Graphite India

1. a) Pursuant to the Scheme of Arrangement ( the Scheme ) approved by
 the shareholders and sanctioned by the Hon’ble High Court at Calcutta
 vide Order of 22nd May, 2009, assets and liabilities of Powmex Steels
 Undertaking ( engaged in the business of manufacturing high speed steel
 and alloy steel) of GKW Limited (GKW) were transferred to and vested in
 the Company with effect from 1st February, 2009 (appointed date) and
 accordingly, the Scheme has been given effect to in these accounts.
 
 b) Pursuant to the Scheme, 19,888,336 Equity Shares of Rs.2/- each
 fully paid ranking pari-passu are to be issued to the Ordinary
 Shareholders of GKW in the ratio of one Equity Share of Rs.2/- each of
 the Company credited as fully paid up for every three Ordinary Shares
 of Rs.10/- each fully paid held by them in GKW. Pending allotment of
 the Equity Shares at the year end, these shares have been shown in
 Schedule 1 as “Share Capital Suspense Account”.
 
 c) In terms of the Scheme, assets and liabilities of Powmex Steels
 Undertaking of GKW have been incorporated in the books of the Company
 at their respective book values as at 31st January, 2009 based on a
 statement of accounts of the said Undertaking for the period ended 31st
 January, 2009 audited by a firm of chartered accountants.
 
 d) Pursuant to the Scheme, Rs.18294.67 Lakh being the difference
 between the assets and liabilities so incorporated in the books of the
 Company as reduced by the aggregate face value of the shares of the
 Company to be issued and allotted to the shareholders of GKW has been
 credited to General Reserve Account.
 
 e) Pursuant to the Scheme, a specified part of the total carried
 forward business losses and unabsorbed depreciation of GKW under the
 Income-tax Act, 1961 as on 31st January, 2009 shall stand apportioned
 to the Powmex Steels Undertaking and be carried forward in the hands of
 the Company in terms of the Income-tax Act, 1961.
 
 f) Pending completion of the relevant formalities of transfer of
 certain assets and liabilities acquired pursuant to the Scheme, such
 assets and liabilities remain included in the books of the Company
 under the name of GKW (including another company, erstwhile Powmex
 Steels Limited, which was amalgamated with GKW in earlier year).
 
 g) Equity Shares to be issued pursuant to the Scheme as indicated in
 Note 2(b) above has been appropriately considered for the purpose of
 proposed dividend and earnings per share for the year.
 
 2.  Provision for curent taxation represents Minimum Alternate Tax
 (MAT) in view of carry forward business losses / unabsorbed
 depreciation as referred in Note 2(e) above.
 
 Based on profit trend for last couple of years and future plan of the
 Company, and its share in the domestic and global market, the
 management is confident of generating sufficient taxable income within
 the next few years against which the deferred tax assets of the Company
 (Schedule 5) would be realised. Accordingly, it has been considered
 prudent to recognise in these accounts deferred tax assets of
 Rs.1451.96 Lakh on account of unabsorbed depreciation as at 31st March,
 2009.
 
 3.  The Company has entered during the year into a Power Delivery
 agreement with Wardha Power Company Limited (WPCL) for procurement of
 power for its manufacturing activity at the terms set out in the said
 agreement for twenty five years from the commencement of commercial
 operation of power plant (target dates for the purpose being July 2009
 for Phase I and December 2009 for Phase II or dates declared by WPCL,
 whichever is later) by WPCL. As per the terms of another related
 agreement with WPCL, the Company has invested/ advanced Rs.247.66 Lakh
 in the Class A Equity Shares [Rs.24.77 Lakh shown under Investments
 (Schedule 7) and Rs.222.89 Lakh shown under Loans and Advances
 (Schedule 12)] and Rs.312.34 Lakh in 0.01% Class A Redeemable
 Preference Shares (shown under Investments in Schedule 7) of WPCL
 during the year and are required to subscribe Rs.350 Lakh to Class C
 Redeemable Preference Shares of WPCL prior to commencement of
 commercial operation of the said Power Plant. The aforesaid shares
 are/shall be under lien with WPCL.
 
 Upon the expiry of Power Delivery agreement, Class A Equity Shares and
 Class A Redeemable Preference Shares will be bought back by WPCL for a
 total consideration of Re.1. One-tenth of Class C Redeemable Preference
 Shares will be redeemed on every anniversary from the date of issue at
 Re.0.01 per share.
 
 4.  a) Fixed Assets including Capital Work-In-Progress includes
 Pre-operative expenses: Salary, Wages and Bonus Rs.NIL (Previous year
 Rs.32.97 lakh), Insurance Rs.NIL (Previous year Rs.0.08 lakh), Contract
 Labour Charges Rs.3.41 lakh (Previous year Rs.0.02 lakh), Travelling
 and Conveyance Rs.NIL (Previous year Rs.1.53 lakh), Communication
 Expenses Rs.NIL (Previous year Rs.0.33 lakh), Rates and Taxes Rs.12.59
 lakh (Previous year Rs.0.03 lakh), Professional Charges Rs.46.81 lakh
 (Previous year Rs.15.24 lakh), Stores and Spares Parts Consumed
 Rs.16.28 lakh (Previous year Rs.Nil) and Miscellaneous Expenses Rs.0.11
 lakh (Previous year Rs.4.93 lakh).
 
 b) Auditors’ Remuneration (Schedule 17) does not include Service tax
 Rs.3.58 lakh (Previous year Rs.2.82 lakh) not routed through Profit and
 Loss Account.
 
 The above particulars, as applicable, have been given in respect of
 MSEs to the extent they could be identified on the basis of the
 information available with the Company and pursuant to amendment of
 Schedule VI to the Companies Act, 1956 (the Act) vide Notification
 dated 16th November, 2007 issued by the Central Government of India.
 
 d) The year-end balance of Rupee Term Loans from Banks (Schedule 3)
 include Rs. 3000 Lakh which was originally obtained from a bank and
 assigned subsequently in favour of a party by the said bank.
 
 5.  Contingent Liabilities not provided in respect of
 
                                                     (Rs.in Lakh)
                                           As at        As at
                                31st March, 2009     31st March, 2008
 
 I) Claims not acknowledged as debts
 
 i.  Disputed Income Tax demand for 
     which appeals are pending             -                 797.99
 ii. Disputed Excise Duty for which 
     appeals are pending                423.57                76.73
 iii. Disputed Customs Duty for 
      which appeals are pending         999.62               121.87
 iv.  Disputed Service Tax for which 
      appeals are pending               309.76                 2.95
 v.   Disputed Sales Tax for which 
      appeals are pending               455.95                35.19
 vi.  Disputed Entry Tax for which 
      appeals are pending               246.04                 - 
 vii. Others                            172.22               139.05
 
 II) Corporate Guarantees given to 
     banks to secure
     the financial assistance/
     accommodation extended to
     Subsidiary Companies              5,723.90             7891.25
 
 6.  Research and Development Expenditure of revenue nature of Rs.22.19
 Lakh (Previous year Rs.29.64 Lakh)
 
 7.  Employee Benefits
 
 (I) Post Employment Defined Benefit Plans
 
 Gratuity
 
 The Company provides for gratuity, a defined benefit retirement plan
 covering eligible employees. As per the scheme, the Gratuity Fund
 Trusts, administered and managed by the Life Insurance Corporation of
 India (LIC), makes payment to vested employees at retirement, death,
 incapacitation or termination of employment, of an amount based on the
 respective employees salary and the tenure of employment. Vesting
 occurs upon completion of five years of service. Liabilities with
 regard to the Gratuity Plan are determined by actuarial valuation as
 set out in Note 1(J)(b) above, based upon which, the Company makes
 contributions to the Employees’ Gratuity Funds.
 
 Provident Fund
 
 Certain employees of the Company receive benefits from provident fund,
 which is a defined benefit plan and administered by the Trusts set up
 by the Company. Aggregate contributions along with interest thereon are
 paid at retirement, death, incapacitation or termination of employment.
 Both the employees and the Company make monthly contributions at
 specified percentage of the employee’s salary to such Provident Fund
 Trusts. The Company has an obligation to fund any shortfall in return
 on plan assets over the interest rates prescribed by the authorities
 from time to time.
 
 A.  Primary Segment Reporting (by Business Segments) i) Composition of
 Business Segments
 
 The Companys operations predominantly related to the following
 segments:
 
 a) Graphite and Carbon Segment, engaged in the production of Graphite
 Electrodes, Anodes and other miscellaneous Carbon and Graphite
 Products,
 
 b) Power Segment engaged in generation of Power,
 
 c) Steel Segment engaged in production of High Speed Steel and Alloy
 Steel, and
 
 d) Other Segment, engaged in manufacturing of Impervious Graphite
 Equipment (IGE) and Glass Reinforced Pipes (GRP)
 
 ii) Inter Segment Transfer Pricing
 
 Inter Segment prices are normally negotiated amongst the segments with
 reference to the costs, market prices and business risks.
 
 8.  The Company has cancellable operating lease arrangements for
 certain accommodation with tenures of three years. Terms of such lease
 include option for renewal on mutual agreed terms. Operating lease
 rentals for the year debited to Profit and Loss Account amount to
 Rs.71.25 Lakh (Previous Year Rs.Nil).
 
 9.  Previous years figures have been regrouped or rearranged,
 wherever necessary and are not strictly comparable in view of the
 assets, liabilites and business of Powmex Steels Undertaking taken over
 pursuant to a sanctioned Scheme of Arrangement as referred to in Note 2
 in Schedule 31.