Nava Bharat Ventures

1. Disclosure of Sundry Creditors under Current Liabilities is based on
 the information available with the Company regarding the status of the
 suppliers as defined under the Micro, Small and Medium Enterprises
 Development Act, 2006 and relied upon by the Auditors. During the year
 the Company has paid no interest in terms of Section 16 of the said
 Act.
 
 2. a) During the year the Company has bought back 17,79,904 Equity
 Shares of Rs. 2/- each at an average price of Rs. 119.20 per share and
 accordingly i) The face value of shares has been reduced from the paid
 up Equity Share Capital.
 
 ii) The balance of Rs. 117.20 paid on these shares aggregating to Rs.
 2,086.10 lakhs has been adjusted against General Reserve.
 
 iii) As required under the provisions of the Companies Act 1956, Rs.
 35.60 lakhs has been transferred to Capital Redemption Reserve from
 current year Surplus.
 
 b) Out of 7,61,25,324 (previous year 7,78,73,668) Equity Shares of Rs.
 2/- each fully paid-up of the Company:
 
 i) 1,41,67,095 shares were allotted as fully paid-up pursuant to
 schemes of amalgamation without receiving the payment in cash.
 
 ii) 1,21,37,095 shares are allotted as fully paid-up by way of bonus
 shares by capitalising Reserves.
 
 iii) Pursuant to the order of Honble High Court of Andhra Pradesh
 dated 30.12.1996 in the Scheme of amalgamation of Nav Chrome Limited
 with the Company, 49,74,510 equity shares of Rs. 2/- each fully paid up
 owned by the company are vested in a Trustee for the benefit of the
 Company which are to be sold and net sale proceeds are to be paid to
 the Company and such shares are not considered for dividend.
 
 iv) During the year, the Company has allotted 31,560 (Previous Year
 1,09,890) Equity Shares of Rs. 2/- each at a premium of Rs. 111.15
 (including the difference between the fair value and the exercise
 price) per share on exercise of 31,560 (Previous Year 1,09,890)
 Employees Stock options.
 
 Consequent to the above allotment and buy back of Shares during the
 year, the paid up Equity Share Capital of the Company stands decreased
 from Rs. 1,557.47 lakhs to Rs. 1,522.51 lakhs and the Securities
 Premium stands increased from Rs. 13,697.41 lakhs to Rs. 13,732.49
 lakhs.
 
 c) i) The Company has granted 6,00,000 stock options under the
 Companys Employees Stock Option Scheme 2006 (ESOS) during the year
 ended March 31, 2007 to be converted into 6,00,000 Equity Shares at a
 premium of Rs. 88.52 per share and stock options outstanding as at
 March 31, 2009 are 3,96,500. During the year 31,560 (Previous Year
 1,09,890) options were exercised and 53,750 (Previous Ye a r 8,300)
 options were cancelled.
 
 ii) The Company has issued and allotted 32,00,000 convertible warrants
 on 8th June, 2006 on preferential basis at a price of Rs. 95/- per
 warrant which enable the warrant holders to convert each warrant into
 one Equity Share of the face value of Rs. 2/- at a price of Rs. 95/-
 (including premium of Rs. 93/-) on or before the expiry of 18 months
 from the date of allotment of warrants. Out of which 9,12,000 warrants
 were converted during the year 2006-07 and the balance 22,88,000 were
 converted into Equity Shares during the pervious year.
 
 3. a) During the year 2006-07, the Company has issued Zero Coupon
 Foreign Currency Convertible Bonds for an amount of JPY 6.00 billion at
 par. These bonds are convertible into Equity Shares with a fixed rate
 of exchange of Rs. 0.3976 per 1 JPY at an initial conversion price of
 Rs. 136.50 per Share at the option of bondholders at any time on or
 after October 14, 2006 and on or before the close of business hours
 (i.e. 5.00 P.M.) on August 31, 2011. The Company also has an option to
 convert all these bonds on or after September 29, 2009 and prior to
 September 30, 2011 at the then prevailing conversion price as per the
 terms of issue. Out of the above 2.48 billion Bonds were converted
 during the year 2007-08 and if all the remaining bonds are converted
 into Equity Shares, the paid up Equity Share Capital of the Company
 will increase by 97,00,620 Equity Shares of Rs. 2/- each. If no such
 conversion takes place, the Bonds are redeemable on September 30, 2011
 at a redemption premium of 25.96% so as to give the bondholders gross
 yield to maturity of 4.67% per annum compounded semi-annually.
 
 c) As the variables are indeterminate at present, the premium on actual
 redemption is not computable and hence will be recognised, as and when
 the redemption option is exercised, as a charge to the Securities
 Premium Account in terms of Section 78(2)(d) of the Companies Act,1956.
 
 4.  Fixed Deposit Receipts for Rs. 429.34 lakhs (Previous year Rs.
 338.74 lakhs) are in lien with Bankers towards Margin Money for Bank
 Guarantees and Letters of Credit issued by them.
 
 5.  a) The Company’s land of about 5.08 acres was given possession to
 Hyderabad Vanaspathi Limited. The sale price of the same is yet to be
 adjusted pending permission from the Government of Andhra Pradesh.
 
 b) Land costing Rs. 1.23 lakhs (previous year Rs. 1.23 lakhs)
 admeasuring 6 acres and 23 guntas (previous year 6 acres 23 guntas) is
 not in the name of the Company.
 
 c) Cost of leasehold land amounting to Rs. 113.07 lakhs shown under the
 head Fixed Assets represents the premium paid to the State Government
 of Orissa for alienation of 42.22 acres in favour of the Company by
 virtue of lease deeds for 99 years and the said land can be resumed by
 the said Government by giving 6 months notice in writing during the
 tenure of lease.
 
 6. As required by Accounting Standard (AS 28) Impairment of Assets,
 the management has carried out the assessment of impairment of assets
 and no impairment loss has been recognised during the year other than
 the assets discarded/dismantled and written off to Profit and Loss
 Account.
 
 c) 6 year National Savings Certificates of the face value of Rs. 3.01
 lakhs (Previous year Rs. 1.41 lakhs) shown under the investments are in
 the names of employees of the Company and the certificates in respect
 of face value of Rs. 2.79 lakhs (Previous year Rs. 1.19 lakhs) were
 pledged with various Government Departments as security.
 
 7. a) In the opinion of the management, the Current Assets, Loans and
 Advances are expected to realise at least the amount at which they are
 stated, if realised in the ordinary course of business and provision
 for all known liabilities have been adequately made in the accounts.
 
 b) Sundry Debtors due for less than six months amounting to Rs. 9392.34
 lakhs (Previous year Rs. 8412.44 lakhs) include Rs. 2292.76 lakhs
 (Previous year Rs. 6145.47 lakhs) due from a foreign subsidiary Company
 viz., M/s.Nava Bharat (Singapore) Pte. Ltd, Singapore.
 
 c) Loans to Other Bodies Corporate amounting to Rs. 6061.08 lakhs
 represents the loan given to Nava Bharat (Singapore) Pte. Limited, a
 foreign subsidiary Company.
 
 8. The Company uses derivative financial instruments such as forward
 contracts and currency swap to hedge currency exposures, present and
 anticipated, denominated mostly in US Dollars and Japanese Yen and all
 financial and derivative contracts entered into by the Company are for
 hedging purpose only.
 
 9. a) Working Capital Loans from Banks are secured by hypothecation of
 raw materials, Work-in- Progress, finished goods, stores and spares and
 book debts to the extent of Rs. 17,000 lakhs and a second charge on
 fixed assets of the Company.
 
 b) The Term Loans from Industrial Development Bank of India Limited,
 Infrastructure Development Finance Company Limited, Andhra Bank, State
 Bank of India, BNP Paribas, HDFC Bank Limited, The South Indian Bank
 Limited, Bank of India, State Bank of Hyderabad and UCO Bank are
 secured by First Charge by way of equitable mortgage by deposit of
 title deeds to cover all immovable properties of the Company and
 hypothecation of all movable properties including movable Plant and
 Machinery, spares, tools and accessories, both present and future and a
 second charge by way of hypothecation of all movable properties both
 present and future (except book debts) subject to prior charges
 created/to be created in favour of Companys bankers on its stocks of
 raw materials, semi-finished and finished goods, consumable stores for
 securing borrowings for working capital requirements. The
 mortgage/charges created above shall rank pari-passu with the charges
 created/to be created in favour of other Financial Institutions/Banks.
 
 c) The Term Loan availed during the year from Andhra Bank amounting to
 Rs. 6,000.00 lakhs out of the sanction of Rs. 20,000 lakhs for funding
 to a foreign subsidiary Company, i.e. Nava Bharat (Singapore) Pte Ltd
 is also further secured by pledge of 30% of shares held by Company in
 the said subsidiary and hypothecation of mineral and mining rights of
 subsidiary.
 
 d) The above said loans are also guaranteed by some of the directors of
 the Company in their personal capacity.
 
 10. Contingent liabilities not provided for on account of:.  
                                                     (Rs. in lakhs)
                                    As at 31.3.2009  As at 31.3.2008
 
 a)  Guarantees given by the Bankers      1,007.09        305.00
 b)  Guarantees given by the Company        732.70        732.70
 c)  Guarantees given by the Company 
 on behalf of others                         10.40         10.40
 d)  Claims against the Company not 
 acknowledged as debts                      727.59        736.14
 
 e) Demand raised by A. P. State Electricity Board (reconstituted as
 Transmission Corporation of Andhra Pradesh Ltd) towards additional
 charges on power tariff difference between HT I and HT III categories
 and surcharge on belated payments
 disputed by the Company, pending in appeal 
 with High Court of A.P.                   136.45         136.45
 
 f) Interest on dues to A. P. State Electricity Board (reconstituted as
 Transmission
 Corporation of Andhra Pradesh Ltd).        62.35          62.35
 
 g) Demand from Income-tax department disputed and pending in appeals
                                         1,377.71         936.90
 
 11. Showcause notices received from Central Excise Department to issue
 demand notices for an amount of Rs. 5,374.89 lakhs are pending for
 final consideration and the Company has already submitted its
 objections in writing against the said demands.
 
 12. The amount of contracts remaining to be executed on capital account
 and not provided for are estimated at Rs. 385.75 lakhs (previous year
 Rs. 4668.76 lakhs).
 
 13. Excise Duty included in Rates and Taxes and debited to Profit and
 Loss Account represents the aggregate of Excise Duty borne by the
 Company and the difference between Excise Duty on opening and closing
 stock of finished/saleable goods.
 
 14. Previous year figures have been re-grouped wherever necessary to
 make them comparable with those of current year.