| A. Balance sheet Disclosures
1. Preference Shares
a) 12% Redeemable Preference shares of Rs. 692400 thousands are
redeemable at the end of 20 years from the date of allotment (Rs.
580000 thousands allotted on 10.09.99 and Rs. 112400 thousands allotted
on 31.03.02)
b) 12% Cumulative Redeemable non-convertible preference shares of
Rs,15000 thousands were due for redemption on 06.02.01, whereas the
company has requested for an extension to redeem the same from the
investors.
c) 12% Cumulative Redeemable Preference shares of Rs. 56726 thousands
are redeemable in 3 equal installments in the years from 2008-09 to
2010 -11. First installment is due for redemption during the year,
which is not yet redeemed.
d) The Company has allotted 8,20,15,000 nos. of 14% cumulative
redeemable preference shares of Rs. 10 each amounting to Rs.820150
thousands as against the Term Loans and other facilities provided by
IDBI and IIBI, as per their restructuring package dated 31.03.2002.
2. Security on Loan Funds
i The secured loans from IDBI, IFCI, IIBI, Exim Bank & ARCIL Included
under Schedule 3 are secured by:-
a. First charge on all present and future movable and immovable assets
of the company in favour of the above institutions/ banks and the
Debenture Trustees ranking pari passu subject to prior charge on
current assets in favour of banks for securing working capital
requirements;
b. Equitable mortgage of Companys lands at Bellary;
c. Personal guarantee of some of the Directors of the Company and
their relatives.
ii. The Short term loan (working Capital) from Central Bank of India,
Indian Bank, HDFC Bank Ltd., The Dhanalashmi Bank Ltd., & ARCIL have
been secured by:-
a. Hypothecation of Stock-in-trade, Stores and Receivables;
b. Joint and several guarantees of some of the Directors of the
Company;
c. Pari Passu second charge on the immovable assets of the Company.
iii. Debentures
21 % Non-Convertible Debenture of Rs. 11600 thousand (Previous year Rs.
11600 thousand) is secured by second charge on the movable Current
assets of the company and the same are redeemable at par at the end of
2nd, 3rd, 4th & 5th year from the date of allotment (12.07.96)
iv. In case of Vehicle loans, the respective vehicles are hypothecated
to the lendor.
3. As on 31.03.2009, the company owes a sum of Rs.4921 thousands to
Micro Small and Medium Enterprises including SSI defined under Clause
(j) of sec. 3 of the Industrial (Development & Regulation) Act, 1951.
No interest has been charged by these enterprises for delay in payment
as there is regular trading taken place throughout the year.
4. Contingent liabilities
(Rs. in thousands)
Particulars For the year Ending For the year Ending
31.03.2009 31.03.2008
Claims against the Company
not acknowledged as debts,
excluding interest from the
date of filing till the
balance sheet date 10,59,607 10,59,607
Bank Guarantees and other
guarantees given but not
invoked 2,60,699 2,60,000
Arrears of cumulative dividends
on Preference shares (Refer Note) 13,31,260 11,24,745
Estimated amount ot contracts
remaining to beexecuted on
capital account and not
provided for (net of Advances
received) 49,27,500 49,27,500
Note: The Company has not provided for dividend on cumulative
preference shares as there are no sufficient profits.
5. In respect of sundry debtors outstanding, the company does not have
any security other than the personal security of the respective
debtors.
6. Except for balances of 6 bank current accounts, which were active
during the year, all other banks balances are subject to confirmation
and reconciliation.
7. Balance confirmation and reconciliations in case of Sundry
Debtors, Sundry Creditors/other loans and Advances, Investments and
Deposits are pending.
8. Secured and unsecured loan liabilities availed from banks and
financial Institutions in the nature of term loans, working capital
loans, bills discounting, interest accruals, financial leases, lease
rentals and letter of credits are subject to confirmations and
reconciliations.
9. The Authorised share capital of the Company as per the Balance
Sheet is Rs. 5700000 thousands. However, as per the records of the
Registrar of Companies, Kamataka, the authorized share capital is Rs.
500000 thousands. The company is yet to reconcile this difference.
B. Profit & Loss Account disclosures
10. The interest on working capital loans ot Rs.12,07,454 thousands
(Previous year Rs.10,23,213 thousands), is provided on quarterly
compounded basis as per the prevailing bank lending rates. There is no
confirmation available from the bank on this matter.
C. Accounting Standards Disclosures
11. Investments
Documentary evidences for investments held in the name of the company,
except shares of odyssey Corporation Ltd., (Formarly known as Odyssye
Financial Services ltd) are in possession either with ARCIL or with
Sales tax department.
12. Accounting for Retirement Benefits.
The amount of leave encashment and gratuity liability for the year are
determined and accounted on accrual basis as estimated by the company.
The company further informs that no Actuarial Valuation has been
carried out in respect of Leave encashment and Gratuity liability as
spelt out in AS-15 issued by the Institute of Chartered Accountants of
India.
13. Borrowing Costs
a) During the year the company has capitalized interest and other
finance charges in respect of certain borrowings, which are exclusively
attributable to Integrated Steel Plant (ISP) division amounting to Rs.
2084066 (Previous year Rs. 1811669 thousands)
b) Though the company has been continuously capitalizing the borrowing
& other related costs of the ISP division, no tangible activities are
being undertaken. The management informs that the activity of
construction of this division is interrupted because of non-closure of
financial mandates. The management is of the view that the interruption
is beyond its control and is on account of unavoidable circumstances.
c) The total amount of borrowing costs capitalized along with the
capital work-in-progress of ISP division as on 31 st March 2009 is Rs.
20603336 thousands (previous year Rs. 18164984 thousands).
d) Interest on other loans consists of interest on working capital
meant for all production facilities like SMS, Sponge Iron Plant and
Rolling Mills. Where as Income from operation is in respect of Sponge
Iron Plant only. Due to this reason interest cost is not reflecting to
the operations.
14. Segmental Reporting
The company during the financial year has dealt only a single product
called Sponge Iron. As the other division viz., Integrated Steel Plant
division which is in the construction stage does not have any active
development during the financial year. Therefore, it cannot be
identified as a division engaged in providing an individual product or
a group of related products that are subject to risks and returns to be
reported as an individual division.
15. Lease Accounting
During the year, the company has not provided any amount towards lease
transactions. All the leases during previous years are Operating
leases. The company is of the view that all operating lease commitments
are already provided for in the earlier years, except I nterest on
delayed or defaults in payments of lease charges.
16. Deferred Taxes
a. Deferred tax is recognized on timing differences between the
accounting income and the taxable income for the year, and quantified
using the tax rates and laws enacted or substantively enacted as on the
Balance Sheet date.
b. Deferred tax assets are recognized and carried forward to the
extent there is a reasonable certainty that sufficient future taxable
income will be available against which such deferred tax assets can be
realized.
c. Additional deferred tax asset / liability for the year as per the
Accounting Standard 22 is not reviewed as there is virtual uncertainty
of future income.
17. Impairment of Assets
The company has not determined and provided in the accounts, the value
of impairment of assets as on 31.03.09 in accordance with Accounting
Standard - 28 issued by Institute of Chartered Accountants of India.
18. Previous period figures have been regrouped and rearranged
wherever necessary to make them comparable with those of the current
year.
19. Figures have been rounded off to Thousands
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