1. GENERAL INFORMATION VISA Steel Limited VISA Steel Limited (VSL) is engaged in the manufacturing of Iron and Steel products including Pig Iron, Sponge Iron, Special Steel and High Carbon Ferro Chrome with captive power plant at Kalinganagar, Odisha. Incorporated on 10 September, 1996, VSL has its registered office at Bhubaneswar and Corporate Office in Kolkata with manufacturing units in Kalinganagar and Golagaon and branch offices across India. VSL is a Public Limited Company with its shares listed on BSE Limited (BSE) and National Stock Exchange of India Limited (NSE). 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1 Basis of Preparation These Financial Statements have been brpared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. Pursuant to Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014, till the standards of accounting or any addendum thereto are brscribed by Central Government in consultation and recommendation of the National Financial Reporting Authority, the existing Accounting Standards notified under the Companies Act, 1956 shall continue to apply. Consequently these Financial Statements have been brpared 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, 2013. All assets and liabilities have been classified as current or non-current as per the Company's operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for the 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. 2.2 Fixed Assets (a) Tangible Assets (i) Tangible Assets are stated at cost net of accumulated debrciation and accumulated impairment losses if any. Cost comprises cost of acquisition, construction and subsequent improvements thereto including taxes and duties (net of credits and drawbacks), freight and other incidental expenses related to acquisition and installation. (ii) Subsequent expenditure related to an item of fixed asset are added to its book value only if they increase the future benefits from the existing asset beyond its brviously assessed standard of performance. (iii) Losses arising from the retirement of, and gains or losses arising from disposal of tangible assets which are carried at cost are recognised in the Statement of Profit and Loss. (b) Intangible Assets Intangible Assets are stated at cost net of accumulated amortization and accumulated impairment losses, if any. Cost comprises cost of acquisition, installations and subsequent improvements thereto including taxes and duties (net of credits and drawbacks, if any). (c) Capital Work-in-Progress Capital Work-in-Progress is stated at cost and is inclusive of broperative expenses, project development expenses etc. (d) Debrciation and amortization (i) Debrciation including amortization on tangible assets, where applicable is provided on pro-rata basis under Straight Line Method (SLM) over the estimated useful lives of the assets as specified in Schedule II to the Companies Act, 2013 ('the Act'), other than the following: Leasehold assets(Buildings and Plant and Machinery) which are jointly held are amortized over the period of lease i.e, 10 years, being lower than the useful lives specified in Schedule II to the Act for similar assets. Furnace refractories are debrciated over useful life of 5-6 years based on technical assessment done by the Company. (ii) Leasehold land is amortized over the period of lease. No debrciation is provided for freehold land. (iii) Amortisation of Intangible Assets is done over its useful life of three years under SLM. 2.3 Impairment Loss An impairment loss, if any, is recognised wherever the carrying amount of the fixed assets exceeds the recoverable amount i.e. the higher of the assets' net selling price and value in use. 2.4 Borrowing Cost Borrowing costs attributable to acquisition and / or construction of qualifying assets are capitalised as a part of the cost of such assets up to the date when such assets are ready for its intended use. Other borrowing costs are charged to Statement of Profit and Loss. 2.5 Investments Investments of long term nature are stated at cost, less adjustment for diminution, other than temporary, in the carrying amounts thereof. 2.6 Inventories Inventories are stated at cost (net of CENVAT credit) or net realisable value, whichever is lower. Cost is determined on weighted average basis and comprises expenditure incurred in the normal course of business in bringing such inventories to their brsent location and condition and includes, where applicable appropriate overheads. Obsolete, slow moving and defective inventories are identified at the time of physical verification and where necessary, provision is made for such inventories. 2.7 Revenue Recognition (i) Sale of Goods: Sales are recognised when the substantial risks and reward of ownership in the goods are transferred to the buyer as per the terms of the contract and are recognised net of trade discounts, rebates, sales taxes, VAT but including excise duties. (ii) Sale of Services : Sales are recognised upon the rendering of services and are recognised net of service tax. (iii) Other items are recognised on accrual basis. 2.8 Other Income (i) Interest: Interest Income is generally recognised on a time proportion basis taking into account the amount outstanding and the rate applicable, when there is reasonable certainty as to realisation. (ii) Dividend: Dividend income is recognised when the right to receive dividend is established. (iii) All other items are recognised on accrual basis. 2.9 Transactions in Foreign Currencies (i) Initial Recognition On initial recognition, all foreign currencies transactions are recorded at exchange rates brvailing on the date of the transaction. (ii) Subsequent Recognition At the reporting date, foreign currency non-monetary items carried in terms of historical cost are reported using the exchange rate at the date of transactions. All monetary assets and liabilities in foreign currency are restated at the end of accounting period at the closing exchange rate. With respect to long-term foreign currency monetary items, from 1 April 2011 onwards, the Company has adopted the following policy: (a) Foreign exchange difference on account of a debrciable asset, is adjusted in the cost of debrciable asset, which would be debrciated over the balance life of the asset. (b) In other cases, the foreign exchange difference is accumulated in a Foreign Currency Monetary Item Translation Difference Account, and amortized over the balance period of such long term asset / liability. Exchange differences on re-instatement of all other monetary items are recognised in the Statement of Profit and Loss. (iii) Forward Exchange Contracts The brmium or discount arising at the inception of forward exchange contracts entered into to hedge an existing asset/liability, is amortized as expense or income over the life of the contract. Exchange differences on such a contract are recognised in the Statement of Profit and Loss in the reporting period in which the exchange rates change. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognised as income or as expense for the period. 2.10 Employee Benefits (i) Short-term Employee Benefits The undiscounted amount of Short-term Employee Benefits expected to be paid in exchange for the services rendered by employees is recognised during the period when the employee renders the service. (ii) Post Employment Benefit Plans Contributions under Defined Contribution Plans payable in keeping with the related schemes are recognised as expenses for the year. For Defined Benefit Plans, the cost of providing benefits is determined using the Projected Unit Credit Method (PUCM), with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains and losses are recognised in full in the Statement of Profit and Loss for the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested, or otherwise is amortized on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the Balance Sheet rebrsents the brsent value of the defined benefit obligation as adjusted for unrecognised past service cost, and as reduced by the fair value of plan assets where such plans are funded. Measurement of any assets resulting from this calculation is limited to the brsent value of economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan. (iii) Other Long-term Employee Benefits (Unfunded) The cost of providing long-term employee benefits is determined using PUCM with actuarial valuation being carried out at each Balance Sheet date. Actuarial gains and losses and past service cost are recognised immediately in the Statement of Profit and Loss for the period in which they occur. Other long term employee benefit obligation recognised in the Balance Sheet rebrsents the brsent value of related obligation. 2.11 Accounting for Taxes on Income Current Tax in respect of taxable income is provided for the year based on applicable tax rates and laws. Deferred tax is recognised subject to the consideration of prudence in respect of deferred tax assets, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods and is measured using tax rates and laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are reviewed at each Balance Sheet date to re-assess realisation. Current tax assets and current tax liabilities are offset when there is legally enforceable right to set off the recognised amounts and there is an intention to settle the asset and the liability on a net basis. Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off assets and liabilities rebrsenting current tax and where the deferred tax assets and the deferred tax liabilities relate to taxes on income levied by the same governing taxation laws. Minimum Alternative Tax Credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period. 2.12 Provisions and Contingent Liabilities Provisions are recognised when there is a brsent obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the amount required to settle the brsent obligation at the Balance sheet date and are not discounted to its brsent value. Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company or a brsent obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made. 2.13 Leases Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the Statement of Profit and Loss on a straight-line basis over the period of the lease. 2.14 Segment Reporting The accounting policies adopted for segment reporting are in conformity with the accounting policies adopted for the Company. Further, inter-segment revenues have been accounted for based on prices normally negotiated between the segments with reference to the costs, market prices and business risks, within an overall optimisation objective for the Company. Revenue and expenses have been identified with segments on the basis of their relationship to the operating activities of the segment. Revenue and expenses, which relate to the Company as a whole and are not allocable to segments on a reasonable basis have been included under "Corporate-Unallocated/Others (Net)". 2.15 Cash and Cash Equivalents In the Cash Flow Statement, cash and cash equivalents includes cash in hand, demand deposits with banks, other short-term highly liquid investments with original maturities of three months or less. 2.16 Earnings per Share Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Earnings considered in ascertaining the Company's earnings per share is the net profit for the period. The weighted average number of equity shares outstanding during the period and for all periods brsented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares, that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares. A. Debt Restructuring The Company was referred to the Corporate Debt Restructuring Forum (CDR), a non statutory voluntary mechanism set up under the aegis of the Reserve Bank of India, for the restructuring of its corporate debt during the year 2012-13 w.e.f 1 March 2012 and pursuant to which the CDR package was approved vide the letter of approval of CDR cell dated 27 September 2012 and a Master Restructuring Agreement (MRA) dated 19 December 2012 was executed to give effect to the CDR package. The CDR Package includes reliefs/measures such as reduction of interest rates, funding of interest, rearrangement of securities etc. During the current year Company's Business Re-organisation Plan (Refer Note 34) was referred to CDR cell by the lenders and same has been approved by CDR cell vide its letter dated 31 December 2014 and pursuant to this approval Common Loan Agreement (CLA) has been executed on 28 March 2015 among the Company, its Subsidiary company, VISA Special Steel Limited, and lenders. CLA would operate in continuation of above mentioned MRA. In terms of CLA, inter-alia, additional credit facilities have been granted and effective 28 March 2015 Company's existing Debt portfolio has been reorganised/ reallocated and secured as under: i) Term Loans (I Corporate Term Loans (I and Fresh Term Loan (for sinter plant)] ii) Working Capital Term Loans (WCTL) iii) Funded Interest Term Loans (FITL) iv) Working Capital Loans [Indicated in Note 9] v) Structured Mezzanine Credit Facity [SMCF (Sub debt)] B. Details of Securities i. Term Loans (I & II), SMCF (Sub debts), Working Capital Term Loans(WCTL), Funded Interest Term Loans (FITL), Corporate Term Loans (I & II) , Fresh Term Loan (For Sinter Plant) and Working Capital facilities: (a) First pari-passu charge by way of hypothecation of all the Company's current assets and fixed assets (excluding land) including movable and immovable plant and machinery, machinery spares, tools and accessories, vehicles and other moveable assets both brsent and future ("Hypothecated Assets") of the Company, save and except specific assets charged to Banks, Financial Institutions and Non Banking Financial Companies (NBFC). (b) First pari-passu mortgage and charge on the immovable properties of the Company situated at Kalinganagar Industrial Complex, Jajpur, Odisha, Golagaon, Jajpur, Odisha, Raigarh, Chhattisgarh and office brmises of the Company at Bhubaneshwar, Odisha. (c) Pledge of 51% of Promoter's Shareholding and further Pledge up to 51% of total equity of the Company needs to be executed by 31 March 2016. (d) Pledge of Equity Shares equivalent to 51% of the brsent shareholding in Ghotaringa Minerals Limited held by the Company and entire Equity Shares held by the Company in VISA Urban Infra Limited. (e) Hypothecation on profits of the Company, both brsent and future. (f) Lien on all Bank Accounts including the Trust and Retention Account. (g) The Lenders of SMCF are having a second pari-passu charge on the hypothecated assets and a second charge on the mortgaged assets of the Company. (h) SIDBI (exposure of Rs. 76.40 Million as on 1 March 2012 for bill discounting facility relating to working capital finance) has a second charge on fixed assets. Further, the above facilities are also covered by the following: ¦ Irrevocable, unconditional personal guarantee of Mr. Vishambhar Saran, Chairman and Mr. Vishal Agarwal, Vice Chairman and Managing Director of the Company. ¦ Irrevocable, unconditional Corporate Guarantee of VISA Infrastructure Ltd. with negative Lien on VISA House situated at 8/10 Alipore Road, Kolkata 700027, till the Company brings in additional equity of Rs. 1,250.00 Million over and above of Rs. 3,250.00 Million in the Company as envisaged in the CDR package. ¦ Irrevocable, unconditional Corporate Guarantee of VISA International Limited and Ghotaringa Minerals Limited ii. Equipment and Vehicle Term Loans These loans are secured by way of hypothecation of vehicles / machinery acquired under the respective loan arrangements. iii. Term Loans from Other Parties (a) Term Loan from IL&FS Financial Services These loans are secured by way of second pari-passu charge on entire pooled assets of the Company save and except assets charged in favour of Banks/FI/NBFC and 50 acres of land on which VISA BAO Limited is setting up a Ferro Chrome Plant. This loan is also covered by a Corporate Guarantee of VISA International Limited. (b) Term Loan from HUDCO - These loans are secured by way of pari-passu first charge on all the fixed assets, both brsent and future, of the Company's plant including township being financed by HUDCO at Kalinganagar Industrial Complex in Odisha and pari-passu second charge on the current assets of the Company within the Integrated Steel Complex including township being financed by HUDCO. C. Terms of Repayment of loans i. Terms of Repayment and outstanding balance as at the year end of Term Loans including SMCF (TL): Upon implementation of CDR Package during the Financial Year 2012-13, then existing Restructured Term Loan of Rs. 12,355.48 Million and Additional Term Loan of Rs. 6,100.00 Million sanctioned as per CDR package, were to be repaid over a period of 10 years in quarterly instalments commencing from March 2013. Further such loans carry interest @ 10.75% p.a. for the first 4 years, @ 11.5% for 5th and 6th year and @ 12%, linked to the base rate, for subsequent years of restructuring. Above mentioned loan amounting to Rs. 17,286.71 Million outstanding as on balance sheet date are to be repaid as per the repayment schedule given below. General Reserve (Refer Note 4) rebrsents free reserve not held for any specific purpose, other than to the extent of Rs. 3,761.16 Million (31 March 2014 : Rs. 3,761.16 Million) which had arisen on implementation of a scheme of amalgamation in earlier year. 50 brVIOUS YEAR FIGURES The brvious year figures are reclassified where considered necessary to conform to this year's classification. For Lovelock & Lewes For and on behalf of the Board of Directors Firm Registration Number - 301056E Chartered Accountants Vishal Agarwal Vice Chairman & Managing Director Pradip Law Partner KeshavSadani Membership Number 51790 Company Secretary Punkaj Kumar Bajaj Joint Managing Director & CEO (Steel Business) Manoj Kumar Digga Executive Director (Finance) & CFO Place: Kolkata Date: 29 May 2015 |