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Sterlite Technologies
BSE: 532374|NSE: STRTECH|ISIN: INE089C01029|SECTOR: Cables - Telephone
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Explore Sterlite Techno connections « Mar 10
Notes to Accounts Year End : Mar '11
1.  NATURE OF OPERATIONS
 
 The Company is primarily engaged in the manufacture of Power
 Transmission and Telecom products in India. Telecom Business includes
 integrated Optical Fiber, Telecom Cables (Fiber Optic Cables, Copper
 Telecom Cables and Structured Data Cables), access equipments and
 integrated management business. Power Transmission Business includes
 power transmission conductors.
 
 2. The amount of foreign exchange (gain)/loss adjusted during the year
 to the carrying cost of the fixed assets and capital work in progress
 is Rs. 1.15 crores (Rs. 5.00 crores) and that (credited)/debited to
 respective heads of accounts in Profit and Loss Account is Rs. (6.73)
 crores (Rs. 12.39 crores); premium on forward exchange contract to be
 recognised in the Profit and Loss account of subsequent accounting
 periods is Rs. 10.03 crores (Rs. 5.75 crores).
 
 3.  In terms of accounting policy (Refer Note 2 (o) of Schedule 21) for
 the accrual of export incentives, estimated benefits of Rs. 50.63 crores
 (Rs. 32.07 crores) have been taken into account under the DEPB /High
 Value Add Income scheme/Duty Drawback scheme. These have been grouped
 as part of turnover in the profit and loss account.
 
 4.  The provision for tax has been made in accordance with provisions
 of Section 115 JB (Minimum Alternate Tax, ''MAT'') of the Income Tax Act,
 1961. The Company is entitled to avail Credit under Section 115JAA (1A)
 and accordingly it has considered MAT credit entitlement as an asset.
 
 5.  The Company had in an earlier year received an order of CESTAT
 upholding the demand of Rs. 188 crores (including penalties and excluding
 interest) (Rs. 188 crores as at March 31, 2010) in the pending
 excise/custom matters on various grounds. The Company''s appeal with the
 Honourable High Court of Mumbai was rejected on the grounds of
 jurisdiction. The Company preferred an appeal with the Honourable
 Supreme Court of India against the order of CESTAT which has been
 admitted.  The Company has revaluated the case on admission of appeal
 by the Honourable Supreme Court.  Based on their appraisal of the
 matter, the legal advisors/consultants are of the view that under most
 likely event, the provision of Rs. 5 crores made by the Company against
 the above demand is adequate. The management is confident of a
 favourable order and hence no provision is considered against the said
 demand.
 
 6.  EMPLOYEE STOCK OPTION SCHEME
 
 The Company has granted Employees Stock Options Plan, 2006 (ESOP) to
 its employees pursuant to the resolution passed by the shareholders at
 the Extraordinary General Meeting held on March 13, 2006. The Company
 has followed the fair value method (Black Scholes Options Pricing
 Model) for the valuation of these options. The Compensation Committee
 of the Company has approved five grants vide their meeting held on June
 14, 2006; March 19, 2007, September 28, 2007, June 14, 2008 and June
 26, 2009. As per the plan, Options granted under ESOP would vest in not
 less than one year and not more than five years from the date of grant
 of such options. Vesting of options is subject to continued employment
 with the Company. The plan is an equity settled plan.
 
 7.  Estimated amount of contracts remaining to be executed on Capital
 Account and not provided for (Net of Advances) are Rs. 52.65 crores (Rs.
 75.58 crores.)
 
 8.  DETAILS OF LOANS AND ADVANCES GIVEN TO SUBSIDIARIES
 
 The details are provided as required by schedule VI of the Companies
 Act, 1956 and SEBI Circular SMD/Policy/Cir-2/2003 dated 10 January,
 2003 of the Listing Agreement.
 
 Outstanding Loans/Advances given to subsidiary Sterlite Display
 Technologies Private Limited (formerly known as ''Sterlite
 Infrastructure Private Limited'') is Rs. 6.16 crores (Rs. Nil). The maximum
 amount outstanding from Sterlite Display Technologies Private Limited
 (formerly known as ''Sterlite Infrastructure Private Limited'') during
 the year is Rs. 6.16 crores (Rs. 0.56 crore).
 
 Outstanding Loans/Advances (including interest) given to subsidiary
 Sterlite Infra-tech Limited is Rs. 46.17 crores (Rs. 6.56 crores). The
 maximum amount outstanding from Sterlite Infra-tech Limited during the
 year is Rs. 46.17 crores (Rs. 6.59 crores).
 
 Outstanding Loans/Advances given to subsidiary Sterlite Global Ventures
 (Mauritius) Limited is Rs. 0.42 crore (Rs. Nil).The maximum amount
 outstanding from Sterlite Global Ventures (Mauritius) Limited during
 the year is Rs. 0.42 crore (Rs. Nil).
 
 9.  There are no amounts due and outstanding to be credited to
 Investor Education and Protection Fund.
 
 10. RELATED PARTY DISCLOSURES
 
 Related party disclosures as required by AS-18, Related Party
 Disclosures issued by the ICAI and notified under Rules are given
 below: (a) Name of related party and nature of its relationship: (i)
 Subsidiary
 
 Sterlite Display Technologies Private Limited (formerly known as
 Sterlite Infrastructure Private Limited)
 
 Sterlite Infratech Limited
 
 East North Interconnection Company Limited
 
 Sterlite Transmission Projects Private Limited
 
 Jabalpur Transmission Company Limited (*)
 
 Bhopal Dhule Transmission Company Limited (*)
 
 Sterlite Global Ventures (Mauritius) Limited
 
 Jiangsu Sterlite and Tongguang Optical Fiber Co. Limited (*)
 
 (ii) Key Management Personnel
 
 Mr. Pravin Agarwal Dr. Anand Agarwal
 
 (iii) Entities where Key Management Personnel / relative of key
 management personnel has significant influence
 
 Sterlite Industries (India) Limited Fujairah Gold FZE
 
 Bharat Aluminium Company Limited Hindustan Zinc Limited Sterlite Energy
 Limited Vedanta Aluminium Limited
 
 (iv) Investing Company
 
 Twin Star Overseas Limited
 
 3.  Share application money paid include Sterlite Transmission Project
 Private Limited Rs. 39.84 crores (Rs. Nil), East North Interconnection
 Company Limited Rs. 51.57 crores (Rs. Nil).
 
 4.  Advances given during the year include Sterlite Display
 Technologies Private Limited Rs. 6.16 crores (Rs. 0.25 crore).
 
 5.  Repayment of advances include Sterlite Display Technologies Private
 Limited Rs. Nil (Rs. 0.56 crore).
 
 6.  Loans given/(repayment) during the year include Sterlite Infratech
 Limited Rs. 37.35 crores (Rs. 6.37 crores), East North Interconnection
 Company Limited Rs. (21.87 crores)(Rs. 21.87 crores).
 
 7.  Interest charged on loans include Sterlite Infratech Limited Rs. 2.24
 crores (Rs. 0.19 crore)
 
 8.  Sale of fixed assets include Sterlite Infratech Limited Rs. 3.75
 crores (Rs. Nil).
 
 9.  Purchase of goods include Vedanta Aluminium Limited Rs. 483.88 crores
 (Rs. 560.06 crores), Bharat Aluminium Company Limited Rs. 90.53 crores (Rs.
 115.45 crores).
 
 10.  Sale of goods include Sterlite Energy Limited Rs. 24.31 crores (Rs.
 13.27 crores).
 
 11.  Expenses incurred include Sterlite Industries (India) Limited Rs.
 0.64 crore (Rs. 0.33 crore), Vedanta Aluminium Limited Rs. 0.21 crore (Rs.
 Nil).
 
 12.  Interest include Vedanta Aluminium Limited Rs. 0.65 crore [Rs. (0.26)
 crore], Bharat Aluminium Company Limited Rs. 0.11 crore (Rs. 0.02 crore).
 
 13.  Advances received against supplies include East North
 Interconnection Company Limited Rs. 19.01 crores (Rs. Nil).
 
 Note: As the liabilities for gratuity and leave encashment are provided
 on an actuarial basis for the Company as a whole, the amounts
 pertaining to the directors are not included above.
 
 14.  OPERATING LEASES
 
 The Company has taken office buildings on operating lease. The lease
 term is for a period of three years and renewable at the option of the
 Company. There is no escalation clause in the lease agreement.
 Disclosures in respect of operating leases of office buildings as per
 the requirement of AS-19 on Leases, notified under the Rules are as
 under:
 
 (a) Lease payments recognised in the statement of Profit and Loss for
 the year is Rs. 3.05 crores (Rs. 2.62 crores).
 
 (b) The future minimum lease payments payable over the next one year is
 Rs. 1.55 crores (Rs. 0.53 crore).
 
 (c) The future minimum lease payments payable later than one year but
 not later than five year is Rs. 2.66 crores (Rs. 0.54 crore).
 
 15.  The disclosures as per AS-15, Employee benefits notified under the
 Rules are as follows:-
 
 The Company has a defined benefit gratuity plan. Every employee who has
 completed five years or more of service gets a gratuity on departure at
 15 days salary (last drawn salary) for each completed year of service.
 The scheme is funded with Life Insurance Corporation of India in the
 form of a qualifying insurance policy.
 
 16.  CONTINGENT LIABILITIES                         (Rs. in crores)
 
 Sr.
 No.     Particulars                          2010-11        2009-10
 
 1.   Disputed Liabilities in Appeal
 
 a)   Sales Tax                                 0.59          0.59
 
 b)   Excise Duty (Including Excise duty 
       case in                                247.07        266.69
      Supreme Court, Refer Note 8, Schedule 21)
 
 c)   Customs Duty                             74.31         74.31
 
 d)   Service Tax                               2.48          2.45
 
 e)   Claims lodged by a Bank Against the
      company (*)                              18.87         18.87
 
 f)   Claims against the company not
      acknowledged as Debt                      --            2.07
 
 2.   Outstanding amount of Export obligation 
      against                                  87.19         58.99
      Advance Licence
 
 3.  The company has given Corporate Guarantee to the Income Tax
 Department on behalf of group companies. The outstanding amount is Rs.
 114.00 crores (Rs. 114.00 crores) on this account as at the year-end.
 
 The company has given Corporate Guarantee to Long Term Transmission
 Customers on behalf of its subsidiary company. The outstanding amount
 is Rs. 30.00 crores (Rs. Nil) on this account as at the year-end.
 
 The Company has not provided for disputed Sales Tax, Excise Duty,
 Customs Duty and Service Tax arising from disallowances made in
 assessments which are pending with Appellate Authorities for its
 decision.
 
 It is not practicable to indicate the uncertainties which may affect
 the future outcome and estimate the financial effect of the above
 liabilities.
 
 (*) In an earlier year, one of the Bankers of the Company had wrongly
 debited an amount of Rs. 18.87 crores, towards import consignment under
 Letter of Credit not accepted by the Company, owing to discrepancies in
 the documents. The Company has filed the case against the bank in the
 High Court of Mumbai. The bank has also filed a claim against the
 Company in the Debt Recovery Tribunal. The Company does not believe
 that any liability will arise to the Company.
 
 17. Expenditure of Rs. 1.88 crores (Rs. 4.39 crores) and 1.12 crores (Rs.
 0.35 crore) on account of financing cost relating to borrowed funds for
 construction or acquisition of fixed assets is debited to Fixed
 Assets and Capital work-in-Progress respectively.
 
 18.  Excise duty on sales amounting to Rs. 54.14 crores (Rs. 63.87 crores)
 has been reduced from sales in profit & loss account and excise duty on
 increase/decrease in stock amounting to Rs. 3.50 crores (Rs. 0.83 crore)
 has been disclosed in Schedule 15 of financial statements.
 
 19.  PREVIOUS YEAR COMPARATIVES
 
 Previous Year''s figures have been regrouped where necessary to confirm
 to current year''s classification.
Source : Dion Global Solutions Limited
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