Adhunik Metaliks

1 Nature of Operations :
 
 Adhunik Metaliks Ltd. having manufacturing facility at Sundargarh
 District, Rourkela, Orissa is primarily engaged in the manufacture and
 sale of steel both alloy & non alloy.
 
 (Rs. in Lakhs)                           31.03.2009     31.03.2008
 
 2 Estimated amount of contracts 
 remaining to be executed on capital
 account and not provided for 
 (Net of advances).                         6,336.78      5,966.07
 
 3 Contingent Liabilities not provided 
 for in respect of:
 
 a) Claims & Government demands against the Company not acknowledged as
 debt
 
 Excise                                        38.71         34.70
 
 Sales Tax                                    511.24        412.00
 
 Income Tax                                    61.95         44.05
 
 The Company does not expect any major impact to arise out of the above
 claims/demands Against the above claims/demand, payments have been made
 under protest to the extent of Rs.172.98 lakhs
 
 b) Outstanding Bank Guarantees 1,280.83 1,332.05
 
 c) Corporate guarantee issued to Bank on behalf of Adhunik Infotech
 Ltd., a Company under the same management – 200.00
 
 d) Regional PF Commissioner, Rourkela has initiated proceedings u/s 7
 of Employees Provident Fund & Miscellaneous Provisions Act, 1952,
 against the management of the Company for determination and recovery of
 PF contribution from the employer in respect of contractors
 establishment since F.Y 2003-04 to February 2008. An amount of Rs.
 29.57 Lakhs was demanded by the PF authorities on PF dues, Mar03 to
 Feb08 in respect of 24 Contractors which has been paid by the Company
 in May 2009 and adjusted against the retention money of the respective
 Contractors. As no demand has been raised by the PF authorities for
 penalty and/or charges for damage u/s 7(q) and 14 (b) of PF Act which
 remains not quantified hence no provision has been made in the books.
 Further, management intends to recover from the contractors any demand
 made by the PF authorities in this regard in future.
 
 4 a) The Rupee Term Loans from banks are secured by way of equitable
 mortgage by deposit of title deeds of the Companys immovable
 properties both owned and leasehold and building at Chadrihariharpur
 Kuarmunda, Sundargarh, Orissa and a first charge by way of
 hypothecation of the Companys moveable assets (save and except book
 debts) including machinery, machinery spares, tools and accessories,
 present and future subject to prior charges created and/or to be
 created in favour of the Companys bankers for securing working capital
 facilities.
 
 b) The working capital facility from banks are secured by first charge
 by way of hypothecation of consumable stores, raw materials, finished
 goods, process stock, book debts (both present and future).
 
 The charge referred to in 5(a) & (b) above rank pari passu amongst
 various banks.
 
 c) Both Rupee Term Loan and working capital facility from banks (as
 specified in 5 (a) & (b) above) are further secured by personal
 guarantee of the promoter directors of the Company.
 
 d) Finance against equipments/vehicles are secured by hypothecation of
 the respective equipments/vehicles.
 
 e) Term loan & Equipment/Vehicle Finance loan aggregating to Rs.
 9006.76 lakhs (Rs. 8708.22 lakhs) are payable within one year.
 
 f) Short term loan from Banks are secured by personal guarantees of the
 promoter Directors of the Company.
 
 5 The Sinter Plant, AOD & Bloom Caster, Railway Siding, Lime Calination
 Plant & Producer Gas Plant, Oxygen Plant, Centralised Raw Material
 Handling System, Power Distribution System and Ferro Alloy Plant,
 having achieved the technical parameters of operation and stabilization
 of production efficiency, have commenced commercial operations.
 Accordingly, assets of Rs. 37821.17 lakhs (including proportionate
 allocation of preoperative and trial run expenditure of Rs.13191.26
 lakhs) have been capitalised during the year.
 
 a) In terms of Section 115JB of the Income Tax Act, 1961, Minimum
 Alternate Tax (MAT) amounting to Rs.383.73 lakhs for the year ended
 31st March, 2009 have been provided in the accounts. Further, in terms
 of accounting policy 2(XVI)(c) above and because of the fact that the
 Company is not likely to have taxable income in the relevant period,
 MAT credit of Rs. 646.03 lakhs (Rs. 262.30 lakhs) has not been
 recognised in the books of accounts.
 
 b) The Honble Kolkata High Court vide its Dictated Order dated May 7,
 2007 has allowed the Company to utilise the Securities Premium Account
 shown under the head Reserve and Surplus towards meeting the Net
 Deferred Tax liability computed as per the Accounting Standard on
 Accounting for Taxes on Income (AS-22) prescribed by the Institute of
 Chartered Accountants of India. Accordingly, the Securities Premium
 Account has been utilized towards
 
 6 Derivative Instruments and Unhedged Foreign Currency Exposure as on
 the Balance Sheet date are as under :
 
 a) Forward Contract
 
 USD 1,25,00,000 (USD 1,56,00,000) has been used for hedging exposure to
 interest outflow on loans.
 
 b) Unhedged foreign Currency Exposure:
 
 Sundry creditors amounting to Rs. 57.12 lakhs (Rs. 11033.80 lakhs).
 
 7 Raw Materials and Stores consumption is after adjustment of Profit /
 Loss on sales thereof.
 
 8 Based on breakup value as per the audited accounts for the year
 March 31, 2009 there is a shortfall of Rs. 97.72 lakhs (Rs.108.76
 Lakhs) in the value of unquoted investment in the subsidiary Neepaz V
 Forge (India) Limited as on the balance sheet date, which having regard
 to the long term investment of the Company and being temporary in
 nature has not been provided for.
 
 9 a) Store & Spares amounting to Rs.802.40 lakhs (Rs. 772.60 lakhs)
 are included under other heads in the Profit & Loss Account.  b)
 Salaries & Wages relating to repairs have not been segregated but are
 charged to the relevant account heads.
 
 10 Excise duty on sales amounting to Rs. 11774.79 Lakhs (Rs. 9945.47)
 Lakhs has been reduced from sales in Profit and Loss Account and excise
 duty on stocks amounting to Rs. -127.07 Lakhs (Rs. 400.43 Lakhs)
 represents differential excise duty on opening & closing stock of
 finished goods.
 
 11 As per the shareholders approved Scheme of Amalgamation of the
 Company, Vedvyas Ispat Limited and Sri M.P. Ispat & Power Private
 Limited will be amalgamated to Adhunik Metaliks Limited with effect
 from the appointed date i.e April 1, 2008. The said draft Scheme for
 Amalgamation is subject to and conditional upon the sanction of the
 Honble High Courts of Orissa and West Bengal pursuant to Section to
 391 & 394 of the Companies Act, 1956 and the scheme though operative
 from the appointed date shall come into effect on the effective date
 being the date or last of the dates on which certified copies of the
 orders sanctioning the scheme are filed by the Company with the
 Registrar of Companies. Pending approval of the scheme by the High
 Courts the amalgamation has not been given effect into the books of
 accounts.
 
 12 The Company has during the year made/received payments (Rs. 9717.56
 lakhs paid and Rs. 8652.55 lakhs received back) to /from a party with
 common directors on behalf of and as per the direction of non-related
 party. The Company holds a legal opinion to the effect that the
 aforesaid payments/receipts being at the behest/instance of an
 unrelated third party and for the benefit of such party, are not to be
 construed as a payment to a body corporate covered under Section 295 of
 the Companies Act, 1956.
 
 13 During the year the Company has entered into transaction of purchase
 of goods aggregating to Rs. 2268.19 Lakhs with Private Limited
 Companies [(Rs. 1537.55 lakhs with Sri M.P. Ispat & Power Private
 Limited, scheme of amalgamation pending approval of High Court), (Rs.
 653.52 lakhs with Orissa Manganese & Minerals Limited, a 100%
 subsidiary) (Rs. 77.12 lakhs with Unistar Galvanisers & Fabricators
 Private Limited, a subsidiary Company)] in which directors of the
 Company are interested as directors. The Company has not obtained prior
 approval as required from Central Government of India under section 297
 of the Companies Act, 1956, for entering into such transactions.
 
 14 a) During the year, the Company has received Rs.1201 lakhs (Rs.
 1311.01 lakhs) against preferential allotment of 11110249 nos. of Zero
 Coupon Convertible Warrants (to be converted into shares at par within
 a period of 18 months) issued and allotted in the year 2007-08 at Rs.
 118/- each to parties and companies covered under the Register
 maintained u/s 301 of the Companies Act, 1956.
 
 15 Segment Information
 
 a) The Companys business activity primarily falls within a single
 business segment i.e Iron & steel business and hence there are no
 additional disclosures to be made under Accounting Standard-17, other
 than those already provided in the financial statements.
 
 16 Previous years figures (including those which are in brackets) have
 been regrouped / rearranged wherever necessary.