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Notes to Accounts of Sarda Energy & Minerals Ltd.
Mar 31, 2025
1.2.19 Provisions and contingent liabilities
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a
past event, it is probable that an outflow of economic benefits will be required to settle the obligation, and a
reliable estimate can be made of the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the present
obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the
obligation.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a
third party, the receivable is recognized as an asset, if it is virtually certain that reimbursement will be received
and the amount of the receivable can be measured reliably.
Contingent liabilities are possible obligations that arise from past events and whose existence will only be
confirmed by the occurrence or non-occurrence of one or more future events not wholly within the control of
the Company. Where it is not probable that an outflow of economic benefits will be required, or the amount
cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of
outflow of economic benefits is remote. Contingent liabilities are disclosed on the basis of judgment of the
management/independent experts. These are reviewed at each balance sheet date and are adjusted to reflect
the current management estimate.
1.2.20 Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits
with a maturity of three months or less, which are subject to an insignificant risk of changes in value. For the
purposes of the cash flow statement, cash and cash equivalents include cash on hand, in banks and demand
deposits with banks are considered part of the Company''s cash management system.
1.2.21 Foreign currency transactions
The Company''s financial statements are presented in INR which is also the functional currency of the Company.
Foreign currency transactions are recorded on initial recognition in the functional currency using the exchange
rate at the date of the transaction. At each balance sheet date, foreign currency monetary items are reported
using the closing exchange rate. Exchange differences that arise on settlement of monetary items or on
reporting at each balance sheet date of the Company''s monetary items at the closing rate are recognized as
income or expenses in the period in which they arise.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are
retranslated to the functional currency at the exchange rate at the date that the fair value was determined.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using
the exchange rate at the date of the transaction.
1.2.22 Borrowing cost
Borrowing costs that are directly attributable to the acquisition, construction or erection of qualifying assets
are capitalized as part of cost of such asset until such time that the assets are substantially ready for their
intended use. Qualifying assets are assets which take a substantial period of time to get ready for their intended
use or sale.
When the Company borrows funds specifically for the purpose of obtaining a qualifying asset, the borrowing
costs incurred are capitalized. When Company borrows funds generally and uses them for the purpose of
obtaining a qualifying asset, the capitalization of the borrowing costs is computed based on the weighted
average cost of general borrowing that are outstanding during the period and used for the acquisition of the
qualifying asset.
Capitalization of borrowing costs ceases when substantially all the activities necessary to prepare the
qualifying assets for their intended uses are complete. Borrowing costs consist of interest and other costs
that an entity incurs in connection with the borrowing of funds. Borrowing costs include exchange differences
arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest
costs.
All other borrowing costs are recognized as an expense in the year in which they are incurred.
1.2.23 Advance Stripping Cost
The Company distributes stripping (waste removal) costs incurred during the production phase of its mining
operations on equitable basis over estimated minable reserves. This calculation requires the use of judgments
and estimates relating to the expected tons of waste to be removed over the life of the mining area and
the expected economically recoverable reserves to be extracted as a result. This information is reviewed
periodically to calculate the average life of mine strip ratio (expected waste to expected mineral reserves
ratio). Changes in a mine''s life and design will usually result in changes to the average life of mine strip ratio.
These changes are accounted for prospectively.
1.2.24 Segment Reporting
i) Identification of Segments
The Company''s operating businesses are organized and managed separately according to the nature of
products and services provided, with each segment representing a strategic business unit that offers
different products and serves different markets.
ii) Segment Accounting Policies
The Company prepares its segment information in conformity with the accounting policies adopted for
preparing and presenting the financial statements of the Company as a whole.
iii) Inter-Segment Transfers
The Company generally accounts for inter-segment transfers at an agreed transaction value.
iv) Unallocated Items
Unallocated items include general corporate income and expense items which are not allocated to any
business segment.
Operating segments are reported in a manner consistent with the internal reporting provided to the
chief operating decision maker. Refer note 34 for details on segment information presented.
1.2.25 Onerous Contracts
Provisions for onerous contracts are recognized when the expected benefits to be derived by the Company
from a contract are lower than the unavoidable costs of meeting the future obligations under the contract. The
provision is measured at lower of the expected cost of terminating/exiting the contract and the expected net
cost of fulfilling the contract.
1.2.26 Cash Flow Statement
Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects
of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or
payments and item of income or expense associated with investing or financing cash flow. The cash flows from
operating, investing and financing activities of the Company are segregated.
1.2.27 New and amended standards
The Company has not early adopted any standards, amendments that have been issued but are not yet effective
/ notified.
The Ministry of Corporate Affairs has notified¬
- The Companies (Indian Accounting Standard) Amendment Rules 2024 dated 14th August 2024,
introducing Ind AS 117, "Insurance Contractsâ.
- The Companies (Indian Accounting Standard) Second Amendment Rules 2024 dated 9th September
2024, amending the existing Ind AS 116- Leases.
- The Companies (Indian Accounting Standard) Third Amendment Rules 2024 dated 28th September
2024,allowing insurers to use Ind AS 104 for consolidated financial statements until the IRDAI notifies
Ind AS 117, and introduces a schedule outlining the financial reporting requirements for insurance
contracts.
There is no such impact of amendments which would have been applicable from 1st April 2024.
1) Nature of security :
a) Term Loans from Bank (For Siltara and Mandhar Complex) are secured by first pari-passu charge by way
of hypothecation of entire movable assets of the Company situated at Industrial Growth Centre, Siltara,
Raipur subject to prior charge on current assets in favour of Working Capital Bankers and by way of
joint equitable mortgage of immovable properties of the Company situated at Industrial Growth Centre,
Siltara, Raipur and Urkura, Raipur.
b) Term Loans from Bank (For IPP Division, Binjkot, Raigarh) are secured by first pari-passu charge by way
of hypothecation of entire movable assets of the Company situated at IPP Division, Binjkot, Raigarh and
by way of joint equitable mortgage of immovable properties of the Company situated at IPP Division,
Binjkot, Raigarh.
c) Term Loan from Banks (For Siltara and Mandhar Complex) are also secured by unconditional and
irrevocable personal guarantees of Mr. K. K. Sarda, Mr. Manish Sarda & Mr. Pankaj Sarda.
d) Term Loan of '' 675 Crore from Axis Bank Limited (For IPP Division, Binjkot, Raigarh) is secured by
unconditional and irrevocable personal guarantees of Mr. K. K. Sarda & Mr. Pankaj Sarda.
2) Repayment terms :
a) Rupee term loan of '' 91.35 crore (Present Outstanding '' 24.33 crore) from HDFC Bank is payable in 20
quarterly installments starting from June 2021.
b) Rupee term loan of '' 50 crore (Present Outstanding '' 10.50 crore) from Axis Bank Limited is payable in
16 equal quarterly installments starting from June 2022.
c) Rupee term loan of '' 700 crore (Present Outstanding '' 693 crore) from HDFC Bank is payable in 120
equal quarterly installments starting from November 2024.
d) Rupee term loan of '' 675 crore (Present Outstanding '' 675 crore) from Axis Bank Limited is payable on
19.05.2025 (Bullet repayment). Further this loan shall be convertible into term loan on agreed terms on
the date of bullet repayment.
Security
Working Capital loans from banks are secured by first pari-passu charge on stocks & book debts and second pari-
passu charge on all present and future movable Plant & Machinery and second pari-passu charge by way of joint
equitable mortgage of immovable properties located at Industrial Growth Centre, Siltara, Raipur and at Urkura Raipur.
These facilities are also secured by irrevocable personal guarantees of Mr. K.K. Sarda, Mr. Pankaj Sarda and Mr. Manish
Sarda. FDOD loans are secured by fixed deposits.
Other Note:
The Company has working capital facilities from banks on the basis of security of current assets and submitting
quarterly financial follow up report as per the terms and conditions of sanction letters. There are no material
discrepancies in the amount of current assets between financial follow up reports and books of accounts.
None of the banks, financial institutions or other landers from whom the company has borrowed funds has declared
the company as a wilful defaulter at any time during the current year or in previous year.
Notes:
(1) There is no customer having 10% of total revenue.
(2) No operating segments have been aggregated to from the above reportable operating segments.
35 BUSINESS COMBINATION
On August 21, 2024, the Company completed acquisition of SKS Power Generation (Chhattisgarh) Limited
(''SKS Power'') pursuant to the Resolution Plan (''RP'') approved by the National Company Law Tribunal vide its
order dated August 13, 2024, under Corporate Insolvency and Resolution Process (''CIRP'') of the Insolvency and
Bankruptcy Code, 2016 (''IBC''). Approval of our Resolution Plan is challenged by unsuccessfull applicants in the
Hon''ble Supreme Court, following rejection of their appeal in the NCLAT.
With effect from August 21, 2024, being the Transfer Date, in terms of the Resolution Plan, the existing issued,
subscribed and paid-up share capital of SKS Power stood cancelled fully, without requiring any further act
or deed. Subsequent to the reconstitution of the Board of Directors, taking over management control and
subscribing to the equity share capital, SKS Power became a wholly owned subsidiary of the Company (100%
voting interest).
Further, pursuant to the resolution plan, the Company amalgamated the whole of the undertaking of SKS
Power along with all the properties, assets, liabilities, permits, licenses, investments etc. with the Company
as a going concern w.e.f. appointed date of September 1, 2024. The Company has taken over the assets and
liabilities at their acquisition date fair values. No additional consideration has been paid on the amalgamation.
The business combination has been initially accounted for on a provisional basis under Ind AS103 "Business
Combination". During the quarter ended March 31, 2025, the Company has finalized purchase price accounting
(PPA) for the acquisition of SKS Power basis final fair valuation of assets and liabilities acquired, within one year
from the date of acquisition as per Ind AS 103 "Business Combination". The Company has paid consideration of
''1,783.98 Crore against the acquisition and accounted for Capital Reserve of '' 1,732.19 Crore after fair valuation
of net idnetifiable assets due to the Business Combination.
The fair value of the identified assets acquired, and liabilities assumed as adjusted for measurement period
adjustments as on the acquisition date are as follows:
As on acquisition date, the gross carrying amount of Trade Receivables and Other Financial Assets acquired was
amounting to '' 55.94 Crore against which no additional provision had been considered since the fair value of acquired
Receivables were equal to carrying value as on the date of acquisition.
Acquisition costs of '' 6.98 Crore related to SKS Power acquisition have been charged to statement of profit and loss
under the head "Legal & Professional Expenses".
Since the date of acquisition, SKS Power has contributed '' 1,077.62 Crore to the group revenue and it is impracticable
to determine the profit and loss contributed by SKS Power due to substantial inter-segment transactions taken place
after the date of acquisition.
If the acquisition had taken place at the beginning of the period, management estimates that consolidated revenue of
the combined entity would be '' 4,559.16 Crore and it is impracticable to determine the profit and loss of the combined
entity due to substantial inter-segment transactions taken place after the date of acquisition. In determining these
amounts, management has assumed that the fair vaue adjustments, that arose on the date of acquisition would have
been same if the acquisition had occurred on 1st April 2024.
Due to business combination, the current year figures are not strictly comparable to those of the previous year.
(1) Disputed Tax matters and claims:
As at 31st March, 2025, there are pending litigations concerning various matters related to excise, customs,
service tax, VAT, GST and Income Tax, involving demands of '' 28.95 crore (PY: '' 37.98 crore). The details of
significant demands are as follows:
(a) Excise duty cases includes disputes related to the availment of CENVAT Credit, which have been
contested by the Company at different forums. As at 31st March, 2025, the total amount under dispute
is '' 0.28 crore (PY: '' 0.51 crore).
(b) The Principal ADG of DRI, Ahmedabad, issued a SCN alleging that the Company acquired MEIS scrips
(and utilized for payment of custom duty) from an exporter who obtained them through deliberate
misclassification of exported goods to gain undue benefits. The matter has been adjudicated by the
Pr. Comm. of Customs, Mumbai, and confirmed a demand of '' 0.20 Crore. Aggrieved by the order, the
Company has filed an appeal before CESTAT Mumbai.
(c) Service tax demand of '' 0.09 crore (PY: '' 0.69 crore) has been raised by the department across various
disputed matters on the ground of Taxability. The Company has contested these demands and preferred
an appeal before the Central Excise and Service Tax Appellate Tribunal (CESTAT) Delhi.
(d) Various matters has been adjudicated by the GST authorities by raising a demand of '' 3.48 Crore
including interest and penalty. The Company appealed to the first appellate authority, who partially
allowed the appeal and re-affirmed the remaining demands. Aggrieved by the appellate order, the
Company has submitted a letter of intent to the department, expressing its intention to file an appeal
before the appellate tribunal once it becomes operational. As at 31st March, 2025, the total amount
under dispute is '' 1.08 Crore.
(e) Value Added Tax/Central Sales Tax/ Entry Tax demands of '' 8.49 Crore (P.Y : '' 8.49 Crore) are pending
in appeal against assessment of various years.
(f) The Company has ongoing disputes with income tax authorities relating to tax treatment of certain
items. These mainly include disallowance of expenses, tax treatment of certain expenses claimed
by the Company as deduction and the computation of or eligibility of the Company''s use of certain
allowances. Most of these disputes and/or disallowances are repetitive in nature and have been raised
by the income tax authorities consistently in most of the years.
As at March 31, 2025, there are matters and/or disputes, pending in appeal amounting to ''17.6 crore
(31st March, 2024: ''17.6 crore). The Company expects to sustain its position on ultimate resolution of
the said appeals.
(g) It is not practicable to predict the outcome and timing of cashflow (if any) of the pending litigations
with accuracy. However, basis experts opinions and/or internal assessment, the Company believes that
it has meritorious defences to the claims and pending actions will not require outflow of resources
embodying economic benefits and will not have a material adverse effect upon the results of the
operations, cash flows or financial condition of the Company.
(2) Others Taxes, claims and Litigations:
(a) Relinquishment charges of ''97.20 Crore have been demanded for 156 MW LTA of Kolam Power Plant, as
per CERC order dated 08.03.2019 in Petition No. 92/MP/2015, read with corrigendum dated 10.05.2019.
The Company has filed a petition before the Hon''ble Tribunal for Electricity, New Delhi, challenging the
said order. The matter is decided in favour of Company with no cost. As at 31st March, 2025, the total
amount under dispute is ''NIL crore (PY: '' 97.20 crore).
(b) Chief Electrical Inspector, Govt. of Chhattisgarh has issued a demand for recovery of Energy Development
Cess for the period May 2006 to December 2024 in the light Chhattisgarh Upkar Sansodhan Adhiniyam
2004.
The Company challenged the constitutional validity of Section 3 (1-a) of the act before Hon''ble HC of
Chhattisgarh, wherein the court held the levy of Energy Development Cess as unconstitutional vide its
Order dated 20th June 2008. The State Govt. has filed a Special Leave Petition before the Honourable
Supreme Court.
As at 31st March, 2025, the total amount under dispute is '' 93.33 crore (PY: '' 88.70 crore) which is
pending for resolution.
38. CONTINGENT ASSETS
(I) The Company has various pending insurance claims amounting '' 0.30 Crore (PY: '' 0.50 crore) against Machine
Break Down (MBD).
(II) The Company has claimed refund of '' 6.30 Crore (PY: '' 6.30) Vikas Upkar and Paryavaran Upkar in respect of its
coal mines at Gare Palma IV/7.
(III) IPP unit of Company filed a claim of '' 13.57 Crore (PY: '' NIL) towards reimbursement of taxes and duties arises
from change in Law in persuant to directions passed by Central Electricity Regulatory Commission (CERC) in
the matter of long-term Power Purchase Agreement entered into between M/s Powerica Limited and Solar
Energy Corporation of India Limited.
(IV) Other claims by the Company not recognized as asset is ''0.45 Crore (PY: '' 0.91 Crore)
39 CORPORATE SOCIAL RESPONSIBILITY
As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to
spend at least 2% of its average net profit for the immediately preceding three financial years on corporate
social responsibility (CSR) activities. The areas for CSR activities are eradication of hunger and malnutrition,
promoting education, art and culture, healthcare, destitute care and rehabilitation, environment sustainability,
disaster relief and rural development projects. A CSR committee has been formed by the Company as per the
Act. The funds were primarily allocated to a corpus and utilized through the year on these activities which are
specified in Schedule VII of the Companies Act, 2013
a) Gross amount required to be spent by the company during the year is ''15.08 Crore
b) Amount spent during the year on:
41 FINANCIAL RISK MANAGEMENT OBJECTIVE AND POLICIES
The Company''s principal financial liabilities comprise of loans and borrowings in foreign as well as domestic
currency, trade payables and other payables. The main purpose of these financial liabilities is to finance the
Company''s operations. The Company''s principal financial assets include investments, loans, trade and other
receivables, and cash and short-term deposits that derive directly from its operations. The Company also
enters into derivative contracts.
The Company is exposed to the following risks from its use of financial instruments:
- Credit risk
- Liquidity risk
Market Risk:
- Interest rate risk
- Currency risk
- Price risk
The Company''s board of directors has overall responsibility for the establishment and oversight of the Group''s
risk management framework.This note presents information about the risks associated with its financial
instruments, the Company''s objectives, policies and processes for measuring and managing risk, and the
Company''s management of capital.
Credit Risk
The Company is exposed to credit risk as a result of the risk of counterparties non performance or default on
their obligations. The Company''s exposure to credit risk primarily relates to investments, accounts receivable
and cash and cash equivalents. The Company monitors and limits its exposure to credit risk on a continuous
basis. The Company''s credit risk associated with accounts receivable is primarily related to party not able to
settle their obligation as agreed. To manage this the Company periodically reviews the financial reliability of its
customers, taking into account the financial condition, current economic trends and analysis of historical bad
debts and ageing of accounts receivables.
Trade receivables
Trade receivables represent the most significant exposure to credit risk and are stated after an allowance for
impairment and expected credit loss.
Loans and Advances
Financial assets in the form of loans and advances are written off when there is no reasonable expectations
of recovery. Where recoveries are made, these are recognize as income in the statement of profit and loss.
The Company measures the expected credit loss of dues based on historical trend, industry practices and the
business environment in which the entity operates. Loss rates are based on actual credit loss experience and
past trends. Based on historical data, loss on collection of dues is not material hence no additional provisions
considered.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and deposits which are readily convertible to cash. These
are subject to insignificant risk of change in value or credit risk.
Liquidity risk
The Company is exposed to liquidity risk related to its ability to fund its obligations as they become due. The Company
monitors and manages its liquidity risk to ensure access to sufficient funds to meet operational and financial
requirements. The Company has access to credit facilities and debt capital markets and monitors cash balances daily.
In relation to the Company''s liquidity risk, the Company''s policy is to ensure, as far as possible, that it will always have
sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions as they fall due while
minimizing finance costs, without incurring unacceptable losses or risking damage to the Company''s reputation.
Financing arrangements
The Company has access to following undrawn borrowing facilities and liquid investments at the end of the reporting
period:
PRICE RISK
The entity is exposed to equity price risk, which arised out from FVTPL quoted equity shares & mutual funds and
FVTOCI unquoted equity shares. The management monitors the proportion of equity securities in its investment
portfolio based on market indices. Material investments within the portfolio are managed on an individual basis and
all buy and sell decisions are approved by the management. The primary goal of the entity''s investment strategy is to
maximize investments returns.
Sensitivity Analysis for Price Risk
Equity Investments carried at FVTOCI are not listed on the stock exchange. For equity investments and mutual funds
classified as at FVTPL, the impact of a 2 % in the index at the reporting date on profit & loss would have been an
increase of '' 7.09 Crore (2023-24: ''8.28 Crore ); an equal change in the opposite direction would have decreased
profit and loss. For equity investments classified as at FVTOCI, the impact of a 2 % in the index at the reporting
date on profit & loss would have been an increase of '' 0.029 Crore (2023-24:'' 0.029 Crore); an equal change in the
opposite direction would have decreased profit and loss.
42 CAPITAL MANAGEMENT
The Company''s main objectives when managing capital are to:
- ensure sufficient liquidity is available (either through cash and cash equivalents, investments or committed
credit facilities) to meet the needs of the business;
- ensure compliance with covenants related to its credit facilities and secured debentures; and
- minimize finance costs while taking into consideration current and future industry, market and economic
risks and conditions;
- safeguard its ability to continue as a going concern;
- to maintain an efficient mix of debt and equity funding thus achieving an optimal capital structure and cost
of capital.
The Board of Directors has the primary responsibility to maintain a strong capital base and reduce the cost
of capital through prudent management of deployed funds and leveraging opportunities in domestic and
international financial markets so as to maintain investor, creditor and market confidence and to sustain
future development of the business.
For the purpose of Company''s capital management, capital includes issued capital and all other equity reserves.
The Company manages its capital structure in light of changes in the economic and regulatory environment
and the requirements of the financial covenants.
The Company manages its capital on the basis of net debt to equity ratio which is net debt (total borrowings net
of cash and cash equivalents) divided by total equity
B. Measurement of fair values
The table shown above analyses financial instruments carried at fair value, by valuation method.The different
levels have been defined below:
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
- Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices)
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable
inputs)
C. Valuation techniques
The following methods and assumptions were used to estimate the fair values
1) Fair value of the cash and short term deposits, current loans and advances and other current financial
liabilities, short term borrowing from banks and other financial institutions and other similar items
approximate their carrying value largely due to short term maturities of these instruments.
2) Long-term receivables/borrowings are evaluated by the Company based on parameters such as
interest rates, specific country risk factors, individual credit worthiness of the customer and the risk
characteristics of the financed project. Based on this evaluation, allowances are taken into account for
the expected credit losses of these receivables.
3) The fair values of the quoted instruments and mutual funds are based on price quotations at the
reporting date. The fair value of unquoted instruments, loans from banks and other financial liabilities,
obligations under finance leases, as well as other non-current financial liabilities is estimated by
discounting future cash flows using rates currently available for debt of similar terms, credit risk and
remaining maturities.
4) The fair values of the unquoted equity shares designated at FVTOCI has been estimated by using the
most recent purchase price of such shares (level 2)
45 The Company has not undertaken any transactions with companies struck off under section 248 of the
Companies Act 2013 or section 560 of Companies Act 1956 during the current year or in previous year.
46 All the transactions are recorded in the books of accounts and there was no income that has been surrendered
or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961. Also there was
no previously unrecorded income and related assets which has been recorded in the books of account during
the year.
47 No proceedings have been initiated or pending against the Company for holding any benami property under the
Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.
48 The Company has not advanced or loaned or invested funds to any other persons or entities, including
foreign entities (Intermediaries) with the understanding, whether recorded in writing or otherwise, that the
Intermediary shall directly or indirectly lend or invest in other persons or entities identified in any manner
whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or provide any guarantee, security or the
like to or on behalf of the Ultimate Beneficiaries. Further, the Company has not received any fund from any
persons or entities, including foreign entities (Funding Party) with the understanding , whether recorded in
writing or otherwise, that the Company shall directly or indirectly lend or invest in other persons or entities
identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or provide
any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
49 The Company has complied with the number of layers of companies prescribed under clause (87) of section 2
of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.
50 The Company has neither traded nor invested in Crypto Currency or Virtual Currency during the financial year.
51 No scheme of compromise or arrangement has been proposed between the Company & its members or the
Company & its creditors under section 230 of the Companies Act 2013 (âThe Actâ) and accordingly the disclosure
as to whether the scheme of compromise or arrangement has been approved or not by the competent authority
in terms of provisions of sections 230 to 237 of the Act is not applicable.
52 The Code on Social Security, 2020 (''Code'') relating to employee benefits during employment and post¬
employment benefits received Presidential assent in September 2020. The Code has been published in the
Gazette of India. However, the date on which the Code will come into effect has not been notified and the final
rules/interpretation have not yet been issued. The Company will assess the impact of the Code when it comes
into effect and will record any related impact in the period the Code becomes effective. Based on a preliminary
assessment, the entity believes the impact of the change will not be significant.
Note * Represents net amount of loan given and repaid during the year ended 31st March 2025
57. Previous year figures have been regrouped/rearranged wherever necessary.
As per our report of even date attached
For SINGHI & CO.
(ICAI FRN 302049E) For and on behalf of the Board
Chartered Accountants
SANJAY KUMAR DEWANGAN K. K. SARDA P. K. JAIN MANISH SETHI
Partner Chairman Wholetime Director & CFO Company Secretary
Membership No. 409524 DIN: 00008170 DIN: 00008379 ACS 18069
Raipur
Dated :May 24, 2025
Mar 31, 2024
1.5.18 Provisions and contingent liabilities
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset, if it is
virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Contingent liabilities are possible obligations that arise from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events not wholly within the control of the Company. Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Contingent liabilities are disclosed on the basis of judgment of the management/independent experts. These are reviewed at each balance sheet date and are adjusted to reflect the current management estimate.
1.5.19 Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with a maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purposes of the cash flow statement, cash and cash equivalents include cash on hand, in banks and demand deposits with banks are considered part of the Company''s cash management system.
1.5.20 Foreign currency transactions
The Company''s financial statements are presented in I NR which is also the functional currency of the Company.
Foreign currency transactions are recorded on initial recognition in the functional currency using the exchange rate at the date of the transaction. At each balance sheet date, foreign currency monetary items are reported using the closing exchange rate. Exchange differences that arise on settlement of monetary items or on reporting at each balance sheet date of the Company''s monetary items at the
closing rate are recognized as income or expenses in the period in which they arise.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.
1.5.21 Borrowing cost
Borrowing costs that are directly attributable to the acquisition, construction or erection of qualifying assets are capitalized as part of cost of such asset until such time that the assets are substantially ready for their intended use. Qualifying assets are assets which take a substantial period of time to get ready for their intended use or sale.
When the Company borrows funds specifically for the purpose of obtaining a qualifying asset, the borrowing costs incurred are capitalized. When Company borrows funds generally and uses them for the purpose of obtaining a qualifying asset, the capitalization of the borrowing costs is computed based on the weighted average cost of general borrowing that are outstanding during the period and used for the acquisition of the qualifying asset.
Capitalization of borrowing costs ceases when substantially all the activities necessary to prepare the qualifying assets for their intended uses are complete. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing costs include exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs.
All other borrowing costs are recognized as an expense in the year in which they are incurred.
1.5.22 Share Based Payments
The fair value of options granted to employees is recognized as an employee expense, with a corresponding increase in equity, over period in which the options are vested. The increase in equity recognized in connection with a share based payment transaction is presented as a separate component of equity. The amount recognized as an expense is adjusted to reflect the actual number of share options that vest.
1.5.23 Advance Stripping Cost
The Company distributes stripping (waste removal) costs incurred during the production phase of its mining operations on equitable basis over estimated minable reserves. This calculation requires the use of judgments and estimates relating to the expected tons of waste to be removed over the life of the mining area and the expected economically recoverable reserves to be extracted as a result. This information is reviewed periodically to calculate the average life of mine strip ratio (expected waste to expected mineral reserves ratio). Changes in a mine''s life and design will usually result in changes to the average life of mine strip ratio. These changes are accounted for prospectively.
1.5.24 Segment Reporting
i) Identification of Segments
The Company''s operating businesses are organized and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.
ii) Segment Accounting Policies
The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.
iii) Inter-Segment Transfers
The Company generally accounts for intersegment transfers at an agreed transaction value.
iv) Unallocated Items
Unallocated items include general corporate income and expense items which are not allocated to any business segment.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. Refer note 33 for details on segment information presented.
1.5.25 Onerous Contracts
Provisions for onerous contracts are recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable costs of meeting the future obligations under the contract. The provision is measured at lower of the expected cost of terminating/
exiting the contract and the expected net cost of fulfilling the contract.
1.5.26 Cash Flow Statement
Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expense associated with investing or financing cash flow. The cash flows from operating, investing and financing activities of the Company are segregated.
1.5.27 New and ammended standards
The Company has not early adopted any standards, amendments that have been issued but are not yet effective / notified. The Ministry of Corporate Affairs has notified Companies (Indian Accounting Standard) Amendment Rules 2023 dated 31st March 2023, to amend the existing Ind AS 12, 1,8,34,109,101,102,103,107 and 115. There is no such impact of amendments which would have been applicable from 1st April 2023.
1) Nature of security :
a) Term Loans from Bank are secured by first pari-passu charge by way of hypothecation of entire movable assets of the Company situated at Industrial Growth Centre, Siltara, Raipur subject to prior charge on current assets in favour of Working Capital Bankers and by way of joint equitable mortgage of immovable properties of the Company situated at Industrial Growth Centre, Siltara, Raipur and Urkura, Raipur.
b) Besides this, the Term Loan from Banks are also secured by unconditional and irrevocable personal guarantees of Mr. K. K. Sarda, Mr. Manish Sarda & Mr. Pankaj Sarda.
2) Repayment terms :
a) Rupee term loan of '' 91.35 crore (Present Outstanding '' 48.67 crore) from HDFC Bank is payable in 20 quarterly installments starting from June 2021.
b) Rupee term loan of '' 50 crore (Present Outstanding '' 23.00 crore) from Axis Bank Ltd. is payable in 16 equal quarterly installments starting from June 2022.
c) Rupee term loan of '' 48.13 crore (Present Outstanding '' 11.25 crore) from HDFC Bank is payable in 20 equal quarterly installments starting from March 2020.
Security
Working Capital loans from banks are secured by first pari-passu charge on stocks & book debts and second pari-passu charge on all present and future movable Plant & Machinery and second pari-passu charge by way of joint equitable mortgage of immovable properties located at Industrial Growth Centre, Siltara, Raipur and at Urkura Raipur. These facilities are also secured by irrevocable personal guarantees of Mr. K.K.Sarda, Mr. Pankaj Sarda and Mr. Manish Sarda.
Other Note:
The Company has working capital facilities from banks on the basis of security of current assets and submitting quarterly financial follow up report as per the terms and conditions of sanction letters. There are no material discrepancies in the amount of current assets between financial follow up reports and books of accounts.
37. CORPORATE SOCIAL RESPONSIBILITY
As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. The areas for CSR activities are eradication of hunger and malnutrition, promoting education, art and culture, healthcare, destitute care and rehabilitation, environment sustainability, disaster relief and rural development projects. A CSR committee has been formed by the company as per the Act. The funds were primarily allocated to a corpus and utilized through the year on these activities which are specified in Schedule VII of the Companies Act, 2013.
i) Excise Duty & Service Tax
a Excise duty demand of '' 0.21 Crore (P.Y. '' 0.21 Crore) raised on account of Cenvat credit availed, which the Company has disputed in High Court, Jabalpur (MP).
b Excise Duty demand of '' 0.30 Crore (P.Y. '' 0.68 Crore) raised on account of Cenvat credit availed has been disputed before Commissioner (Appeals).
c GST demand of '' 3.48 Crore (P.Y. '' NIL) raised on account of inadmissible credit carried forward in Tran-1 has been disputed before Commissioner (Appeals).
d Service Tax demand of '' NIL (P.Y. '' 16.17 Crore) raised on account of Service Tax on amount received in an international arbitration case settled out of court, which the Company has disputed and has filed appeal before Central Excise & Service Tax Appellate Tribunal (CESTAT).
e Service Tax demand of '' 0.59 Crore (P.Y. '' 1.49 Crore) on various cases raised by the department, which the Company has disputed and has filed appeal before Central Excise & Service Tax Appellate Tribunal (CESTAT).
ii) Value Added Tax/Central Sales Tax/Entry Tax
Value Added Tax/Central Sales Tax/ Entry Tax demands of '' 8.49 Crore (P.Y. '' 8.49 Crore) are pending in
appeal against assessment of various years.
iii) Income Tax
'' 10.42 Crore (P.Y. '' 2.68 Crore) for the Assessment Year 2017-18 on account of addition made by Assessing Officer u/s 147 read with section 144B of the Income tax Act and '' 1.16 Crore (P.Y. '' 4.71 Crore) for the Assessment Year 2018-19 on account addition made by Assessing Officer u/s 154 r.w.s 143(3) of the Income tax Act. '' 0.71 Crore (P.Y. '' 0.88 Crore) for the Assessment Year 2020-21 on account of addition made by Assessing Officer u/s 143(3) of the Income tax Act. '' 6.06 Crore (P.Y.'' NIL) for the Assessment Year 2022-23 on account of computation error made by the Assessing Officer u/s 143(3) of the Income tax Act. Most of these disputes and/or disallowances, being repetitive in nature, have been raised by the income tax authorities consistently in most of the years. The Company expects to sustain its position on ultimate resolution of the said appeals
iv) Energy Development Cess of '' 88.70 Crore (P.Y. '' 80.63 Crore) net of amount deposited '' 2.94 Crore (P.Y. '' 2.94 Crore) demanded by the Chief Electrical Inspector, Govt. of Chhattisgarh for the period May 2006 to December 2020. The Honorable High Court of Chhattisgarh has held the levy of Energy Development Cess as unconstitutional vide its Order dated 20th June 2008. The State Govt. has filed a Special Leave Petition before the Honorable Supreme Court.
v) Relinquishment charges of 156 MW LTA for Kolam Power Plant, Relinquishment Charges in accordance with the directions under petition no 92/MP/2015 vide order dated 08-03-2019 is '' 97.20 Crore. Petition filled before the Hon''ble Tribunal for Electricity at New Delhi "against the Impugned Order dated 08.03.2019 read with the corrigendum dated 10.05.2019 passed by the Central Electricity Regulatory Commission in the Petition No. 92/MP/2015 . Matter is pending before the Hon''ble Tribunal for Electricity at New Delhi.
40 CONTINGENT ASSET
i) The Company has various pending insurance claims in lieu of machine break down adding up to '' 0.50 Crore (PY '' NIL) as on 31st March 2024.
ii) The Company has claimed refund of '' 6.30 Crore (PY '' NIL) Vikas Upkar and Paryavaran Upkar in respect of its coal mines at Gare Palma IV/7.
iii) Claims by the Company not acknowledged as assets - '' 0.91 Crore (PY '' NIL).
41 FINANCIAL RISK MANAGEMENT OBJECTIVE AND POLICIES
The Company''s principal financial liabilities comprise of loans and borrowings in foreign as well as domestic currency, trade payables and other payables. The main purpose of these financial liabilities is to finance the Company''s operations. The Company''s principal financial assets include investments, loans, trade and other receivables, and cash and short-term deposits that derive directly from its operations. The Company also enters into derivative contracts.
The Company is exposed to the following risks from its use of financial instruments:
- Credit risk
- Liquidity risk Market Risk- Interest rate risk
- Currency risk
- Price risk
The Company''s board of directors has overall responsibility for the establishment and oversight of the Group''s risk management framework.This note presents information about the risks associated with its financial instruments, the Company''s objectives, policies and processes for measuring and managing risk, and the Company''s management of capital.
The Company is exposed to credit risk as a result of the risk of counterparties non performance or default on their obligations. The Company''s exposure to credit risk primarily relates to investments, accounts receivable and cash and cash equivalents. The Company monitors and limits its exposure to credit risk on a continuous basis. The Company''s credit risk associated with accounts receivable is primarily related to party not able to settle their obloigation as agreed. To manage this the Company periodically reviews the finanial reliability of its customers, taking into account the financial condition, current economic trends and analysis of historical bad debts and ageing of accounts receivables.
Trade receivables
Trade receivables represent the most significant exposure to credit risk and are stated after an allowance for impairment and expected credit loss.
Loans and Advances
Financial assets in the form of loans and advances are written off when there is no reasonable expectations of recovery. Where recoveries are made, these are recognize as income in the statement of profit and loss. The Company measures the expected credit loss of dues based on historical trend, industry practices and the business environment in which the entity operates. Loss rates are based on actual credit loss experience and past trends. Based on historical data, loss on collection of dues is not material hence no additional provisions considered.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and deposits which are readily convertible to cash. These are subject to insignificant risk of change in value or credit risk.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:
The Company is exposed to liquidity risk related to its ability to fund its obligations as they become due. The Company monitors and manages its liquidity risk to ensure access to sufficient funds to meet operational and financial requirements. The Company has access to credit facilities and debt capital markets and monitors cash balances daily. In relation to the Company''s liquidity risk, the Company''s policy is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions as they fall due while minimizing finance costs, without incurring unacceptable losses or risking damage to the Company''s reputation.
The Company operates internationally and portion of the business is transacted in several currencies and consequently the Company is exposed to foreign exchange risk through its sales in overseas and purchases from overseas suppliers in various foreign currencies.
Foreign currency exchange rate exposure is partly balanced by purchasing of goods in the respective currencies
The Company evaluates exchange rate exposure arising from foreign currency transactions and the Company follows established risk management policies, including the use of derivatives like foreign exchange forward contracts to hedge exposure to foreign currency risk.
The entity is exposed to equity price risk, which arised out from FVTPL quoted equity shares & mutual funds and FVTOCI unquoted equity shares. The management monitors the proportion of equity securities in its investment portfolio based on market indices. Material investments within the portfolio are managed on an individual basis and all buy and sell decisions are approved by the management. The primary goal of the entity''s investment strategy is to maximize investments returns.
Sensitivity Analysis for Price Risk
Equity Investments carried at FVTOCI are not listed on the stock exchange. For equity investments and mutual funds classified as at FVTPL, the impact of a 2 % in the index at the reporting date on profit & loss would have been an increase of '' 8.28 Crore (2022-23: '' 4.22 Crore ); an equal change in the opposite direction would have decreased profit and loss. For equity investments classified as at FVTOCI, the impact of a 2% in the index at the reporting date on profit & loss would have been an increase of '' 0.029 Crore (2022-23: '' 0.029 Crore); an equal change in the opposite direction would have decreased profit and loss.
42 CAPITAL MANAGEMENT
The Company''s main objectives when managing capital are to:
- ensure sufficient liquidity is available (either through cash and cash equivalents, investments or committed credit facilities) to meet the needs of the business;
- ensure compliance with covenants related to its credit facilities and secured debentures;
- minimize finance costs while taking into consideration current and future industry, market and economic risks and conditions;
- safeguard its ability to continue as a going concern; and
- to maintain an efficient mix of debt and equity funding thus achieving an optimal capital structure and cost of capital.
The Board of Directors has the primary responsibility to maintain a strong capital base and reduce the cost of capital through prudent management of deployed funds and leveraging opportunities in domestic and international financial markets so as to maintain investor, creditor and market confidence and to sustain future development of the business.
For the purpose of Company''s capital management, capital includes issued capital and all other equity reserves. The Company manages its capital structure in light of changes in the economic and regulatory environment and the requirements of the financial covenants.
B. Measurement of fair values
The table shown below analyses financial instruments carried at fair value, by valuation method. The different
levels have been defined below:
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
- Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices)
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)
C. Valuation techniques
The following methods and assumptions were used to estimate the fair values
1) Fair value of the cash and short term deposits, current loans and advances and other current financial liabilities, short term borrowing from banks and other financial institutions and other similar items approximate their carrying value largely due to short term maturities of these instruments.
2) Long-term receivables/borrowings are evaluated by the Company based on parameters such as interest rates, specific country risk factors, individual credit worthiness of the customer and the risk characteristics of the financed project. Based on this evaluation, allowances are taken into account for the expected credit losses of these receivables.
3) The fair values of the quoted instruments and mutual funds are based on price quotations at the reporting date. The fair value of unquoted instruments, loans from banks and other financial liabilities, obligations under finance leases, as well as other non-current financial liabilities is estimated by discounting future cash flows using rates currently available for debt of similar terms, credit risk and remaining maturities.
4) The fair values of the unquoted equity shares designated at FVTOCI has been estimated by using the most recent purchase price of such shares (level 2)
45. The Company has not undertaken any transactions with companies struck off under section 248 of the Companies Act 2013 or section 560 of Companies Act 1956 during the current year or in previous year.
46. All the transactions are recorded in the books of accounts and there was no income that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961. Also there was no previously unrecorded income and related assets which has been recorded in the books of account during the year.
47. No proceedings have been initiated or pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.
48. The Company has not advanced or loaned or invested funds to any other persons or entities, including foreign entities (Intermediaries) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries. Further, the Company has not received any fund from any persons or entities, including foreign entities (Funding Party) with the understanding , whether recorded in writing or otherwise, that the Company shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
49. The Company has complied with the number of layers of companies prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.
50. The Company has neither traded nor invested in Crypto Currency or Virtual Currency during the financial year.
51. No scheme of compromise or arrangement has been proposed between the Company & its members or the Company & its creditors under section 230 of the Companies Act 2013 ("The Actâ) and accordingly the disclosure as to whether the scheme of compromise or arrangement has been approved or not by the competent authority in terms of provisions of sections 230 to 237 of the Act is not applicable.
52. The Code on Social Security, 2020 (''Code'') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules/interpretation have not yet been issued. The Group will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective. Based on a preliminary assessment, the entity believes the impact of the change will not be significant.
Note :- * Represents net amount of loan given and repaid during the year ended 31st March 2024 57. Previous year figures have been regrouped/rearranged wherever necessary.
AS PER OUR REPORT OF EVEN DATE ATTACHED FOR AND ON BEHALF OF THE BOARD
For O.P.Singhania & Co.
(ICAI FRN 002172C)
Chartered Accountants
SANJAY SINGHANIA K. K. SARDA P. K. JAIN MANISH SETHI
Partner Chairman & Managing Director Wholetime director & CFO Company Secretary
Membership No. 076961 DIN: 00008170 DIN: 00008379 ACS 18069
RAIPUR RAIPUR
DATED : 25th May, 2024 DATED : 25th May, 2024
Mar 31, 2023
C. Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of ''10 per share. Each shareholder is eligible for one vote per share held. In the event of liquidation of the company, the holders of equity shares will be entitled to receive the sales proceeds of the remaining assets of the company after distribution of all the preferential amounts. The distribution shall be in proportion to the number of equity shares held by the shareholders.
E. In the period of five years immediately preceding 31st March 2023, the Group has not issued bonus shares and has not allotted any equity shares. However the Company has bought back 8,11,108 equity shares during the year.
F There are no shares reserved for issue under options and there are no contracts or commitments for the sale of shares or disinvestment
G Details of promoters'' shareholding percentage in the Company is as below:
(i) During amalgamation, the excess of net assets acquired, over the cost of consideration paid is treated as capital reserve.
(ii) Capital Redemption Reserve is created on buy back of equity shares, it is to be utilized in accordance with the provisions of Companies Act, 2013.
(iii) Securities premium is used to record the premium received on issue of shares. It is to be utilized in accordance with the provisions of Companies Act, 2013.
(iv) General Reserve is available for payment of dividend to the shareholders buy back of equity shares as per the provisions of Companies Act, 2013.
(v) The cumulative gains and losses arising from fair value changes of equity investments measured at fair value through other comprehensive income are recognized in fair value of financial assets. The balance of the reserve represents such changes recognized net off amounts re-classified to retained earnings on disposal of such investments.
a) Term Loans from Bank are secured by first pari-passu charge by way of hypothecation of entire movable assets of the Company situated at Industrial Growth Centre, Siltara, Raipur subject to prior charge on current assets in favour of Working Capital Bankers and by way of joint equitable mortgage of immovable properties of the Company situated at Industrial Growth Centre, Siltara, Raipur and Urkura, Raipur.
b) Besides this, the Term Loan from Banks are also secured by unconditional and irrevocable personal guarantees of Mr. K. K. Sarda, Mr Manish Sarda & Mr. Pankaj Sarda.
a) Rupee term loan of ''91.35 crore (Present Outstanding ''73.00 crore) from HDFC Bank is payable in 20 quarterly installments starting from June 2021.
b) Rupee term loan of ''50 crore (Present Outstanding ''35.50 crore) from Axis Bank Limited, is payable in 16 equal quarterly installments starting from June 2022.
Security
Working Capital loans from banks are secured by first pari-passu charge on stocks & book debts and second pari-passu charge on all present and future movable Plant & Machinery and second pari-passu charge by way of joint equitable mortgage of immovable properties located at Industrial Growth Centre, Siltara, Raipur and at Urkura Raipur. These facilities are also secured by irrevocable personal guarantees of Mr. K.K.Sarda, Mr. Pankaj Sarda and Mr. Manish Sarda.
Other Note:
The Company has working capital facilities from banks on the basis of security of current assets and submitting quarterly financial follow up report as per the terms and conditions of sanction letters. There are no material discrepancies in the amount of current assets between financial follow up reports and books of accounts.
Estimated amount of contracts remaining to be executed on capital account, net of advance given and not provided for as at 31st March 2023 is ? 14.05 Crore (31st March 2022: ? 4.99 Crore).
Note 37 : CORPORATE SOCIAL RESPONSIBILITY
As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. The areas for CSR activities are eradication of hunger and malnutrition, promoting education, art and culture, healthcare, destitute care and rehabilitation, environment sustainability, disaster relief and rural development projects. A CSR committee has been formed by the company as per the Act. The funds were primarily allocated to a corpus and utilized through the year on these activities which are specified in Schedule VII of the Companies Act, 2013.
a) Gross amount required to be spent by the company during the year is ''9.47 Crore
a. Excise duty demand of ''0.21 Crore (P.Y. ''0.21 Crore) raised on account of Cenvat credit availed, which the Company has disputed in High Court, Jabalpur (MP).
b Excise Duty demand of ''0.68 Crore (P.Y. ''0.71 Crore) raised on account of Cenvat credit availed has been disputed before Commissioner (Appeals).
c Service Tax demand of ''17.66 Crore (P.Y. ''16.27 Crore) raised on account of Service Tax on amount received in an international arbitration case settled out of court, which the Company has disputed and has filed appeal before Central Excise & Service Tax Appellate Tribunal (CESTAT).
ii) Value Added Tax/Central Sales Tax/Entry Tax
Value Added Tax/Central Sales Tax/ Entry Tax demands of ''8.49 Crore (P.Y. ''3.09 Crore) are pending in appeal against assessment of various years.
?0.88 Crore (P.Y. ? Nil) for the Assessment Year 2020-21, ?2.68 Crore (P.Y. ?2.68 Crore) for the Assessment Year 2017-18 and ?4.71 Crore(P.Y. ?5.42 Crore) for the Assessment Year 2018-19 on account of partial disallowance of deduction claimed under Section 80IA, 80G and other disallowances made by Assessing Office as per order passed under Section 143(3) of the Income Tax Act, 1961. ? Nil Crore (P.Y. ? 16.90 ) for the Assessment Year 2016-17 for disallowance made under section 148 of Income Tax Act,1961 . ? Nil Crore (P.Y. ? 7.76 ) for the Assessment Year 2018-19 for penalty made under section 270(A) of Income Tax Act,1961. For Assessment year 2020-21,2018-19, 2017-18 and 2016-17 the Company has filed appeal before Commissioner of Income Tax (Appeal).
iv) Energy Development Cess of ? 80.63 Crore (P.Y. ?74.86 Crore) net of amount deposited ?2.94 Crore (P.Y. ?2.94 Crore) demanded by the Chief Electrical Inspector, Govt. of Chhattisgarh for the period May 2006 to December 2020. The Honorable High Court of Chhattisgarh has held the levy of Energy Development Cess as unconstitutional vide its Order dated 20th June 2008. The State Govt. has filed a Special Leave Petition before the Honorable Supreme Court.
v) Relinquishment charges of 156 MW LTA for Kolam Power Plant, Relinquishment Charges in accordance with the directions under petition no 92/MP/2015 vide order dated 08-03-2019 is ''97.20 Crore. Petition filled before the Hon''ble Tribunal for Electricity at New Delhi against the Impugned Order dated 08.03.2019 read with the corrigendum dated 10.05.2019 passed by the Central Electricity Regulatory Commission in the Petition No. 92/MP/2015 . Matter is pending before the Hon''ble Tribunal for Electricity at New Delhi.
The Company has ? NIL pending (PY ''NIL) as on 31st March, 2023 Note 41 : FINANCIAL RISK MANAGEMENT OBJECTIVE AND POLICIES
The Company''s principal financial liabilities comprise of loans and borrowings in foreign as well as domestic currency, trade payables and other payables. The main purpose of these financial liabilities is to finance the Company''s operations. The Company''s principal financial assets include investments, loans, trade and other receivables, and cash and short-term deposits that derive directly from its operations. The Company also enters into derivative contracts.
The Company is exposed to the following risks from its use of financial instruments:
- Credit risk
- Liquidity risk Market Risk- Interest rate risk
- Currency risk
- Price risk
The Company''s board of directors has overall responsibility for the establishment and oversight of the Group''s risk management framework.This note presents information about the risks associated with its financial instruments, the Company''s objectives, policies and processes for measuring and managing risk, and the Company''s management of capital.
The Company is exposed to credit risk as a result of the risk of counterparties non performance or default on their obligations. The Company''s exposure to credit risk primarily relates to investments, accounts receivable and cash and cash equivalents. The Company monitors and limits its exposure to credit risk on a continuous basis. The Company''s credit risk associated with accounts receivable is primarily related to party not able to settle their obloigation as agreed. To manage this the Company periodically reviews the finanial reliability of its customers, taking into account the financial condition, current economic trends and analysis of historical bad debts and ageing of accounts receivables.
Trade receivables represent the most significant exposure to credit risk and are stated after an allowance for impairment and expected credit loss.
Financial assets in the form of loans and advances are written off when there is no reasonable expectations of recovery. Where recoveries are made, these are recognize as income in the statement of profit and loss. The Company measures the expected credit loss of dues based on historical trend, industry practices and the business environment in which the entity operates. Loss rates are based on actual credit loss experience and past trends. Based on historical data, loss on collection of dues is not material hence no additional provisions considered.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and deposits which are readily convertible to cash. These are subject to insignificant risk of change in value or credit risk.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:
No significant changes in estimation techniques or assumptions were made during the reporting period Liquidity risk
The Company is exposed to liquidity risk related to its ability to fund its obligations as they become due. The Company monitors and manages its liquidity risk to ensure access to sufficient funds to meet operational and financial requirements. The Company has access to credit facilities and debt capital markets and monitors cash balances daily. In relation to the Company''s liquidity risk, the Company''s policy is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions as they fall due while minimizing finance costs, without incurring unacceptable losses or risking damage to the Company''s reputation.
The entity is exposed to equity price risk, which arised out from FVTPL quoted equity shares & mutual funds and FVTOCI unquoted equity shares. The management monitors the proportion of equity securities in its investment portfolio based on market indices. Material investments within the portfolio are managed on an individual basis and all buy and sell decisions are approved by the management. The primary goal of the entity''s investment strategy is to maximize investments returns.
Sensitivity Analysis for Price Risk
Equity Investments carried at FVTOCI are not listed on the stock exchange. For equity investments and mutual funds classified as at FVTPL, the impact of a 2% in the index at the reporting date on profit & loss would have been an increase of ?4.22 Crore (2021-22: ?5.48 Crore); an equal change in the opposite direction would have decreased profit and loss. For equity investments classified as at FVTOCI, the impact of a 2% in the index at the reporting date on profit & loss would have been an increase of ?0.029 Crore (2021-22: ?0.029 Crore); an equal change in the opposite direction would have decreased profit and loss.
The Company''s main objectives when managing capital are to:
- ensure sufficient liquidity is available (either through cash and cash equivalents, investments or committed credit facilities) to meet the needs of the business;
- ensure compliance with covenants related to its credit facilities and secured debentures;
- minimize finance costs while taking into consideration current and future industry, market and economic risks and conditions;
- safeguard its ability to continue as a going concern; and
- to maintain an efficient mix of debt and equity funding thus achieving an optimal capital structure and cost of capital.
The Board of Directors has the primary responsibility to maintain a strong capital base and reduce the cost of capital through prudent management of deployed funds and leveraging opportunities in domestic and international financial markets so as to maintain investor, creditor and market confidence and to sustain future development of the business.
For the purpose of Company''s capital management, capital includes issued capital and all other equity reserves. The Company manages its capital structure in light of changes in the economic and regulatory environment and the requirements of the financial covenants.
The Company manages its capital on the basis of net debt to equity ratio which is net debt (total borrowings net of cash and cash equivalents) divided by total equity.
The table shown below analyses financial instruments carried at fair value, by valuation method. The different levels
have been defined below:
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
- Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (i.e., as prices) or indirectly (i.e., derived from prices)
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)
C. Valuation techniquesThe following methods and assumptions were used to estimate the fair values
1) Fair value of the cash and short term deposits, current loans and advances and other current financial liabilities, short term borrowing from banks and other financial institutions and other similar items approximate their carrying value largely due to short term maturities of these instruments.
2) Long-term receivables/borrowings are evaluated by the Company based on parameters such as interest rates, specific country risk factors, individual credit worthiness of the customer and the risk characteristics of the financed project. Based on this evaluation, allowances are taken into account for the expected credit losses of these receivables.
3) The fair values of the quoted instruments and mutual funds are based on price quotations at the reporting date. The fair value of unquoted instruments, loans from banks and other financial liabilities, obligations under finance leases, as well as other non-current financial liabilities is estimated by discounting future cash flows using rates currently available for debt of similar terms, credit risk and remaining maturities.
4) The fair values of the unquoted equity shares designated at FVTOCI has been estimated by using the most recent purchase price of such shares. (level 2)
Note 45 :
The Company has not undertaken any transactions with companies struck off under section 248 of the Companies Act 2013 or section 560 of Companies Act 1956 during the current year or in previous year.
Note 46 :
All the transactions are recorded in the books of accounts and there was no income that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961. Also there was no previously unrecorded income and related assets which has been recorded in the books of account during the year.
Note 47 :
No proceedings have been initiated or pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.
Note 48 :
The Company has not advanced or loaned or invested funds to any other persons or entities, including foreign entities (Intermediaries) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries. Further, the Company has not received any fund from any persons or entities, including foreign entities (Funding Party) with the understanding , whether recorded in writing or otherwise, that the Company shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
Note 49 :
The Company has complied with the number of layers of companies prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.
Note 50 :
The Company has neither traded nor invested in Crypto Currency or Virtual Currency during the financial year.
Note 51 :
No scheme of compromise or arrangement has been proposed between the Company & its members or the company & its creditors under section 230 of the Companies Act 2013 ("The Act") and accordingly the disclosure as to whether the scheme of compromise or arrangement has been approved or not by the competent authority in terms of provisions of sections 230 to 237 of the Act is not applicable.
Note 52 :
The Code on Social Security, 2020 (''Code'') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules/interpretation have not yet been issued. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective. Based on a preliminary assessment, the entity believes the impact of the change will not be significant.
Note 57 : Previous year figures have been regrouped/rearranged wherever necessary.
Mar 31, 2018
C Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of Rs.10 per share. Each shareholder is eligible for one vote per share held. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive the sales proceeds of the remaining assets of the Company after distribution of all the preferential amounts. The distribution shall be in proportion to the number of equity shares held by the shareholders.
E In the period of five years immediately preceding 31st March, 2018, the Company has neither issued bonus shares, bought back any equity shares nor has allotted any equity shares as fully paid up without payment being received in cash except 1,99,235 options given to employees under ESOP for subscription of shares @ Rs.125/ per share.
F There are no shares reserved for issue under options and there are no contracts or commitments for the sale of shares or disinvestment.
G During the year the Compnay has issued 18,837 Equity Shares of Rs.10/- each at a premium of Rs.115/- under ESOP scheme.
H. SEML ESOP Scheme 2012
a. The Company has established an Employee Stock Option Plan (''ESOP'') in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, which has been approved by the Board of Directors and the shareholders. Nomination & Remuneration Committee of the Company administers the ESOPs. All options under the ESOPs are exercisable for equity shares. The Company plans to grant upto 7,17,000 options to eligible employees and directors of the Company and subsidiaries of the Company.
b. The options Granted under the SEML ESOP Scheme 2012 shall vest as under:
i) 1/3 rd at the end of one year from the date of Grant.
ii) 1/3 rd at the end of two years from the date of Grant.
iii) 1/3 rd at the end of three years from the date of Grant.
c. The Grantees have a period of 2 years to exercise the Options from the date of vesting, after which unexercised options will lapse.
d. Options in respect of the Shares vested at each vesting date can be exercised in maximum four tranches subject to the exercise period of 2 years from the date of vesting. Each option is exercisable for one equity share of '' 10 each fully paid up on payment of exercise price of share determined with respect to the date of grant.
1) Nature of security :
a) Term Loan from Banks are secured by first pari-passu charge by way of hypothecation of entire movable assets of the Company situated at Industrial Growth Centre, Siltara, Raipur subject to prior charge on current assets in favour of Working Capital Bankers and by way of joint equitable mortgage of immovable properties of the Company situated at Industrial Growth Centre, Siltara, Raipur and Urkura, Raipur.
b) Term Loan of Rs.5,000 Lakh which is secured by way of mortgage of immovable properties of related companies (Present outstanding is Rs.1,000 Lakh).
c) Besides this, the Term Loan from Banks are also secured by unconditional and irrevocable personal guarantees of Mr. K. K. Sarda, Mr. Manish Sarda & Mr. Pankaj Sarda.
2) Repayment terms :
a) Company has issued 9.55% p.a. Non-Convertible Debentures amounting to Rs.12,500 Lakh which are redeemable in three equal annual installments commencing from July 2015. The Company has an option to redeem these debentures earlier. The third and final installment of Debentures has been repaid in July 2017.
b) Rupee term loan of Rs.14,797 lakh (Present Outstanding Rs.11,095.71 Lakh) from Banks is payable in 32 equal quarterly installments starting from June 2016.
c) Rupee term loan -II of Rs.3,691 lakh (Present Outstanding Rs. 2,074.22 Lakh) from Banks is payable in 28 equal quarterly installments starting from Dec. 2018.
d) Rupee term loan of Rs.5,000 Lakh from Bank is payable in 10 equal half yearly installments starting from August 2014. Eight installments have been repaid upto the financial year 2017-2018.
b) Commercial Paper of '' 5,000 lakh were redeemed in July 2017.
Security
a) Working Capital loans from banks are secured by first pari-passu charge on stocks & book debts and second pari-passu charge on all present and future movable Plant & Machinery and second charge by way of joint equitable mortgage of immovable properties located at Industrial Growth Centre, Siltara, Raipur and land located at Urkura Raipur. These facilities are also secured by irrevocable personal guarantees of Mr. K.K.Sarda, Mr. Pankaj Sarda and Mr. Manish Sarda.
b) Commercial Paper issued were secured by earmarking the existing Working Capital Facilities of the Company.
c) Short term loan from others is secured by pledge of shares belonging to related companies.
3. SEGMENT REPORTING
Segment information has been prepared in Confirmity with the accounting policies adopted for preparing and presenting the financial statements of the Company.
As part of secondary reporting , the Company has no geographical segment by location.
4. COMMITMENTS
a. Estimated amount of contracts remaining to be executed on capital account, net of advance given and not provided for as at 31st March, 2018 is Rs.899.15 Lakh (31st March, 2017: Rs.1,922.72 lakh).
b. Company has commitment of Rs.NIL as at 31st March, 2018 (31st March, 2017: Rs.1,100.00 lakh) for further investment in controlled entity Chhattisgarh Hydro Power LLP and Rs.1,092.73 lakh as at 31st March, 2018 (31st March, 2017: Rs.10,311.50 lakh) in Madhya Bharat Power Corporation Limited.
5. CORPORATE SOCIAL RESPONSIBILITY
As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. The areas for CSR activities are eradication of hunger and malnutrition, promoting education, art and culture, healthcare, destitute care and rehabilitation, environment sustainability, disaster relief and rural development projects. A CSR committee has been formed by the Company as per the Act. The funds were primarily allocated to a corpus and utilized through the year on these activities which are specified in Schedule VII of the Companies Act, 2013.
a) Gross amount required to be spent by the Company during the year is Rs.184.06 Lakh.
6. DUE TO MICRO AND SMALL ENTERPRISES AS DEFINED UNDER THE MSMED ACT, 2006
The Company has not received any memorandum ( as required to be field by the supplier with the notified authority under the Micro, Small and Medium Enterprises Development ACT,2006) claiming their status as on 31st March,2018 as micro, small or medium enterprises, consequenly the amount paid/payable to these parties during the year is NIL.
7. Consequent to the deallocation of the coal block Gare Palma IV/7, the Company has filed a writ petition before the Hon''ble High Court of Delhi challenging the compensation amount and exclusion of washary from the mine infrastructure. This matter is still under subjudice. However, the Company has received compensation of Rs.NIL (P.Y. Rs.2,641.44 lakh) as per the calculations of the Govenment of India. Following prudence, pending decision of the Hon''ble High court, the Company on the basis of compensation received, has booked losses of Rs.NIL (P.Y. Rs.2,027.76 lakh, shown under exceptional items) on coal mine assets handed over to the new allottee of the said block.
i) Guarantee given to Director General of Foreign Trade Rs.98.88 lakh (P.Y. Rs.98.88 lakh) and Assistant Commissioner of Customs Rs.88.71 Lakh (P.Y. Rs.318.21 lakh) on behalf of Sarda Metal & Alloys Limited, wholly owned subsidiary of the Company for fulfillment of Export Obligation against import of capital goods under Export Promotion Capital
Goods Scheme.
ii) Excise Duty & Service Tax
a Excise duty demand of Rs.20.57 Lakh (P.Y. Rs.20.57 Lakh) raised on account of Cenvat credit availed, which the Company has disputed in High Court, Jabalpur (MP).
b Rs.6.97 Lakh (P.Y. Rs.6.97 Lakh) on account of duty on VAT Collected by the Company against which the Company has filed an appeal before the High Court, Bilaspur (CG).
c Excise Duty demand of Rs.54.78 Lakh (P.Y. Rs.NIL) raised on account of Cenvat credit availed which the Company has disputed and has filed appeal before the Central Excise & Service Tax Appellate Tribunal (CESTAT).
d Excise Duty demand of Rs.NIL (P.Y. Rs.17.49 Lakh) raised on account of Cenvat credit availed which the Department has disputed and has filed appeal before the High Court, Bilaspur (CG).
e Excise Duty demand of Rs.NIL (P.Y. Rs.69.38 Lakh) raised on account of Cenvat credit availed which the Company has disputed and has filed appeal before the Central Excise & Service Tax Appellate Tribunal (CESTAT).
f Excise Duty demand of Rs.13.99 Lakh (P.Y. Rs.65.52 Lakh) raised on account of Cenvat credit availed has been disputed before Commissioner (Appeals), Raipur.
g Excise Duty demand of Rs.7.62 Lakh (P.Y. Rs.7.62 Lakh) raised on account of Cenvat credit availed has been disputed before Commissioner (Appeals), Raipur.
h Service Tax demand of Rs.1,616.70 Lakh (P.Y. Rs. NIL) raised on account of Service Tax on amount received in an internation arbitration case settled out of court, which the Company has disputed and has filed appeal before Central Excise & Service Tax Appellate Tribunal (CESTAT).
i Service Tax demand of Rs.NIL (P.Y. Rs.31.09 Lakh) raised on account of Service Tax on foreign services availed, which the Department has disputed and has filed appeal before CESTAT.
j Service Tax demand of Rs.NIL (P.Y. Rs.64.93 Lakh) raised on account of Cenvat credit availed on service Tax on construction services (Ready mix concrete) has been disputed and filed appeal by Company before CESTAT.
iii) Value Added Tax/Central Sales Tax/Entry Tax
Value Added Tax/Central Sales Tax/ Entry Tax demands of Rs.724.42 Lakh (P.Y. Rs.451.82 Lakh) are pending in appeal against assessment of various years.
iv) Income Tax
Rs. Nil ( P.Y. Rs. 95.97 Lakh ) for the Assessment Year 2006-07 on account of penalty u/s 271(1)(C) of the Income Tax Act, 1961, for the same, the Company has filed appeals before Commissioner of Income Tax (Appeals), Raipur, which was rejected and upward by its order dated 08.12.2016, against the order of Commissioner of Income Tax (Appeals), application is filed before Income Tax Appellate Tribunal and the matter is decided in favour of Company vide order dated 07.03.2018.
Rs. Nil (P.Y. Rs. 39.24 Lakh) TDS demand raised by the TRACES is on account of a matter disputed by Company, We have already been filed application before concerned AO for the correction and rectification, The application has been disposed off and the liability based on the order has been paid by the Company.
v) Pursuant to the search operation carried out by the Income Tax Department during the financial year 2014-15 u/s 132 of Income Tax Act, 1961, the Company had filed an application before Hon''ble Income Tax Settlement Commission. The Hon''ble Income Tax Settlement Commission was pleased to pass an order on 31.07.2017 and settled all the issue arose due to search operation related to A.Y. 2009-10 to 2015-16, accordingly the Company has passed due/necessary entries in the books of account and paid the tax liability on the same.
vi) Energy Development Cess of Rs.5,543.80 Lakh (P.Y. Rs.5,003.8 Lakh) net of amount deposited Rs.294.34 Lakh (P.Y. Rs.294.34 Lakh) demanded by the Chief Electrical Inspector, Govt. of Chhattisgarh for the period May 2006 to January 2017. The Honorable High Court of Chhattisgarh has held the levy of Energy Development Cess as unconstitutional vide its Order dated 20th June, 2008. The State Govt. has filed a Special Leave Petition before the Honorable Supreme Court.
vii) Bank Guarantee of Rs.500.00 Lakh (P.Y. Rs.500.00 Lakh) given as security deposit against contract for disposal of old power project awarded to the Company was invoked by M/s. West Bengal Power Development Corporation Limited. The Company has challenged the wrongful invocation in the High court of Kolkata. WBPDCL has on the orders of the Hon''ble High Court deposited the amount of bank guarantee with the Court. The Company has been legally advised that it has a strong case in its favour, hence no liability provided.
viii) Company has subscribed for equity shares of M/s. Sarda Global Trading DMCC amounting to AED 200,000 (equivalent to INR 36.40 Lakh); payment and allotment of which was pending as on 31st March, 2018.
ix) Bank Guarantee of Rs.NIL (P.Y. Rs.780.00 Lakh) was invoked by M/s. Power Grid Corporation Limited after the Company notified force majeure for annulling the transmission corridor agreement for its proposed 350 MW power project. Implementation of the project became impossible as the land on which the power project was to come-up has been notified as coal bearing area and allocated to NTPC for development of coal mine. On Company''s petition, CERC has asked PGCIL to keep the money in separate deposit account.
8. FINANCIAL RISK MANAGEMENT OBJECTIVE AND POLICIES
The Company''s principal financial liabilities comprise of loans and borrowings in foreign as well as domestic currency, trade payables and other payables. The main purpose of these financial liabilities is to finance the Company''s operations. The Company''s principal financial assets include investments, loans, trade and other receivables, and cash and shortterm deposits that derive directly from its operations. The Company also enters into derivative contracts.
The Company is exposed to the following risks from its use of financial instruments:
- Credit risk
- Liquidity risk
- Market Risk
- Interest rate risk
- Currency risk
- Price risk
The Company''s board of directors has overall responsibility for the establishment and oversight of the Group''s risk management framework. This note presents information about the risks associated with its financial instruments, the Company''s objectives, policies and processes for measuring and managing risk, and the Company''s management of capital.
CREDIT RISK
The Company is exposed to credit risk as a result of the risk of counterparties non performance or default on their obligations. The Company''s exposure to credit risk primarily relates to investments, accounts receivable and cash and cash equivalents. The Company monitors and limits its exposure to credit risk on a continuous basis. The Company''s credit risk associated with accounts receivable is primarily related to party not able to settle their obloigation as agreed. To manage this the Company periodically reviews the finanial reliability of its customers, taking into account the financial condition, current economic trends and analysis of historical bad debts and ageing of accounts receivables.
Trade receivables
Trade receivables represent the most significant exposure to credit risk and are stated after an allowance for impairment and expected credit loss.
Loans and Advances
Financial assets in the form of loans and advances are written off when there is no reasonable expectations of recovery. Where recoveries are made, these are recognize as income in the statement of profit and loss. The Company measures the expected credit loss of dues based on historical trend, industry practices and the business environment in which the entity operates. Loss rates are based on actual credit loss experience and past trends. Based on historical data, loss on collection of dues is not material hence no additional provisions considered.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and deposits which are readily convertible to cash. These are subject to insignificant risk of change in value or credit risk.
LIQUIDITY RISK
The Company is exposed to liquidity risk related to its ability to fund its obligations as they become due. The Company monitors and manages its liquidity risk to ensure access to sufficient funds to meet operational and financial requirements. The Company has access to credit facilities and debt capital markets and monitors cash balances daily. In relation to the Company''s liquidity risk, the Company''s policy is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions as they fall due while minimizing finance costs, without incurring unacceptable losses or risking damage to the Company''s reputation.
INTEREST RATE RISK
Interest rate risk is the risk that an upward movement in the interest rate would adversley effect the borrowing cost of the company. The Company is exposed to long term and short-term borrowings, Commercial Paper Program. The Company manages interest rate risk by monitoring its mix of fixed and floating rate instruments, and taking action as necessary to maintain an appropriate balance.
CURRENCY RISK
The Company operates internationally and portion of the business is transacted in several currencies and consequently the Company is exposed to foreign exchange risk through its sales in overseas and purchases from overseas suppliers in various foreign currencies.
Foreign currency exchange rate exposure is partly balanced by purchasing of goods in the respective currencies.
The Company evaluates exchange rate exposure arising from foreign currency transactions and the Company follows established risk management policies, including the use of derivatives like foreign exchange forward contracts to hedge exposure to foreign currency risk.
PRICE RISK
The entity is exposed to equity price risk, which arised out from FVTPL quoted equity shares & mutual funds and FVTOCI unquoted equity shares. The management monitors the proportion of equity securities in its investment portfolio based on market indices. Material investments within the portfolio are managed on an individual basis and all buy and sell decisions are approved by the management. The primary goal of the entity''s investment strategy is to maximize investments returns.
Sensitivity Analysis for Price Risk:
Equity Investments carried at FVTOCI are not listed on the stock exchange. For equity investments and mutual funds classified as at FVTPL, the impact of a 2% in the index at the reporting date on profit & loss would have been an increase of Rs.146.50 lakh (2016-17: Rs.132.43 lakh); an equal change in the opposite direction would have decreased profit and loss. For equity investments classified as at FVTOCI, the impact of a 2% in the index at the reporting date on profit & loss would have been an increase of Rs.1.75 lakh (2016-17: Rs.1.75 lakh); an equal change in the opposite direction would have decreased profit and loss.
9. CAPITAL MANAGEMENT
The Company''s main objectives when managing capital are to:
- ensure sufficient liquidity is available (either through cash and cash equivalents, investments or committed credit facilities) to meet the needs of the business;
- ensure compliance with covenants related to its credit facilities and secured debentures; and
- minimize finance costs while taking into consideration current and future industry, market and economic risks and conditions;
- safeguard its ability to continue as a going concern;
- to maintain an efficient mix of debt and equity funding thus achieving an optimal capital structure and cost of capital.
The Board of Directors has the primary responsibility to maintain a strong capital base and reduce the cost of capital through prudent management of deployed funds and leveraging opportunities in domestic and international financial markets so as to maintain investor, creditor and market confidence and to sustain future development of the business.
For the purpose of Company''s capital management, capital includes issued capital and all other equity reserves. The Company manages its capital structure in light of changes in the economic and regulatory environment and the requirements of the financial covenants.
The Company manages its capital on the basis of net debt to equity ratio which is net debt (total borrowings net of cash and cash equivalents) divided by total equity.
B. Measurement of fair values
The table shown below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined below:
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
- Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices)
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)
C. Valuation techniques
The following methods and assumptions were used to estimate the fair values
1) Fair value of the cash and short term deposits, current loans and advances and other current financial liabilities, short term borrowing from banks and other financial institutions and other similar items approximate their carrying value largely due to short term maturities of these instruments.
2) Long-term receivables/borrowings are evaluated by the Company based on parameters such as interest rates, specific country risk factors, individual credit worthiness of the customer and the risk characteristics of the financed project. Based on this evaluation, allowances are taken into account for the expected credit losses of these receivables.
3) The fair values of the quoted instruments and mutual funds are based on price quotations at the reporting date. The fair value of unquoted instruments, loans from banks and other financial liabilities, obligations under finance leases, as well as other non-current financial liabilities is estimated by discounting future cash flows using rates currently available for debt of similar terms, credit risk and remaining maturities.
4) The fair values of the unquoted equity shares designated at FVTOCI hase been estimated by using the most recent purchase price of such shares. (level 2)
10. PREVIOUS YEAR''S FIGURES HAVE BEEN RECASTED/REGROUPED/RESTATED, WHEREVER NECESSARY TO MAKE THEM COMPARABLE.
Mar 31, 2017
1 Company Overview
The Company has integrated steel manufacturing facility starting from iron ore mining to the finished steel in the form of wire rod and H.B. wire. The Company is also a leading manufacturer and exporter of Ferro Alloys enjoying Two Star Export House Status. The manufacturing facilities are backed by captive thermal power plant. The Company has also promoted hydropower projects through SPVs.
1.1 Significant Accounting Policies
Basis of preparation of financial statements
1.2 Statement of compliance
These financial statements are prepared in accordance with Indian Accounting Standards (Ind AS), the provisions of the Companies Act, 2013 (âActâ) (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.
The Company has adopted all the Ind AS standards and the adoption was carried out in accordance with Ind AS 101 First time adoption of Indian Accounting Standards. The transition was carried out from Indian Accounting Principles generally accepted in India as prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (IGAAP), which was the previous GAAP. Reconciliations and descriptions of the effect of the transition has been summarized in note no 41.
1.3 Basis of measurement
The financial statements have been prepared on the historical cost convention and on accrual basis except for the following:
- certain financial assets and liabilities including derivative instruments-measured at fair value
- defined benefit plans - plan assets measured at fair value
- Share based payments
The financial statements are presented in Indian rupees rounded off to nearest lakhs.
1.4 Use of estimate
The preparation of financial statements in conformity with Ind AS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on a periodic basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
A Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of â10 per share. Each shareholder is eligible for one vote per share held. In the event of liquidation of the company, the holders of equity shares will be entitled to receive the sales proceeds of the remaining assets of the company after distribution of all the preferential amounts. The distribution shall be in proportion to the number of equity shares held by the shareholders.
B In the period of five years immediately preceding 31st March, 2017, the Company has neither issued bonus shares, nor bought back any equity shares nor has allotted any equity shares as fully paid up without payment being received in cash except 1,80,398 options given to employees under ESOP for subscription of shares @ Rs.125/ per share.
C There are no shares reserved for issue under options and there are no contracts or commitments for the sale of shares or disinvestment.
D During the year the Company has issued 52079 Equity Shares of Rs.10/- each at a premium of Rs.115/- under ESOP scheme.
E. SEML ESOP scheme 2012
a. The Company has established an Employee Stock Option Plan (âESOPâ) in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, which has been approved by the Board of Directors and the shareholders. Nomination & Remuneration Committee of the Company administers the ESOPs. All options under the ESOPs are exercisable for equity shares. The Company plans to grant upto 7,17,000 options to eligible employees and directors of the Company and subsidiaries of the Company.
b. The options Granted under the SEML ESOP Scheme 2012 shall vest as under:
i) 1/3 rd at the end of one year from the date of Grant.
ii) 1/3 rd at the end of two years from the date of Grant.
iii) 1/3 rd at the end of three years from the date of Grant.
c. The Grantees have a period of 2 years to exercise the Options from the date of vesting, after which unexercised options will lapse.
d. Options in respect of the Shares vested at each vesting date can be exercised in maximum four tranches subject to the exercise period of 2 years from the date of vesting. Each option is exercisable for one equity share of Rs.10 each fully paid up on payment of exercise price of share determined with respect to the date of grant.
f. Proforma accounting for stock option grants
The Company has applied the intrinsic value-based method of accounting for determining compensation cost for its ESOP Plan. Had the compensation cost been determined using fair value approach, the Companyâs net income and basic/diluted earnings per share as reported would have changed to the proforma amounts as indicated:
g. The fair value of the options, calculated by an independent consultant was estimated on the date of grant using the Black-Scholes model with the following significant assumptions:
1) Nature of security :
a) Term Loans from Bank, Financial Institution and Debentures are secured by first pari-passu charge by way of hypothecation of entire movable assets of the Company situated at Industrial Growth Centre, Siltara, Raipur subject to prior charge on current assets in favour of Working Capital Bankers and by way of joint equitable mortgage of immovable properties of the Company situated at Industrial Growth Centre, Siltara, Raipur and Urkura, Raipur.
b) The Non-convertible Debentures are also secured by a registered mortgage of an immovable property of the Company situated at Ahmedabad.
c) Term Loan of Rs.5,000 Lakh which is secured by way of mortgage of immovable properties of related companies (Present outstanding is Rs.2,000 Lakh).
d) Hire purchase loan from bank is secured by hypothecation of related vehicles.
e) Besides this, the Term Loan from Banks are also secured by unconditional and irrevocable personal guarantees of Mr. K. K. Sarda, Mr. Manish Sarda & Mr. Pankaj Sarda.
2) Repayment terms :
a) Company has issued 9.55% p.a. Non-Convertible Debentures amounting to Rs.12,500 Lakh which are redeemable in three equal annual installments commencing from July 2015. The Company has an option to redeem these debentures earlier. The third and final installment of Debentures is due for repayment in July 2017.
b) Rupee term loan of Rs.14,797 lakh from Bank is payable in 32 equal quarterly installments starting from June 2016.
c) Rupee term loan of Rs.5,000 Lakh from Bank is payable in 10 equal half yearly installments starting from August 2014. Six installments have been repaid upto the financial year 2016-2017.
Terms of repayment
a) Short term loan from Bank Rs.2,000 Lakh is payable in August 2017 and Rs.2,000 Lakh from others is payable in April 2018.
b) Commercial Paper of Rs.5,000 lakh was issued in January 2017, redeemable in July 2017.
Security
a) Working Capital loans from banks are secured by first pari-passu charge on stocks & book debts and second pari-passu charge on all present and future movable Plant & Machinery and second charge by way of joint equitable mortgage of immovable properties located at Industrial Growth Centre, Siltara, Raipur and land located at Urkura, Raipur. These facilities are also secured by irrevocable personal guarantees of Mr. K.K.Sarda, Mr. Pankaj Sarda and Mr. Manish Sarda.
b) Commercial Paper issued is secured by earmarking the existing Working Capital facilities of the Company.
c) Short term loan from others is secured by pledge of shares belonging to related companies.
b) Sensitivity analysis of significant assumptions
The following table present a sensitivity analysis to one of the relevant actuarial assumption, holding other assumptions constant, showing how the defined benefit obligation would have been affected by changes in the relevant actuarial assumptions that were reasonably possible at the reporting date.
The capitalization rate used to determine the amount of borrowing costs to be capitalized is the weighted average interest rate applicable to the entityâs general borrowings during the year, in this case 11.96% (P.Y. 12.27%).
5 COMMITMENTS
a. Estimated amount of contracts remaining to be executed on capital account, net of advance given and not provided for as at 31st March, 2017 is Rs.1,922.72 Lakh (P.Y. Rs.3,068.96 lakh).
b. Company has commitments of Rs.1,100.00 lakh as at 31st March, 2017 (P.Y. Rs.644.00 lakh) for further investment in controlled entity Chhattisgarh Hydro Power LLP and Rs.10,311.50 lakh as at 31st March, 2017 (P.Y. Rs.12,447.00 lakh) in Madhya Bharat Power Corporation Limited.
6 CORPORATE SOCIAL RESPONSIBILITY
As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. The areas for CSR activities are eradication of hunger and malnutrition, promoting education, art and culture, healthcare, destitute care and rehabilitation, environment sustainability, disaster relief and rural development projects. A CSR committee has been formed by the Company as per the Act. The funds were primarily allocated to a corpus and utilized through the year on these activities which are specified in Schedule VII of the Companies Act, 2013.
a) Gross amount required to be spent by the company during the year is Rs.182.74 Lakh.
b) Amount spent during the year on:
7 DISCLOSURE ON SPECIFIED BANK NOTES (SBNs)
During the year, the Company had specified bank notes or other denomination note as defined in the MCA notification G.S.R. 308(E) dated March 31, 2017 on the details of Specified Bank Notes (SBN) held and transacted during the period from November 8, 2016 to December, 30 2016. The denomination wise SBNs and other notes as per the notification is given below:
* For the purposes of this clause, the term âSpecified Bank Notesâshall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated the 8th November, 2016.
8 DUE TO MICRO AND SMALL ENTERPRISES AS DEFINED UNDER THE MSMED ACT, 2006
The Company has not received any memorandum (as required to be filed by the supplier with the notified authority under the Micro, Small and Medium Enterprises Development Act, 2006) claiming their status as on 31st March, 2017 as micro, small or medium enterprises. Consequently the amount paid/payable to these parties during the year is NIL.
9 Consequent to the deallocation of the coal block Gare Palma IV/7, the Company has filed a writ petition before -the Honâble High Court of Delhi challenging the compensation amount and exclusion of washary from the mine infrastructure. This matter is still under subjudice. However, the Company has received compensation of Rs.2,641.44 lakh as per the calculations of the Government of India. Following prudence, pending decision of the Honâble High court, the Company on the basis of compensation received, has booked losses of Rs.2,027.76 lakh (shown under exceptional items) on coal mine assets handed over to the new allottee of the said block.
i) Guarantee given to Director General of Foreign Trade Rs.98.88 lakh (P.Y. Rs.98.88 lakh) and Assistant Commissioner of Customs Rs.318.21 lakh (P.Y. Rs.318.21 lakh) on behalf of Sarda Metals & Alloys Limited, wholly owned subsidiary of the Company for fulfillment of Export Obligation against import of capital goods under Export Promotion Capital Goods Scheme.
ii) Excise Duty & Service Tax
a Excise duty demand of Rs.20.57 lakh (P.Y. Rs.20.57 Lakh) raised on account of Cenvat credit availed, which the Company has disputed in High Court, Jabalpur (MP).
b Rs.6.97 lakh (P.Y. Rs.6.97 Lakh) on account of duty on VAT Collected by the Company against which the Company has filed an appeal before the High Court, Bilaspur (CG).
c Excise Duty demand of Rs.17.49 lakh (P.Y. NIL) raised on account of Cenvat credit availed which the Department has disputed and has filed appeal before the High Court, Bilaspur (CG).
d Excise Duty demand of Rs.69.38 lakh (P.Y. Rs.172.58 lakh) raised on account of Cenvat credit availed which the Company has disputed and has filed appeal before the Central Excise & Service Tax Appellate Tribunal (CESTAT).
e Excise Duty demand of Rs.NIL (P.Y. Rs.77.40 lakh) raised on account of Cenvat credit availed which the Department has disputed and has filed appeal before the CESTAT.
f Excise Duty demand of Rs.65.52 lakh (P.Y. Rs.92.79 lakh) raised on account of Cenvat credit availed has been disputed before Commissioner (Appeals), Raipur.
g Excise Duty demand of Rs.7.62 lakh (P.Y. Rs.7.62 lakh) raised on account of Cenvat credit availed has been disputed before Commissioner (Appeals), Raipur.
h Service Tax demand of Rs.31.09 lakh (P.Y. Rs.31.09 lakh) raised on account of Service Tax on foreign services availed, which the Department has disputed and has filed appeal before CESTAT.
i Service Tax demand of Rs.64.93 lakh (P.Y. Rs.65.37 lakh) raised on account of Cenvat credit availed on service Tax on construction services (Ready mix concrete) has been disputed before Commissioner (Appeals), Raipur.
iii) Value Added Tax/Central Sales Tax/Entry Tax
Value Added Tax/Central Sales Tax/ Entry Tax demands of Rs.451.82 lakh (P.Y. Rs.224.20 lakh) are pending in appeal against assessment of various years.
iv) Income Tax
Nil (P.Y. Rs.46.58 lakh) for the Assessment Year 2012-13 on account of partial disallowance of deduction claimed under Section 80IA of the Income Tax Act, 1961, disputing the transfer pricing of Power captively consumed by other divisions. The Company has filed appeals before Commissioner of Income Tax (Appeals), Nagpur and the matter is decided in favor of Company vide order dated 24.03.2017. Rs.95.97 Lakh (P.Y. Rs.44.02 lakh) for the Assessment Year 2006-07 on account of penalty u/s 271(1)(C) of the Income Tax Act, 1961, for the same, the Company has filed appeals before Commissioner of Income Tax (Appeals), Raipur, which was rejected and upward by its order dated 08.12.2016, against the order of Commissioner of Income Tax (Appeals), application is filed before Income Tax Appellate Tribunal and the matter is pending.
Rs.39.24 Lakh (P.Y. NIL) TDS demand raised by the TRACES is on account of a matter disputed by Company. We have already filed application before concerned AO for correction and rectification, which is still under process.
During the financial year 2014-15, search operation was conducted in the premises of the company, u/s 132 of Income Tax Act, 1961. The block assessment is pending before Honâble Income Tax Settlement Commission. The Company does not foresee any liability at this stage, however the due provision of liability, if any, shall be made after completion of the block assessment.
v) Energy Development Cess of Rs.5,003.80 lakh (P.Y. Rs.4,452.20 lakh) net of amount deposited Rs.294.34 lakh (P.Y. Rs.294.34 Lakh) demanded by the Chief Electrical Inspector, Govt. of Chhaffisgarh for the period May 2006 to January 2017. The Honorable High Court of Chhaffisgarh has held the levy of Energy Development Cess as unconstitutional vide its Order dated 20th June, 2008. The State Govt. has filed a Special Leave Petition before the Honâble Supreme Court.
vi) Bank Guarantee of Rs.500.00 lakh (P.Y. Rs.500.00 lakh) given as security deposit against contract for disposal of old power project awarded to the Company was invoked by M/s. West Bengal Power Development Corporation Limited. The Company has challenged the wrongful invocation in the High court of Kolkata. WBPDCL has on the orders of the Honâble High Court deposited the amount of bank guarantee with the Court. The Company has been legally advised that it has a strong case in its favour, hence no liability provided.
vii) Bank Guarantee of Rs.780.00 lakh (P.Y.Rs.780.00 lakh) was invoked by M/s. Power Grid Corporation Limited after the Company notified force majeure for annulling the transmission corridor agreement for its proposed 350 MW power project. Implementation of the project became impossible as the land on which the power project was to come-up has been notified as coal bearing area and allocated to NTPC for development of coal mine. On Companyâs petition, CERC has asked PGCIL to keep the money in separate deposit account.
10 TRANSITION TO IND AS
The Companyâs financial statements for the year ended 31st March, 2017 are prepared in accordance with Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2015 in accordance with the accounting policies notified in Note 1. For the year ended 31st March, 2016, the Company had prepared its financial statements in accordance with Companies (Accounting Standards) Rules, 2006 notified under section 133 of the Act and other relevant provisions of the act (âprevious GAAPâ).
The accounting policies as set out in Note No. 1 have been applied in preparing financial statements for the year ended 31st March, 2017 including comparative information for the year ended 31st March, 2016 and the opening Ind AS balance sheet on the date of transition date i.e. 1st April, 2015.
In preparing its Ind AS balance sheet as at 1st April, 2015 and in preparing the comparative information for the year ended 31st March, 2016, the Company has adjusted amounts reported previously in financial statements prepared in accordance with previous GAAP. This note explains the principal adjustments made by the Company in restating its financial statements prepared in accordance with previous GAAP, and how the transition from previous GAAP to Ind AS has affected the Companyâs financial position.
A. Exceptions:
1) Estimates exception: Upon an assessment of the estimates made under Indian GAAP, the Company has concluded that there was no necessity to revise such estimates under Ind AS, except where estimates were required by Ind AS and not required by Indian GAAP.
2) The Company has classified financial assets in accordance with Ind AS 109 on the basis of the facts and circumstances that exist at the date of transition to Ind AS.
B. Exemptions:
Ind AS 101 allows first time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:
1) The Company has elected to apply the deemed cost option available under Para D7AA of Ind AS 101 i.e. all items of property, plant and equipment, investment property and intangible assets have been recognized in the financial statements as at the date of transition to Ind AS at the carrying value measured as per previous GAAP.
2) The Company has elected to apply previous GAAP carrying amount to its investment in subsidiaries, associates and joint venture as deemed cost as on the date of transition to Ind AS.
3) An entity may elect to apply Ind AS 102 to equity instruments that vested before the date of transition to Ind AS. The Company has not applied Ind AS 102 to grants which vested before the date of transition to Ind AS.
C. Reconciliations:
(i) Equity as at April 1, 2015 and March 31, 2016.
(ii) Total Comprehensive Income for March 31, 2016.
Standards issued but not yet effective
The standards issued but not yet effective upto the date of issuance of the financial statements is disclosed below: Ind AS 115 - Revenue from contracts with customers
This standard will come into force from accounting period commencing on or after 1 April, 2018. The Company will adopt the standard on the required effective date.
Explanation for reconciliations of Equity, Total Comprehensive Income and Cash Flow as previously reported under IGAAP to Ind AS
a) Property, Plant and Equipment (PPE)
(i) Under previous GAAP, investment properties were presented as a part of property, plant and equipment. Based on Ind AS 40, the Company has reclassified land building held for rental or undetermined future use to Investment Property.
(ii) As per Ind AS 16, PPE are defined as tangible items that are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and are expected to be used during more than one period. Certain spare parts now meets the definition of PPE and are accordingly classified as PPE.
b) Investments
Under previous GAAP, the Company accounted for long term investments in unquoted and quoted equity shares as investment measured at cost less provision for other than temporary diminution in the value of investments.
Under Ind AS, financial assets representing investments in equity shares of other entities other than subsidiaries, joint venture and associates have been fair valued. The Company has designated such investments as FVTOCI/ FVTPL investments. At the date of transition to Ind AS, difference between the instruments fair value and Indian GAAP carrying amount has been recognized as a separate component of equity, in the FVTOCI reserve, net of related deferred taxes for investments measured at FVTOCI. Investments which are measured at FVTPL, difference between the instruments fair value and Indian GAAP carrying amount should be recognized under Profit & Loss.
c) Financial Assets - Loans
The Company has given interest free advances to parties and security deposits for leasehold land. The same have been measured at transaction price as per Previous GAAP. However, as per Ind AS, all financial assets should be measured at fair value on initial recognition. The initial fair value is estimated as the present value of the refundable amount of security deposits, discounted using the market interest rates for similar instruments. The difference between nominal amount and fair value of the such advance/security deposit is classified as pre paid expense.
Subsequent to initial recognition, the security deposit and such advances are measured at amortized cost using the Effective Interest Rate method with the carrying amount increased over the contract/lease period up to the refundable/repayable amount. The amount of increase in the carrying amount of deposit is recognized as interest income. The prepaid expense is amortized on a straight line basis over the term as lease rental expense in case of lease and finance cost in case of interest free advances. The prepaid expenses are further classified in to non-current and current.
d) Other Non- current Assets
Under Ind AS, carry forward of unused tax credits i.e. Minimum Alternative Tax (MAT) forms parts of deferred tax balances.
e) Inventory
(i) Recognition of inventory on account of deferral of sales due to continuing managerial involvement.
(ii) Stores and spare parts in the nature of property, plant and equipment has been reclassified.
f) Trade Receivables
(i) Under Indian GAAP, the Company has created provision for impairment of receivables consists only in respect of specific amount for incurred losses. Under Ind AS, impairment allowance has been determined based on Expected Loss Model (ECL). Due to ECL model, the Company impaired its trade receivable by Rs.39 lakh on 1st April, 2015 which has been eliminated against retained earnings. The impact of Rs.91 lakh for year ended on 31st March, 2016 has been recognized in the statement of profit and loss.
(ii) Under Indian GAAP, trade receivables derecognized by way of bills of exchange have been shown as contingent liability since there is recourse clause. Under Ind AS, the trade receivables have been restated with corresponding recognition of short term borrowings.
g) Borrowings
Under Indian GAAP, transaction costs incurred in connection with borrowings are amortized upfront and charged to profit or loss for the period. Under Ind AS, transaction costs are included in the initial recognition amount of financial liability and charged to profit or loss using the Effective Interest Rate method. The unamortized transaction cost is further classified into non current and current.
(h) Deferred Tax liabilities
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. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences i.e. land 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 recognized in correlation to the underlying transaction either in retained earnings or a separate component of equity.
(i) Revenue
(i) Under Indian GAAP, sale of goods was presented as net of excise duty. However, under Ind AS, sale of goods includes excise duty. Excise duty on sale of goods is separately presented on the face of statement of profit and loss. Thus sale of goods under Ind AS has increased by Rs.11,433 lakh with a corresponding increase in other expense.
(ii) Under Ind AS the timing of risk and reward varies to the extent that revenue can be recognized when there is no continuing control over or the managerial involvement over the goods. This has resulted in deferment of revenue to the extent of Rs.18 lakh with a consequential impact on recognition of inventory.
(j) Employee Benefits Expenses
(i) Under Ind AS, all actuarial gains and losses are recognized in other comprehensive income. Under previous GAAP, the company recognized actuarial gains and losses in profit and loss. However, this has no impact on the total comprehensive income and total equity as on 1st April, 2015 or as on 31st March, 2016.
(ii) As per the previous GAAP, in respect of stock options granted pursuant to the Companyâs stock option schemes, the intrinsic value of the options (excess of market price of the share on the grant date over the exercise price of the option) is treated as employee compensation cost and is charged over the vesting period of the options. As per Ind AS fair value of options on grant date is recognized as employee cost and accordingly, an additional expense of Rs.2.10 lakh was recognized in the profit and loss for the year ended 31st March, 2016.
(k) Depreciation
Recognition of additional PPE from spare parts has resulted in additional depreciation charge for the year ended 31st March, 2016.
(l) Equity
Adjustments to retained earnings and other comprehensive income has been made in accordance with Ind AS for the above mentioned line items.
11 FINANCIAL RISK MANAGEMENT OBJECTIVE AND POLICIES
The Companyâs principal financial liabilities comprises of loans and borrowings in foreign as well as domestic currency, trade payables and other payables. The main purpose of these financial liabilities is to finance the Companyâs operations. The Companyâs principal financial assets include investments, loans, trade and other receivables, and cash and short-term deposits that derive directly from its operations. The Company also enters into derivative contracts.
The Company is exposed to the following risks from its use of financial instruments:
- Credit risk
- Liquidity risk
- Market Risk
- Interest rate risk
- Currency risk
- Price risk
The Companyâs board of directors has overall responsibility for the establishment and oversight of the Companyâs risk management framework. This note presents information about the risks associated with its financial instruments, the Companyâs objectives, policies and processes for measuring and managing risk, and the Companyâs management of capital.
Credit Risk
The Company is exposed to credit risk as a result of the risk of counterparties non performance or default on their obligations. The Companyâs exposure to credit risk primarily relates to investments, accounts receivable and cash and cash equivalents. The Company monitors and limits its exposure to credit risk on a continuous basis. The Companyâs credit risk associated with accounts receivable is primarily related to party not able to settle their obligation as agreed. To manage this the Company periodically reviews the financial reliability of its customers, taking into account the financial condition, current economic trends and analysis of historical bad debts and ageing of accounts receivables.
Trade receivables
Trade receivables represent the most significant exposure to credit risk and are stated after an allowance for impairment and expected credit loss.
Loans and Advances
Financial assets in the form of loans and advances are written off when there is no reasonable expectations of recovery. Where recoveries are made, these are recognized as income in the statement of profit and loss. The Company measures the expected credit loss of dues based on historical trend, industry practices and the business environment in which the entity operates. Loss rates are based on actual credit loss experience and past trends. Based on historical data, loss on collection of dues is not material hence no additional provisions considered.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and deposits which are readily convertible to cash. These are subject to insignificant risk of change in value or credit risk.
No significant changes in estimation techniques or assumptions were made during the reporting period.
Liquidity risk
The Company is exposed to liquidity risk related to its ability to fund its obligations as they become due. The Company monitors and manages its liquidity risk to ensure access to sufficient funds to meet operational and financial requirements. The Company has access to credit facilities and debt capital markets and monitors cash balances daily. In relation to the Companyâs liquidity risk, the Companyâs policy is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions as they fall due while minimizing finance costs, without incurring unacceptable losses or risking damage to the Companyâs reputation.
Financing arrangements
The Company has access to following undrawn borrowing facilities and liquid investments at the end of the reporting period:
Interest rate risk
Interest rate risk is the risk that an upward movement in the interest rate would adversely effect the borrowing cost of the Company. The Company is exposed to long term and short-term borrowings, Commercial Paper Program. The Company manages interest rate risk by monitoring its mix of fixed and floating rate instruments, and taking action as necessary to maintain an appropriate balance.
The exposure of the Companyâs borrowings to interest rate changes at the end of the reporting period are as follows:
Currency risk
The Company operates internationally and portion of the business is transacted in several currencies and consequently the Company is exposed to foreign exchange risk through its sales in overseas and purchases from overseas suppliers in various foreign currencies.
Foreign currency exchange rate exposure is partly balanced by purchasing of goods in the respective currencies.
The Company evaluates exchange rate exposure arising from foreign currency transactions and the Company follows established risk management policies, including the use of derivatives like foreign exchange forward contracts to hedge exposure to foreign currency risk.
Price risk
The entity is exposed to equity price risk, which arised out from FVTPL quoted equity shares & mutual funds and FVTOCI unquoted equity shares. The management monitors the proportion of equity securities in its investment portfolio based on market indices. Material investments within the portfolio are managed on an individual basis and all buy and sell decisions are approved by the management. The primary goal of the entityâs investment strategy is to maximize investments returns.
Sensitivity Analysis for Price Risk
Equity Investments carried at FVTOCI are not listed on the stock exchange. For equity investments and mutual funds classified as at FVTPL, the impact of a 2 % in the index at the reporting date on profit & loss would have been an increase of Rs.132.43 lakh (P.Y. Rs.0.73 lakh); an equal change in the opposite direction would have decreased profit and loss. For equity investments classified as at FVTOCI, the impact of a 2 % in the index at the reporting date on profit & loss would have been an increase of Rs.1.75 lakh (P.Y. Rs.1.75 lakh); an equal change in the opposite direction would have decreased profit and loss.
11 CAPITAL MANAGEMENT
The Companyâs main objectives when managing capital are to:
- ensure sufficient liquidity is available (either through cash and cash equivalents, investments or committed credit facilities) to meet the needs of the business;
- ensure compliance with covenants related to its credit facilities and secured debentures;
- minimize finance costs while taking into consideration current and future industry, market and economic risks and conditions;
- safeguard its ability to continue as a going concern; and
- to maintain an efficient mix of debt and equity funding thus achieving an optimal capital structure and cost of capital.
The Board of Directors has the primary responsibility to maintain a strong capital base and reduce the cost of capital through prudent management of deployed funds and leveraging opportunities in domestic and international financial markets so as to maintain investor, creditor and market confidence and to sustain future development of the business.
For the purpose of Companyâs capital management, capital includes issued capital and all other equity reserves. The Company manages its capital structure in light of changes in the economic and regulatory environment and the requirements of the financial covenants.
The Company manages its capital on the basis of net debt to equity ratio which is net debt (total borrowings net of cash and cash equivalents) divided by total equity.
The Company has complied with the covenants as per the terms of the major borrowing facilities throughout the reporting period.
B. Measurement of fair values
The table shown below analysis financial instruments carried at fair value, by valuation method. The different levels have been defined below:
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
- Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)
C. Valuation techniques
The following methods and assumptions were used to estimate the fair values -
1) Fair value of the cash and short term deposits, current loans and advances and other current financial liabilities, short term borrowing from banks and other financial institutions and other similar items approximate their carrying value largely due to short term maturities of these instruments.
2) Long-term receivables/borrowings are evaluated by the Company based on parameters such as interest rates, specific country risk factors, individual credit worthiness of the customer and the risk characteristics of the financed project. Based on this evaluation, allowances are taken into account for the expected credit losses of these receivables.
3) The fair values of the quoted instruments and mutual funds are based on price quotations at the reporting date. The fair value of unquoted instruments, loans from banks and other financial liabilities, obligations under finance leases, as well as other non-current financial liabilities is estimated by discounting future cash flows using rates currently available for debt of similar terms, credit risk and remaining maturities.
4) The fair values of the unquoted equity shares designated at FVTOCI have been estimated by using the most recent purchase price of such shares. (level 2)
12 Previous yearsâ figures have been recasted/regrouped/restated wherever necessary to make them comparable.
Mar 31, 2016
b. Terms/rights attached to equity shares
The company has only one class of shares - equity shares - having a par value of Rs. 10/- per share. Each holder of equity shares is entitled to one vote per share.
The Board of Directors of the Company have declared interim dividend of Rs. 2 per share (P.Y. Rs. NIL).
The Board of Directors of the Company subject to the approval of the members in the ensuing general meeting, has proposed a dividend of Rs. NIL per share (P.Y. Rs. 3/-).
In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
d. SEML ESOP Scheme 2012
a. The Company has established an Employee Stock Option Plan (''ESOP'') in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, which has been approved by the Board of Directors and the shareholders. Nomination & Remuneration Committee of the Company administers the ESOPs. All options under the ESOPs are exercisable for equity shares. The Company plans to grant up to 7,17,000 options to eligible employees and directors of the Company and subsidiaries of the Company.
b. The options Granted under the SEML ESOP Scheme 2012 shall vest as under:
i) 1/3 rd at the end of one year from the date of Grant.
ii) 1/3 rd at the end of two years from the date of Grant.
iii) 1/3 rd at the end of three years from the date of Grant.
c. The Grantees have a period of 2 years to exercise the Options from the date of vesting, after which unexercised options will lapse.
d. Options in respect of the Shares vested at each vesting date can be exercised in maximum four tranches subject to the exercise period of 2 years from the date of vesting. Each option is exercisable for one equity share of Rs. 10 each fully paid up on payment of exercise price of share determined with respect to the date of grant.
f. Performa accounting for stock option grants
The Company has applied the intrinsic value-based method of accounting for determining compensation cost for its ESOP Plan. Had the compensation cost been determined using fair value approach, the Company''s net income and basic/diluted earnings per share as reported would have changed to the proforma amounts as indicated:
Terms of repayment
a) The Non-Convertible Debentures are redeemable in three equal annual installments commencing from July 2015. The Company has an option to redeem these debentures earlier; however, no redemption will take place before the end of 3rd year from the date of allotment.
b) Rupee term loan from a financial institution is payable in 12 equal quarterly installments commencing from September 2013. Eleven installments have already been paid.
c) Rupee term loan of Rs. 5,000 Lac from Bank is payable in 11 quarterly installments starting from September 2013 quarter. 10% of the loan has been repaid in the financial year 2013-14, 20% has been repaid in the financial year 2014-15 and the remaining 4 installments involving 70% of the loan amount has been repaid fully in the financial year 2015-16.
d) Rupee term loan of Rs. 5,000 Lac from bank is payable in 10 equal half yearly installments starting from August 2014. Four installments have been repaid upto the financial year 2015-16.
e) Rupee term loan of Rs.11,670 lac from bank is payable in 32 equal quarterly installments starting from June 2016.
f) Hire purchase loan of Rs. 1,080.08 Lac from bank is payable in 35 equal installments starting from August 2014.
g) Deferred sales tax loan is interest free and payable at the end of fifth year from the end of the financial year of accrual. It has been repaid fully in the financial year 2015-16.
Security
The Non-convertible Debentures are secured by a registered mortgage of an immovable property of the Company situated at Ahmadabad.
Term Loans from Bank, Financial Institution and Debentures are secured by first pari-passu charge by way of hypothecation of entire movable assets of the Company situated at Industrial Growth Centre, Siltara, Raipur subject to prior charge on current assets in favour of Working Capital Bankers and by way of joint equitable mortgage of immovable properties of the Company situated at Industrial Growth Centre, Siltara, Raipur.
Term Loan of '' 5,000 Lac from HDFC Bank is secured by way of mortgage of immovable properties of related companies. Besides this, the Term Loan from Banks are also secured by unconditional and irrevocable personal guarantees of Mr. K. K. Sarda, Mr. Manish Sarda & Mr. Pankaj Sarda.
Hire purchase loan from bank is secured by hypothecation of related vehicles.
Segment information has been prepared in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company.
As part of secondary reporting , the company has no geographical segment by location.
i) Estimated amount of contracts remaining to be executed on Capital Account, net of advance given Rs. 3,068.96 lac (P.Y. Rs. 3,330.66 lac).
ii) Company has commitments of Rs. 644.00 lac (P.Y. Rs. 911.88 lac) for further investment in controlled entity Chhattisgarh Hydro Power LLP and Rs.12,447.00 lac (P.Y. Rs. 19,106.50 lac) in Madhya Bharat Power Corporation Limited.
i) Guarantee given to Director General of Foreign Trade Rs. 98.88 lac (P.Y. Rs. 98.88 lac) and Assistant Commissioner of Customs Rs. 318.21 lac (P.Y. Rs. 318.21 lac) on behalf of Sarda Metals & Alloys Limited, wholly owned subsidiary of the Company for fulfillment of Export Obligation against import of capital goods under Export Promotion Capital Goods Scheme.
ii) Excise Duty & Service Tax
a) Excise duty demand of Rs. 20.57 lac (P.Y. Rs. 20.56 lac) raise on account of Cenvat credit availed, which the Company has disputed in High Court.
b) Excise Duty demand of Rs. 172.58 lac (P.Y. Rs. 174.51 lac) raised on account of Cenvat credit availed which the Company has disputed and has filed appeal before the Central Excise & Service Tax Appellate Tribunal (CESTAT).
c) Excise Duty demand of Rs. 77.40 lac (P.Y. Rs. 129.39 lac) raised on account of Cenvat credit availed which the Department has disputed and has filed appeal before the CESTAT.
d) Rs. 6.97 lac (P.Y. Rs.6.97 Lac) on account of duty on VAT Collected by the Company against which the Company has filed an appeal before the CESTAT.
e) Rs. 6.66 lac (P.Y. Rs. 6.66 Lac) on account of duty on sale of waste and scrap by the Company. The case has been decided in favour of the Company by Commissioner Central Excise (Appeals) (CCE(A)). The Central Excise Department has filed appeal before the CESTAT against decision of the CCE(A).
f) Excise Duty demand of Rs. 92.79 lac (P.Y. Rs. 41.56 lac) raised on account of Cenvat credit availed has been disputed before Commissioner (Appeals), Raipur.
g) Excise Duty demand of Rs. 7.62 lac (P.Y. Rs. 7.62 lac) raised on account of Cenvat credit availed has been disputed before Commissioner (Appeals), Raipur.
h) Service Tax demand of Rs. 31.09 lac (P.Y. Rs. 31.09 lac) raised on account of Service Tax on foreign services availed, which the Department has disputed and has filed appeal before CESTAT.
i) Service Tax demand of Rs. 65.37 lac (P.Y. Rs. NIL) raised on account of Cenvat credit availed on service Tax on construction services (Ready mix concrete) has been disputed before Commissioner (Appeals), Raipur.
iii) Value Added Tax/Central Sales Tax/Entry Tax
Value Added Tax/Central Sales Tax/ Entry Tax demands of Rs. 224.20 lac (P.Y. Rs. 124.81 lac) are pending in appeal against assessment of various years.
iv) Income Tax
Rs.46.58 Lac ( P.Y Rs. 46.58 lac) for the Assessment Year 2012-13 on account of partial disallowance of deduction claimed under Section 80IA of the Income Tax Act, 1961, disputing the transfer pricing of Power captively consumed by other divisions. For Assessment year 2012-13, the company has filed appeals before Commissioner of Income Tax (Appeals), Nagpur and the matter is pending. Rs. 44.02 Lac ( P.Y. Rs. Nil) for the Assessment Year 2006-07 on account of penalty u/s 271(1)(C) of the Income Tax Act, 1961, for the same, the company has filed appeals before Commissioner of Income Tax (Appeals), Raipur and the matter is pending.
v) Energy Development Cess of Rs. 4,452.20 lac (P.Y. Rs. 3,933.80 lac) net of amount deposited Rs. 294.34 lac (P.Y. Rs. 294.34 Lac) demanded by the Chief Electrical Inspector, Govt. of Chhattisgarh for the period May 2006 to February 2014. The Honorable High Court of Chhattisgarh has held the levy of Energy Development Cess as unconstitutional vide its Order dated 20th June 2008. The State Govt. has filed a Special Leave Petition before the Honorable Supreme Court.
vi) Bank Guarantee of Rs. 500.00 lac (P.Y. Rs. 500.00 lac) given as security deposit against contract for disposal of old power project awarded to the company was invoked by M/s. West Bengal Power Development Corporation Limited. The Company has challenged the wrongful invocation in the High court of Kolkata. WBPDCL has on the orders of the Hon''ble High Court deposited the amount of bank guarantee with the Court. The Company has been legally advised that it has a strong case in its favour, hence no liability provided.
vii) Bank Guarantee of Rs. 780.00 lac (P.Y. Rs. NIL) was invoked by M/s. Power Grid Corporation Limited after the company notified force majeure for annulling the transmission corridor agreement for its proposed 350 MW power project. Implementation of the project became impossible as the land on which the power project was to come-up has been notified as coal bearing area and allocated to NTPC for development of coal mine. On company''s petition, CERC has asked PGCIL to keep the money in separate deposit account.
1. During the previous year, the Income Tax Department has conducted a search operation U/s 132 of the Income Tax Act, 1961. During the course of search:-
i) The various documents and records have been seized by them and physical verification of stocks was also conducted by independent agencies appointed by them.
ii) The company does not foresee any liability at this stage, however the due provision of liability, if any, shall be made after completion of the block assessment.
2. Consequent to the deal location of the coal block Gare Palma IV/7, the company has filed a writ petition before the Hon''ble High court of Delhi challenging the compensation amount and exclusion of washary from the mine infrastructure. Since, the matter is subjudice, pending settlement of the claim, no adjustment has been made in the accounts for the impairment, if any.
During the year, in terms of the requirements of Section 135 of the Companies Act, 2013, the Company has spent a sum of Rs.212.49 lac on CSR Activities. The details of the same are given in the annexure to the directors'' Report.
3. PREVIOUS YEAR FIGURES HAVE BEEN RECASTED / REGROUPED / RESTATED WHEREVER NECESSARY TO MAKE THEM COMPARABLE.
Mar 31, 2015
1. Nature of Operation
The Company has integrated steel manufacturing facility starting from
iron ore mining to the finished steel in the form of wire rod and H.B.
wire. The Company is also a leading manufacturer and exporter of Ferro
Alloys enjoying Star Export House Status. The manufacturing facilities
are backed by captive thermal power plant. The Company has also
promoted hydro power projects through SPVs.
b Terms/rights attached to equity shares
The company has only one class of shares - equity shares - having a par
value of Rs. 10/- per share. Each holder of equity shares is entitled to
one vote per share.
The Board of Directors of the Company, subject to the approval of the
members in the ensuing general meeting, has proposed a dividend of Rs.
3/- per share (P.Y. Rs. 3/-).
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the Company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
shareholders.
d SEML ESOP Scheme 2012
a. The Company has established an Employee Stock Option Plan ('ESOP')
in accordance with the Securities and Exchange Board of India (Employee
Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,
1999, which has been approved by the Board of Directors and the
shareholders. Nomination & Remuneration Committee of the Company
administers the ESOPs. All options under the ESOPs are exercisable for
equity shares. The Company plans to grant up to 7,17,000 options to
eligible employees and directors of the Company and subsidiaries of the
Company.
b. The options granted under the SEML ESOP Scheme 2012 shall vest as
under:
i) 1 /3rd at the end of one year from the date of grant.
ii) 1/3rd at the end of two years from the date of grant.
iii) 1/3rd at the end of three years from the date of grant.
c. The Grantees have a period of 2 years to exercise the Options from
the date of vesting, after which unexercised options will lapse.
d. Options in respect of the shares vested at each vesting date can be
exercised in maximum four tranches subject to the exercise period of 2
years from the date of vesting. Each option is exercisable for one
equity share of Rs. 10 each fully paid up on payment of exercise price of
share determined with respect to the date of grant.
f. Proforma accounting for stock option grants
The Company has applied the intrinsic value-based method of accounting
for determining compensation cost for its ESOP Plan. Had the
compensation cost been determined using fair value approach, the
Company's net income and basic/ diluted earnings per share as reported
would have changed to the proforma amounts as indicated:
Terms of repayment
a) The Non-Convertible Debentures are redeemable in three equal annual
installments commencing from July 2015. The Company has an option to
redeem these debentures earlier; however, no redemption will take place
before the end of 3rd year from the date of allotment.
b) Rupee term loan from a financial institution is payable in 12 equal
quarterly installments commencing from September 2013. Seven
installments have already been paid.
c) Rupee term loan of Rs. 5,000 lac from bank is payable in 11 quarterly
installments starting from September 2013 quarter. 10% of the loan has
been repaid in the financial year 2013-14, 20% has been repaid in the
financial year 2014-15 and the remaining 4 installments involving 70%
of the loan amount will be repaid in the financial year 2015-16.
d) Rupee term loan of Rs. 5,000 lac from bank is payable in 10 equal half
yearly installments starting from August 2014. Two installments have
been repaid in the financial year 2014-15.
e) Rupee term loan of Rs. 8,550 lac from bank is payable in 32 equal
quarterly installments starting from June 2016.
f) Hire purchase loan of Rs. 1,080.08 lac from bank is payable in 35
equal installments starting from August 2014.
g) Deferred sales tax loan is interest free and payable at the end of
fifth year from the end of the financial year of accrual.
Security
The Non-convertible Debentures are secured by a registered mortgage of
an immovable property of the Company situated at Ahmedabad.
Term Loans from bank, financial institution and Debentures are secured
by first pari-passu charge by way of hypothecation of entire movable
assets of the Company situated at Industrial Growth Centre, Siltara,
Raipur subject to prior charge on current assets in favour of Working
Capital Bankers and by way of joint equitable mortgage of immovable
properties of the Company situated at Industrial Growth Centre,
Siltara, Raipur.
Term Loan of Rs. 5,000 lac from HDFC Bank is secured by way of mortgage
of immovable properties of related companies.
Besides this, the term loan from banks are also secured by
unconditional and irrevocable personal guarantees of Mr K. K. Sarda, Mr
Manish Sarda & Mr. Pankaj Sarda.
Hire purchase loan from bank is secured by hypothecation of related
vehicles.
2 Short term borrowings
Security
Working Capital including buyers credit facilities from banks are
secured by first pari-passu charge on stocks & book debts and second
pari-passu charge on all present and future movable plant & machinery
and second charge by way of joint equitable mortgage of immovable
properties located at Industrial Growth Centre, Siltara, Raipur.
The working capital including buyers credit facilities and unsecured
short term loans from banks are also secured by irrevocable personal
guarantees of Mr. K.K.Sarda, Mr. Pankaj Sarda and Mr. Manish Sarda.
26.1 As per Accounting standard 15 "Employee benefits'; the disclosures
as defined in the Accounting Standard are given below:
The present value of defined obligation and the related current service
cost were measured using the projected unit credit method, with
actuarial valuations being carried out at each balance sheet date.
The following table sets out the funded status of the gratuity plan and
the amounts recognized in the Company's Balance Sheet as at 31st March
2015.
3. Segment reporting
Segment information has been prepared in confirmity with the accounting
policies adopted for preparing and presenting the financial statements
of the Company.
As part of secondary reporting, the Company has no geographical segment
by location.
4. Capitalization of expenditure
During the year, Company has capitalized the following expenses to the
cost of fixed asset/ capital work-in-progress (CWIP) because these were
attributable to the installation of fixed assets. Consequently,
expenses disclosed under the respective notes are net of amounts
capitalized by the Company.
5. Interest in joint ventures
The above joint venture companies are incorporated in India. The
Company's share of assets and liabilities as on 31st March, 2015 and
income and expenses for the year ended on that date are given below
which are based on audited figures of the joint venture companies.
The Madanpur South Coal block allotted in JV (in which the Company's
share is 20.63%) had been cancelled by the government because the JV
could not achieve the milestones. The cancellation has been challenged
in the High Court at Bilaspur because the delay was on account of delay
in government approvals. The HC had granted stay on the cancellation.
In the meantime, the Hon'ble Supreme Court has cancelled all coal
blocks vide its order. The Company has invested Rs. 321.61 lac in the
said Joint venture company as its contribution. No impairment has been
booked against the investment because the Company feels that realizable
value of the assets (including land) shall be more than the value of
investment.
6. Capital and other commitments
i) Estimated amount of contracts remaining to be executed on Capital
Account, net of advance given Rs. 3,330.66 lac (P.Y. Rs. 502.48 lac).
ii) Company has commitments of Rs. 911.88 lac (P.Y. Rs. 2,832 lac) for
further investment in controlled entity Chhattisgarh Hydro Power LLP
and Rs. 19,106.50 lac (P.Y. Rs. 5,443 lac) in Madhya Bharat Power
Corporation Limited.
7. Proposed dividend
Board of Directors have recommended dividend of Rs. 3/- (P.Y. Rs. 3/-) per
share for equity share of Rs. 10/- each totaling Rs. 1,078.57 lac (P.Y. Rs.
1,077.78 lac) for the year ended March 31,2015.
8. Contingent liabilities
(Rs. in lac)
Particulars Year Ended Year Ended
31st March 2015 31st March 2014
Guarantees given by Company's
bankers 2,075.68 1,968.95
Share of guarantees given by the
jointly controlled entity NIL 900.00
Guarantees given to DGFT on behalf
of wholly owned subsidiary for
meeting 98.88 98.88
export obligation
Guarantees given to Assistant
Commissioner of Customs on
behalf of wholly 318.21 318.21
owned subsidiary
Bills discounted with the
Company's bankers under Letters
of Credit 3,156.28 5,851.50
Corporate Guarantee given to Axis
Bank Ltd. for disbursement of
term loan to NIL 6,412.00
Sarda Metals & Alloys Ltd (SMAL),
wholly owned subsidiary of the
Company Claims against the Company
not acknowledged as debt &
disputed in appeals 179.63 219.63
Excise duty & service tax demand 418.36 379.27
VAT, CST & Entry Tax 124.81 111.75
Income tax 46.58 2,281.93
Energy development cess 3,933.80 3,363.80
i) Guarantee (equal to Company's share in Joint Venture) given by the
Company to IDBI Bank Limited against guarantee issued by the Bank in
favor of Government of India on behalf of Madanpur South Coal Company
Limited (The Joint Venture Company for Coal Mining) NIL (P.Y. Rs. 900.00
lac).
ii) Guarantee given to Director General of Foreign Trade Rs. 98.88 lac
(P.Y. Rs. 98.88 lac) and Assistant Commissioner of Customs Rs. 318.21 lac
(P.Y. Rs. 318.21 lac) on behalf of Sarda Metals & Alloys Limited, wholly
owned subsidiary of the Company for fulfillment of export obligation
against import of capital goods under Export Promotion Capital Goods
Scheme.
iii) Excise Duty & Service Tax
a) Excise duty demand of Rs. 20.56 lac (P.Y. Rs. 20.56 lac) raised on
account of Cenvat credit availed, which the Company has disputed in
High Court.
b) Excise Duty demand of Rs. 174.51 lac (P.Y. Rs. 176.10 lac) raised on
account of Cenvat credit availed which the Company has disputed and has
filed appeal before the Central Excise & Service Tax Appellate Tribunal
(CESTAT).
c) Excise Duty demand of Rs. 129.39 lac (P.Y. Rs. 130.27 lac) raised on
account of Cenvat credit availed which the Department has disputed and
has filed appeal before the CESTAT.
d) Rs. 6.97 lac (P.Y. Rs. 6.97 lac) on account of duty on VAT collected by
the Company against which the Company has filed an appeal before the
CESTAT.
e) Rs. 6.66 lac (P.Y. Rs. 6.66 lac) on account of duty on sale of waste and
scrap by the Company. The case has been decided in favour of the
Company by Commissioner Central Excise (Appeals) (CCE(A)). The Central
Excise Department has filed appeal before the CESTAT against decision
of the CCE(A).
f) Excise Duty demand of Rs. 41.56 lac (P.Y. Rs. NIL) raised on account of
Cenvat credit availed has been disputed before Commissioner (Appeals),
Raipur.
g) Excise Duty demand of Rs. 7.62 lac (P.Y. Rs. 7.62 lac) raised on account
of Cenvat credit availed has been disputed before Commissioner
(Appeals), Raipur.
h) Service Tax demand of Rs. 31.09 lac (P.Y. Rs. 31.09 lac) raised on
account of Service Tax on foreign services availed, which the
Department has disputed and has filed appeal before CESTAT.
iv) Value Added Tax/Central Sales Tax/Entry Tax
Value Added Tax/Central Sales Tax/ Entry Tax demands of Rs. 124.81 lac
(P.Y. Rs. 111.75 lac) are pending in appeal against assessment of various
years.
v) Income Tax
NIL (P.Y. Rs. 2,080.80 lac) for the Assessment Year 2009-10 and NIL (P.Y.
Rs. 201.13 lac) for the Assessment year 2010-11 and 46.58 lac (P.Y. Rs.
NIL) for the Assessment Year 2012-13 on account of partial disallowance
of deduction claimed under Section 80IA of the Income Tax Act, 1961,
disputing the transfer pricing of Power captively consumed by other
divisions. For Assessment year 2012-13, the Company has filed appeals
before Commissioner of Income Tax (Appeals), Nagpur and the matter is
pending. For the A.Y. 2009-10 and A.Y. 2010-11, the Commissioner of
Income Tax (Appeals), Nagpur has pronounced the judgments order in
favour of the Company by its order dated 25.03.2015.
vi) Energy Development Cess of Rs. 3,933.80 lac (P.Y. Rs. 3,363.80 lac) net
of amount deposited Rs. 294.34 lac (P.Y. Rs. 294.34 lac) demanded by the
Chief Electrical Inspector, Govt. of Chhattisgarh for the period May
2006 to February 2014. The Honorable High Court of Chhattisgarh has
held the levy of Energy Development Cess as unconstitutional vide its
Order dated 20th June 2008. The State Govt. has filed a Special Leave
Petition before the Honorable Supreme Court.
9. During the year, the Income Tax Department has conducted a search
operation U/s 132 of the Income Tax Act, 1961. During the course of
search:-
i) The various documents and records have been seized by them and
physical verification of stocks was also conducted by independent
agencies appointed by them.
ii) The company does not foresee any liability at this stage, however
the due provision of liability, if any, shall be made after completion
of the block assessment.
39. Effective from 1st April 2014, the useful lives of fixed assets
have been revised in accordance with Schedule II to the Companies Act,
2013. Consequently, the depreciation for the year ended 31st March 2015
is higher by Rs. 513.46 lac. Further, pursuant to the transitional
provision provided in schedule II to the Act, the Company has opted to
charge the carrying amount of the assets with no useful life as on 1st
April 2014 being Rs. 117.35 lac, to the Statement of Profit & Loss as
depreciation.
10. Exceptional item includes:
i) Additional Govt. levy of Rs. 10,755.36 lac paid in pursuance of the
Supreme Court order dated 24th September 2014 on coal extracted from
its captive coal mines since commissioning till 31.03.2014.
ii) Write off of expenses incurred on thermal power projects which have
now been shelved in view of the change in the Government policy for
allocation of coal blocks being Rs. 1,878.30 lac.
11. In pursuance of the order dated 24th September 2014 issued by the
Hon'ble Supreme Court of India deallocating 204 coal blocks, the
allotment of coal block Gare Palma IV/7 to the Company, which was in
operation since 2009 stands cancelled w.e.f. 1st April 2015. The
company has filed a writ petition before the Hon'ble High court of
Delhi challenging the compensation amount and exclusion of washary from
the mine infrastructure. Since, the matter is subjudice, pending
settlement of the claim, no adjustment has been made in the accounts
for the impairment, if any.
12. Corporate Social Responsibility
During the year, in terms of the requirements of Section 135 of the
Companies Act, 2013, the Company has spent a sum of Rs. 227.52 lac on CSR
activities. The details of the same are given in the annexure to the
Directors' Report.
13. Dues to micro and small enterprises as defined under the MSMED Act,
2006
The Company has not received any memorandum (as required to be filed by
the suppliers with the notified authority under the Micro, Small and
Medium Enterprises Development Act, 2006) claiming their status as on
31st March, 2015 as micro, small or medium enterprises. Consequently
the amount paid/ payable to these parties during the year is NIL.
14. Previous year figures have been recasted / regrouped / restated
wherever necessary to make them comparable.
Mar 31, 2014
1. NATURE OF OPERATION
The Company has integrated steel manufacturing facility starting from
iron ore and coal mining to the fnished steel in the form of wire rod
and wire. The Company is also a leading manufacturer and exporter of
Ferro Alloys enjoying Star Export House Status. The manufacturing
facilities are backed by captive thermal power plant. The Company has
also promoted hydro power projects through SPVs.
2. As per Accounting standard 15 "Employee benefits", the disclosures
as Defined in the Accounting Standard are given below:
The present value of Defined obligation and the related current service
cost were measured using the projected unit credit method, with
actuarial valuations being carried out at each balance sheet date.
2.2 SEML ESOP Scheme 2012
a. The Company has established an Employee Stock Option Plan (''ESOP'')
in accordance with the Securities and Exchange Board of India (Employee
Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,
1999, which has been approved by the board of Directors and the
shareholders. appointment & Compensation Committee of the Company
comprising of independent non-executive members of the Board of
Directors administers the ESOPs. All options under the ESOPs are
exercisable for equity shares. the Company plans to grant upto 7,17,000
options to eligible employees and directors of the Company and
subsidiaries of the Company.
b. The options granted under the SEML ESOP Scheme 2012 shall vest as
under: i) 1/3rd at the end of one year from the date of grant.
ii) 1/3rd at the end of two years from the date of grant. iii) 1/3rd
at the end of three years from the date of grant.
c. The employees have a period of 2 years to exercise the options from
the date of vesting, after which unexercised options will lapse.
d. Options in respect of the shares vested at each vesting date can be
exercised in maximum four tranches subject to the exercise period of 2
years from the date of vesting. Each option is exercisable for one
equity share of Rs 10 each fully paid up on payment of exercise price
of share determined with respect to the date of grant.
f. Proforma accounting for stock option grants
The company has applied the intrinsic value-based method of accounting
for determining compensation cost for its ESOP Plan. Had the
compensation cost been determined using fair value approach, the
Company''s net income and basic/diluted earnings per share as reported
would have changed to the proforma amounts as indicated:
The volatility of the options is based on the historical volatility of
the share price for the last one year as on the date of grant.
h. Details of weighted average exercise price and fair value of the
stock options granted at price below market price (on the date of
grant):
3. Segment reporting
Segment information has been prepared in confirmity with the accounting
policies adopted for preparing and presenting the fnancial statements
of the company.
As part of secondary reporting, the company has no geographical segment
by location.
4. Capitalization of expenditure
During the year, Company has capitalized the following expenses to the
cost of fixed asset/ capital work-in-progress (CWIP) because these were
attributable to the installation of fixed assets. Consequently, expenses
disclosed under the respective notes are net of amounts capitalized by
the company.
The above joint venture companies are incorporated in India. The
Company''s share of assets and liabilities as on 31st March, 2014 and
income and expenses for the year ended on that date are given below
which are based on audited figures of the joint venture companies.
5. Related party disclosure
a) Names of related parties and description of relationship
NoDescription of Relationship Names of Related Parties
1 Subsidiaries Sarda Energy & Minerals Hongkong
Limited, Hongkong
Sarda Global Ventures Pte Limited,
Singapore
Sarda Metals & alloys Limited
Sarda Energy Limited
Parvatiya Power Limited
Madhya Bharat Power Corporation Ltd
Sarda Hydro Power Private Limited
Raipur Fabritech Private Limited
Raipur industrial Gases Private Ltd
2 Controlled entities Chhattisgarh Hydro Power LLP
Shri Ram Electricity LLP
3 associate companies Chhattisgarh investments Limited
4 Related enterprises where R.R. Sarda & Company
significant infuence exists
Sarda Power and Steels Limited
5 Key management personnel Mr. Kamal Kishore Sarda
Mr. Pankaj Sarda
Mr. Ghanshyam Das Mundra
6 Relative of key management Mrs. Uma Sarda
personnel
Mrs. Veena Sarda
7 Joint ventures Raipur infrastructure Company Limited
Madanpur South Coal Company Limited
Note: Figures in bracket represents previous year''s figures.
Out of the above items, transactions in excess of 10% of the total
related party transactions are as unde
6. Capital and other commitments
a) Estimated amount of contracts remaining to be executed on Capital
account, net of advance given Rs 502.48 lac (P.Y. Rs 298.18 lac).
b) Company has commitments of Rs 2,832 (P.Y.NIL) for further investment
in subsidiary Chhattisgarh Hydro Power LLP and Rs 5,443 lac (P.Y. Rs
5,440 lac) in Madhya Bharat Power Corporation Limited.
7. Proposed dividend
board of Directors have recommended dividend of Rs 3/- (P.Y. Rs 3/-)
per share for equity share of Rs 10/- each totaling Rs 1,075.50 lac
(P.Y. Rs 1,075.50 lac) for the year ended March 31, 2014. Tax on
proposed dividend will be Rs 182.78 lac (P.Y. Rs 182.78 lac).
8. Contingent liabilities
(Rs in lac)
Particulars Year Ended 31st Year Ended 31st
March 2014 March 2013
Guarantees given by Company''s bankers 1,968.95 1,428.45
Share of guarantees given by the jointly
controlled entity 900.00 900.00
Guarantees given to DGFT on behalf of
wholly owned subsidiary for 98.88 98.88
meeting export obligation
Guarantees given to assistant Commissioner
of Customs on behalf of 318.21 300.71
wholly owned subsidiary
Penal interest for non creation of securities
for rupee term loan from iDFC NiL 391.86
Bills discounted with the Company''s bankers
under Letters of Credit 5,851.50 3,778.28
Corporate Guarantee given to axis bank Ltd.
for disbursement of term 6,412.00 6,412.00
loan to Sarda Metals & Alloys Ltd.,
wholly owned subsidiary of the
Company (SMaL)
Claims against the Company not acknowledged
as debt & disputed in 219.63 163.49
appeals
Excise duty & service tax demand 379.27 388.92
VAT, CST & Entry tax 111.75 138.55
income tax 2,281.93 3,498.27
Energy development cess 3,363.80 2,913.60
i) Guarantee (equal to Company''s share in Joint Venture) given by the
Company to IDBI Bank Limited against guarantee issued by the bank in
favor of Government of india on behalf of Madanpur South Coal Company
Limited (The Joint Venture Company for Coal Mining) Rs.900.00 lac ( P.Y.
Rs.900.00 lac).
ii) Guarantee given to Director General of Foreign trade Rs.98.88 lac
(P.Y.Rs.98.88 lac) and assistant Commissioner of Customs Rs.318.21 lac
(P.Y.Rs.300.71 lac) on behalf of Sarda Metals & Alloys Limited, wholly
owned subsidiary of the Company for fulfllment of Export Obligation
against import of capital goods under Export Promotion Capital Goods
Scheme.
iii) Excise Duty & Service tax
a) Excise duty demand ofRs.20.56 lac (P.Y. Rs.20.56 lac) raised on
account of Cenvat credit availed, which the Company has disputed in
High Court.
b) Excise Duty demand ofRs.176.10 lac (P.Y. Rs.166.24 lac) raised on
account of Cenvat credit availed which the Company has disputed and has
fled appeal before the Central Excise & Service Tax Appellate Tribunal
(CESTAT).
c) Excise Duty demand ofRs.130.27 lac (P.Y. Rs.111.17 lac) raised on
account of Cenvat credit availed which the Department has disputed and
has fled appeal before the CESTAT.
d) Rs.6.97 lac (P.Y. Rs.6.97 lac) on account of duty on VAT collected by
the Company against which the Company has fled an appeal before the
CESTAT.
e) Rs..66 lac (P.Y. Rs.6.66 lac) on account of duty on sale of waste and
scrap by the Company. The case has been decided in favour of the
Company by Commissioner Central Excise (appeals) (CCE(a)). the Central
Excise Department has fled appeal before the CESTAT against decision of
the CCE(A).
f) Excise Duty demand of NiL (P.Y. Rs.38.60 lac) raised on account of
Cenvat credit availed has been disputed before Commissioner (appeals),
Raipur.
g) Excise Duty demand of Rs.7.62 lac (P.Y. Rs.7.62 lac) raised on account
of Cenvat credit availed has been disputed before Commissioner
(appeals), Raipur.
h) Service tax demand of Rs.31.09 lac (P.Y. Rs.31.09 lac) raised on
account of Service tax on foreign services availed, which the
Department has disputed and has fled appeal before CESTAT.
iv) Value Added Tax/Central Sales Tax/Entry Tax
Value Added Tax/Central Sales Tax/ Entry Tax demands of RS.111.75 lac
(P.Y. Rs.138.55 lac) are pending in appeal against assessment of various
years.
v) income tax
Nil ( P.Y. Rs.1,216.34 lac) for the assessment Year 2008-09 and Rs.
2,080.80 lac (P.Y. Rs.2,080.80 lac) for the assessment year 2009-10 and
Rs.201.13 lac ( P.Y. Rs.201.13) for the Assessment Year 2010-11 on
account of partial disallowance of deduction claimed under Section 80IA
of the Income Tax Act, 1961, disputing the transfer pricing of Power
captively consumed by other divisions. For Assessment year 2009-10 and
2010-11, the Company has fled appeals before CIT (Appeals) and the
matters are still pending. For the A.Y 2008-09 pending matter before
ITAT, Nagpur is now resolved and decided in favor of the Company by the
income tax appellate tribunal E-bench Nagpur order dated 03.02.2014.
this issue has also been decided in favor of the Company by the income
tax appellate tribunal for earlier assessment years.
vi) Energy Development Cess of Rs.3,363.80 lac (P.Y. Rs.2,913.60 lac) net
of amount deposited Rs.294.34 lac (P.Y. Rs.94.34 lac) demanded by the
Chief Electrical inspector, Govt. of Chhattisgarh for the period May
2006 to February 2014. the Honorable High Court of Chhattisgarh has
held the levy of Energy Development Cess as unconstitutional vide its
Order dated 20th June 2008. The State Govt. has fled a Special Leave
Petition before the Honorable Supreme Court.
Note: as per Company''s policy loans given to employees are not
considered in above.
9. Dues to micro and small enterprises as Defined under the MSMED Act,
2006
The Company has not received any memorandum (as required to be fled by
the suppliers with the notifed authority under the Micro, Small and
Medium Enterprises Development act, 2006) claiming their status as on
31st March, 2014 as micro, small or medium enterprises. Consequently
the amount paid/ payable to these parties during the year is NiL.
Mar 31, 2013
1. NATURE OF OPERATION
The company has integrated steel manufacturing facility starting from
iron ore and coal mining to the fnished steel in the form of wire rod
and wire. The company is also a leading manufacturer and exporter of
ferro alloys enjoying Star Export House Status. The manufacturing
facilities are backed by captive thermal power plant. The company has
also promoted hydro power projects through SPVs.
2.1 SEML ESOP Scheme 2012
a. The company has established an Employee Stock Option Plan (ÂESOP'')
in accordance with the Securities and Exchange Board of India (Employee
Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,
1999, which has been approved by the Board of Directors and the
shareholders. Appointment & Compensation Committee of the company
comprising of independent non-executive members of the Board of
Directors administer the ESOP. All options under the ESOP are
exercisable for equity shares. The company plans to grant upto 7,17,000
options to eligible employees and directors of the company and
subsidiaries of the company.
b. The options granted under the SEML ESOP Scheme 2012 shall vest as
under: i) 1/3rd at the end of one year from the date of grant.
ii) 1/3rd at the end of two years from the date of grant. iii) 1/3rd
at the end of three years from the date of grant.
c. The employees have a period of 2 years to exercise the options from
the date of vesting, after which unexercised options will lapse.
d. Options in respect of the shares vested at each vesting date can be
exercised in maximum four tranches subject to the exercise period of 2
years from the date of vesting. Each option is exercisable for one
equity share of Rs. 10 each fully paid up on payment of exercise price of
share determined with respect to the date of grant.
3. Capitalization of expenditure
During the year, company has capitalized the following expenses to the
cost of fxed asset/ capital work-in-progress (CWIP) because these were
attributable to the installation of fxed assets. Consequently, expenses
disclosed under the respective notes are net of amounts capitalized by
the company.
4. Capital and other commitments
a) Estimated amount of contracts remaining to be executed on capital
account, net of advance given Rs. 298.18 Lacs (P.Y. Rs. 501.91 Lacs).
b) Company has commitments of Nil (P.Y. Rs. 1,812 Lacs) for further
investment in subsidiary Sarda Metals & Alloys Limited and Rs. 5,440 Lacs
(P.Y. Rs. 5,510 Lacs) in Madhya Bharat Power Corporation Limited.
5. Proposed dividend
Board of directors have recommended dividend of Rs. 3/- (P.Y. Rs. 3/-) per
share for equity share of Rs. 10/- each totaling Rs. 1,075.50 Lacs (P.Y. Rs.
1,075.50 Lacs) for the period ended March 31, 2013. Tax on proposed
dividend will be Rs. 182.78 Lacs (P.Y. Rs. 174.48 Lacs).
6. Contingent liabilities
(Rs.in Lacs)
Particulars 31.03.2013 31.03.2012
Guarantees given by company''s bankers 1,428.45 704.89
Share of guarantees given by the
jointly controlled entity 900.00 900.00
Guarantees given to DGFT on behalf of
wholly owned subsidiary for 98.88 98.88
meeting export obligation
Guarantees given to Assistant
Commissioner of Customs on behalf of 300.71 299.21
wholly owned subsidiary
Penal Interest for non creation of
securities for rupee term loan from
IDFC 391.86 65.43
Bills discounted with the company''s
bankers under Letters of Credit 3,778.28 1,625.77
Corporate Guarantee given to Axis
Bank Ltd. for disbursement of term 6,412.00
loan to Sarda Metals & Alloys Ltd.,
wholly owned subsidiary of the
company (SMAL)
Claims against the company not
acknowledged as debt & disputed in 163.49 85.29
appeals
Excise duty & service tax demand 388.92 353.90
VAT, CST & Entry Tax 138.55 200.20
Income tax 3,498.27 3,986.14
Energy development cess 2,913.60 2,189.80
i) Guarantee (equal to company''s share in Joint Venture) given by the
company to IDBI Bank Limited against guarantee issued by the Bank in
favour of Government of India on behalf of Madanpur South Coal Company
Limited (The Joint Venture Company for Coal Mining) Rs. 900.00 Lacs (
P.Y. Rs. 900.00 Lacs).
ii) Guarantee given to Director General of Foreign Trade Rs. 98.88 Lacs
(P.Y. Rs. 98.88 Lacs) and Assistant Commissioner of Customs Rs. 300.71 Lacs
(P.Y. Rs. 301.13 Lacs) on behalf of Sarda Metals & Alloys Limited, wholly
owned subsidiary of the company for fulfllment of Export Obligation
against import of capital goods under Export Promotion Capital Goods
Scheme.
iii) Excise Duty & Service Tax
a) Excise duty demand of Rs. 20.56 Lacs (P.Y. Rs. 20.56 Lacs) raised on
account of Cenvat credit availed, which the company has disputed in
High Court.
b) Excise Duty demand of Rs. 166.24 Lacs (P.Y. Rs. 165.38 Lacs) raised on
account of Cenvat credit availed which the company has disputed and has
fled appeal before the Central Excise & Service Tax Appellate Tribunal
(CESTAT).
c) Excise Duty demand of Rs. 111.17 Lacs (P.Y. Rs. 97.87 Lacs) raised on
account of Cenvat credit availed which the department has disputed and
has fled appeal before the CESTAT.
d) Rs. 6.97 Lacs (P.Y. Rs. 6.97 Lacs) on account of duty on VAT collected
by the company against which the company has filed an appeal before the
CESTAT.
e) Rs. 6.66 Lacs (P.Y. Rs. 6.96 Lacs) on account of duty on sale of waste
and scrap by the company. The case has been decided in favour of the
company by Commissioner Central Excise (Appeals) (CCE(A)). The Central
Excise department has fled appeal before the CESTAT against decision of
the CCE(A).
f) Excise Duty demand of Rs. 38.60 Lacs (P.Y. Rs. 10.10 Lacs) raised on
account of Cenvat credit availed has been disputed before Commissioner
(Appeals), Raipur.
g) Excise Duty demand of Rs. 7.62 Lacs (P.Y. Rs. 7.62 Lacs) raised on
account of Cenvat credit availed has been disputed before Commissioner
(Appeals), Raipur.
h) Service Tax demand of Rs. 31.09 Lacs (P.Y. Rs. 38.44 Lacs) raised on
account of Service Tax on foreign services availed, which the
department has disputed and has fled appeal before CESTAT.
iv) Value Added Tax/Central Sales Tax/Entry Tax
Value Added Tax/Central Sales Tax/ Entry Tax demands of Rs. 138.55 Lacs
(P.Y. Rs. 200.20 Lacs) are pending in appeal against assessment of
various years.
v) Income Tax
Rs. 1,216.34 Lacs (P.Y. Rs. 1,896.34 Lacs) for the Assessment Year 2008-09
and Rs. 2,080.80 Lacs (P.Y. Rs. 2,080.80 Lacs) for the Assessment Year
2009-10 and Rs. 201.13 Lacs (P.Y. Nil) for the Assessment Year 2010-11 on
account of partial disallowance of deduction claimed under Section 80IA
of the Income Tax Act, 1961, disputing the transfer pricing of Power
captively consumed by other divisions. For Assessment Year 2009-10 and
2010-11, the company has fled appeals before CIT (Appeals) and for
Assessment Year 2008-09 the appeal is pending before ITAT. The CIT
(Appeals) has decided the similar issue in favour of the company for
the Assessment Year 2007-08. This issue has also been decided in favour
of the company by the Income Tax Appellate Tribunal for earlier
assessment years.
vi) Energy development cess of Rs. 2,913.60 Lacs (P.Y. Rs. 2,189.80 Lacs)
net of amount deposited Rs. 294.34 Lacs (P.Y. Rs. 294.34 Lacs) demanded by
the Chief Electrical Inspector, Govt. of Chhattisgarh for the period
May 2006 to March 2013. The Honorable High Court of Chhattisgarh has
held the levy of Energy Development Cess as unconstitutional vide its
Order dated 20th June 2008. The State Govt. has fled a Special Leave
Petition before the Honorable Supreme Court.
7. Dues to micro and small enterprises as defned under the MSMED Act,
2006
The company has not received any memorandum (as required to be fled by
the suppliers with the notifed authority under the Micro, Small and
Medium Enterprises Development Act, 2006) claiming their status as on
31st March, 2013 as micro, small or medium enterprises. Consequently
the amount paid/ payable to these parties during the year is NIL.
Mar 31, 2012
1. NATURE OF OPERATION
The Company has integrated steel manufacturing facility starting from
iron ore and coal mining to the finished steel in the form of wire rod
and wire. The Company is also a leading manufacturer and exporter of
Ferro Alloys enjoying Star Export House Status. The manufacturing
facilities are backed by captive thermal power plant. The Company has
also promoted hydro power projects through SPVs.
a Terms/rights attached to equity shares
The Company has only one class of shares - equity shares - having a par
value of Rs. 10/- per share. Each holder of equity shares is entitled to
one vote per share. The dividend proposed by the Board of Directors is
subject to the approval of the shareholders in the ensuing Annual
General Meeting.
During the year ended March 31, 2012, the amount of per share dividend
proposed for distribution to equity shareholders is Rs. 3/- (P.Y. Rs. 3/-).
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the Company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
shareholders
Terms of repayment
a) The Non-Convertible Debentures are redeemable in three equal annual
installments commencing from July, 2015. The Company has an option to
redeem these debentures earlier; however, no redemption will take place
before the end of 3rd year from the date of allotment.
b) External Commercial Borrowings availed in foreign currencies are
payable in 5 Annual installments (First three installments are 1/6th of
the loan amount and remaining 2 installments are 1/4th of the loan
amount). First two installments have already been paid.
c) Rupee term loan from a financial institution is payable in 12 equal
quarterly installments commencing from September, 2013.
d) Rupee term loan of Rs. 1,920 Lacs from Bank is payable in monthly
installment of Rs. 70 Lacs.
e) Deferred Sales Tax loan is interest free and payable at the end of
fifth year from the end of the financial year of accrual.
Security
The Non-convertible Debentures are also secured by a registered
mortgage of an immovable property of the Company situated at Ahmedabad.
Term Loans from Bank, Financial Institution, External Commercial
Borrowing and Debentures are secured by first pari- passu charge by way
of hypothecation of entire movable assets of the Company situated at
Industrial Growth Centre, Siltara, Raipur subject to prior charge on
current assets in favour of Working Capital Bankers and by way of joint
equitable mortgage of immovable properties of the Company situated at
Industrial Growth Centre, Siltara.
Besides this, the Term Loan from Bank and Non Convertible Debentures
are also secured by unconditional and irrevocable personal guarantees
of Mr. K. K. Sarda & Mr. Manish Sarda.
Security
Working Capital loans from banks are secured by first pari-passu charge
on stocks & book debts and second pari- passu charge on all present and
future movable Plant & Machinery and second charge by way of joint
equitable mortgage of immovable properties located at Industrial Growth
Centre, Siltara, Raipur. These facilities are also secured by
irrevocable personal guarantees of Mr. K. K. Sarda and Mr. Manish
Sarda.
Mortgage loan of Rs. 2,500.00 Lacs is payable in 3 monthly installments
starting from November, 2012. Mortgage loan is also secured by
irrevocable personal guarantees of Mr. K. K. Sarda and Mr. Manish
Sarda, Corporate Guarantee of M/s. Chhattisgarh Investments Limited and
Rishabh Mining & Transport Co. Private Limited.
The Loan of Rs. 1.83 Lacs is secured by hypothecation of related vehicle
is payable in monthly installment of Rs. 0.92 Lacs.
2.1 As per Accounting Standard 15 "Employee Benefits", the disclosures
as defined in the Accounting Standard are given below:
The present value of defined obligation and the related current service
cost were measured using the projected unit credit method, with
actuarial valuations being carried out at each Balance Sheet date.
The following table sets out the funded status of the gratuity plan and
the amounts recognized in the Company's Balance Sheet as at 31st March,
2012.
3. Segment Reporting
Segment information has been prepared in confirmity with the accounting
policies adopted for preparing and presenting the financial statements
of the company.
As part of secondary reporting, the company has no geographical segment
by location.
4. Capitalization of Expenditure
During the year, Company has capitalized the following expenses to the
cost of fixed asset/ capital work-in-progress (CWIP) because these were
attributable to the installation of fixed assets. Consequently,
expenses disclosed under the respective notes are net of amounts
capitalized by the Company.
The above joint venture companies are incorporated in India. The
companies' share of assets and liabilities as on 31st March, 2012 and
income and expenses for the year ended on that date are given below
which are based on audited figures of the joint venture companies.
5. Capital and other commitments
a) Estimated amount of contracts remaining to be executed on Capital
Account, net of advance given Rs. 501.91 Lacs (P.Y.Rs. 1,288.62 Lacs).
b) Company has commitments of Rs. 1,812 Lacs (P.Y. Rs. 7,102 Lacs) for
further investment in subsidiary Sarda Metals & Alloys Limited and Rs.
5,510 Lacs (P.Y. Rs. 7,195 Lacs) in Madhya Bharat Power Corporation
Limited.
c) Uncalled amount on partly paid shares of Sarda Energy & Minerals
Hongkong LimitedÃRs. 10 Lacs (P.Y. Rs. 8.73 Lacs).
6. Proposed Dividend
Board of Directors have recommended dividend of Rs. 3/- (P.Y. Rs. 3/-) per
share for equity share of Rs. 10/- each totaling Rs. 1,075.50 Lacs (P.Y. Rs.
1,075.50 Lacs) for the period ended March 31, 2012. Tax on proposed
dividend will be Rs. 174.47 Lacs (P.Y. Rs. 174.47 Lacs).
7. Contingent Liabilities
(Rs. in Lacs)
Particulars 31.03.2012 31.03.2011
Guarantees given by
company's bankers 704.89 719.44
Share of guarantees given
by the jointly
controlled entity 900.00 900.00
Guarantees given to dgft on
behalf of wholly owned
subsidiary for 63.87 63.87
meeting export obligation
Guarantees given to assistant
commissioner of
customs on behalf of 334.21 42.57
wholly owned subsidiary
Penal interest for non creation
of securities for rupee
term loan from idfc 65.43 ---
Post dated cheques given to Axis
Bank Limited for disbursement of term NIL 12,128.10
loan to Sarda Metal & Alloys
Limited, wholly owned subsidiary of the
company, pending creation of
security for sanctioned facilities
Bills discounted with the company's
bankers under letters of credit 1,625.77 1,712.05
Claims against the company not
acknowledged as debt & disputed in 85.29 96.87
appeals
Excise duty & service tax demand 353.90 230.48
VAT, CST & entry tax 200.20 50.78
Income tax 3,986.14 1,896.37
Energy development cess 2,189.80 1,567.40
i) Guarantee (equal to Company's share in Joint Venture) given by the
Company to IDBI Bank Limited against guarantee issued by the Bank in
favour of Government of India on behalf of Madanpur South Coal Company
Limited (The Joint Venture Company for Coal Mining) Rs. 900.00 Lacs (
P.Y. Rs. 900.00 Lacs).
ii) Guarantee given to Director General of Foreign Trade Rs. 63.87 Lacs
(P.Y. Rs. 63.87 Lacs) and Assistant Commissioner of Customs Rs. 301.13 Lacs
(P.Y. Rs. 42.57 Lacs) on behalf of Sarda Metal & Alloys Limited, wholly
owned subsidiary of the Company for fulfillment of Export Obligation
against import of capital goods under Export Promotion Capital Goods
Scheme.
iii) Excise Duty & Service Tax
a) Excise duty demand of Rs. 20.56 Lacs (P.Y. Rs. 20.56 Lacs) raised on
account of Cenvat credit availed, which the Company has disputed in
High Court.
b) Excise Duty demand of Rs. 165.38 Lacs (P.Y. Rs. 170.38 Lacs) raised on
account of Cenvat credit availed which the Company has disputed and has
filed appeal before the Customs Excise & Service Tax Appellate Tribunal
(CESTAT).
c) Excise Duty demand of Rs. 97.87 Lacs (P.Y. Rs. 10.23 Lacs) raised on
account of Cenvat credit availed which the Department has disputed and
has filed appeal before the CESTAT.
d) Rs. 6.97 Lacs (P.Y. Rs. 6.97 Lacs) on account of duty on VAT Collected
by the Company against which the Company has filed an appeal before the
CESTAT.
e) Rs. 6.96 Lacs (P.Y. Rs. 4.44 Lacs) on account of duty on sale of waste
and scrap by the Company. The case has been decided in favour of the
Company by Commissioner Central Excise (Appeals) (CCE(A)). The Central
Excise Department has filed appeal before the CESTAT against decision
of the CCE(A).
f) Excise Duty demand of Rs. 10.10 Lacs (P.Y. Rs. 10.28 Lacs) raised on
account of Cenvat credit availed has been disputed before Commissioner
(Appeals), Raipur.
g) Excise Duty demand of Rs. 7.62 Lacs (P.Y. Rs. 7.62 Lacs) raised on
account of Modvat credit availed has been disputed before Commissioner
(Appeals), Raipur.
h) Service Tax demand of Rs. 38.44 Lacs (P.Y. NIL) raised on account of
Service Tax on foreign services availed, which the Company has disputed
and has filed appeal before Commissioner (Appeals), Raipur.
iv) Value Added Tax/Central Sales Tax/Entry Tax
Value Added Tax/Central Sales Tax/ Entry Tax demands of Rs. 200.20 Lacs
(P.Y. Rs. 50.78 Lacs) are pending in appeal against assessment of various
years.
v) Income Tax
Rs. 1,896.34 Lacs ( P.Y. Rs. 1,896.34 Lacs) for the Assessment Year 2008-09
and Rs. 2,089.80 Lacs ( P.Y. NIL) for the Assessment year 2009-10 on
account of partial disallowance of deduction claimed under Section 80IA
of the Income Tax Act, 1961 disputing the transfer pricing of Power
captively consumed by other divisions. The Company has filed appeal
before CIT (Appeals). The CIT (Appeals) has decided the similar issue
in favour of the Company for the Assessment Year 2007-08. This issue
has also been decided in favour of the Company by the Income Tax
Appellate Tribunal for earlier Assessment years.
vi) Energy Development Cess of Rs. 2,189.80 Lacs (P.Y. Rs. 1,288 Lacs) net
of amount deposited Rs. 294.34 Lacs (P.Y. Rs. 294.34 Lacs) demanded by the
Chief Electrical Inspector, Govt. of Chhattisgarh for the period May,
2006 to January, 2012. The Honorable High Court of Chhattisgarh has
held the levy of Energy Development Cess as unconstitutional vide its
Order dated 20th June, 2008. The State Govt. has filed a Special Leave
Petition before the Honorable Supreme Court.
8. Dues to micro and small enterprises as defined under the MSMED Act,
2006
The Company has not received any memorandum (as required to be filed by
the suppliers with the notified authority under the Micro, Small and
Medium Enterprises Development Act, 2006) claiming their status as on
31st March, 2012 as micro, small or medium enterprises. Consequently
the amount paid/ payable to these parties during the year is NIL.
Mar 31, 2011
I) Nature Of Operation
The Company has got integrated steel manufacturing facility starting
from iron ore and coal mining to the fnished steel in the form of wire
rod and wire. The Company is also a leading manufacturer and exporter
of Ferro Alloys enjoying Star Export House Status. The manufacturing
facilities are backed by captive thermal power plant. The Company has
also promoted hydro power projects through SPVs.
1. Estimated amount of contracts remaining to be executed on Capital
Account, net of advance given - Rs. 1288.62 lacs (Prev year Rs. 932.67
lacs).
2. Contingent Liabilities not provided for in respect of:
i) Guarantees given by Company's bankers - Rs. 719.44 lacs (Prev. year
Rs. 424.78 lacs).
ii) Guarantee (equal to Company's share in Joint Venture) given by the
Company to IDBI Bank Ltd. against guarantee issued by the Bank in
favour of Government of India on behalf of Madanpur South Coal Company
Ltd (The Joint Venture Company for Coal Mining) - Rs. 900.00 lacs
(Prev. year Rs. 900.00 lacs).
iii) Guarantee given to Director General of Foreign Trade - Rs. 63.87
lacs (Prev. year Nil) and Asst. Commissioner of Customs Rs. 42.57 lacs
(Prev. year Nil) on behalf of Sarda Metal & Alloys Ltd., wholly owned
subsidiary of the Company for fulfillment of Export Obligation against
import of capital goods under "Export Promotion Capital Goods Scheme".
iv) Company has given Post Dated Cheques totalling Rs. 12128.10 lacs
(Prev. year Nil) to Axis Bank Ltd. for disbursement of term loan to
Sarda Metal & Alloys Ltd., wholly owned subsidiary of the Company
(SMAL), pending creation of security in SMAL for sanctioned facilities.
v) Bills discounted with the Company's bankers under Letters of Credit
- Rs. 1712.05 lacs (Prev. year - Rs. 1328.14 lacs)
vi) Claim against the Company not acknowledged as debt & disputed in
appeal - Rs. 96.87 lacs (Prev. year Rs. 72.00 lacs)
vii) Excise Duty & Service Tax
a) Excise duty demand of Rs. 20.56 lacs (Prev. year Rs. 20.56 lacs)
raised on account of Cenvat Credit availed, which the Company has
disputed in High Court.
b) Excise Duty demand of Rs. 17.91 lacs (Prev. year Rs. 44.14 lacs)
raised on account of Cenvat Credit availed & duty amount has been
disputed before Commissioner Appeals, Raipur.
c) Excise Duty demand of Rs. 170.38 lacs (Prev. year Nil) raised on
account of Cenvat Credit availed which the Company has disputed and has
filed appeal before the CESTAT.
d) Excise Duty demand of Rs. 10.23 lacs (Prev. year Nil) raised on
account of Cenvat Credit availed which the Department has disputed and
has filed appeal before the CESTAT.
e) Rs. 6.97 Lacs (Prev. year Rs. 6.97 lacs) on account of duty on VAT
Collected by the Company against which the Company has filed an appeal
before the CESTAT.
f) Rs. 4.44 Lacs (Prev. year Nil) on account of duty on sale of waste
and scrap by the Company. The case has been decided in favour of the
Company by Commissioner Central Excise (Appeals). The Central Excise
Department has filed appeal before the CESTAT against decision of the
CCE(A).
viii) Value Added Tax/Central Sales Tax/Entry Tax
Value Added Tax/Central Sales Tax/Entry Tax demand of Rs. 50.78 lacs
(Prev. year Rs. 59.58 lacs) are pending in appeal against assessment of
various years.
ix) Income Tax
Rs. 1896.34 lacs (Prev. year Nil) for the Assessment year 2008-09 on
account of partial disallowance of deduction claimed under section 80IA
of the Income Tax Act, 1961, disputing the transfer pricing of Power
captively consumed by other divisions. The Company has filed appeal
before CIT (Appeal). The CIT (Appeal) has decided the similar issue in
favour of the Company for the A. Y 2007-08. This issue has also been
decided in favour of the Company by the Income Tax Appellate Tribunal
for earlier Assessment years.
x) Energy development cess of Rs. 1567.40 lacs (Prev. year Rs. 1288
lacs) net of amount deposited of Rs. 294.34 lacs (Prev. year Rs. 294.34
lacs) demanded by the Chief Electrical Inspector, Govt. of
Chhattisgarh for the period May 2006 to August 2010. The Honorable High
Court of Chhattisgarh has held the levy of cess as unconstitutional
vide its order dated 20th June 2008. The State Govt. has filed a
Special Leave Petition before the Honorable Supreme Court.
xi) Uncalled amount on partly paid shares of Sarda Energy & Minerals
Hongkong Limited Rs. 8.73 lacs (Prev. year Rs. 38.72 lacs).
3. Notes to Schedule 'C Ã Secured Loans
i) Term Loans from Banks, External Commercial Borrowings and Debentures
are secured by first pari- passu charge by way of hypothecation of
entire movable assets of the Company situated at Industrial Growth
Centre, Siltara, Raipur subject to prior charge on current assets in
favour of Working Capital Bankers and by way of joint equitable
mortgage of immovable properties of the Company situated at Industrial
Growth Centre, Siltara.
The Debentures are also secured by a registered mortgage of an
immovable property of the Company situated at Ahmedabad. The Debentures
are redeemable in three equal annual installments commencing from July
2015.
Besides this, the Term Loan from Banks and Non Convertible Debentures
are also secured by unconditional and irrevocable personal guarantees
of Mr. K. K. Sarda & Mr. Manish Sarda.
Loan from ILFS is secured by pledge of 20,00,000 equity shares of the
Company pledged by Chhattisgarh Investments Ltd., one of the promoter
Company and personal guarantees of Mr. K. K. Sarda.
ii) Working Capital loans from banks are secured by first pari-passu
charge on stocks & book debts and second pari-passu charge on all
present and future movable Plant & Machinery and second charge by joint
equitable mortgage of immovable properties located at Industrial Growth
Centre, Siltara, Raipur, for which credit facilities have been
sanctioned. These facilities are also secured by irrevocable personal
guarantees of Mr. K. K. Sarda and Mr. Manish Sarda.
iii) Other Loans are secured by hypothecation of related vehicles.
4. Details of Investment in Partnership Firm
a) Shri Ram Electricity LLP
Total Capital Rs. 69.00 Lacs Name of the Partner and Their Profit
Sharing Ratio Sarda Energy & Minerals Ltd 51%
Akshay Ispat Udyog Private Ltd 26%
Mosh Varya Insfrastructure Pvt. Ltd. 23%
b) Chhattisgarh Hydro Power LLP
Total Capital Rs. 652.60 Lacs
Name of the Partner and Their Profit Sharing Ratio
Sarda Energy & Minerals Ltd 66.81%
Chhattisgarh Investments Ltd 17.09%
Prachi Agriculture & Properties Pvt ltd 0.15%
Sarda Agriculture & Properties Pvt Ltd 0.15%
Sarda Family Investments 3.77%
Shri Kamal Kishore Sarda 8.20%
Smt. Shakuntala Sarda 3.83%
5. Retirement Benefit Plans
i) Defined contribution plans
The Company makes provident fund contributions for qualifying employees
to the statutory provident fund of the Govt. of India. During the year
the Company recognized Rs. 133.91 lacs (net of amount capitalized of
Rs. 11.24 lacs) (previous year Rs. 88.54 lacs (net of amount
capitalized of Rs. 17.02 lacs)) for provident fund contributions in the
Profit & Loss Account.
The Company also makes defined contribution to the Superannuation plan
for specified employees and charges the same to the revenue account of
the respective period. During the year the Company has made
contribution of Rs. 8.28 lacs in the plan.
ii) Defined Benefit Plans
The Company makes annual contributions to the approved Gratuity Trust,
which in turn contributes to the Employees Group Gratuity cum Life
Insurance Scheme of the Life Insurance Corporation of India and SBI
Life Insurance Company Ltd. The Scheme provides for lump sum payment to
vested employees at retirement / resignation / death while in
employment or on termination of employment of an amount equivalent to
15 days salary for each completed year of service or part thereof in
excess of six months. Vesting occurs upon completion of five years of
service.
The present value of defined obligation and the related current service
cost were measured using the projected unit credit method, with
actuarial valuations being carried out at each Balance Sheet date.
6. The Company has not received any memorandum (as required to be
filed by the suppliers with the notified authority under the Micro,
Small and Medium Enterprises Development Act, 2006) claiming their
status as on 31st March, 2011 as micro, small or medium enterprises.
Consequently the amount paid/ payable to these parties during the year
is nil.
1. Purchase of Manganese Ore and Coal does not include purchases as
raw material for manufacturing operation.
2. Sale of Iron Ore Pellet excludes 1,42,088 MT (Prev. year 17,109 MT)
consumed captively for manufacturing of Sponge Iron.
3. Sale of Sponge Iron excludes 75,169 MT (Prev. year 12,446 MT)
consumed captively for manufacturing of Steel Billets.
4. Sale of Runner Riser is exclusive of NIL (Prev. year 160 MT) of
Runner Riser consumed internally for manufacturing of Steel Ingots.
5. Sale of Steel Billet excludes 42,510 MT (Prev. year NIL) consumed
captively for manufacturing of Wire Rod.
6. Used NIL (Prev. year 362 MT) of Ingot and NIL (Prev. year 4 MT) of
billets by the rerolling subcontractor for conversion into Rolled
Products.
7. Rolled Product NIL (Prev. year 344 MT) was obtained on conversion
of Ingot & Billet through reroller
8. Sale of Rolled Products includes NIL (Prev. year 385 MT) of
material valued at NIL (Prev. year Rs. 80.88 Lacs) consumed captively
for various projects of the Company.
9. Sale of Ferro Alloys excludes 1,044 MT (Prev. year 152 MT)
consumed captively for manufacturing of Steel Billets.
1. Iron & Steel Scrap
a. Consumption of Iron & steel scrap excludes consumption of 75,168.900
MT (Prev. year 12,466.260 MT) of Sponge Iron used for production of
Billets and 42,609.950 MT (Prev. year NIL) of Billets used for
production of Wire Rod and 1,585.480 MT (Prev. year 642.750 MT) of
waste & scrap generated internally.
2. Iron Ore
a. Consumption is inclusive of 25,805 MT (Prev. year 40,558.440 MT) of
Iron ore fines generated during the production of Sponge Iron.
b. Consumption is inclusive of 1,37,733.58 MT (Prev. year 1,68,710.850
MT) of Purchased Lump Ore issued for Production of Sized Ore. Out of
Sized ore produced therefrom 178.560 MT (Prev. year 484.740 MT) remains
in stock as on 31st March 2011 which is included in semi fnished goods.
c. Ore produced from Captive Mines is considered as Semi Finished
Goods. Hence, consumption of Iron Ore is exclusive of 42,780.09 MT
(Prev. year 310.100 MT) of Captive Ore consumed.
d. Consumption is exclusive of 1,43,715.200 MT (Prev. year 16,244.440
MT) of Iron Ore Pellets (produced during trial run of Iron Ore
Pelletisation Plant) consumed for production.
e. Consumption is exclusive of 1,26,214.26 MT (Prev. Year Nil) of Iron
Ore Fines produced from crushing/generated from production.
3. Mangenese Ore
a. Consumption is inclusive of 28,025.567 MT (Prev. year 17,211.93 MT)
of fines issued for Sintering & briquetting and consequently used for
production.
b. Consumption is exclusive of captive consumption of 15,581.115 MT
(Prev. year 12,753.920 MT) of slag internally generated.
4. Coal
a. Consumption is exclusive of 4,28,144.960 MT (Prev. year
2,50,062.770 MT) of captive coal produced from Mines.
b. Consumption is exclusive of 48,527 MT (Prev. year 32,060.750 MT) of
captive consumption of Char/Dolochar generated internally.
c. Consumption is inclusive of 64,083.600 MT (Prev. year 28,329.620
MT) of ROM Coal issued for washing. Washed Coal received thereafter has
been fully consumed.
d. Consumption is exclusive of 5,532.550 MT of rewashed coal generated
from washing of coal.
5. Other Raw Materials
Consumption includes consumption of miscellaneous raw material.
7. Related Party Disclosure
I) Names of related parties and description of relationship:
1 Subsidiary Sarda Energy & Minerals Hongkong Limited, Hongkong
Sarda Global Ventures Pte Ltd, Singapore
Sarda Metals & Alloys Limited
Sarda Energy Limited
Parvatiya Power Limited
Madhya Bharat Power Corporation Limited
Sarda Hydro Power Private Limited
2 Controlled Entities Chhattisgarh Hydro Power LLP
Shri Ram Electricity LLP
3 Associate Chhattisgarh Bricks Private Limited
Natural Resources Energy Private limited
4 Related Enterprises where
significant influence exist
Prachi Agriculture & Properties Private Limited
Sarda Agriculture & Properties Private Limited
R.R. Sarda & Company
5 Key Management Personnel Mr. Kamal Kishore Sarda
Mr. Gopal Krishna Chhanghani
Mr. Pankaj Sarda
Mr. Ghanshyam Das Mundra
6 Relative of Key Management
Personnel
Mrs. Shakuntala Devi Sarda
Mrs. Uma Sarda
7 Joint Venture Raipur Infrastructure Company Limited
Madanpur South Coal Company Limited
b) The above joint venture companies are incorporated in India. The
Company's share of the assets and liabilities as on 31st March, 2011
and income and expenses for the year ended on that date are given below
which are based on audited figures of the joint venture companies.
8. Provision for Contingencies - NIL
9) Segment Reporting
Segment information has been prepared in confirmity with the accounting
policies adopted for preparing and presenting the financial statements
of the Company. As part of secondary reporting, the Company has no
geographical segment by location.
10) Previous year figures are shown in bracket and have been recast /
regrouped / restated wherever necessary to make them comparable.
Mar 31, 2010
1. Estimated amount of contracts remaining to be executed on Capital
Account, net of advance given Rs. 932.67 lacs (Prev year Rs. 7312.79
lacs).
2. Contingent Liabilities not provided for in respect of:
i) Guarantee given by Companys bankers Rs. 424.78 lacs (Prev. year Rs.
873.37 lacs).
ii) Guarantee (equal to Companys share in Joint Venture) given by the
Company to IDBI Bank Ltd against guarantee issued by the Bank in favour
of Government of India on behalf of Madanpur South Coal Company Ltd
(The Joint Venture Company for Coal Mining) Rs. 900.00 lacs (Prev. year
Rs. 900.00 lacs)
iii) Outstanding Letters of Credit Rs. 7836.25 lacs (Prev. year Rs.
1169.00 lacs)
iv) Bills discounted with the Companys bankers under Letters of Credit
Rs. 1328.14 lacs (Prev. year Rs. 569.99 lacs)
v) Claims against the Company not acknowledged as debt & disputed in
appeal Rs. 72.00 lacs (Prev. year Rs. 67.39 lacs)
vi) Uncalled amount on partly paid shares of Sarda Energy & Minerals
Hongkong Limited Rs. 38.72 Lacs (Prev. year Rs. 44.20 Lacs)
vii) Excise Duty & Service Tax
a) Excise duty demand of Rs. 20.56 lacs (Prev. year Rs. 20.56 lacs)
raised on account of modvat credit availed, which the company has
disputed in High Court.
b) Excise Duty demand of Rs. 44.14 lacs (Prev. year Rs. 7.62 lacs)
raised on account of modvat credit availed which the company has
disputed and has fled appeal with Commissioner Appeals, Raipur.
c) Excise Duty demand of Rs. 381.87 lacs (Prev. year Rs. 381.87 lacs)
raised on account of sale of electricity which the company has disputed
and has already received stay from CESTAT. Excise Duty demand of Rs.
247.35 Lacs (Prev. year Nil) raised on account of sale of Steam and
Heat to erstwhile Chhattisgarh Electricity Company Limited against
which the company has fled an appeal with CESTAT.
d) Excise Duty demand of Rs. 63.42 lacs (Prev. year Rs. 126.84 lacs)
raised on account of sale of electricity against which the company has
fled an appeal with High Court of Chhattisgarh.
The Finance Act 2010 has amended Central Excise Rules and Cenvat Credit
Rules retrospectively with effect from 01.09.1996 giving an option to
reverse pro-rata credits in all disputed cases pending as on 8th May
2010. The Company has already been reversing pro- rata cenvat credit.
As such demands mentioned under clauses (c) and (d) above will stand
annulled.
e) Rs. 6.97 Lacs (Prev. year Rs. 5.47 Lacs) on account of duty on VAT
collected by the company against which the company has fled an appeal
before the CESTAT.
f) Excise Duty demand of Rs. 988.20 lacs (Prev. year Nil) raised for
want of proof of export. The company has exported goods within the
permitted time and has already submitted the required documents. Such
demands raised in earlier years were also subsequently withdrawn by the
department on submission of documents.
viii) Commercial Tax / Entry Tax
Commercial Tax / Entry Tax demand of Rs. 59.58 lacs (Prev. year Rs.
20.60 lacs) are pending in appeal against assessment of various years.
ix) Income Tax
Rs. 433.15 lacs (Prev Year NIL) for the Assessment year 2007-08 on
account of partial disallowance of deduction claimed under section 80IA
disputing the transfer pricing of Power captively consumed by other
divisions, pending with CIT Appeal. This issue has already been decided
in favour of the company by the Income Tax Appellate Tribunal for
earlier Assessment years.
x) Energy development cess of Rs. 1288.00 lacs net of amount deposited
of Rs. 294.34 lacs (Prev. year Rs. 478.77 lacs) demanded by the Chief
Electrical Inspector, Govt. of Chhattisgarh for the period May 2006 to
December 2009. The Honorable High Court of Chhattisgarh has held the
levy of cess as unconstitutional vide its order dated 20th June 2008.
The State Govt. has fled a Special Leave Petition before the Honble
Supreme Court.
3. Notes to Schedule ÃC Ã Secured Loans
i) Term Loans from Banks and Financial Institutions and Debentures are
secured by first pari-passu charge by way of hypothecation of entire
movable assets of the company situated at Industrial Growth Centre,
Siltara, Raipur subject to prior charge on current assets in favour of
Working Capital Bankers and by way of joint equitable mortgage of
immovable properties of the company situated at Industrial Growth
Centre, Siltara. The Debentures are also secured by a registered
mortgage of an immovable property of the company situated at Ahmedabad.
In case of Debentures, there is stipulation of additional security by
way of assignment of all rights, title & interest into and / or
exclusive mortgage of captive iron ore mines subject to prior consent
of State Government in this regard. Pending creation of assignment, the
company has created a negative lien on all movable and immovable assets
of captive iron ore mines. These Debentures are redeemable in twenty
equal quarterly installments commencing from June 2006.
Besides this, the Term Loan from Banks & Financial Institutions and Non
Convertible Debentures are also secured by unconditional and
irrevocable personal guarantees of Mr K K Sarda & Mr Manish Sarda.
ii) Working Capital loans from banks are secured by first pari-passu
charge on stocks & book debts and second pari-passu charge on all
present and future movable Plant & Machinery and by joint equitable
mortgage of immovable properties located at Industrial Growth Centre,
Siltara, Raipur , for which credit facilities have been sanctioned.
These facilities are also secured by irrevocable personal guarantees of
Mr. K.K. Sarda and Mr. Manish Sarda.
iii) Other Loans are secured by hypothecation of related vehicles.
5. Retirement Benefit Plans
i) Defned contribution plans
The Company makes provident fund contributions to defined contribution
retirement benefit plans for qualifying employees. The contributions
are made to the statutory provident fund of the Govt. of India. During
the year the Company recognized Rs. 88.54 Lacs (net of amount
capitalized of 17.02 lacs) (previous year Rs. 75.55 lacs (net of amount
capitalized of 6.22 lacs)) for provident fund contributions in the
Profit & Loss Account.
ii) Defined Benefit Plans
The Company makes annual contributions to the approved Gratuity Trust,
which in turn contributes to the Employees Group Gratuity cum Life
Insurance Scheme of the Life Insurance Corporation of India and SBI
Life Insurance Company Ltd. The Scheme provides for lumpsum payment to
vested
employees at retirement / resignation / death while in employment or on
termination of employment of an amount equivalent to 15 days salary for
each completed year of service or part thereof in excess of six months.
Vesting occurs upon completion of five years of service.
The present value of defined obligation and the related current service
cost were measured using the projected unit credit method, with
actuarial valuations being carried out at each balance sheet date.
9. The company has not received any memorandum (as required to be fled
by the suppliers with the notified authority under the Micro, Small and
Medium Enterprises development Act, 2006) claiming their status as on
31st March, 2010 as micro, small or medium enterprises. Consequently
the amount paid / payable to these parties during the year is nil.
Notes:
1. Sale of Runner Riser is exclusive of 160 MT (Prev. year 778 MT) of
Runner Riser consumed internally for manufacturing of Steel Ingots.
2. 362 MT (Prev. year NIL) of Ingot and 4 MT (Prev. year 2,575 MT) of
billets was used by the rerolling subcontractor for conversion into
Rolled Products.
3. 344 MT (Prev. year 2,007 MT) of Rolled Product was obtained on
conversion of Ingot & Billet through reroller.
4. Sale of Rolled Products includes 385 MT (Prev.year 1,718 MT) of
material valued at Rs. 80.88 Lacs (Prev. year Rs. 653.32 Lacs) consumed
captively for various projects of the company.
5. Sale of Sponge Iron is exclusive of 12,446 MT (Prev. year 71,679
MT) consumed internally for manufacturing of Steel Ingots / Billets.
6. Sale of Ferro Alloys is exclusive of 152 MT (Prev. Year 1034 MT)
consumed internally for manufacturing of Steel Ingots / Runner Risers
and Billets.
7. Purchase of Ferro Manganese Slag and Manganese Ore does not include
purchase made for self consumption which is included in the raw
material.
1. Iron & Steel
a. Consumption of Iron & Steel scrap excludes consumption of 12,466.260
MT (Prev. year 71,947 MT) of Sponge Iron and NIL MT (Prev. year 778 MT)
of Runner Riser produced internally and 642.750 MT (Prev. year 745 MT)
of waste & Scrap generated internally.
2. Iron Ore
a. Consumption is inclusive of 40,558.440 MT (Prev. year 33,199 MT) of
Iron ore fines generated during the production of Sponge Iron.
b. Consumption is inclusive of 1,68,710.850 MT (Prev. year 66,545 MT)
of Purchased Lump Ore issued for Production of Sized Ore. Out of Sized
ore produced therefrom 484.74 MT (Prev. year 896 MT) remains in stock
as on 31st March 2010 which is included in semi finished goods.
c. Ore produced from Captive Mines is considered as Semi Finished
Goods. Hence consumption of Iron Ore is exclusive of 310.100 MT (Prev.
year1,24,408 MT) of Captive Ore consumed.
d. Consumption is exclusive of 16,244.44 MT (Prev. year NIL) of Iron
Ore Pellets (produced during trial run of Iron Ore Pelletisation Plant)
consumed for production.
3. Mangenese Ore
a. Consumption is inclusive of 17,211.93 MT of fnes issued for
Sintering and consequently used for Production.
b. Consumption is exclusive of captive consumption of 12,753.920 MT of
slag internally generated.
4. Coal
a. Consumption is exclusive of 2,50,062.77 MT of captive coal produced
from Mines.
b. Consumption is exclusive of 32,060.75 MT of captive consumption of
Char / Dolochar generated internally.
c. Consumption is inclusive of 28,329.620 MT of ROM Coal issued for
washing. Washed Coal received thereafter has been fully consumed.
5. Other Raw Materials
Consumption includes consumption of miscellaneous raw material and also
cost of manufacture of Iron Ore Pellets & Coal used / intended for
captive consumption.
16. Deferred Tax
The Company has estimated the deferred tax charge using the applicable
rate of taxation and the same has been charged to Proft & Loss Account.
Accordingly Deferred tax liability (Net) of Rs. 2859.21 lacs is
disclosed under separate heading in the Balance Sheet as given below:
17. Related Party Disclosure
I) Names of related parties and description of relationship:
S.No. Description of
Relationship Names of Related Parties
1 Subsidiary Sarda Energy & Minerals Hongkong Limited,
Hongkong
Sarda Global Ventures Pte Ltd, Singapore
Sarda Metals & Alloys limited
Sarda Energy limited
Parvatiya Power limited
Madhya Bharat Power Corporation Limited
Chhattisgarh Hydro Power Private limited
2 Associate Chhattisgarh Bricks Private Limited
Natural Resources Energy Private limited
3 Related Enterprises
where Prachi Agriculture & Properties Private
Limited
signifcant infuence
exist Sarda Agriculture & Properties Private
Limited
R.R. Sarda & Company
4 Key Management
Personnel Mr. Kamal Kishore Sarda
Mr. Gopal Krishna Chhanghani
Mr. Pankaj Sarda
Mr. Ghanshyam Das Mundra
5 Relative of Key
Management Mrs. Shakuntala Devi Sarda
Personnel Mrs. Uma Sarda
6 Joint Venture Raipur Infrastructure Company Limited
Madanpur South Coal Company Limited
20.Provision for Contingencies - Nil
23) Previous year figures are shown in bracket and have been recast /
regrouped / restated wherever necessary to make them comparable.
Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article
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