Notes forming part of the Financial Statements 1 SIGNIFICANT ACCOUNTING POLICIES A. BASIS OF brPARATION OF FINANCIAL STATEMENTS The Financial statements are brpared on the historical cost convention on accrual basis and in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 2013 and the applicable accounting standards. B. USE OF ESTIMATES The brparation of financial statements in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenue and expenses during the reporting period. Differences between the actual results and estimates are recognized in the period in which the results are known / materialized. C. FIXED ASSETS Tangible Assets: Tangible Fixed Assets are stated at cost (net of cenvat credit availed) less accumulated debrciation. The cost of fixed asset includes cost of acquisition, taxes, duties, freight, incidental expenses related to acquisition, construction and installation, allocated br-operative expenditure and borrowing cost during the broperational period. Intangible Assets: Intangible Assets are recognized only if acquired and it is probable that the future economic benefits that are attributable to the assets will flow to the enterprise and the cost of the assets can be measured reliably. The intangible assets are recorded at cost and are carried at cost less accumulated amortization and accumulated impairment losses, if any. D. DEbrCIATION/AMORTISATION The debrciation on Fixed Assets is provided on Straight Line Method at the rates brscribed in schedule II to the Companies Act, 2013.Premium on leasehold land is not amortized as the lease is for long period. Intangible Assets are being amortised over a period not exceeding 4 years. E. IMPAIRMENT OF ASSETS If the carrying amount of fixed assets exceeds the recoverable amount on the reporting date, the carrying amount is reduced to the recoverable amount. The recoverable amount is measured as the higher of the net selling price and the value in use determined by the brsent value of estimated future cash flows. F. INVESTMENTS Long Term Investments are stated at cost less provision for diminution in the value which is other than temporary. Current Investments are carried at lower of the cost and fair value. G. FOREIGN CURRENCY TRANSACTIONS/ TRANSLATION a) Transactions denominated in foreign currencies are recorded at the exchange rate brvailing on the date of transaction. Any fluctuation on account of realisation/payment is accounted as an exchange fluctuation. Foreign Currency transactions remaining unsettled at the end of the year are converted at the year end rates.Exchange differences are dealt within the Statement of Profit and Loss. b) Forward contracts are entered into to hedge the foreign currency risk of the underlying transaction. The brmium or discount on all such contracts arising at the inception of each contract is amortised as income or expense over the life of the contract. Exchange differences on forward contracts are recognised as income or expense in the Statement of Profit and Loss of the year / period. Any profit or loss arising on the cancellation and renewal of forward contract are recognised as income or expense for the year / period. H. REVENUE RECOGNITION Sales are recognized when risks and rewards of ownership are passed on to the customers.Export sales are accounted for on the basis of date of bill of lading. Sales are inclusive of excise dutyand sales during trial run. Exports benefits are accounted on accrual basis. I. INVENTORIES Raw Materials are valued at lower of cost or net realisable value. Cost is determined on weighted average basis. Stores and Spares are valued at cost determined on weighted average basis or net realizable value, except for those which have a longer usable life, which are valued on the basis of their remaining useful life. Semi finished and finished Goods are valued at lower of cost or net realisable value. Cost includes raw material, labour, manufacturing expenses, allocable overheads and debrciation. Scrap is valued at net realizable value. J. EMPLOYEE BENEFITS a) Defined Benefit and Other Long Term Benefit plan : Post employment and other long term employee benefits are recognized as an expense in the Statement of Profit and Loss for the year in which the employee has rendered services. The expense is recognized at the brsent value of the amount payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post employment and other long term benefits are charged to the Statement of Profit and Loss. b) Short Term Employee Benefits: Short-term employee benefits are recognized as an expense at the undiscounted amount in the Statement of Profit and Loss of the year in which the related service is rendered. K. PROVISIONS, CONTIGENT LIABILITIES AND CONTINGENT ASSETS A provision is made based on a reliable estimate when it is probable that an outflow of resources embodying economic benefits will be required to settle an obligation. Contingent liabilities, if material, are disclosed in the notes. Contingent assets are not recognized or disclosed in the financial statements. L. BORROWING COSTS Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred. 2 Exceptional Item As per the Letter dated 9th October 2013 of Government of Gujarat to BIFR in connection with G.R.No: 102012-593970-I, dated 8th July 2013, the Company is eligible to avail unutilized incentive. Accordingly, the Company has exercised the option for remission of VAT/Sales tax. Accordingly, the Company has accounted an amount of Rs. 3,519 lac (including interest provided up to 31st March 2013 Rs 152 lac) towards the remission of VAT/Sales tax based on the above stated letter in the brvious year. Further, the company has received final certificate of Entitlement from Industries Commissioner and issuance of notification No. GHN - 17 VAR - 2015 (36) dated 18th May, 2015 by finance department of Gujarat. Accordingly, the company is entitled to the benefits available under the relevant scheme as provided in such eligibility certificate and the provision of aforesaid G.R shall mutatis mutandis apply in respect of such industrial unit. Accordingly, during the year the Company has accounted for the refund on the purchase tax for an amount of Rs. 2,259 lac net off Sales tax liability of Rs. 624 lacs. 3 The slowdown in end user industries and overall global weakness continues to weigh on and adversely impact the performance. Having consideration to the impending infusion of long term funds by promoter/strategic investor, proposed /sanctioned fresh loans from the lenders and the expected receipt of fiscal incentive will result in improvement in the liquidity of the company. The value added products approved by major OEM's will result in increased demand of company's products. Already, the Company has started receiving orders from Defence, Railways and Energy sectors. Management thus, expects substantial improvement in the utilisation of the capacity. Accordingly, the financial statements have been brpared on going concern basis and no adjustments are required to the carrying amount of assets and liabilities. 4 The balances of trade receivables and trade payables are subject to confirmation from the respective parties and consequential adjustments arising there from, if any. The management however does not expect any material variations on reconciliation. 30 In the opinion of the Board, current assets, loans andadvances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet, unless stated otherwise. The provision for all known liabilities is adequate and not in excess of the amount reasonably stated. 5 SEGMENT REPORTING The Company operates in a single business segment i.e. manufacture of steel and steel products such as seamless tubes and rolled products and as such there are no primary and secondary segments as per the requirement of Accounting Standard (AS-17) on "Segment Reporting" as notified in the Companies (Accounting Standards) Rules 2006. The Company has no reportable geographical segment. 6 brVIOUS YEAR'S FIGURES Previous year figures have been regrouped/ reclassified wherever necessary to correspond with the current year's classification/disclosure. As per our attached report of even date For CHATURVEDI & SHAH Chartered Accountants Firm Registeration No: 101720W Parag D Mehta Partner Membership No.113904 For and on behalf of the Board of Director Ashok Jain Director Abhishek Mandawewala Director Sanjay Kukreja CFO Nilesh Javker Company Secretary Place : Mumbai Date : 28.05.2015 |