Notes to Accounts of VBC Industries Ltd.

Mar 31, 2013

1. Orrisa Power Consortium Limited, Bhuneshwrr is an Associate Company as defined in paragraph 4 of Accounting Standard on "Accounting for Investmenss in Associates in Consoiidated Financial Statemenss (AS 23)" of Companies (Accounting Standards) Rules, 2006 as the company''s voting power in the said Company exceeds the limits presciibed in the said paragraph. Howeve,, the said Accounting Standard is not appiicable, as the company is not requrred to prepare consolidated statements under AS 21.

2. According to an internal technical assessment.There is no impairment in the carrying cost of cash Generating assets of the Company in terms of Accounting Standard on Imparrmntt of Assets (AS 28) of Companies (Accounting Standards) Rules, 2006.

3. Previous year figures were regrouped where ever necessayy to make them comparable with the current year.

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Mar 31, 2012

1. Contingent liabilities .

a). Unexpired Bank Guarantees 99,71,600 99,71,600

b). Demands of Central Excise disputed by the Company in appeals before higher authorities : 56,84,230 56,84,230

c). Demands of Sales Tax disputed by the Company in appeals before higher authorities : 18,93,000 18,93,000

d) Disputed Sales Tax Demands for non submission of "C" & "H" Forms 23,40,910 -

An amount of Rs. 15.30 Lakhs paid under protest (P.Y. - Rs. 15.30 Lakhs) against item Nos. b& c is grouped under loans and advances.

e) Disputed Income tax Demands 21,80,867 -

f). Demands towards Load factor short fall charges for the period from September, 2005 to August, 2006 during which the Ferro Alloys Unit of the Company was closed, and for the years 2008-09, 2009-10 and 2010-11during Load Relief (Power Cut Period) and Surcharge thereon disputed by the Company. 36,39,14,851 30,10,92,105

Note No.2.28:

2. The Company operates in only one business Segment of manufacture of Ferro Alloys and there are no geographical segments to be reported

3. Related parties in terms of AS 18, of Companies (Accounting Standards) Rules, 2006

a. Promoters

Dr.M.V.V.S.Murthi and others

b. Associates:

1. VBC ferro Alloys Limited

2. Orissa Power Consortium Limited

3. Konaseema Gas Power Limited

c. Key Management Personnel:

Sri MS Lakshman Rao, Managing Director

d. Relatives of Key Managerial Personnel :

Dr.M.V. V.S.Murthi

e. Others - Enterprises in which key Managerial Personnel or their relatives have substantial interest:

1. Techno Infratech Projects (India) Private Limited

2. Basil Infrastructure Projects Limited

3. Indo -US Coal Washeries Limited

5. Orrisa Power Consortium Limited. Bhuneshwer is an Associate Company as defined in paragraph 4 of Accounting Standard on "Accounting for Investments in Associates in Consolidated Financial Statements (AS 23)" of Companies (Accounting Standards) Rules, 2006 as the company's voting power in the said Company exceeds the limits prescribed in the said paragraph. However, the said Accounting Standard is not applicable, as the company is not required to prepare consolidated statements under AS 21.

6. According to an internal technical assessment,There is no impairment in the carrying cost of cash Generating assets of the Company in terms of Accounting Standard on Impairmnet of Assets (AS 28) of Companies (Accounting Standards) Rules, 2006

7. Previous year figures were regrouped where ever necessary to make them comparable with the current year

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Mar 31, 2010

1. Estimated amount of contracts remaining to be executed on Capital Account and not provided for (net of advances) Rs. Nil Nil 2. Contingent Liabilities : a) Unexpired Bank Guarantees and Rs. 99,71,600 1,00,83,178 Letters of Credit opened

b) Demands of Central Excise disputed by Rs. 56,84,230 56,84,230 the Company in appeals before higher authorities

c) Demands of Income Tax disputed by the Company in appeals before higher authorities Rs. - 1,54,47,433

d) Demands of Sales Tax disputed by the Company in appeals before higher authorities Rs. 18,93,000 18,93,000 An amount of Rs. 15.30 Lakhs paid under protest (P.Y.-64.36 Lakhs) against item Nos. b, c & d is grouped under loans and advances.

e) Demands towards Load factor short fall charges for the period from September, 2005 to August, 2006 during which the Ferro Alloys Unit of the Rs.18,55,29,665 18,55,29,665

Company was closed, disputed by the Company.

f) The Company together with two other Promoter companies has furnished an undertaking on behalf of Konaseema Gas Power Limited jointly promoted by them to the financial institutions to finance the cost over-run,if any.in respect of the power project being executed by the said Company.

g) The Company together with an other Promoter company has furnished an undertaking on behalf of Orissa Power Consortium Limited jointly promoted by them to the financial institutions to finance the cost over- run,if any, in respect of the power project being executed by the said Company.

3 As per Accounting Standard 15 Employees Benefits the disclosure of Employee Benefits as defined in the Accounting Standard are given hereunder:

II Reconciliation of opening and closing balances of fair value of plan assets and fair value of assets and obligations does not arise as the company has no planned assets in respect of its obligation towards Gratuity.

III Expenses recognized during the year (in the statement of Profit & Loss Account)

4 The Company operates in only one business segment of Ferro Alloys and there is no geographical segment to be reported.

5. Micro small and Medium enterprises to the extent such parties have been identified from the available information and there are no Micro Small and Medium enterprises where the outstandings are due for more than 45 days are Nil.

6. Related Party Transactions:

Related parties in terms of AS-18 issued by the Institute of Chartered Accountants of India :

a. Promoters:

Dr. M.V.V.S. Murthi and others

b. Associates:

1. VBC Ferro Alloys Limited

2. Orissa Power Consortium Limited

3. Konaseema Gas Power Limited

c. Key Management Personnel:

Sri M.S. Lakshman Rao, Managing Director

d. Relatives of Key Managerial Personnel: Dr. M.V.V.S. Murthi

e. Others - Enterprises in which key Managerial Personnel or their relatives have substantial interest :

1. Techno Infratech Projects (India) Private Limited

2. Basil Infrastructure Projects Limited

3. Indo-US Coal Washeries Limited

7 Previous years figures have been regrouped and rearranged wherever necessary.

8 Paise have been rounded off to the nearest rupee.