| 1) General Information
Facor Steels Limited ("The Company") is a Public Limited Company
incorporated in India under the Companies Act, 1956. It is part of
Worldwide reputed FACOR Group of Industries. The Company is listed at
Bombay Stock Exchange. The Company, is one of the leading Producers of
Carbon/Alloy steel/Stainless and special steel. The products are
manufactured at its works in Nagpur and caters both domestic and
international market.The products are meant for critical industrial
application.
2) Abridged financial statement
The abridged financial statements have been prepared in prescribed Form
AOC-3 pursuant to Rule 10 of the Companies (Accounts) Rules 2014 as per
notification F. No. 1/19/2013-CL-V, dated March 31, 2014 and are based
on the annual financial statements for the year ended March 31, 2015
approved by the Board of Directors at their meeting held on May 29,
2015.
3. (Note 27 of notes to financial statements)
Disclosure pursuant to Accounting Standard - 15 (Revised) "Employee
Benefits" :
The company provides for Gratuity, a defined benefit retirement plan
covering eligible employees. As per the scheme, the Gratuity fund
trust, administered and managed by the Life Insurance corporation of
India (LIC), make payment to vested employees at retirement, death or
termination of employment of an amount based on the respective
employees salary and the tenure of employment.
4. (Note 28 of notes to financial statements)
The slowing industrial activity and depressed market conditions had
seriously affected the operations of the company. Considering the
dwindling order position, the company has discussed with Workers union
and reached an agreement for consensus lock out effective from Jan,
2013 and which was in force upto 8th Aug, 2013. The company restarted
its operation from 9th Aug, 2013 after getting revised fund and non
fund based limits approved and released by the individual banks. The
company's application for Corporate Debt Restructure (CDR) has been
approved by CDR - Empowered Group vide its Letter of Approval dated
April 27, 2013. Inspite of the best efforts the company continued to
incurr cash loss and the capacity utilisation could not be improved to
avoid cash loss situation The Company has again reached an agreement
for consensus lock out with its workers union effective from 30th May,
2014 which is still in force and exploring various alternatives to
improve the operations of the company.
5. (Note 29 of notes to financial statements)
As per the Corporate Debt Restructure (CDR) package approved by
Empowered Group of Corporate Debt Restructuring cell (CDR-EG) approval
dated April 27, 2013 the amount of Recompense payable from cut off date
to end of package period i.e. March 31,2023 ' 852 lakhs.
6. (Note 30 of notes to financial statements)
In view of accumulated losses and no reasonable certainty of future
income to recover Deferred Tax Assets, no provision for deferred tax
assets has been considered necessary.
7. (Note 31 of notes to financial statements)
No provision for current Income-Tax is considered necessary in view of
the brought forward Business loss and unabsorbed depreciation. In view
of current year book loss no provision for Minimum Alternate Tax is
required.
8. (Note 32 of notes to financial statements)
The company and Baltic International Bank have reached and
understanding and in term of the settlement Agreement, the lender has
agreed to settle the account for an amount not less than USD 56872/-.
The lender has agreed to release the obligation of the company arising
from this loan agreement after the repayment of the above amount
towards the principal amount, payment of loan interest and penalty
charges. In view of this agreement, company has written back the
balance amount of USD 2943128/- amounting to ' 1842.11 lacs and the
same has been shown under exceptional item.
9. (Note 33 of notes to financial statements)
The company could not make the interest payment to the banks in time
and company's drawing power was reduced considerably due to suspension
of production. In view of this, All the bank accounts of the company
has been classified as Non Performing Assets by the Bankers.
10. (Note 34 of notes to financial statements)
The Company has entered into a Power Delivery agreement with Wardha
Power Company Limited (WPCL) for procurment of power for its
manufacturing activity at the term set out in the said agreement for
twenty five years from the commencement of commercial operation of
power plant to be declared by WPCL. As per the terms of another related
agreement with WPCL, the company has invested ' 440 lacs (Previous year
' 440 lacs) shown under Non current investments (Note 11) in Equity
shares of 1945867 of ' 10 each aggregating to ' 19458670- and 2454133
no of 0.01% redeemable class A preference shares aggregating to '
24541330.Therefore said 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 total
consideration of ' 1. During the year company has sold the 1061382
equity shares on their face value of ' 10 each aggregating to '
10613820/- (previous year Nil).
11. (Note 35 of notes to financial statements)
Short term loans and advances includes ' 75.58 lacs(previous year '
75.58) towards advance paid against supply of scrap by overseas
supplier against which company has initiated action for recovery
towards quality dispute.
12. (Note 36 of notes to financial statements)
M/s Madhur Engineering Pvt. Ltd. and M/s Tarini steel co. Ltd. have
filed winding up petition u/s 433 and 434 of the companies Act, 1956 in
the Nagpur bench of Bombay High court at Nagpur. The matter is yet to
be heard before the court and company has taken all steps to suitably
defend the case.
13. (Note 41 of notes to financial statements)
Segment Information :
The Management Information System of the Company identifies and
monitors Steel Products as the business segment. The Company is
managed organisationally as a single unit. In the opinion of the
management, the Company is primarily engaged in the business of Steel
Product. As the basic nature of these activities are governed by the
same set of risk and return, these constitute and are grouped as single
segment as per Accounting Standard (AS) 17 dealing with segment
reporting issued by ICAI.
14. (Note 42 of notes to financial statements)
Contingent Liabilities and Commitments :
(I) Contingent Liabilities :
(a) Estimated amount of contracts on Capital Account & other
Commitments remaining to be executed and not provided for in accounts '
Nil lacs (Previous Year ' 76.75 lacs).
(b) Claims against the Company not acknowledged as debts, since
disputed ' 302.80 lacs (Previous Year ' 249.29 lacs). Amounts already
paid under protest ' 35.89 lacs (Previous year ' 33.21 lacs) have been
debited to Advance Account.
15. (Note 43 of notes to financial statements)
Related Party Disclosure:-
I List of related parties:-
A Name and nature of relationship with the related party where control
exists:
Vidarbha Iron and Steel Corporation Limited (VISCO)- Associates
B Enterprise, over which key management personnel and their relatives
exercise significant influence, with whom transactions have taken place
during the year :
I Ferro Alloys Corporation Limited 2 Facor Alloys Limited
3 Rai Bahadur Shreeram And Company
Private Limited 4 Dass Papers Products. Ltd.
5 Orchard consultancy Pvt. Ltd. 6 Godavaridevi Saraf & Sons.
7 S.D. Ores Pvt. Ltd. 8 Suchitra Investment &
Leasing Ltd.
9 Saraf Bandhu Pvt. Ltd. 10 Facor Power Ltd.
II GDP Infrastructure Pvt. Ltd. 12 Queen Consultancy
Services Pvt. Ltd.
13 Vineet Infin Pvt. Ltd. 14 Shreeram shipping services
Pvt. Ltd.
C Key Management Personnel :
i) N.D. Saraf Chairman
ii) M.D.Saraf Vice Chairman & Director
iii) Vinod Saraf Managing Director
iv) Anurag Saraf Director
16. (Note 44 of notes to financial statements)
Previous year's figures have been re-grouped wherever necessary.
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