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Moneycontrol.com India | Notes to Account > Steel - Medium / Small > Notes to Account from Jindal Stainless - BSE: 532508, NSE: JSL
Jindal Stainless
BSE: 532508|NSE: JSL|ISIN: INE220G01021|SECTOR: Steel - Medium / Small
Apr 17, 17:00
0.9 (2.38%)
VOLUME 23,663
Apr 17, 17:00
1 (2.64%)
VOLUME 74,514
Mar 12
Notes to Accounts Year End : Mar '13
1.  Estimated amount of contracts remaining to be executed on capital
 account and not provided for (net of advances) is Rs. 2,082.96 Lacs
 (Rs. 5,725.73 Lacs).
 2.  Custom Duty saved on material consumed imported under advance
 license scheme as on 31st March, 2013 and 31st March, 2012 is Rs.
 266.66 Lacs and Rs. 34.29 Lacs respectively. The management is of the
 view that considering the past export performance, future prospects and
 going concern concept there is certainty that pending export obligation
 under advance licenses will be fulfilled before expiry of the
 respective licenses.
 3.  Exceptional items includes Gain/(Loss) (net) of (Rs. 12,484.53
 Lacs) {(Rs. 17,231.29 Lacs)} on translation/settlement of foreign
 currency monetary items (including borrowing), gain / (loss) of
 Rs.119.04 Lacs {Rs. 456.08 Lacs} upon marked to market of derivatives
 contracts, gain/(loss) of (Rs. 4,330.19 Lacs) {Rs. 1,045.24 Lacs} on
 forward cover cancelation, resulting from volatile global market
 4.  Appeals in respect of certain assessments of Sales Tax / Income
 Tax are pending and additional tax liabilities/refunds, if any, are not
 determinable at this stage. Adjustments for the same will be made after
 the same are finally determined. In the opinion of management there
 will not be material liability on this account.
 5.  a) Addition/adjustment to Plant & Machinery / Capital
 Work-In-Progress includes Rs. 25,876.17 Lacs (Net Debit) (Rs. 41,153.60
 Lacs (Net Debit)) on account of foreign exchange fluctuation on
 Loan/Liability including fluctuation relating to forward cover.
 (Includes amount disclosed in Note No. 42 (c) below).
 b) Interest expenses includes pro-rata premium of Rs. 134.64 Lacs (Net
 Credit) {Rs. 41.99 Lacs (Net Credit)}
 6.  (A) Corporate Debt Restructuring
 i) The Company''s proposal in relation to re-work of its term debt
 obligations (Rework Scheme) under CDR mechanism has been approved
 by CDR EG through Rework Letter of Approval (Rework LOA) vide its
 letter dated September 18, 2012. The Rework Scheme inter-alia includes
 reworking of repayment schedule, interest funding, adjustments in
 interest rates to ensure protection of net present value of the
 respective facilities, etc w.e.f. 31st March 2012 (Reworking Cut-off
 Date). Consequently, the amended & restated master restructuring
 agreement (Amended MRA) & other necessary documents have been
 executed with all the lenders, except one.
 ii) Under the Rework Scheme, the interest rates are shifted from fixed
 rate of interest to floating rate of interest. Interest has been
 accounted for based upon terms of Rework Scheme / confirmation so far
 received from banks.
 iii) The Funded Interest Term Loan (FITL-II) has been created on
 certain credit facilities. Accordingly, the value of debt service
 (including interest paid) post Reworking Cut-off Date amounting to Rs.
 906.61 Lacs (including refunds due of CDR 2009-10) to be refunded by
 banks/institutions is included under loans and advances.
 Further, subject to necessary applicable approvals including regulatory
 and CDR EG, each CDR Lender have the option to convert up to an amount
 equivalent to 30% of FITL- II (being created out of interest for the
 financial year 2012-13 in the Rework Scheme), into equity shares on
 certain terms and conditions.
 iv) As per the Rework Scheme, the company/promoters are to arrange
 equity of Rs. 200 crores out of which the promoters have already
 brought in Rs. 100 crores by way of preferential subscription and
 balance equity is to be introduced by 31st March, 2014.
 v) The credit facilities / loans under Rework Scheme will also be
 secured by:
 a.  Unconditional & irrevocable personal guarantee of VC & MD Mr. Ratan
 b.  Unconditional & irrevocable corporate guarantee of promoter group
 companies in proportion to the number and to the extent of equity
 shares pledged or required to be pledged by each body corporate;
 c.  Pari-passu pledge/ non disposal undertaking / lodgment of
 65,306,625 nos. of equity shares held in the company by promoters. The
 pledge to the extent of 87.7% in respect of additional equity shares
 allotted to, a member of the promoter group, on 30th March 2013; and
 d.  Under the Scheme, the company has created pari passu pledge and
 submitted non-disposal undertaking for all its investment in
 subsidiaries as listed below:
 - JSL Lifestyle Limited
 - JSL Logistics Limited
 - PT. Jindal Stainless Indonesia
 - Jindal Stainless UK Limited
 - JSL Stainless FZE
 - JSL Group Holdings Pte. Limited
 - JSL Architecture Limited
 - Jindal Stainless Madencilik Sanaye Ve Ticaret A.S.
 - Jindal Aceros Inoxidables S.L.
 - Iberjindal S.L.
 e.  Certain conditions, covenants and creation of security under the
 Rework Scheme are in process of compliance. Certain secured facilities
 (including FITL -II) are subject to bank confirmation and/or
 (B) Restructuring of ECB Facilities
 Besides reworking of its domestic term debt obligations as stated in
 note A above, the Company has also completed the restructuring of its
 debt obligations in relation to USD 250 million ECB facilities
 (outstanding of USD 225 million as on 31st March 2013) availed for the
 part financing of Odisha Phase II project and has executed requisite
 amendment agreements with all the ECB lenders on 29th March 2013. The
 revised terms inter-alia includes deferment of repayment schedule,
 increase in interest rates, etc.
 7.  (a) The company has filed Writ Petition (C) before the Hon''ble
 High Court of Odisha, challenging the order passed by the Dy
 Commissioner of Commercial Tax, Jajpur for the period from 01/10/2006
 to 30/09/2010, for payment of Entry Tax under the Odisha Entry Tax Act
 1999 on the goods procured from outside the territory of India. The
 demand is on 2/3rd amount of Entry Tax on the goods imported from
 outside the territory of India on which the payment of 1/3rd amount of
 entry tax deposited as per the interim order of the Hon''ble Supreme
 Court. Considering the prudence demand of entry tax have been fully
 provided for and pending final decision interest and penalty have been
 shown under note no. 27(d)(i) (Contingent Liability).The Hon''ble
 Court has heard the matter and vide its interim order dated 14.03.2012,
 directed the company to deposit 50% of the amount of interest i.e. Rs.
 1.08 crores by 25.03.2012 and granted stay for the balance amount of
 demand till disposal of the case. The company has deposited the amount
 within the permitted time and informed to the Hon''ble Court.
 (b) The Company had also challenged the levy of entry tax on goods not
 produced in Odisha and same is pending before decision of the Hon''ble
 Supreme Court. Considering the prudence full liability in this regards
 have been provided. Interest/ penalty if any, will be accounted for as
 and when finally settled/determined and the same is included in note
 no. 27(d)(i) (Contingent Liability).
 8.  Due from Grid Corporation of Odisha (Gridco) Limited is of Rs.
 9,268.43 Lacs. During the year the company have realized part of the
 overdue amount on receipt of the order of Odisha Electricity Regulatory
 Commission (OERC) in Case no. 106 of 2011 No. 4387 dated 17/11/2012.
 Delayed payment surcharge (Interest) on this have been accounted in
 terms of contractual obligation. The management is hopeful of recovery
 of balance amount from Gridco.
 9.  The company has tiled Writ Petition (C) before the Hon''ble High
 Court of Odisha, Cuttak challenging the order passed by the Jt
 Commissioner of Commercial Tax, Jajpur disallowing the issue of C Form
 for the procurement of plant and machinery for Captive Power Plant
 during the year 2005-06, 2006-07 & 2007-08. The Hon''ble Court heard
 the matter and passed interim order dated 14.03.2012, directing the
 company to deposit 25% out of total demanded amount of Rs. 3,305.92
 Lacs. The company has deposited an amount of Rs. 826.47 Lacs within the
 permitted time and informed the Hon''ble Court. Pending tinal
 decision, no provision in this respect has been made in the books and
 the same is included in note no. 27(d)(i) (Contingent Liability).
 10.  During the year, the company has received a notice from office of
 the Dy. Director of Mines, Jajpur Road Circle, Odisha (the Office)
 asking company to deposit Rs. 8,540.27 Lacs with the department on
 account of royalty on mining of excess quantity of Chrome Ore over and
 above the approved quantity of mining plan/scheme. The company has
 disputed and challenge the same as demand made by the Office is
 incorrect, unjustified, baseless and was without furnishing any
 supporting documents and/or providing any basis/reason for such demand.
 11.  (A) certain balances of debtors, trade payable and other
 liabilities are subject to confirmation and/or reconciliation.
 (B) Certain charges created for secured loans are in process of
 (C) Although the book value\ fair value of certain unquoted investments
 amounting to Rs.3,663.10 Lacs (Rs. 3,663.10 Lacs), as reflected in Note
 no 12, including investment in a foreign subsidiary is lower than the
 cost or companies are having negative net worth, considering the
 strategic and long term nature of the investment, future prospectus and
 assets base of the investee company, such decline, in the opinion of
 the management, has been considered to be of temporary nature and hence
 no provision for the same at this stage is considered necessary.
 The company has also given inter corporate deposit to its subsidiary
 companies amounting to Rs.3,243.15 Lacs (Rs. 4,639.70 Lacs) where the
 subsidiary companies has accumulated losses\negative net worth. In view
 of the long term involvement of the company (read with note (C) above)
 in the said companies no provision has been considered necessary.
 12.  (a) Advance recoverable in cash or in kind or for value to be
 received includes Interest free loan to employee amounting to Rs. 29.76
 Lacs (Rs. 35.62 Lacs) in the ordinary course of business and as per
 employee service rules of the company.
 Maximum balance outstanding during the year is Rs.37.53 Lacs (Rs. 61.85
 (b) Loan & Advances to subsidiaries includes Rs. 22.30 Lacs (Rs. 22.30
 Lacs) as advance against share application money with a subsidiary
 13.  Research and Development expenses for the year amounting to Rs.
 113.46 Lacs (Rs. 86.47 Lacs) on account of revenue expenditure
 charged/debited to respective heads of accounts.
 14. The Haryana Government levied w.e.f. 05.05.2000 a Local Area
 Development Tax (the LADT Act) on the Manufacturing units in the State
 of Haryana on the entry of goods for use and consumption. JSL and other
 units have challenged the Act in the Hon''ble Punjab and Haryana High
 Court. The Hon''ble Punjab and Haryana High Court disallowed the
 petition in December, 2001 and the company had by a Special Leave
 Petition challenged the Order of High Court in the Hon''ble Supreme
 Court. The Hon''ble Supreme Court referred the matter to a ''tive
 judges'' Constitutional Bench, which laid certain parameters to
 examine the Act on those lines. On the basis of these parameters the
 Hon''ble High Court have declared the Act to be ultra virus on 14th
 March, 2007. Since, this issue was being canvassed by various High
 Courts, the Hon''ble Supreme Court gave an Interim Order that those
 states where the High Courts have given judgment in favour of the
 petitioner, no tax would be collected. In the mean time the Haryana
 Government has repealed the LADT Act and introduced another Act by the
 name of ''Entry Tax'' on the same lines. That Act was also been held
 ultra virus by the High Court.  However, on prudence basis, the
 liability has been fully provided for. The order of Punjab and Haryana
 High Court and other judgements of all the Courts of India have been
 long pending. The State Governments have requested the Hon''ble
 Supreme Court that it is very difficult for them to run the Government.
 So at least till the pendency of the cases in the Hon''ble Supreme
 Court they may be allowed to charge from past liability and also from
 the future liability to be accrued. On 30th October, 2009, the
 Hon''ble Supreme Court have directed that 1/3rd of the liability is to
 be paid by all the assesses whose cases are pending in the High Courts.
 As, at present, there is no Act either LADT/Entry Tax prevalent in
 Haryana State, no tax is being collected from the assesses however
 undertaking have given by assesses that in case they lose they will
 make the payment. As such on prudence basis, full liability has been
 provided for. In the meantime, i.e. on 16.04.2010 the Entry Tax matters
 of the states have been referred to a larger 9-Judges Constitutional
 Bench of the Supreme Court, where the judgement of 7-Judges
 Constitutional Bench passed 49 years ago would be revisited.
 Constitution Bench has not been constituted as yet and the status of
 the case is as it is and at present no tax is being collected/paid in
 15.  On 28th July, 2010, the Company granted 35,77,500 stock options to
 eligible employees of the Company, its subsidiaries including non
 executive directors (excluding Nominee Director), as per Employees
 Stock Option Scheme, 2010 (ESOP 2010). The exercise price of stock
 options is Rs.75/- per share which would gradually vest over a maximum
 period of 4 years from the date of grant based on specified criteria,
 as may be decided by the Compensation Committee.
 16.  Finance Lease
 Assets acquired under leases where the company has substantially all
 the risks and rewards of ownership are classified as finance lease.
 Such assets are capitalized at inception of the lease at the lower of
 the fair value or net present value if minimum lease payments and a
 liability is created for an equivalent amount.
 17.  During the year, Company has issued and allotted 13,550,000 nos
 fully paid up equity shares of Rs. 2 each at Rs. 74 per share
 (including premium of Rs. 72 per share) on preferential basis in terms
 of approval taken from shareholders. Amount received of Rs. 100.27
 Crores have been fully utilized for the purpose the issue was made.
 18 Segment Reporting
 i) Information about Business Segment ( for the year 2012-13 )
 Company operates in a Single Primary Segment ( Business Segment ) i.e.
 Stainless Steel products.
 19 Related Party Transactions
 A List of Related Party & Relationship ( As identified by the
 a) Subsidiary Companies :
 1 PT. Jindal Stainless Indonesia
 2 Jindal Stainless Steelway Limited
 3 JSL Lifestyle Limited
 4 JSL Architecture Limited
 5 Jindal Stainless UK Limited
 6 Jindal Stainless FZE
 7 Green Delhi BQS Limited
 8 Jindal Stainless Madencilik Sanayi Ve Ticaret Anonim Sirketi
 9 JSL Media Limited
 10 Jindal Aceros Inoxidables S.L.
 11 JSL Group Holdings Pte. Limited
 12 JSL Logistics Limited
 13 Iberjindal S.L.
 14 Jindal Stainless Italy Srl.
 15 JSL Ventures Pte. Limited
 16 JSL Europe SA
 17 JSL Minerals & Metals SA
 b) Joint Ventures:
 1 MJSJ Coal Limited
 c) Key Management Personnel :
 1 Shri Ratan Jindal Vice Chairman & Managing Director
 2 Shri Ramesh R. Nair President & Executive Director (w.e.f.
 3 Shri Arvind Parakh Director - Finance (till 01.10.2011)
 4 Shri S.S. Virdi Executive Director & Chief Operating Officer
 5 Shri Jitender P. Verma Executive Director - Finance (w.e.f.
 6 Shri Jitendra Kumar Company Secretary
 d) Enterprises over which Key Management Personnel and their relatives
 exercise significant influence with whom transactions have been taken
 place during the year:
 1 Jindal Steel & Power Limited
 2 JSW Steel Limited
 3 Jindal Saw Limited
 4 Jindal Industries Limited
 5 Nalwa Steel & Power Limited
 6 Bir Plantation Private Limited
 7 Sona Bheel Tea Limited
 8 Jindal Overseas Holding Limited
 9 JSW Ispat Steel Limited
Source : Dion Global Solutions Limited
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