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Moneycontrol.com India | Notes to Account > Mining/Minerals > Notes to Account from Sesa Goa - BSE: 500295, NSE: SESAGOA

Sesa Goa

BSE: 500295  |  NSE: SESAGOA  |  ISIN: INE205A01025  |  Mining/Minerals

Explore Sesa Goa connections « Mar 08
Notes to Accounts Year End : Mar '09
1.  By Order dated 18th December, 2008 the Single Bench of the
 Honourable High Court of Bombay, at Goa, Panaji (Bombay High Court) had
 approved the Scheme of Amalgamation (the “Scheme”) of Sesa Industries
 Limited (SIL) with the Company effective from the appointed date i.e.
 1st April 2005. Consequent to an appeal filed by a shareholder the
 Order dated 18th December, 2008 was set aside by the Division Bench of
 the Bombay High Court vide order dated 21st February 2009. While SIL
 has filed an appeal against the Order of the Division Bench before the
 Honourable Supreme Court, the financial statements have been prepared
 on a standalone basis without considering the impact of the merger with
 SIL.
 
 2.  Contingent Liabilities:
 
 i) Guarantees (excluding the liability for which provisions have been
 made) amounting to Rs. 13.31 crore (Previous year Rs. 14.73 crore)
 given by the Bankers in favour of various parties - none invoked.
 
 ii) Letters of Credit opened by the banks in favour of suppliers
 amounting to Rs. 62.63 crore (Previous year Rs.1.27 crore).
 
 iii) Bonds executed in favour of customs authorities in respect of
 export of iron ore Rs. 1,281.97 crore (Previous year Rs. 583.71 crore).
 
 iv) Claims by custom authorities (under dispute) relating to
 differential export duty on export shipments Rs. 49.13 crore (Previous
 year Rs. 18.79 crore). The said amount is also included under bonds
 executed detailed in point 3 (iii) above.
 
 v) Bills discounted under letters of credit with banks Rs. 269.68 crore
 (Previous year Rs. 65.02 crore).
 
 vi) Provisions have also not been made in the accounts in respect of
 the following liabilities not acknowledged as debts for the reasons
 stated against them:
 
 a) Dead rent on deemed mining leases for the period from 20.12.1962 to
 23.5.1987 amounting to Rs. 0.10 crore (Previous year Rs. 0.10 crore)
 and royalty for the period from 20.12.1961 to 30.9.1963 amounting to
 Rs.  0.12 crore (Previous year Rs. 0.12 crore) sought to be levied by
 the Government pursuant to the Goa, Daman & Diu Mining Concessions
 (Abolition & Declaration as Mining Leases) Act, 1987, challenged by
 Special Leave Petition before Supreme Court of India.
 
 b) Claims related to commercial and employment contracts Rs. 6.08 crore
 (Previous year Rs. 5.20 crore).
 
 c) Claims by Chennai Port Trust related to shortfall of throughput from
 Chennai Port Rs. 1.13 crore (Previous year Rs. 1.13 crore).
 
 d) A civil suit claiming a damage of a minimum amount of Rs. 37.50
 crore (Previous year Rs. 37.50 crore) towards infringement of patent
 has been filed against the Company. Based on the legal opinion, the
 Company does not expect any liability on this account.
 
 e) Disputed sales tax demand of Rs. 0.98 crore (Previous year Rs. 0.98
 crore) including interest and penalty of Rs. 0.14 crore (Previous year
 Rs. 0.14 crore) appealed before Appellate Authority. Based on legal
 opinion obtained the Company does not expect any liability on this
 account.
 
 f) Disputed income tax demand of Rs. 3.85 crore (Previous year Rs. 8.42
 crore) including interest of Rs. 0.01 crore (Previous year including
 interest and penalty of Rs. 2.26 crore), appealed before Appellate
 Authority.  Based on the legal opinion obtained, the company does not
 expect any liability on this account.
 
 g) Disputed demand from customs authorities towards fine and penalty of
 Rs. 0.35 crore (Previous year Rs. 0.35 crore) for improper
 documentation of equipments loaded/unloaded to/from the Company’s
 vessel M.V. Orissa and its improper use. Based on the legal opinion
 obtained, the company does not expect any liability on this account.
 
 h) The Companys metallurgical coke division has made an advance
 payment of Rs. 1.59 crore (Previous year Rs. 1.59 crore) towards
 acquisition of leasehold land through State Government. A deed of lease
 in respect of 0.04 crore sq. meters of land valued at Rs. 0.58 crore
 (Previous year Rs. 0.58 crore) was executed. Some of the interested
 parties have legally disputed the quantum of compensation received and
 any further liability that may arise in future is not ascertainable.
 
 i) Disputed forest development tax amounting to Rs. 29.88 crore
 (Previous year Rs. Nil) levied by Government of Karnataka challenged by
 writ petition filed in the High Court of Karnataka and stay granted.
 
 j) A Notice issued by the Deputy Conservator of Forest, Chitradurga,
 demanding registration of a supplemental forest lease agreement by
 payment of stamp duty calculated on the net present value which has
 been challenged in the High Court of Karnataka. Estimated liability is
 Rs. 0.92 crore (previous year Rs. Nil).
 
 k) Cess on transportation of Ore, coal and coke within Goa levied by
 Government of Goa under the Goa Rural Development and Welfare Cess Act,
 2000 (Goa Act 29 of 2000) amounting to Rs. 21.17 crore (Previous year
 Rs. Nil) challenged by way of writ petition in the High Court of
 Bombay, Panjim Bench.
 
 l) Claim for non-performance of contract of affreightment amounting to
 Rs. 12.74 crore (Previous year Rs. Nil) under arbitration.
 
 3.  Estimated amount of contracts (net of advances) remaining to be
 executed on capital account Rs. 19.14 crore (Previous year Rs. 17.33
 crore).
 
 4.  The Company has applied hedge accounting principles in respect of
 forward exchange contracts as set out in Accounting Standard (AS) 30 -
 Financial Instruments: Recognition and Measurement, issued by the
 Institute of Chartered Accountants of India. Accordingly, all such
 contracts as on 31st March, 2009 are marked to market and a loss
 aggregating to Rs. 9.08 crore (net of deferred tax aggregating Rs. 4.59
 crore) arising on contract that were designated and effective as hedges
 of future cash flows, has been directly recognised in the reserves, to
 be ultimately recognised in the Profit and Loss Account depending on
 the exchange rate fluctuation till and when the underlying transaction
 occurs. As a result of this change, the profit for the year is higher
 and reserves for the year lower by Rs. 9.08 crore.
 
 5.  Research and development expenditure of Rs. 1.95 crore (Previous
 year Rs. 1.36 crore) has been charged to profit and loss account under
 specific heads of accounts, while Rs. 0.65 crore has been incurred as
 capital cost for research and development.
 
 6.  Related Party Information
 
 Related party information as required by AS 18 is given below:
 
 A.  Names of the related parties and their relationships:
 
 i) Holding Companies:
 
 - Finsider International Company Limited      Holding Company
 
 - Richter Holding Limited              Holding Companies of Finsider
 
 - Westglo be Limited                  International Compa ny Limited
 
 - Vedanta Resources Plc               Ultimate Holding Company
 
 ii) Subsidiary of the Company Sesa Industries Limited
 
 iii) Fellow Subsidiaries: With whom transactions have taken place
 during the year
 
 - Bharat Aluminum Company Limited
 - Sterlite Industries (India) Limited
 - The Madras Aluminum Company Limited
 - Vedanta Aluminum Limited
 - Hindustan Zinc Limited
 
 iv) Details of Key Management Personnel Executive directors
 
 - Mr. P.K. Mukherjee
 - Mr. A.K. Rai
 - Mr. A. Pradhan
 - Mr. H.P.U.K. Nair
 - Mr. M.D. Phal (Appointed from 21.12.2008)
 
 v) Enterprise in which significant influence is exercised by Key
 Management Personnel
 
 - Sesa Community Development Foundation
 
 7.  Previous years figures have been regrouped and rearranged
 wherever necessary to conform to current year’s classification.
Source : Religare Technova

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