Notes to Accounts of Southern Magnesium & Chemicals Ltd.

Mar 31, 2024

10 (b) Rights, preference and restriction attached to shares :

Equity shares: The company has one class of equity shares having a par value of Rs.10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

Financial Risk Management

The Company''s activities expose it to market risk, credit risk and liquidity risk. Company''s overall risk management focus the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance.

I. Market Risk

Market risk is the risk of loss of the future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, commodity prices and other market changes that affect market risks ensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and borrowings.

a. Foreign Currency Risk

Foreign Currency Risk is the risk of impact related to fair value or future cash flows of anexposure in foreign currency, which fluctuate due to change in foreign currency rates. The Company''s exposure to the risk of changes in foreign exchange rates is negligible.The company does not enter into any derivative instruments for trading or speculative purposes.

b. Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrumentwill fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes inmarket rates relates primarily to the Company''s short term borrowing. The Company constantly monitors the credit markets and rebalances its financing strategies to achieve an optimal maturity profile and financing cost.

II. Credit Risk

Credit risk arises when a customer or counterparty does not meet its obligations under a financial instrument or custom contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing/investing activities, including deposits with banks. The company has a prudent and conservative process for managing its credit risk arising in the course of its business activities. The Company is receiving payments regularly from its customers and hence the Company has no significant credit risk.

III. Liquidity Risk

Liquidity risk is defined as the risk that the company will not be able to settle or meet obligations on time or at reasonable price. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of credit facilities to meet obligations when due. The Company''s treasury team is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company''s liquidity position through rolling forecasts based on expected cash flows

Note 27

Fair Value Hierarchy :

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into level 1 to level 3 as described below.

Level 1 - Quoted prices in an active market:

This level of hierarchy includes financial assets that are measured by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Valuation techniques with observable inputs:

This level of hierarchy includes financial assets and liabilities, measured using 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). There are no financial instruments held by the company which fall under this category.

Level 3 - Valuation techniques with significant unobservable inputs:

This level of hierarchy includes financial assets and liabilities measured using inputs that are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data. There are no financial instruments held by the company which fall under this category.

Note 28

Capital Management

The Company''s objectives when managing capital are to

i) Safeguardtheirabilitytocontinue asagoingconcern,sothattheycancontinuetoprovidereturnsfor shareholders and benefits for otherstakeholders.

ii) Maintain an optimal capital structure to reduce the cost ofcapitalConsistent with others in the industry, the company monitors capital on the basis of the following gearing ratio:

Net debt (total borrowings net of cash and cash equivalents) divided by Total ‘equity'' (as shown in the balance sheet)

Employee benefits

In view of very limited strength of the employees, presently working in the Company the requirementsof the Ind AS -19 Employee Benefits in respect of Gratuity could not be complied with. However, Liability for Gratuity is being funded through Life Insurance Corporation of India.

Micro, Small and Medium Enterprises

There are no amounts outstanding as at 31stMarch, 2024 payable to Micro, Small and Medium Enterprises.There are no Micro, Small and Medium Enterprises, to whom the Company owes dues, which are outstanding for morethan 45 days during the year and also as at 31st March, 2024. This information as required to be disclosed under the Micro,Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company and relied upon by the Auditors.

Note 32B:

Additional Disclosures required by Schedule III (Amendments Dated 24th March, 2021) to the Companies Act, 2013 :

Reasons:

1. Debt Equity Ratio decreased due to increase in debt in the current year.

2. Return on Equity decreased due to decrease in PAT during the year.

3. Inventory Turnover Ratio decreased due to increase in cost of goods sold and increase in inventories.

4. Trade Receivables Turnover Ratio decreased due to increase in credit sales.

5. Net Capital Turnover Ratio decreased due to increase in working capital.

6. Return on Capital Employed decreased due to decrease in EBIT during the year.

Note34

Additional Information

(i) The Company do not have any Benami property and neither any proceedings have been initiated or is pending against the Company for holding any Benami property.

(ii) The Company do not have any transactions with companies struck off.

(iii) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

(iv) The Company has not been declared a wilful defaulter by any bank or financial institution or any other lender during the current period.

(v) The Company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

a. 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

b. provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

(vi) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

a. 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

b. provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(vii) The loan has been utilized for the purpose for which it was obtained and no short term funds have been used for long term purpose.

(viii) The Company is in compliance with the number of layers prescribed under clause (87) of section 2 of the Companies Act read with the Companies (Restriction on number of Layers) Rules, 2017.

(ix) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year

(x) The Company have not any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

Note 35

Previous Year''s figures have been regrouped wherever necessary to correspond with the current year''s figures. Except otherwise state.

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Mar 31, 2023

i. Provisions, Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an out flow of resources. Contingent Liabilities are not recognized but are disclosed in the notes on accounts. Contingent Assets are neither recognized nor disclosed in the financial statements.

j. Income Taxes

Income tax expense for the year comprises of current tax and deferred tax. It is recognized in the Statement of Profit and Loss except to the extent it relates to a business combination or to an item which is recognized directly in equity or in other comprehensive income.

Current tax is the expected tax payable/receivable on the taxable income/ loss for the year using applicable tax rates at the Balance Sheet date, and any adjustment to taxes in respect of previous years. Interest income/ expenses and penalties, if any, related to income tax are included in current tax expense.

Deferred tax is recognized in respect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes using tax rates enacted, or substantively enacted, by the end of the reporting period.

k. Earnings Per Share

The Company presents basic and diluted earnings per share (“EPS”) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which includes all stock options granted to employees.

l. Critical Accounting Estimates and Judgments

The preparation of financial statements is in conformity with generally Accepted Accounting Principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the result of operations during the reporting period. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates. Revisions in accounting estimates are recognized prospectively.

The areas involving critical estimates or judgments are -

• Estimates of Useful life of Property, plant and equipment and intangibles

• Measurement of defined benefit obligation

• Recognition of deferred taxes

• Estimation of impairment

• Estimation of provision and contingent liabilities

1.23 Recent accounting pronouncements

(i) Adoption of recent accounting pronouncements

Ministry of Corporate Affairs (MCA) notifies new standards or amendments to the existing standards

under Companies (Indian Accounting Standards) Rules as issued from time to time.

On March 31,2023, MCA amended the Companies (Indian Accounting Standards) Amendment Rules,

2023, as below:

i) Ind AS 1 - Presentation of Financial Statements - This amendment requires the entities to disclose their material accounting policies rather than their significant accounting policies. The effective date for adoption of this amendment is annual periods beginning on or after April 1,2023. The Company has evaluated the amendment and the impact of the amendment is insignificant in the financial statements.

ii) Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors - This amendment has introduced a definition of ‘accounting estimates'' and included amendments to Ind AS 8 to help entities distinguish changes in accounting policies from changes in accounting estimates. The effective date for adoption of this amendment is annual periods beginning on or after April 1,2023. The Company has evaluated the amendment and there is no impact on its financial statements.

iii) Ind AS 12 - Income Taxes - This amendment has narrowed the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences. The effective date for adoption of this amendment is annual periods beginning on or after April 1,2023. The Company has evaluated the amendment and there is no impact on its standalone financial statement.

Financial Risk Management

The Company''s activities expose it to market risk, credit risk and liquidity risk. Company''s overall risk management focus the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance.

I. Market Risk

Market risk is the risk of loss of the future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, commodity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and borrowings.

a. Foreign Currency Risk-

Foreign Currency Risk is the risk of impact related to fair value or future cash flows of an exposure in foreign currency, which fluctuate due to change in foreign currency rates. The Company''s exposure to the risk of changes in foreign exchange rates is negligible. The company does not enter into any derivative instruments for trading or speculative purposes.

b. Interest Rate Risk-

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market rates relates primarily to the Company''s short term borrowing. The Company constantly monitors the credit markets and re-balances its financing strategies to achieve an optimal maturity profile and financing cost.

II. Credit Risk

Credit risk arises when a customer or counterparty does not meet its obligations under a financial instrument or custom contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing/investing activities, including deposits with banks. The company has a prudent and conservative process for managing its credit risk arising in the course of its business activities. The Company is receiving payments regularly from its customers and hence the Company has no significant credit risk.

III. Liquidity Risk

Liquidity risk is defined as the risk that the company will not be able to settle or meet obligations on time or at reasonable price. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of credit facilities to meet obligations when due. The Company''s treasury team is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company''s liquidity position through rolling forecasts based on expected cash flows

Note 26

Fair value hierarchy

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into level 1 to level 3 as described below

Level 1 - Quoted prices in an active market:

This level of hierarchy includes financial assets that are measured by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Valuation techniques with observable inputs:

This level of hierarchy includes financial assets and liabilities, measured using 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). There are no financial instruments held by the company which fall under this category

Level 3 - Valuation techniques with significant unobservable inputs:

This level of hierarchy includes financial assets and liabilities measured using inputs that are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data. There are no financial instruments held by the company which fall under this category.

Note 27

Capital Management

The Company''s objectives when managing capital are to

i) Safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders.

ii) Maintain an optimal capital structure to reduce the cost of capital Consistent with others in the industry, the company monitors capital on the basis of the following gearing ratio:

Note 31

Micro, Small and Medium Enterprises

There are no amounts outstanding as at 31^stMarch, 2023 payable to Micro, Small and Medium Enterprises. There are no Micro, Small and Medium Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days during the year and also as at 31st March, 2023. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company and relied upon by the Auditors.

Reasons:

1 Current Ratio increased due to increase in current assets and decrease of current liabilities.

2 Debt Equity Ratio decreased due to decrease in decrease in debt in the current year.

3 Return on Equity increased due to increase in PAT during the year.

4 Inventory Turnover Ratio increased due to increase in cost of goods sold and decrease in inventories.

5 Trade Receivables Turnover Ratio increased due to increase in net credit sales.

6 Net Capital Turnover Ratio increased due to increase in net sales.

7 Net Profit Ratio increase in net profit and net sales.

8 Return on Capital Employed increased due to increase in EBIT during the year.

Note 32

Additional Information

(i) The Company do not have any Benami property and neither any proceedings have been initiated or is pending against the Company for holding any Benami property.

(ii) The Company do not have any transactions with companies struck off.

(iii) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

(iv) The Company has not been declared a wilful defaulter by any bank or financial institution or any other lender during the current period.

(v) The Company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

a. 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

b. provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

(vi) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

a. 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

b. provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(vii) The loan has been utilised for the purpose for which it was obtained and no short term funds have been used for long term purpose.

(viii) The Company is in compliance with the number of layers prescribed under clause (87) of section 2 of the Companies Act read with the Companies (Restriction on number of Layers) Rules, 2017.

(ix) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year

(x) The Company have not any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

Note 33

Previous Year''s figures have been regrouped wherever necessary to correspond with the current year''s figures. Except otherwise stated.

^{As per our rep}°rt ^{of even date} For and on behalf of the Board of Directors

^For BRAHMAYYA & CO., Southern Magnesium and Chemicals Limited

Chartered Accountants

^{Firm Registration} N^o.°⁰°513S n. Rajender prasad N. _ Ravi Prasad

Jt. Managing Director & CFO ^Managing D^irector & ^CE0 K_arS_n^h_e^ravan (Din- 00145659) (^{DiN- 00319537})

Membership No. 215798

Place : Hyderabad Mrs. Sneha Sridayal Soni

Date : 26.5.2023 Company Secretary

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Mar 31, 2015

1. Rights, preferences and restrictions attached to shares

(i). Equity Shares: The company has one class of equity shares having a par value of Rs.10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

2. Explanatory Notes & Other Disclosures

2.1 Financial Statements of the Company have been prepared on "Going Concern basis" despite complete erosion of net worth and the current liabilities exceeding the current assets by Rs.58.87 lakhs.

3. Contingent Liabilities

(i) Arrears of Fixed cumulative dividends on preference shares. (Rs. in Lakhs)

Particulars Current Year Previous Year

Arrears of cumulative Dividend on 5 % Nil 72.25 preference shares

(ii) Interest against Late Filing of TDS Returns of Rs. 79,000/- not acknowledged as debt.

4. Excise Duty expenses of Rs. 48,169 /- represents the differential excise duty in respect of finished goods as on 01.04.2014 and as on 31.03.2015.

5. (i) Depreciation for the year has been provided as per the provisions of the Section 123 read with Schedule II to the Companies Act 2013 under the Straight Line Method pursuant to this, provision of depreciation is lower by Rs. 30,760/- compared to the depreciation as per the schedule XIV of the Companies Act 1956. and accordingly the profit for the year is more by Rs. 30,760/-for the year.

(ii) In respect of Fixed Assets those had completed usefull life as on 31-03-2014, the carrying amount of Rs. 19,782/- had been adjusted to accumulated loss.

(iii) Where the Net block of an asset is less than the residual value specified in schedule - II to the Companies Act 2013, residual values are restored by adjusting the net block and crediting the excess depreciation written back which is taken to statement of profit and loss.

6. Disclosures in accordance with the requirements of Accounting Standards stated under the Companies (Accounting Standards) Rules, 2006.

a. Segment Reporting

The Company operates only in one segment i.e, manufacture and sale of magnesium metal related products and hence, Segment Reporting in accordance with Accounting Standard -17 is not applicable.

b. Related Party Disclosures

The Related party disclosures as required by AS - 18 are given below:

S. No Related Parties Nature of Relationship

1 Mr. N. Ravi Prasad, Managing Director Key Managerial Personnel

2 Mr. N. Rajender Prasad, Joint Managing Director

3 Smt. N. Anantha Lakshmi Relatives of Key Managerial Personnel

4 Southern Electrodes Ltd Enterprise over which relatives of

5 Pumps India Pvt. Ltd Key Managerial Personnel exercise significant influence.

7. Accounting for Taxes on income i) Current Tax

The Company has made Current Tax Provision for Minimum Alternate Tax (MAT) under section 1 5JB of the Income Tax Act, 1961. As per the provisions of section 115JAA, MAT Credit receivable for the amount in excess over tax liability as per normal computation of income has been recognized as an asset. MAT Credit is recognized as an asset in accordance with the recommendations contained in Guidance Note Issued by ICAI. The said asset is created by way of the credit to the Statement of Profit and Loss and shown as MAT Credit entitlement.

8. Dues to Micro, Small and Medium Enterprises

On the basis of details furnished by the suppliers, there are no amounts to be reported as dues to micro, small and medium enterprises as required under section 22 of the Micro, Small and Medium Enterprises Development Act, 2006 (''MSMED Act').

9. Previous Year's figures have been reclassified, wherever necessary so as to conform with those of Current Year.

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Mar 31, 2014

1. Rights, preferences and restrictions attached to shares

(i). Equity Shares: The company has one class of equity shares having a par value of Rs.10/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

2. Explanatory Notes & Other Disclosures

A. Financial Statements of the Company have been prepared on "Going Concern basis" despite complete erosion of net worth and the current liabilities exceeding the current assets by Rs. 2.065 Crores.

B. Contingent Liabilities

(i) Arrears of Fixed cumulative dividends on preference shares. (Rs. in Lakhs)

Particulars Current Year Previous Year

Arrears of cumulative Dividend on 5 % preference shares 72.25 67.25

(ii) Interest on Late Filing of TDS Returns of Rs. 65,440/- not acknowledged as debt by the Company.

3. Excise Duty expenditure of Rs. 83,810/- represents the differential excise duty in respect of finished goods as on 01.04.2013 and as on 31.03.2014.

4. Disclosures in accordance with the requirements of Accounting Standards stated under the Companies (Accounting Standards) Rules, 2006.

a. Segment Reporting

The Company operates only in one segment i.e, manufacture and sale of magnesium metal related products and hence, Segment Reporting in accordance with Accounting Standard -17 is not applicable.

d. Accounting for Taxes on income

i) Current Tax

Provision for current tax is not required in view of the brought forward unabsorbed depreciation and business loss, both under book profits tax and normal provisions of the income tax act.

ii) Deferred Tax

In view of the absence of reasonable certainty that sufficient future taxable income will be available against which deferred tax asset can be realized, the Company has considered it prudent not to provide for deferred tax asset of Rs. 75,24,845 (Previous Year Rs. 82,72,453), in accordance with Accounting Standard - 22, Accounting for taxes on income, resulted on account of brought forward losses and unabsorbed depreciation.

Note - 5

Dues to Micro, Small and Medium Enterprises

On the basis of details furnished by the suppliers, there are no amounts to be reported as dues to micro, small and medium enterprises as required under section 22 of the Micro, Small and Medium Enterprises Development Act, 2006 (''MSMED Act'').

Note - 6

Previous Year''s figures

Previous Year''s figures have been reclassified, wherever necessary so as to conform with those of Current Year.

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Mar 31, 2013

1.1 Financial statements of the Company have been prepared on "Going concern basis" despite complete erosion of net worth and the current liabilities exceeding the current assets by Rs.2,31,91,128 as at 31 March 2013.

1.2 Excise Duty expenditure of Rs. 2,45,139/- represents the differential excise duty in respect of finished goods as on 31.03.2012 and as on 31.03.2013.

2. Additional Information :

b. Earnings in foreign exchange:

The Company has no earnings in foreign exchange for the year to report.

c. The value of consumption of imported and indigenously obtained raw materials, stores and spare parts and the percentage of each to the total consumption:

3. Disclosures in accordance with the requirements of Accounting Standards stated under the Companies (Accounting Standards) Rules, 2006.

The Company has made disclosures in accordance with the Accounting Standards as applicable for the year under report.

3.1 Segment Reporting

The Company operates only in one segment i.e, manufacture and sale of magnesium metal related products and hence, Segment Reporting in accordance with Accounting Standard -17 is not applicable.

3.4 Taxes on income

3.4.1 Current Tax

Provision for current tax is not made, in view of the brought forward unabsorbed depreciation and business loss, in accordance with the provisions of the Income-tax Act, 1961 as well as book profits tax under Section 115JB of the Income-tax Act, 1961.

3.4.2 Deferred Tax

In view of the absence of reasonable certainty that sufficient future taxable income will be available against which deferred tax asset can be realized, the Company has considered it prudent not to provide for deferred tax asset of Rs. 82,72,453 (Previous Year Rs. 1,11,68,149), in accordance with Accounting Standard - 22, Accounting for taxes on income, resulted on account of brought forward losses and unabsorbed depreciation.

4. Dues to Micro, Small and Medium Enterprises

On the basis of details furnished by the suppliers, there are no amounts to be reported as dues to micro, small and medium enterprises as required under section 22 of the Micro, Small and Medium Enterprises Development Act, 2006 (''''MSMED Act'').

5. Previous Year''s figures

Previous Year''s figures have been reclassified, wherever necessary so as to conform with the requirements of the Revised Schedule VI to the Companies Act, 1956.

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Mar 31, 2010

1. Contingent Liabilities to the extent not provided for on account of:

Particulars As at 31.03.2009 As at 31.03.2008

(Rs.In lakhs) (Rs.in lakhs)

i)Penalty levied by the Deputy Director, Directorate of Enforcement (FEMA) As the company prefers as appeal Before the special Director (Appeals) FEMA - New Delhi. Nil 0.50

ii) a) Interest levied by the Sales Tax Authorities for the accounting year 2000-01 on delayed payments of General Sales Tax Nil 1.96 Central Sales Tax Nil 2.36

The Company preferred appeals before Deputy Commissioner (Appeals)

b) Arrears of cumulative Dividend on preference shares (@ 5%) 52.25 47.25

(The Cum. Pref Shareholders have agreed to reduce the rate of dividend from 14% to 5% with retrospective effect from 1999 onwards and the time for the maturity has been extended till March 2015)

2. Excise Duty of Rs.1,06,231/- represents the differential excise duty in respect of finished goods as on 01.04.2009 and as on 31.03.2010.

3. Managerial Remuneration, included in other Heads of Account

4. In view of the absence of reasonable certainty that sufficient future taxable income will be available against which deferred tax asset can be realized, it is considered prudent not to provide for deferred tax asset of Rs.2,27,21,627/-, in accordance with Accounting Standard - 22, Accounting for taxes on income, resulted on account of brought forward losses and unabsorbed depreciation.

5. Information required pursuant to the Accounting Standards issued by the Institute of Chartered Accountants of India.

a) AS-17 Segment Reporting: Company operates only in one segment that of manufacture and sale of magnesium metal related products, Segment Reporting in accordance with AS-17 is not required.

b) AS-18 Related party disclosures:

Related party disclosures as required by AS - 18 are given below

Related Parties

1. Southern Electrodes Ltd

2. Pumps (India) Pvt. Ltd

3. Phoenix Finance & Leasing Limited

4. Mr.N.Ravi Prasad

5. Mr.N.Rajender Prasad

6. Smt N.Anantha Lakshmi

7. Sri N.B.Prasad

8. Sri N. Ram Prasad

Nature of Relationship

Associate Companies

Key Management Personnel

Relatives of Key Management Personnel

i) Transactions with associate Companies

ii) Details of transactions in respect of Key Management personnel.

6. Quantitative particulars in accordance with the requirements of Part - II of Scheduled VI to the Companies Act., 1956.

7. Previous Years figures have been regrouped wherever necessary and paise have been rounded off to the nearest rupee.