NOTE 1 SIGNIFICANT ACCOUNTING POLICIES (Annexed to as forming part of accounts for the year ended 31st March, 2015) 1.1 Basis of Preparation of Financial Statements a) These Financial Statements have been brpared to comply in all material aspects with applicable accounting principles in India, the applicable Accounting Standards brscribed under Section 133 of the Companies Act, 2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act (to the extent notified) and other accounting principles generally accepted in India, to the extent applicable. b) 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 Schedule III to the Companies Act, 2013. Based on the nature of products and the time between acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current/non-current classification of assets and liabilities. c) Transactions and balances with values below the rounding off norm adopted by the Company have been reflected as "0.00" in the relevant notes in these Financial Statements. 1.2 Tangible Assets, Intangible Assets and Capital Work-in-Progress a) Tangible Assets are stated at cost of acquisition less accumulated debrciation and impairment losses, if any. b) Expenditure which are of Capital in nature are capitalised which comprises of purchase price and all other expenditure directly attributable to bringing the assets to its working condition for the intended use. Assets under erection / installation are shown as Capital Work-in-Progress. Capital Work-in-Progress are net of CENVAT credit availed / available thereon. c) Intangible Assets are stated at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortisation and impairment losses, if any. d) Interest on borrowing costs related to qualifying assets is worked out on the basis of actual utilisation of funds out of project specific loans and/or other borrowings to the extent identifiable with the qualifying assets and are capitalised with the cost of qualifying assets. Incidental indirect expenses relating to the project are apportioned amongst the Fixed Assets on the basis of their cost of erection / acquisition on commencement of commercial production. e) Subsidy received / or crystallisation in respect of fixed assets are deducted from the cost of respective assets. f) Variations of exchange rate attributable to fixed assets are capitalised. 1.3 Debrciation & Amortisation a) Debrciation on Fixed Assets is calculated on the Straight Line Method at the rate brscribed under the Schedule II of Companies Act, 2013. b) Intangible Assets are amortised over their respective individual estimated useful lives on a straight-line basis commencing from the date the assets is available to the Company for its use. 1.4 Inventories Inventories are valued at lower of Cost and Net Realisable Value. Cost is computed on FIFO basis. Finished goods and Work-in-Progress include cost of conversion and other overheads incurred in bringing the inventories to their brsent location and condition. 1.5 Investments Long Term Investment are valued at cost. Provision for diminution in value of these investments is made only if such a decline other than of temporary in nature. 1.6 Excise Duty Excise duty on finished goods lying at the factory is accounted for at the point of manufacturing of goods and is accordingly considered for valuation of finished goods stock as on the Balance Sheet date. 1.7 Recognition of Income & Expenditures a) Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. b) Sales are recognised net of trade discounts, rebates, sales tax and excise duties. c) Export Incentives Income arising out of Export Sales are accounted for on accrual basis. d) Purchases are inclusive of freight and the net of CENVAT/VAT Credit, Trade Discount and Claims. e) Gain and losses from the remeasurement and settlement of financial instrument at fair value are reported in the financial result through profit and loss. f) Interest income is recognised on a time proportion basis taking into account and the amount outstanding and the rate applicable. g) Income from commission is recognised based on agreements/arrangements with the customers as the service is performed using the proportionate completion method, when no significant uncertainty exists regarding the amount of the consideration that will be derived from rendering the service. 1.8 Subsidy a) The Company is registered under the West Bengal Incentive Scheme 2000 & 2004 of The Director of Industries, Government of West Bengal. Under the said scheme the Company is entitled to receive Capital Investment Subsidy, Interest Subsidy, Employment Generation Subsidy, Remission of Stamp Duty & Registration Fee. These shall be accounted for in the year of receipt and/or crystallisation. b) The Company has been granted eligibility certificate under the West Bengal Incentives to Power Intensive Industries Scheme, 2005, promulgated by the Department of Commerce & Industries, Government of West Bengal, vide notification no. 276-CI/O/Incentive/052/05/i dt. 19.05.2005, effective from 1st April, 2004. Under the said scheme, the Company is entitled to receive incentive on energy charges, which has been accounted for in the books on accrual basis. 1.9 Foreign Currency Transaction Foreign Currency Transactions are accounted for at the exchange rates brvailing at the date of the transaction. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Profit and Loss. 1.10 Taxation a) Current Tax is determined at the amount of tax payable in respect of taxable income for the period, computed with relevant tax rules and tax laws. In case of tax payable as per provisions of MAT under Section 115JB of the Income Tax Act, 1961, Deferred MAT Credit Entitlement is separately recognised as advance. b) Deferred Tax is recognised, subject to the consideration of prudence, 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. 1.11 Segment Reporting The Company has identified Iron & Steel as the sole business segment and the same has been treated as primary business segment. The Company sells mostly within India and does not have operations in economic environments with different risks and returns, it is considered operating in single geographical segment. Hence, no further disclosure as required under the Accounting Standard - 17 " Segment Reporting" as issued by the 'The Institute of Chartered Accountants of India'. 1.12 Retirement Benefits a) Liability with regards to long-term employee benefits is provided for on the basis of actuarial valuation at the Balance sheet date. Actuarial gain/ loss is recognised immediately in the statement of Profit & Loss Account. The Company has an Employee Gratuity Fund managed by the Life Insurance Corporation of India. b) Retirement benefit in the form of contribution to Provident Fund is a defined contribution scheme and is charged to Profit & Loss Account in the year when they become due. c) Short - term compensated absences are provided for on the basis of estimates. 1.13 Preliminary & Public Issue Expenses As the future economic benefit of Preliminary & Public Issue Expenses is not ascertainable & thus the same is adjusted with the share brmium. 1.14 Borrowing Costs a) Borrowing costs and its related expenses that are directly attributable to the acquisition, construction or production of a qualifying assets is capitalised as part of the cost of that asset. Other borrowing costs are recognised as an expenses in the period in which they are incurred. b) Net exchange gain/loss on foreign currency borrowings to the extent considered as an adjustment to interest cost is attributable to the finance cost. 1.15 Impairment of Assets At each Balance Sheet date the Company assesses whether there is any indication that assets may be impaired. If any such indication exists, the Company estimates the recoverable amount. If the carrying amount of the assets exceeds its recoverable amount, an impairment loss is charged to the statement of Profit & Loss to the extent the carrying amount exceeds the recoverable amount. 1.16 Provision, Contingent Liabilities and Contingent Assets - Provision involving substantial degree of estimation in measurement are recognised when there is a brsent obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognised but are disclosed in the Notes unless the possibility of outflow of resources is remote. Contingent Assets are neither recognised nor disclosed in the Financial Statements. 1.17 Use of Estimates The brparation of the Financial Statements in conformity with the generally accepted accounting principles requires that the management makes estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of the Financial Statements, and the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. NOTE 2 Contingent Liabilities not provided for in the books of Accounts : a) In respect of Letter of Credit amounting to Rs. NIL Lacs (P.Y.- Rs. 16,310.00 Lacs) & Bank guarantee amounting to Rs. 539.20 Lacs ( P. Y. Rs. 482.20 Lacs). b) Right to Recompense to CDR Lenders for the relief and sacrifice extended, subject to provisions of CDR Guidelines, amounting to Rs. 4,440.00 Lacs. c) Relating to Assessment year 2006-07, 2009-10 & 2012-13 a demand of Rs. 21.11 Lacs, Rs. 25.28 Lacs & Rs. 6,692.78 Lacs was raised by the Income Tax Department against which the Company has filed an application with respective department. An amount of Rs. 16.10 Lacs was paid under protest relating to A.Y. 2006-07. d) Relating to Earlier Financial years a demand of Rs. 384.70 Lacs (P.Y. Rs. 186.98 Lacs) were raised by the CESTAT department against which appeal has been filed by the Company. The Company has paid Rs. 50.00 Lacs under protest. e) Relating to Financial year 2005-06 , 2006 -07, 2007-08, 2008-09, 2009-10, 2011-12 a demand of Rs. 222.89 Lacs, Rs. 917.91 Lacs, Rs. 358.16 Lacs, Rs. 2,127.7 Lacs, Rs. 37.28 Lacs & Rs.446.29 Lacs respectively were raised by the Sales Tax department against which appeal has been filed by the Company. f) (i) A Suit of Rs. 100 Lacs filed by Mr. Ram Krishna Mukherjee for recovery of outstanding money against coal supplied to the Company in the year 2011. The Company has opposed the suit on the ground of inferior quality. (ii) In the year 2013 M/s. Mjunction filed a money suit for recovery of outstanding from the Company, amount being Rs. 0.40 Lacs. Hearing is under process. g) The Ministry of Railway issued a Show Cause Notice in respect of Evasion of Freight on loading of Iron-ore at a concessional rate and the penalty on such thereof amounting to Rs. 5,697.90 Lacs. The Company has filed a writ petition in the High Court in the year 2013 for issuing an unjustified notice. Interest of X NIL (P. Y. Rs. 2,643.72 Lacs) capitalised during the year as identified for acquisition & construction of qualifying assets and a sum of Rs. NIL (P. Y. Rs. 1,059.03 Lacs) transferred to br operative expenses as a borrowing cost. NOTE 3 Excise duty payable on Closing Stock on Finished Goods valued at Rs. 1,260.31 Lacs (P. Y. Rs. 302.10 Lacs) included in Closing Stock of Finished Goods and effect on Excise duty on change in stock of Finished Goods shown under Other Expenses (Notes No. 27). Due to above, there is no effect on profitability of the Company for the year under review. NOTE 4 Certain balances of the Sundry Creditors, Sundry Debtors, Unsecured Loan and Advances are subject to confirmation and reconciliation. NOTE 5 In the opinion of the Board of Directors, the Current Assets and Loans & Advances have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated in the accounts. NOTE 6 INTEREST IN JOINT VENTURE The Company has the following investment, in a jointly controlled entity: Name of the Entity : M/s. SKP Mining Pvt. Ltd. Country of Incorporation : India Percentage of ownership interest : 50% as at 31st March, 2015 Percentage of ownership interest : NIL as at 31st March, 2014 The Company's interest in this Joint Venture is reported as Non-current investment (Refer Note 13) and is stated at cost (net of provision for other than temporary diminution in value). The Company's share of each of the assets, liabilities, income, expenses, etc (each without elimination of the effect of transactions between the Company and the Joint Venture) related to its interest in this joint venture, based on the audited financial statements are : NOTE 7 Previous year's figures have been regrouped/restated wherever necessary to conform with this year's classification. As per our report of even date. For R. Kothari & Company Chartered Accountants FRN: 307069E Manoj Kumar Sethia Partner Membership No. 064308 For and on behalf of Board of Directors Suresh Kumar Patni Chairman Nikhil Deora Company Secretary Ankit Patni Managing Director Anand Jain Chief Financial Officer Kolkata, 30th May, 2015 |