satisfaction of charge has been filed with Government of India, Ministry of Corporate Affairs, Maharashtra, Pune.

(ii) Axis Bank Limited - Repaid in full on 23rd January, 2013 and satisfaction of charge has been filed with Government of India, Ministry of Corporate Affairs, Maharashtra, Pune.

(iii) Canara Bank - Repaid in full on 30th April, 2012 and satisfaction of charge has been filed with Government of India, Ministry of Corporate Affairs, Maharashtra, Pune.

2 (c) Foreign Currency Term Loans : From Bank of Baroda, London (i) External Commercial Borrowing (ECB) Term Loan balance outstanding USD 13,721,000/-. Repayable in 20 quarterly installments commencing from 30th June, 2014, carrying interest at 6 month USD LIBOR plus 400 bps p.a. payable quarterly.

(ii) External Commercial Borrowing (ECB) Term Loan balance outstanding USD 9,181,650/- comprising of :

a) Facility A of USD 4,681,650/- repayable in six half yearly installments starting from 24th month of initial drawdown i.e. repayment commencing from 22nd December, 2014 and;

b) Facility B of USD 4,500,000/- repayable in four half yearly installments starting from 27th month of initial drawdown i.e. repayment commencing from 22nd March, 2015. Both Facility A and Facility B carrying interest at 6 month USD LIBOR plus 315 bps p.a. payable six monthly. Above Debentures and Foreign Currency Term Loans are secured by mortgage of Company''s immovable properties consisting of land together with all buildings and structures thereon and all plant and machinery, attached to the earth or permanently fastened to anything attached to the earth, both present and future and hypothecation of whole of the movable fixed assets / properties of the Company, including its movable plant and machinery, machinery spares, tools and accessories and other movable fixed assets, both present and future, ranking pari passu with charges created and / or to be created in favour of the Trustees for Debenture holders and Banks / Financial Institutions for their term / foreign currency loans. The Foreign Currency Term Loans are also secured by Second Pari-passu charge on the Current Assets of the Company consisting of stock of raw materials, stocks in process, semi-finished and finished goods, bills receivables and book debts.

Note : 3 (a)

The Fund based and Non-Fund based Limits, sanctioned to the Company by the bankers, for meeting working capital requirements, are secured by First pari-passu charge on the Current Assets of the Company consisting of stock of raw materials, stocks in process, semi-finished and finished goods, bills receivables and book debts.

3 (b) PROVIDENT FUND :

In case of certain employees, the Provident Fund contribution is made to Kalyani Steels Limited Provident Fund Trust. In terms of the guidance note issued by the Institute of Actuaries of India, the actuary has provided a valuation of Provident Fund liability based on the assumptions listed below and determined that there is shortfall as at 31st March, 2013. The assumptions used in determining the present value of obligation of the interest rate guarantee under deterministic approach are :

NOTE ''4'' :

Related party disclosures have been set out in a separate statement annexed to the Financial Statements. The related parties, as defined by Accounting Standard 18 ''Related Party Disclosures'' issued as prescribed by the Companies (Accounting Standard) Rules, 2006 in respect of which the disclosures have been made, have been identified on the basis of disclosures made by the key management persons and taken on record by the Board.

NOTE ''5'' :

Disclosures required as per Clause 32 of the Listing Agreement have been set out in a separate statement annexed to the Financial Statements.

NOTE ''6'' :

The Company has entered into agreements in the nature of lease / leave and license agreement with different lessors / licensors for the purpose of establishment of premises and accommodation of executives. These are generally in the nature of operating lease / leave and license and period of agreements is generally for one year and renewable / cancellable at the option of the lessee or lessor. In view of above there are no disclosures required as per Accounting Standard - 19 "Leases" as prescribed by Companies (Accounting Standard) Rules, 2006.

NOTE ''7'' :

Previous Year Figures :

Previous year figures have been regrouped and reclassified wherever necessary to make them comparable with current period.


Mar 31, 2012

1 (a) Terms / Rights attached to Shares :

Equity Shares :

The Company has only one class of Equity Shares having at par value of Rs 5/- per share. Equity Shares are pari-passu in all respects and each shareholder is eligible for one vote per share held. The Company declares and pays dividend in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders at the ensuing Annual General Meeting.

In the event of liquidation of the Company, the equity shareholders are eligible to receive the remaining assets of the Company, after distribution of all preferential amounts, in proportion of their shareholding.

2 (a) Debenture Redemption Reserve :

Debenture Redemption Reserve has been created in accordance with Circular No.9/2002 dated 18th April, 2002 issued by Department of Company Affairs, Ministry of Law Justice and Company Affairs, Government of India and Section 117(c) of Companies Act, 1956 at 25% of the maturity amount equally over the terms of Debentures privately placed. Amount set out for the year represents the entire required amount for the year in respect of the Seventeenth Series and the Nineteenth Series of the Debentures.

3 (a) Debentures :

The Company has issued the following Secured Non-Convertible Redeemable Debentures :

(i) 400 - 10.75% Secured Non-Convertible Redeemable Debentures (NCDs) (Nineteenth Series) of Rs 1,000,000/- each, aggregating Rs 400,000,000/- (Rupees Four Hundred Million only) were issued on private placement basis. In terms of the Debenture Trust Hypothecation Deed dated 15th December, 2009, NCDs are to be redeemed in three annual installments commencing from the end of fourth year from the date of allotment i.e. redeemable on 18th September, 2013 Rs 333,333/- per debenture, on 18th September, 2014, Rs 333,333/- per debenture and on 18th September, 2015, Rs 333,334/- per debenture.

(ii) 550 - 12.50% Secured Non-Convertible Redeemable Debentures (NCDs) (Seventeenth Series) of Rs 1,000,000/- each, aggregating Rs 550,000,000/- (Rupees Five Hundred Fifty Million only) were issued on private placement basis, held by Life Insurance Corporation of India. In terms of the Debenture Trust Hypothecation Deed dated 8th April, 2009, NCDs are to be redeemed in three annual installments commencing from the end of third year from the date of allotment i.e. redeemable on 16th January, 2012 Rs 333,333/- per debenture, on 16th January, 2013, Rs 333,333/- per debenture and on 16th January, 2014, Rs 333,334/- per debenture. The first redemption installment is already paid by the Company on 16th January, 2012.

5 (b) Rupee Term Loans :

(i) Bank of Baroda - Repayable in 16 quarterly installments commencing from 10th December, 2012, carrying interest of Base Rate plus 2% p.a. payable monthly.

(ii) Axis Bank Limited - Repayable in quarterly installment of Rs 31,502,500/- each, commencing from 1st April, 2012, carrying interest of BPLR minus 4.75% p.a. payable monthly.

(iii)Canara Bank - Repayable in 8 quarterly installments, last installment due on 30th April, 2012, carrying interest of BPLR minus 2% p.a. payable monthly.

(iv)HDFC Bank Limited - Repaid in full on 2nd May, 2011 and satisfaction of charge has been filed with Government of India, Ministry of Corporate Affairs, Maharashtra, Pune.

Above debentures and loans are secured by mortgage of Company's immovable properties consisting of land together with all buildings and structures thereon and all plant and machinery, attached to the earth or permanently fastened to anything attached to the earth, both present and future and hypothecation of whole of the movable fixed assets / properties of the Company, including its movable plant and machinery, machinery spares, tools and accessories and other movable fixed assets, both present and future, ranking pari-passu with charges created and / or to be created in favour of the Trustees for Debenture holders and Banks / Financial Institutions for their term / foreign currency loans.

6 (a) On the basis of information available with the Company regarding the status of suppliers as defined vide "Micro, Small and Medium Development Act, 2006" total dues to suppliers as at 31st March, 2012 amount to Rs 583,530/-. Since there were no over dues beyond the credit period extended to the Company which is less than 45 days, no liability for payment of interest and related disclosures under the said act arose.

Note :

7 (a) Long term Inter Corporate Loans includes interest free loans aggregating Rs 11,250,000/- (Previous Year Rs 11,250,000/-) given to six private companies formed with the same purpose and obligation as the Six Employees Welfare Trusts under a Scheme in terms of Clause (b) of the proviso to Section 77(2) of the Companies Act, 1956.

7 (b) Long term advances recoverable in cash or kind represents interest free loans amounting to Rs 9,180,000/- (Previous Year Rs 9,180,000/-) to seven trusts connected with the welfare of employees.

As at 31st As at 31st March, 2012 March, 2011

NOTE '8' : CONTINGENT LIABILITIES :

A. Contingent Liabilities not provided for in respect of :

a) Claims against the Company not acknowledged as debts 12,648,157 12,648,157

b) Service Tax Demands - Matter under dispute 1,182,269 1,182,269

B. Mysore Minerals Limited had raised an illegitimate claim aggregating to Rs 281,552,035/- for price of calibrated iron ore purchased by the Company over and above the agreed contracted price. The Company has repudiated the said claim as the same is in ultra-vires to the contract. The dispute has been referred to Arbitrator.

NOTE '9' :

In the absence of balance confirmation, the balances in respect of a Government party are as per Books of Accounts only. Adjustments having an impact of revenue nature, if any, will be made in the year in which the same are confirmed and reconciled.

NOTE '10' :

Segment information has been set out in a separate statement annexed to the Financial Statements.

NOTE '11' :

Related party disclosures have been set out in a separate statement annexed to the Financial Statements. The related parties, as defined by Accounting Standard 18 'Related Party Disclosures' issued as prescribed by the Companies (Accounting Standard) Rules, 2006 in respect of which the disclosures have been made, have been identified on the basis of disclosures made by the key management persons and taken on record by the Board.

NOTE '12' :

Disclosures required as per Clause 32 of the Listing Agreement have been set out in a separate statement annexed to the Financial Statements.

NOTE '13' :

The Company has entered into agreements in the nature of lease / leave and license agreement with different lessors / licensors for the purpose of establishment of premises and accommodation of executives. These are generally in the nature of operating lease / leave and license and period of agreements is generally for one year and renewable / cancelable at the option of the lessee or lessor. In view of above there are no disclosures required as per Accounting Standard 19 'Leases' as prescribed by Companies (Accounting Standard) Rules, 2006.

NOTE '14' :

Previous Year Figures :

The Financial Statements for the year ended 31st March, 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act, 1956, the Financial Statements for the year ended 31st March, 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year's classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of Financial Statements.


Mar 31, 2011

As at 31st As at 31st March, 2011 March, 2010

Rs Rs

1. A. Contingent Liabilities not provided for in respect of :

a) Claims against the Company not acknowledged as debts 12,648,157 16,672,364

b) Service Tax Demands - Matter under Dispute 1,182,269 1,182,269

B. Mysore Minerals Limited had raised an illegitimate claim aggregating to Rs 281,552,035/- for price of calibrated iron ore purchased by the Company over and above the agreed contracted price. The Company has repudiated the said claim as the same is in ultra-vires to the contract. The dispute has been referred to Arbitrator.

2. In furnishing information under Note No.4(b) and 7(a), the view has been taken that particulars are required only in respect of items that are incorporated in the Finished Goods produced and not for such material used for maintenance of Plant & Machinery.

3. (a) (1) 550 - 12.50% Secured Non-Convertible Redeemable Debentures (Seventeenth Series) of Rs 1,000,000/- each, allotted on 16th January, 2009, privately placed, held by Life Insurance Corporation of India, redeemable in three equal annual installments commencing from the end of three years from the date of allotment.

(2) 400 - 10.75% Secured Non-Convertible Redeemable Debentures (Nineteenth Series) of Rs 1,000,000/- each, allotted on 18th September, 2009, privately placed, held by Indian Overseas Bank, Bank of India, Union Bank of India, Bajaj Auto Limited, NPS Trust - A/c LIC Pension Fund Scheme - Central Govt. and NPS Trust - A/c LIC Pension Fund Scheme - State Govt., redeemable in three equal annual installments commencing from the end of fourth year from the date of allotment.

Above Debentures are secured by mortgage of Company's immoveable properties consisting of land together with all buildings and structures thereon and all plant and machinery, attached to the earth or permanently fastened to anything attached to the earth, both present and future and hypothecation of whole of the moveable fixed assets / properties of the Company, including its movable plant and machinery, machinery spares, tools and accessories and other movable fixed assets, both present and future, ranking pari passu with charges created and / or to be created in favour of the Banks / Financial Institutions for their term / foreign currency loans.

(b) Rupee Term Loans :

(i) Canara Bank - Term Loan

(ii) Bank of Baroda - Term Loan

(iii) HDFC Bank Limited - Term Loan

(iv) Axis Bank Limited - Term Loan

Above loans are secured by mortgage of Company's immoveable properties consisting of land together with all buildings and structures thereon and all plant and machinery, attached to the earth or permanently fastened to anything attached to the earth, both present and future and hypothecation of whole of the moveable fixed assets / properties of the Company, including its movable plant and machinery, machinery spares, tools and accessories and other movable fixed assets, both present and future, ranking pari passu with charges created and / or to be created in favour of the Trustees for Debenture holders and Banks / Financial Institutions for their term / foreign currency loans.

(c) Foreign Currency Term Loans :

(i) Canara Bank - Foreign Currency Term Loan, Outstanding Balance : Nil (Previous Year : US$ 2,098,983) Above Foreign Currency Term Loan is converted into Rupee Term Loan during the year.

4. On the basis of information available with the Company regarding the status of suppliers as defined vide "Micro, Small and Medium Development Act, 2006" total dues to suppliers as at 31st March, 2011 amount to Rs 373,195/-. Since there were no overdues beyond the credit period extended to the Company which is less than 45 days, no liability for payment of interest and related disclosures under the said act arose.

5. In the absence of balance confirmation, the balances in respect of a Government party are as per Books of Account only. Adjustments having an impact of revenue nature, if any, will be made in the year in which the same are confirmed and reconciled.

6. Debentures Redemption Reserve has been created in accordance with Circular No.9/2002 dated 18th April, 2002 issued by Department of Company Affairs, Ministry of Law Justice and Company Affairs, Government of India and Section 117(c) of Companies Act, 1956 at 25% of the maturity amount equally over the terms of Debentures privately placed. Amount set out for the year represents the entire required amount for the year in respect of the Seventeenth Series and the Nineteenth Series of the Debentures.

7. Segment information has been set out in a separate statement annexed to this schedule.

8. Related party disclosures have been set out in a separate statement annexed to this Schedule. The related parties, as defined by Accounting Standard 18 'Related Party Disclosures' issued as prescribed by Companies (Accounting Standard) Rules, 2006 in respect of which the disclosures have been made, have been identified on the basis of disclosures made by the key management persons and taken on record by the Board.

9. The Company has entered into agreements in the nature of lease / leave and license agreement with different lessors / licensors for the purpose of establishment of premises and accommodation of executives. These are generally in the nature of operating lease / leave and license and period of agreements is generally for one year and renewable / cancelable at the option of the lessee or lessor. In view of above there are no disclosures required as per Accounting Standard - 19 "Leases" as prescribed by Companies (Accounting Standard) Rules, 2006.

10. Disclosures required as per Clause 32 of the Listing Agreement have been set out in a separate statement annexed hereto.

11. Previous year's figures have been regrouped wherever considered necessary to make them comparable with those of the current year.

12. Reference is invited to Statement of Significant Accounting Policies annexed hereto.


Mar 31, 2010

1. On the basis of information available with the Company regarding the status of suppliers as defined vide "Micro, Small and Medium Development Act, 2006" total dues to suppliers as at 31st March, 2010 amount to Rs.887,380/-. Since there were no overdues beyond the credit period extended to the Company which is less than 45 days, no liability for payment of interest and related disclosures under the said act arose.

2. In the absence of balance confirmations, the balances in respect of third parties are as per Books of Account only. Adjustments having an impact of revenue nature, if any, will be made in the year in which the same, are confirmed and reconciled.

3. Debentures Redemption Reserve has been created in accordance with Circular No.9/2002 dated 18th April, 2002 issued by Department of Company Affairs, Ministry of Law Justice and Company Affairs, Government of India and Section 117(c) of Companies Act, 1956 at 25% of the maturity amount equally over the terms of Debentures privately placed. Amount set out for the year represents the entire required amount for the year in respect of Seventeenth Series and the proportionate amount for the period of seven months since issued during the year in respect of the Nineteenth Series.

4. Segment information has been set out in a separate statement annexed to this Schedule.

5. Related party disclosures have been set out in a separate statement annexed to this Schedule. The related parties, as defined by Accounting Standard 18 Related Party Disclosures issued as prescribed by Companies (Accounting Standard) Rules, 2006 in respect of which the disclosures have been made, have been identified on the basis of disclosures made by the key management persons and taken on record by the Board.

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