1.1.1 The Company has only one class of shares referred to as equity
shares having a par value of Re 1/-. Each holder of equity shares is
entitled to one vote per share. In the event of liquidation, the equity
shareholders are eligible to receive the remaining assets of the
company, after distribution of all preferential amount, in proportion
of their shareholding.
1.1.2 The dividend proposed by the Board of Directors is subject to the
approval of the shareholders in the ensuing Annual General Meeting.
1.1.3 During the year ended 31 March 2012, the amount of per share
dividend recognized as distribution to equity shareholders was Re. 0.50
1.2.1 The Company through Qualified Institutional Placements had issued
33568312 warrants at a price of Rs. 3 each, entitling the holder to 1
(one) equity share. As per terms and conditions of the issue, the
warrant holders have an option to convert, warrant into equity at any
time on or after three years from the date of allotment (i.e.
08/02/2010) and upto five years from the date of allotment (i.e.
08/02/2010) at exercise price of Rs. 59.58 per share. The warrant issue
price aggregating to Rs. 1,007.05 lakhs, being non adjustable/non
refundable has been credited to Capital Reserve.
1.2.2 Premium on Zero Coupon Convertible Bond has been provided
proportionately and accordingly Rs. 519.88 lakhs (out of total
redemption premium amounting to Rs. 3,563.48 lakhs) (previous year Rs.
611.29 lakhs, out of total redemption premium amounting to Rs. 3,137.73
lakhs) on this account has been debited to Securities Premium Account.
1.3.1 11.80% Non Convertible Debentures (privately placed) are secured
by first pari-passu charge on company''s fixed assets (immovable and
movable) including land and buildings both present and future other
than assets located at Chennai and Elavur. However the Company
exercised the put option during the year and re-paid the outstanding
1.3.2 9.15% Non Convertible Debentures (privately placed) are secured
by second pari-passu charge on company''s fixed assets (immovable and
movable) including land and buildings both present and future other
than assets located at Chennai and Elavur. These debentures were
allotted on 8th February, 2010 and redeemable at par on 8th February,
220.127.116.11 Term loan from a financial institution are secured by way of
first pari-passu charge over the movable fixed assets, lands and other
immovable properties of the Company both present and future other than
assets located at Chennai and Elavur.
18.104.22.168 Term loan of Rs. 1,50,00 lakhs is repayable in 16 quarterly
equal Installments of Rs. 9,37.50 lakhs from 14th August 2010 and term
loan of Rs. 1,00,00 lakhs is repayable in 17 quarterly equal
installments of Rs. 5,88.23 lakhs from 30th December 2011. The interest
rate ranges from 10% to 12%.
22.214.171.124 External Commercial Borrowing of Rs. 3,94,24.25 lakhs is
secured by way of first pari-passu charge on all immovable and movable
Fixed Assets, both present and future of the Company other than assets
located at Chennai and Elavur, and External Commercial Borrowing of Rs.
3,51,00.30 lakhs is to be secured by way of first pari-passu charge on
all immovable and movable Fixed Assets, both present and future of the
Company other than assets located at Chennai and Elavur.
126.96.36.199 External Commercial Borrowings of Rs. 3,94,24.25 lakhs is
repayable in 3 annual installments of 33.25% in July''2013, 33.25% in
July''2014 & 33.50% in July''2015 and external commercial borrowings of
Rs. 3,51,00.30 lakhs is repayable in 12 Semi annual installments from
29th August''2015. The interest rate ranges from 6M Libor 200 to 500
1.4.1 Working Capital facilities from Banks (both fund based and non
fund based) are secured by pari passu charge by way of joint
hypothecation of inventories and book debts, both present and future.
1.5.1 Including acceptances of Rs. 1,05,62.71 lakhs (previous year Rs.
1.5.2 Disclosure of Trade payables is based on the information
available with the company regarding the status of the suppliers as
defined under the Micro, Small and Medium Enterprise Development
Act, 2006 (the Act). There are no delays in payment made to such
suppliers and there is no overdue amount outstanding as at the balance
sheet date. Based on above the relevant disclosures u/s 22 of the Act
are as follows :
1.6.1 Other provisions include (a) provision relating to indirect
taxes in respect of proceedings of various excise duty matters -
carrying amount at the end of the year Rs. 5,00.00 lakhs and carrying
amount at the beginning of the year Rs. 5,00.00 lakhs. No amount was
used and reversed during the year. Outflows in these cases would depend
on the final developments/outcomes; (b) Other class of provisions
related to disputed customer claims/rebates/demands - carrying amount
at the end of the year Rs. nil and at the beginning of the year Rs.
28,40.00 lakhs. Amount reversed during the year was Rs. 28,40.00 lakhs.
1.7.1. Plant and Equipments indudes Rs.8,03.021akhs (Previous year
Rs.3,40.87 lakhs) being contribution for laying the Power line, the
ownership of which does not vest with the company
1.7.2 Depreciation and amortization for the year includes Rs.11,90.62
lakhs (Previous year Rs. 10,92.69 lakhs) transferred to Pre-operative
1.7.3 Leasehold Land of Rs.2,04.00 lakhs( Previous Year Rs.2,04.00
lakhs) is pending execution of lease agreement and registration
1.7.4 Freehold land includes Rs. 1,31.39 lakhs (Previous year
Rs.2,05.97 lakhs) in respect of which the execution of conveyance deeds
is under process.
1.7.5 Plant and Equipments includes Rs. 24,98.72 lakhs (Previous year
Rs. 24,98.72 lakhs) being cost of wagons procured under Wagon
1.7.6 Other adjustment(net) includes Rs. 4,74.39 lakhs(Previous Year
17.70 lakhs) being interest capitalised during the year, Rs. 359.41
lakhs(Previous Year nil) representing foreign exchange fluctuation.
1.7.7. Railway siding includes Rs. 40,35.96 lakhs (Previous year Rs.
nil) being amount incurred for construction, the ownership of which
does not vest with the company
1.7.8 Land with factory buildings (net block Rs. 61.02 lakhs) at
Elavur plant of the Company are mortgaged in the favour of lender to
Electrosteel Steel limited, an associate of the Company
1.7.9 Refer note 2.3 and 2.7
1.8.1 500000000 Equity shares of Rs 10/- each fully paid up of
Electrosteel Steels Ltd. aggregating Rs. 5,00,00.00 lakhs held by the
Company as Investment have been pledged in favour of Electrosteel
Steels Ltd. lenders for securing financial assistance to Electrosteel
1.8.2 The Company has investment in equity shares of Domco Private
Limited (DPL), a Company incorporated in India, and has joint control
(proportion of ownership interest of the Company being 50%) over DPL
along with other venturers (the Venturers). The Venturers had filed a
petition before the Company Law Board, Principal Bench, New Delhi (CLB)
against the Company on various matters including for forfeiture of the
Company''s investment in equity shares of the DPL. The Company had
inter alia filed petition before the Hon''ble High Court of Jharkhand
at Ranchi,. The Hon''ble High Court of Jharkhand at Ranchi upheld the
Company''s appeal and decided that the matter would have to be
referred for Arbitration. The Venturer has challenged the aforesaid
judgment in the Divisional Bench of the Hon''ble High Court of
Jharkhand at Ranchi. Pending final outcome of the matter and since, the
other Venturer are not providing the financial statements of DPL,
disclosures as regards contingent liability and capital commitments, if
any, aggregate amounts of each of the assets, liabilities, income and
expenses related to the Company''s interest in DPL has not been made
in these financial statements.
1.8.3 The Company''s investment in Electrosteel Steels Limited being
strategic and long term in nature, no provision has been considered
necessary with regard to diminution in market value of these
1.9.1 Quoted Investments for which quotations are not available have
been included in the market value at the face value/paid up value,
whichever is lower except in case of debenture, bonds and government
securities where the net present value at current yield to maturity
have been considered.
1.10.1 Includes loans and advances to employees.
1.10.2 Includes Rs. 2,34.59 lakhs (previous year Rs. 60.98 lakhs) paid
towards share application money.
1.10.3 In the opinion of the Board of Directors, current assets and
loans and advances have the value at which these are stated in the
Balance Sheet, unless otherwise stated and adequate provisions for all
known liabilities have been made and are not in excess of the amount
1.10.4 Security deposits include Rs. 5,57.50 lakhs (previous year Rs.
5,57.50 lakhs) with Private Limited Companies in which directors are
interested as a member / director.
1.11.1 Balances of Trade receivables including for Turnkey Contracts,
Work-in-progress, Creditors and advances are subject to
confirmation/reconciliation and adjustments in this respect are carried
out as and when amounts thereof, if any are ascertained.
1.12.1 Fixed Deposits with Banks include Fixed Deposit of Rs. 4,96.70
lakhs (previous year Rs. 4,08.28 lakhs) lodged with Government
Departments, Customers and Banks.
1.13.1 Includes Rs. 9,97.93 lakhs (previous year Rs. nil) receivable
from banks on account of derivative settlement.
1.14.1 Miscellaneous expenses include Charity and Donation of Rs. 15.78
lakhs (previous year Rs. 63.97 lakhs), Rs. nil (previous year Rs.
3,00.00 lakhs) towards relocation of certain assets of Elavur unit.
1.14.2 The Marked-to-Market losses on derivative contract for the year
stood at Rs. 68,61.35 lakhs (previous year Rs. 18.26 lakhs). Even
though such losses have not been determined and accrued during the
year, keeping in view the announcement of Institute of Chartered
Accountants of India dated March 29, 2008 regarding Accounting for
Derivatives, the Company has recognized losses in the Statement of
Profit and Loss for the year.
1.14.3 The Company has certain operating lease arrangements for office
accommodations etc. with tenure extending upto 9 yrs. Term of certain
lease arrangements include escalation clause for rent on expiry of 36
months from the commencement date of such lease and deposit / refund of
security deposit etc. Expenditure incurred on account of rent during
the year and recognized in the Statement of Profit and Loss amounts to
Rs. 5,61.03 lakhs (previous year Rs. 5,15.86 lakhs).
1.14.4 During the year, the Company has incurred Rs. 91.44 lakhs
(previous year Rs 83.26 lakhs) on account of research and development
expenses which has been charged to Statement of Profit and Loss.
1.15.1 The Company has provided for Minimum Alternate Tax (MAT). The
Company is entitled to MAT credit and accordingly based on evidences
MAT credit of Rs. 7,00.21 lakhs (previous year Rs. Nil) has been
recognised in this financial statements.
Defined Benefit Scheme
The employee''s gratuity fund scheme managed by Life Insurance
Corporation of India and ICICI Prudential Life Insurance Company Ltd.
is a defined benefit plan. The present value of obligation is
determined based on actuarial valuation using the Projected Unit Credit
Method, which recognizes each period of service as giving rise to
additional unit of employee benefit entitlement and measures each unit
separately to build up the final obligation.
i) Assumptions relating to future salary increases, attrition, interest
rate for discount & overall expected rate of return on Assets have been
considered based on relevant economic factors such as inflation, market
growth & other factors applicable to the period over which the
obligation is expected to be settled.
ii) The Company expects to contribute Rs 1,30.00 lakhs (previous year
Rs 1,00.00 lakhs) to Gratuity fund in 2012-13.
1.16 The expenses incurred for projects/assets during the
construction/mine development period are classified as Pre-operative
Expenses pending capitalization and are included under capital work
in progress and will be allocated to the assets on completion of the
project/assets. Consequently expenses disclosed under the respective
head are net of amount classified as preoperative expenses by the
Company. The details of these expenses are as follows :
1.17 As regards construction contracts in progress as on 31.03.2012,
aggregate amount of costs incurred and recognised profit (less
recognized losses) upto the year end (to the extent ascertained by the
management), aggregate amount of advances received and aggregate amount
of retentions are Rs. 1,79,61.59 lakhs, Rs. 5,96.34 lakhs and Rs.
10,10.09 lakhs respectively. (previous year Rs. 2,87,81.12 lakhs, Rs.
8,23.69 lakhs and Rs.7,90.41 lakhs respectively).
i) The Company has disputed downward revision in the prices effected by
the purchaser subsequent to sale of certain specified materials. In the
opinion of the management and also on the merit of the case, as advised
legally no liability is likely to arise. The matter is subjudice and
pending final judgement the amount payable, if any is not ascertainable
Note : Future cash outflows, if any, in respect of (a) to (d), and (i)
above is dependent upon the outcome ofjudgments / decisions.
1.18 Related party disclosure as identified by the management in
accordance with the Accounting Standard (AS) 18 on Related Party
Disclosures are as follows :
A) Names of related parties and description of relationship
1) Subsidiary Company Electrosteel Europe SA
Electrosteel Algeria SPA
Electrosteel Castings (UK) Limited
Electrosteel USA LLC
WaterFab, LLC (100% subsidiary of Electrosteel USA, LLC)
Mahadev Vyapaar Private Limted
Electrosteel Trading S.A, Spain Singardo International Pte Ltd.
2) Associate Company Lanco Industries Ltd.
Electrosteel Steels Limited (Formerly Electrosteel Integrated Limited)
Electrosteel Thermal Power Ltd.
3) Joint Venture North Dhadhu Mining Company Pvt. Ltd.
Domco Private Limited
4) (a) Key Management
Mr. Umang Kejriwal (Managing Director)
Mr. Mayank Kejriwal (Joint Managing Director )
Mr. Uddhav Kejriwal (Wholetime Director)
Mr. Vyas Mitre Ralli (Wholetime Director)
Mr. Mahendra Kumar Jalan (Wholetime Director)
Mr. Rama Shankar Singh (Wholetime Director)
Mr. S Y Rajagopalan (Director)
4) (b) Relatives of Key Management
Smt. Uma Kejriwal-mother of Mr. Umang Kejriwal-Managing Director Mr. S.
Y Ganapathy - brother of Mr. S Y Rajagopalan, Director Umang
5) Enterprise where KMP/Relatives of KMP have signifinant influnce or
Global Exports Ltd.
G. K. & Sons Private Limited
Badrinath Industries Ltd.
Akshay Ispat & Ferro Alloys Pvt. Ltd.
Electrocast Sales India Ltd
Tulsi Highrise Pvt. Ltd.
Wilcox Merchants Pvt. Ltd.
Murari Investment & Trading Company Ltd.
Electrosteel Thermal Coal Ltd.
1.19.1 The Company has given Corporate Guarantee amounting to Rs.
2,50,00.00 lakhs on behalf of Electrosteel Steels Limited. Out of the
aforesaid amount, Electrosteel Steels Limited has drawn Rs. 1,38,00.00
1.20 The company operates mainly in one business segment viz Pipes
being primary segment and all other activities revolve around the main
activity. The secondary segment is geographical, information related to
which is given as under :
1.21 The Ministry of Corporate Affairs (MCA) has issued the amendment
dated 29th December 2011 to AS-11. The effect of changes in foreign
exchange rates, to allow companies deferral / capitalisation of
exchange differences arising on long term foreign currency monetary
items. In accordance with the amendment to AS-11, the Company has
capitalised / decapitalised exchange loss/gain respectively arising on
long term foreign currency loans, amounting to Rs. 69,51.67 lakhs
(previous year Rs. Nil) to Capital work in progress and Fixed assets.
The Company does not have any other long term foreign currency monetary
items. Hence, the amount of exchange loss deferred in the Foreign
Currency Monetary Item Translation Difference Account is Rs. Nil
(previous year Rs. Nil).
1.21 Till the year ended March 31, 2011, the company was using
pre-revised Schedule VI to the Companies Act 1956, for the preparation
and presentation of its financial statements. During the year ended
March 31, 2012, the revised Schedule VI notified under the Companies
Act 1956, has become applicable to the company. The company has
reclassified previous year figures to conform to this year''s