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Corporate Information

Board of Directors

Shri Vivek AgarwalChairman & Managing Director

Shri Manish Kumar MishraDirector

Shri Umesh Kumar SahuDirector

Shri Thiagaraja Iyer VenkatramaniIndependent Director

Shri V. ManikandanIndependent Director

Shri T. N. SivakumarIndependent Director

Registered Office:19/629 (1), “Sreyas”,Near Yakkara School Bus Stop,West Yakkara,Palakkad - 678 001

AuditorsM/s Sunil Johri & AssociatesChartered Accountants,Raipur, Chattisgarh

BankersState Bank of India, Palakkad

Share Transfer AgentsM/s Adroit Corporate Services Pvt. Ltd.17-20 Jaferbhoy Industrial Estate,1st Floor,, Makwana Road, Marol Naka,Andheri (East),Mumbai – 400 059Ph. : 022 - 285 940 60Fax : 022 - 285 037 48Email : [email protected]

CONTENTSChairman & Managing Directors Message................................................................... 3

Notice to Annual General Meeting................................................................................ 7

Directors Report to Shareholders................................................................................... 9

Annexure to Directors Report ....................................................................................... 13

Management Discussion & Analysis............................................................................ 15

Corporate Governance Report....................................................................................... 19

Managing Director Certification.................................................................................... 25

Audit Certificate............................................................................................................... 26

Auditors Report on Consolidated Financial Statement............................................. 27

Consolidated Financial Statement................................................................................. 28

Auditors Report on Standalone Financial Statement................................................. 47

Standalone Financial Statement..................................................................................... 51

Consolidated Cash Flow Statement.............................................................................. 67

Standalone Cash Flow Statement................................................................................... 68

Attendance Slip/Proxy Form......................................................................................... 69

17th ANNUAL REPORT 2011-12

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VIVEK AGARWALCHAIRMAN & MANAGING DIRECTOR

Emerging as SteelConglomerate

Dear Shareholders,

It is my pleasure and privilege to reach youthrough this momentous Annual Report &share with you the highlights of our Company’sperformance during the year 2011-12.

This occasion merits pride and celebra-tions and I am sure that you all share thesame feeling. Your company has transformeditself from a domestic player to one of theleading Global Steel Conglomerate. I amdelighted to inform you that your com-pany has scaled a new height in top lineand registered a healthy performance duringFinancial year 2011-12 with a almost 25%growth in revenue to Rs 10011.63 millionsas compared to previous years & highestever top line registered in any other FY.

Steel Industry Overview

The global economy is witnessing anotherperiod of uncertainty due to the Euro-pean Sovereign debt crisis. The increasein inflation in emerging economies hasled to a sharp hike in interest rates, whichhas resulted in slowdown in demand. The

From Chairman &Managing Director’s Desk


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global financial uncertainty has also re-sulted in volatility in exchange rates.The global Steel industry has witnessedreasonable demand growth and Steelmaking capacities have gradually shiftedto emerging markets such as China andIndia. However, the high cost of rawmaterials and increased volatility in priceshas put pressure on margins.

The Indian economy is expected to growat 7.6% in 2012-13 against 6.9% in 2011-12. The economy is likely to grow sig-nificantly over the next decade drivenby the infrastructure (power, road, railways,ports etc.) and consumption (automo-bile, real estate etc.) sectors which willresult in sustained growth in demandfor various Iron and Steel products.

Company OverviewYour Company is focused on its visionto emerge as a low cost producer of valueadded Steel products with captive mineralresources and captive power. The Com-pany is also focused on mining its owniron ore in order to improve margins andalso to set up a Beneficiation Plant toexploit the resources.

Company Strategic Measures

Iron Ore MinesYour Company is in dialogue toacquire 50% stake, in Buxwaha IronOre mine spread over 150 Hectaresin Chattarpur area of Madhya Pradesh,India with a view to secure its rawmaterial requirements and integratingbackwards into mining of Iron Ore.The mines have a substantial re-source base of superior quality ironore with high Fe (iron) content andbulk density. The Fe content var-ies between 63 to 66 per cent, which

OutlookIndia has immense potential for creatingnew steel capacity. Indian per capita steelconsumption is presently very low comparedto world average which further re-con-firms the opportunities for steel demandto continue accelerating in the times ahead.

makes it one of the best quality ma-terials available in the country. Themining operations are mechanized,adopting state-of-the-art technol-ogy and equipment namely hydraulic


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drifter, in-pit crusher, cone crushersand mobile crushers. Flexibility inoperations enables the division tomaximize the utilization of resources,as well as cater to the needs of diversecustomers.

Beneficiation &Pelletization Plant

Your Company is also planning toset up a Beneficiated & Pelletizingplant with an installed capacity of12,00,000 TPA in area of MadhyaPradesh, India for Agglomerationof beneficiated and ground iron oreinto spherical shaped green balls andsubsequent heat hardening them istermed as Pelletizing.

infancy still, has enormous poten-tial to be the leading energy sup-plier in the near future. In this re-gard, we have taken a few positivesteps in assessing about the need,the resources available and variousother factors which would influencethe setting up of a manufacturingfacility for Silicon ingots and bricks.In this regard a lot of groundworkhas gone into the appraisal of variousparameters and the requirements forsetting up such a facility, Such asthe company have established contactand have gone into various contractswith leading manufacturers of equip-ments required for the facility likeGT Solar, Centrotherm, ALD VacuumTech., Schmid Silicon, Cyberstar andvarious other reputed conglomettes& have detailed our project to themand have received instructive quo-tations and estimates regarding theequipments.

Pellets thus produced to desiredphysical and chemical properties aremuch superior to the convention-ally sized iron ore lumps. Iron orePellets are in very high demand. Thecompany has also acquired adequateland near to mines for setting up ofa Beneficiation & Pellatization plantfor exploiting the mining operations& maximizing profits.

Solar Grade SiliconYour Company as a group is diver-sifying by going into manufacturingof solar grade Silicon ingots and bricks,which are the vital component of Solarcells. With the dying of natural re-sources, solar energy, though in its


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Corporate Governance that is deeply motivated by its commitmentto create value for its stakeholders andsociety. Your Company looks to the futurewith confidence, driven by an inspiringVision, Values of Trusteeship and Vi-tality powered by a dedicated world classteam of human resources.

SIEL owns its sustained success to itstrusted relationships with customers,employees, banks and of course with you,our shareowners. I would like to sin-cerely thank you for your confidence,for being a pillar of support in helpingto accomplish our shared aspirations.We will continue to make every effortin years to come to justify your confi-dence. As we move on new thinking willlead us to new horizons.

As always, I am looking forward for yourcontinued support and encouragement.

Sd/-

Vivek AgarwalChairman and Managing Director

Date: 26th November, 2012Place: Palakkad, Kerala

Your company is committed to conformingto the highest standards of CorporateGovernance by ensuring transparency,

disclosures and reporting as requiredunder various laws, regulations and guide-lines, including those issued by the De-partment of Public Enterprises, Govern-ment of India.

Acknowledgement

I gratefully acknowledge the guidanceand support extended by the variousMinistries particularly the Ministry ofSteel under the Government of Indiaand State Government of Kerala. I wouldalso like to thank all the stakeholdersof the Company for their continuedsupport in all our endeavors.

I express my sincere appreciation for theinvaluable contribution and cooperationof my colleagues on the Board in chartingthe road map of the Company for growthand profitability, thereby steering it togreater heights.

As I conclude, it is indeed satisfying towitness a fulfilling journey of an enterprise


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Notice is hereby given that the SeventeenthAnnual General Meeting of the Membersof Southern Ispat and Energy Limited willbe held on 26th December 2012 at 11.30AM at its Registered Office at 19/629(1),“Sreyas” Near Yakkara School Bus Stop,West Yakkara, Palakkad – 678 001 to transactthe following business:

Ordinary BusinessItem No.1To consider and adopt the Audited Bal-ance Sheet as on 30th June 2012, the Profitand Loss Account for the financial yearended on that date and the report of theBoard of Directors and Auditors thereon.

Item No.2To appoint a Director in place of Mr. T.N.Sivakumar, who retires by rotation and beingeligible, offers himself for re-appointment.

Item No.3To reappoint Auditors and to fix their re-muneration

“RESOLVED THAT M/s. Sunil Johri & As-sociates, Chartered Accountants be and arehereby appointed as Auditors of the companyfrom the conclusion of this Annual Gen-eral Meeting till the conclusion of next AnnualGeneral Meeting on a remuneration fixedby the Board of Directors in consultationwith the Auditors.”

Item No.4To appoint a Director in place of Sri. UmeshKumar Sahu who has given his unwillingnessfor his reappointment and to pass the followingresolution with or without modification.

“RESOLVED THAT Sri. Umesh Kumar Sahu,who retires by rotation and given his un-willingness to be reappointed, be not re-appointed and the vacancy be filled in theensuing Annual General Meeting.”

Special BusinessItem No.5To appoint a Director in place of Shri. ManishKumar Mishra (Additional Director) whoretires at the Ensuing Annual GeneralMeeting and being eligible, offers himself forre-appointment and to pass with or withoutmodification the following resolution asOrdinary Resolution.

“RESOLVED THAT Shri Manish KumarMishra who was appointed as an Director ofthe company by the Board of Directors andwho ceases to hold office under Section 260of the Companies Act,1956 on the date of thismeeting and in respect of whom the companyhas received a notice under section 257 inwriting proposing his candidature for theoffice of director, be and is hereby elected andappointed as a director of the company liableto retire by rotation”

Item No.6To consider and if thought fit to pass withor without modification the following reso-lution as ordinary resolution

“RESOLVED THAT Sri Vinod Bajoria beand is hereby appointed as the director ofthe Company whose office is determinableas liable to retire by rotation.”

By the order of the Board of Directors.

NOTICE TO ANNUAL GENERAL MEETING

Date: 26th November, 2012Place: Palakkad, Kerala

Sd/-Vivek AgarwalChairman and Managing Director


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Notes1 . A member entitled to attend and vote

at the Annual General Meeting is entitledto appoint a proxy and to vote on apoll instead of herself / himself andneed not be a member of the company.The instrument appointing a proxyshould however be deposited at theregistered office of the company notless than 48 hours before the com-mencement of the meeting.

2 . An Explanatory Statement pursuant toSection 173 (2) of the Companies Act inrespect of the special business is set outin the Annexure enclosed.

3 . Members are requested to notify changeof address if any immediately to theRegistrars and Share Transfer AgentsM/s.Adroit Corporate Services Pvt Ltd,17-20, Jafferbhoy Industrial Estate,1stFloor, Makhwana Road,Marol Naka,Andheri (East) , Mumbai-400 059.

4. The register of members of the companywill remain closed from 21st December2012 to 26th December 2012 (both daysinclusive).

Annexure to NoticeExplanatory statement pursuant to Section 173(2)of the Companies Act,1956 which forms partof the Notice convening the Annual GeneralMeeting of the Company on 26th December 2012.Item No. 5 :Mr. Manish Kumar Mishra was appointed asadditional director of the company on 14thJanuary 2012 by the Board of Directors of theCompany. According to the provisions of theSection 260 of the Companies Act,1956 he mayhold office as director only upto the date of theensuing Annual General Meeting. As requiredby Section 257 of the Act, a notice has been re-ceived from a member signifying his intention

to propose appointment of Mr. Manish KumarMishra as a director along with a deposit ofRs.500/-. Mr. Manish Kumar Mishra is a gradu-ate in Commerce andhas an overall experienceof 15 years in steel industry. His vast and richexperience, consistent with Production strategywill provide operational excellence to the Com-pany and a capability to drive innovation. TheBoard considers that it is desirable that the com-pany should contiune to avail itself of his ser-vices and recommend to pass necessary resolu-tion as an Ordinary Resolution.

None of the directors are interested other Mr.Manish Kumar Mishra who may be deemed tobe interested to the extend of his appointment.

Item No.6

Mr. Vinod Bajoria is a graduate in Commerceand has an overall experience of 15 years in steelindustry. His vast and rich experience, consis-tent with Production strategy will provide operationalexcellence to the Company and a capability todrive innovation. Your company decides to includethe proposal in the notice of Annual GeneralMeeting appointing him as Director of the company.As required by Section 257 of the Act, a noticehas been recieved from a member signifyinghis intention to prapose appointment of Mr. VinodBajoria as a director along with a deposit ofRs 500/-. The Board considers that it is desireablethat the company should pass necessary reso-lution to avail his services.

None of the directors are interested otherthan Shri Vinod Bajoria who may be deemedto be interested to the extent of his appointment.


Sd/-

Vivek Agarwal

Chairman and Managing DirectorDate: 26th November, 2012Place: Palakkad, Kerala


9

Directors Report to ShareholdersDear Shareholders,Your Directors take immense pleasure inpresenting this 17th Annual Report togetherwith the Consolidated Audited Accountsof the Company for the financial year 2011-12 for the period ended on 30th June 2012.Financial Results (Rs. Million).Particulars 11-12 10-11Sales & Other Income 10191.36 8050.48Material Consumed 9577.75 7554.02Changes in Inventory (4.87) 6.88Employee Benefits 5.19 4.18Finance Cost 4.02 10.50Depreciation 19.27 24.05Other Expenses 179.10 62.39Profit before Taxes 410.89 388.44Taxes - Current Tax 6.59 29.69

- Deferred Tax (22.84) (6.60)Profit After Taxes 412.52 365.36Earnings per Share 3.12 8.15(Basic & Dilutive)

REVIEW OF OPERATIONSDuring the year under review, theCompany’s financial performance hasbeen adversely affected due to the non-availability of raw material, increasingraw material costs, high bank interestrates and volatile foreign exchange. Thecompany took various initiatives to improveits profitability by diversification whichhelped the company to post a reason-able performance for the year.

DIVIDENDIn order to augment resources for the ex-pansion plans, your directors do not rec-ommend distributing any dividend for theyear ended 30th June 2012.

CONSOLIDATED FINANCIALSTATEMENTSIn accordance with the Accounting Stan-dard AS-21 on Consolidated Financial State-ments, the audited Consolidated FinancialStatements are provided in the Annual Report.

SUBSIDIARYIn accordance with the general circu-lar issued by the Ministry of Corpo-rate Affairs, Government of India, theBalance Sheet, Profit and Loss Accountand other documents of the subsidiarycompany is not being attached withthe Balance Sheet of the Company. How-ever the financial information of thesubsidiary companies is disclosed inthe Annual Report in compliance withthe said circular. The Company willmake available the Annual Accountsof the subsidiary company and the relateddetailed information to any memberof the Company who may be interestedin obtaining the same. The annual accountsof the subsidiary company will alsobe kept open for inspection at the RegisteredOffice of the Company and that of therespective subsidiary company. TheConsolidated Financial Statements pre-sented by the Company include the fi-nancial results of its subsidiary Company.Details of subsidiary of the Companyare covered in Management’s Discussionand Analysis Report forming part ofthe Annual Report.

EXPANSION PLANS Exploring Mining Opportunities & Securing

Raw materials and integrating backwardsinto mining of Iron Ore and Chrome Ore.

Setting up a Beneficiated & Pellet-izing plant with an installed capac-ity of 12, 00,000 TPA in Madhya


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Pradesh, India for exploiting the miningoperations & maximizing profits.

Entering into Solar cells/ solar powerplant equipments which aim to manu-facture “electricity from Sun & Sand”.

INTERNAL CONTROL SYSTEMThe Company has in place an adequateand appropriate system of internal control,commensurate with its size and natureof business to ensure efficacy of opera-tions and compliance with applicable leg-islations. The company has comprehensivebudgetary control system. The managementregularly reviews actual performance.

SOCIAL RESPONSIBILITY ANDCOMMUNITY DEVELOPMENTCorporate Social Responsibility occu-pies a central position in Companies ac-tivities and is an ongoing daily affair.Our Company’s plant at Kottayi, Palakkadis a leading industrial unit in the regionand therefore the local community looktowards the Company for social support.Company continues to provide neces-sary support to economically backwardpeople of the adjoining villages throughvarious community development, edu-cation and healthcare programmes.

HUMAN RESOURCES ANDINDUSTRIAL RELATIONSYour Company all the time strives towardsthe development of its employees, toupgrade their skills and to boost themotivation levels of its human resourcethrough various mechanisms. For en-hancing the team spirit of the employeesdepartmental quality circles and otherawareness programmes being organizedfrom time to time. We were success-ful in maintaining a healthy working

environment and cordial industrial re-lations throughout the year. The ef-forts put in by the employees at alllevels are highly commendable and havecontributed immensely to the excel-lent performance of the company. YourCompany HR team has been continuouslystriving for establishing a better andcongenial relationship with Workmen,Unions and all external agencies re-sulting in achieving zero man days’loss due to industrial unrest.

BOARD OF DIRECTORSDuring the year Mr. E Sankaranaryanahas given his unwillingness due to hishealth to continue on the board w e f14 th January 2012. The Directors hadappointed Mr. Manish Kumar Mishraas Director of the company. Mr. ManishKumar Mishra is a graduate in Com-merce and has an overall experienceof 15 years in steel industry. His vastand rich experience, consistent with Pro-duction strategy will provide opera-tional excellence to the Company anda capability to drive innovation. Yourdirectors also place on record their deepappreciation of the valuable servicesrendered by Mr. E Sankaranaryana duringhis directorship.

Mr. Manish Kumar Mishra who was ap-pointed by the Board of Directors of yourcompany in its meeting held on 14th Janu-ary 2012 as an Additional Director w.e.f14th January 2012 in terms of the Articlesof Association of the Company, holds of-fice upto the date of the ensuing AnnualGeneral Meeting. Your Company has re-ceived a notice under Section 257 of theCompanies Act, 1956 from a shareholderof your company, signifying his intention


11

to propose the name of Mr. Manish KumarMishra for appointment as Director of yourcompany liable to retire by rotation.

Mr. Umesh Kumar Sahu also given hisunwillingness to continue on the boardw e f the date of ensuing Annual Gen-eral Meeting. The Directors included theresolution in the notice of Annual Gen-eral Meeting indicating the intention ofthe above director not to be re-appointed.Your directors place on record his deepappreciation of the valuable services ren-dered by him during his directorship tenure.

Mr. Vinod Bajoria is a commerce graduateand has an overall experience of 15 yearsin steel industry. His vast and rich ex-perience, consistent with Production strategywill provide operational excellence to theCompany and a capability to drive innovation.Your company decides to include theproposal in the notice of Annual Gen-eral Meeting appointing him as Direc-tor of the company. As required by Section257 of the Act, a notice has been recievedfrom a member signifying his intentionto prapose appointment of Mr. VinodBajoria as a director of your companyliable to retire by rotation.

Mr. T. N. Sivakumar, Independent Di-rectors retire by rotation at the ensuingAnnual General Meeting and being eligibleoffers himself for reappointment.

The proposals regarding the appoint-ment/re-appointment of the aforesaiddirectors are placed for your approval.

PARTICULARS UNDER SEC 217None of the employees of the Company wasin receipt of remuneration above Rs. 2,00,000/= per month or Rs. 24,00,000/= per annumduring the year under review and as such

there is no need to give a declaration u/s217 (2A) of the Companies Act, 1956

CORPORATE GOVERNANCEThe Company has implemented all themandatory provisions of Clause 49 ofthe Listing Agreement relating to theCorporate Governance. The Annual Reportcontains a separate Section for the same.As required under the said provisions,the Company has obtained the Certifi-cate from the Auditors of the Companywhich is annexed to forms part of theAnnual Report.The Management Discussion and AnalysisReport forms part of the Annual Report.

DEPOSITSThe Company has not accepted any fixeddeposits during the period under review.

SHARE WARRANTSDuring the Year, Company has forfeitedthe share warrant money received againstOne Crore Shares of Rs.10 each with aPremium of Rs.22 due to the non receiptof remaining 75% amount. The amountforfeited has been transferred to Capi-tal Reserves.

AUDITORS AND AUDITORS REPORTM/s. Sunil Johri & Associates and M/s. Mahadevan & Sivarajan, Chartered Ac-countants were appointed as Joint au-ditors of the Company in the last An-nual General Meeting. But M/s.Mahadevan & Sivarajan has resigned fromauditor ship as joint auditor w.e.f. Sep-tember 27, 2012 due to personaloccupancy.Your directors place on recordtheir deep appreciation of the valuableservices rendered by them during theirAuditorship tenure.


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M/s. Sunil Johri & Associates, CharteredAccountant shall remain statutory au-ditor till the conclusion of ensuing Generalmeeting of the Company and are eligiblefor reappointment.The Company has received letters fromM/s. Sunil Johri & Associates, CharteredAccountants, to the effect that their ap-pointment, if made would be within theprescribed limits under Section 224(1B)of the Companies Act, 1956 and that theyare not disqualified for such appoint-ment within the meaning of Section 226of the Companies act,1956.The observation and comments given byauditors in this report read together withnotes to Accounts are self explanatoryand hence do not call for any further com-ments under Section 217 of the CompaniesAct,1956.

DIRECTOR’S RESPONSIBILITYSTATEMENTIn accordance with Section 217 (2AA) ofthe Companies Act, 1956 the Directorsstate that:-i. In the preparation of the Annual

Accounts, all applicable AccountingStandards have been followed andproper explanations relating to ma-terial departures, if any have beenfurnished.

ii. Accounting policies as listed in notesto the financial statements have beenmade so as to give a true and fairview of the state of affairs of theCompany for the financial year 2011-12 for the pe riod ended on 30th

June,2012 and of the Profit of theCompany for the Accounting Yearended on that day.

iii. Proper and sufficient care for themaintenance of adequate accountingrecords has been taken in accor-dance with the provisions of thisAct so as to safeguard the assetsof the Company and to preventand detect fraud and other irregu-larities and

iv. The Annual Accounts have beenprepared on a going concern basis.

CONSERVATION OF ENERGY,TECHNOLOGY ABSORPTION ANDFOREIGN EXCHANGE EARNINGAND OUTGOThe particulars as required to be dis-closed pursuant to Section 217 (1) (e) ofthe Companies Act,1956 read with Com-panies ( Disclosures of Particulars in theReport of Board of Directors) Rules 1988are given in Annexure: A forming partof this report.

ACKNOWLEDGEMENTSYour directors acknowledge the assis-tance and goodwill received from theconcerned departments of the State andCentral Governments, Financial Institutions,Banks, Customers, Selling Agents, Dealers,Distributors, employees at all levels andthe Shareholders.For, Southern Ispat & Energy Limited

Date: 26/11/2012Place:Palakkad, Kerala

Sd/-Vivek AgarwalChairman and

Managing Director

Sd/-Manish Mishra

Director


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ANNEXURE TO THE DIRECTORS’ REPORTCompany’s (Disclosure of Particulars in the Report of the Board of Directors) Rules1988:-

Information under Section 217 (1)(e) of the Companies Act, 1956, read with Com-panies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.

I. Conservation of Energy

a. Energy conservation measures taken

b. Additional investments and proposals, if any,being implemented for reduction of consump-tion of energy.

Impact of measures at (a) & (b) above for reductionof energy consumption and consequent impacton the cost of production of goods.

The Company is using Induction Furnace and hencepossibility of conserving energy is limited.

NIL

NA

Current Year ended on30/06/12

Previous Year ended on30/06/11

6907320341.76

4.95

NILNANA

NILNANA

NILNILNA

6904320298.10

4.32

NILNANA

NILNANA

NILNILNA

A. Power and Fuel Consumption

1. Electricity PurchasedUnits/KWHTotal Amount (Rs. in Lakhs)Rate/Unit (Rs.)Own Generation (Diesel Generation)Units/KWHUnits per litre of Diesel OilCost of Unit of Diesel Oil (Rs. / KWH)

2. CoalQty. (MT) (Grade varies from A to D)

Total Cost (Rs. lakhs)Average Rate (Rs. / Tonne)

3. Furnace Oil (Diesel Oil / LD Oil)Quantity (Litres)Total amount (Rs. lakhs)Average rate (Rs. / Litre)

FORM - A


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Current Year (30/06/12) Previous Year (30/06/11)Electricity

(KWH)M S IngotsDiesal /

LD Oil (Ltr)Coal (MT) Electricity

(KWH)Diesal /

LD Oil (Ltr)Coal (MT)

1346 NIL NIL 1367 NIL NIL

B. Consumption per unit of productionProduct

II. Technology Absorption

1 Specific area in which R & D carried out2 Benefits derived as a result of the above3 Future plan of action4 Expenditure on R & D

CapitalRecurringTotalTotal R & D Expenditure as a percentage of total turnover

Technology Absorption, Adaptation and Innovation1. Efforts, in brief, made towards technology Absorption, adaptation and

innovation.2. Benefits derived as a result of the above efforts e.g. product

improvement, cost reduction, product development, import substitution3. In case of imported technology (imported during the last five years,

reckoned from the beginning of the financial year), followinginformation may be furnished.Technology Imported.Year of ImportHas technology has been fully absorbed ?If not fully absorbed, areas where this has not taken place(reasons and future plans of action)

III. Foreign Exchange Earnings and outgoThe particulars of foreign exchange earned / utilized during the year NIL

NIL

NA

NIL

NIL

NIL

NA

NIL

FORM B (See Rule 2)(Form for disclosure of particulars with respect to Technology Absorption)


15

OVERVIEWThe financial year 2011-12 has been one of themost challenging years for the Company. Thecombined effect of European debt crisis and globaleconomic slowdown along with the domesticchallenges of non availability and high costof raw material has impacted the Iron & Steelindustry and the performance of the Company.SIEL saw through this challenging period hasachieved healthy growth in sales and profit-ability and is poised to emerge as a strongerCompany to deliver enhanced shareholder valueover the coming years. During the financial year2011-12, your Company registered a 24% growthin revenues to Rs.10011.63 million, 2.5% growthin EBIDTA to Rs.434.18 million and 13% risein PAT to Rs. 412.51 million.

INDUSTRY STRUCTURE &DEVELOPMENTSWith recent global developments contributingto a significant rebalancing of portfolios as aresult of rapidly changing risk perceptions andappetites, the Indian macroeconomic environmenthas looked turbulent during the past year. Aftera promising start to the decade, with achieve-ments like maintaining GDP growth rate around8 percent, bringing down fiscal deficit to 4.8percent of GDP as well as containing currentaccount deficit to 2.6%, the fiscal year 2011-12 has been challenging for the Indian Economy.The year started on a note of optimism throughimpressive growth in exports and high levelsof foreign exchange inflows, only to moderateas the year progressed through continued monetarytightening in response to the untamed infla-tionary pressures. Gradually, high levels of inflationgave way to a slow-down in the growth. Ad-ditionally, as fiscal conditions worsened overthe year, export numbers were revised in lightof data discrepancies leading to a wideningof trade deficit. In light of a perceivably weakmacroeconomic environment, a well-plannedeconomic revival policy from the Government’spart is required to get back the Indian Economyon the path to stable and prosperous growth.

GLOBAL STEEL INDUSTRYOVERVIEWPerformance of major advanced economies hasbeen a point of concern as the economic out-look of the Euro Area continues to be grim inthe shadow of a protracted sovereign debt crisis.Japan is still trying to cope up with the eco-nomic impact of natural calamities which ishaving an impact on its export partners. De-spite some modest signs of improvement in theUS, the European debt problem has unques-tionably remained as a dominant global fac-tor and a source of volatility in asset and cur-rency markets all over the world. By contrast,emerging market economies have generally shownreasonable robustness – mainly on account oftheir domestic drivers and increasing linkageswith each other. Nevertheless a slowdown inadvanced economies is a point of concern asit impacts the investment and exchange ratechannel of the domestic economy.The world steel industry is a key driver of theworld’s economy.

INDIAN STEEL INDUSTRY &ITS PROSPECTSThe global Steel industry has witnessed rea-sonable demand growth and Steel making ca-pacities have gradually shifted to emerging marketssuch as China and India. However, the highcost of raw material and increased volatilityin prices has put pressure on margins. Indiais poised to be a dominant player in the Glo-bal Steel industry with a strong growth in itseconomy. Demand for steel products is beingdriven primarily by infrastructure and consumptionled sectors including construction, automobile,white goods and oil & gas. However, the Steelindustry in India has suffered due to the nonavailability and high prices of Iron Ore, highinterest rates and foreign exchange volatility.Steel is at the core of a green economy, in whicheconomic growth and environmental respon-sibility work hand in hand. The steel indus-try believes that sustainable development mustmeet the needs of the present without compromising

MANAGEMENT DISCUSSION AND ANALYSIS REPORT


16

the ability of future generations to meet theirown needs. Within this, a green economy de-livers prosperity for all nations, wealthy andpoor alike, while preserving and enhancing theplanet’s resources.Steel’s two key components are iron (one of Earth’smost abundant elements) and recycled steel.Once steel is produced it becomes a permanentresource because it is 100% recyclable and hasan infinite life cycle. Infinite recyclability withoutloss of properties makes steel unique and valuable.For example, trade in ferrous scrap has beensteadily increasing over the years.In 2011, world average steel use per capita was215 kg, it has steadily increased over time. Steeltouches every aspect of our lives. No other materialhas the same unique combination of strength,formability and versatility. Steel is central totransport, housing, energy, agriculture, waterand infrastructure.

COMPANY OVERVIEWYour Company is focused on its vision to emergeas a low cost producer of value added Steelproducts with captive mineral resources andcaptive power. The Company is also focusedon mining its own iron ore in order to improvemargins & also to setup a Beneficiation Plantto exploit the resources.

STRATEGIC INITIATIVES IRON ORE MINES

Your Company has also taken necessarysteps for securing its raw material requirementsand integrating backwards into mining ofIron Ore, Coal and Chrome Ore. SIEL intalks to acquire 50% stake, in BuxwahaIron Ore mine spread over 150 Hectaresin Chattarpur area of Madhya Pradesh,India. The mining division has its ironore operations in the mineral rich Chattarpurbelt of Madhya Pradesh. The mines havea substantial resource base of superior qualityiron ore with high Fe (iron) content andbulk density. The Fe content varies be-tween 63 to 66 per cent, which makes itone of the best quality materials availablein the country. SIEL Mining will hold aleading position in the Indian mining industry

for its superior mining techniques, equipment,and scale and flexibility of operations andsystems. The potential of the proven de-posit, as well as the quality and quantityof reserves, are good enough to sustain themining operations for the next 20 years atthe current operating capacity. The mainproducts are: Calibrated Iron Ore Lumps – inputs for steelmaking through the DRI/ BF process. Iron Ore Fines – inputs for sinters andpellets, used for making steel.

The mining operations are mechanized,adopting state-of-the-art technology andequipment namely hydraulic drifter, in-pit crusher, cone crushers and mobile crushers.Flexibility in operations enables the di-vision to maximize the utilization of re-sources, as well as cater to the needs ofdiverse customers.

BENEFICIATION &PELLETIZATION PLANTYour Company is planning to set up a Ben-eficiated & Pelletizing plant with an in-stalled capacity of 12,00,000 TPA in areaof Gujarat, India for Agglomeration of ben-eficiated and ground iron ore into sphericalshaped green balls and subsequent heathardening them is termed as Pelletizing.Pellets thus produced to desired physi-cal and chemical properties are much superiorto the conventionally sized iron ore lumps.Iron ore Pellets are in very high demand.No difficulties are foreseen regarding itsmarketability. Indeed, Iron Ore Pellet fillsa long standing demand and supply gapin the steel industry by use of abundantand easily available iron ore fines whichotherwise find no buyer in India. The demandof high quality sized iron ore is ever in-creasing and constantly echoed at vari-ous apex bodies. Moreover, Pelletizing unitsare using low grade iron ore available inabundance. The company has also acquiredadequate land near to mines for settingup of a Beneficiation & Pellatization plantfor exploiting the mining operations & maxi-mizing profits.


17

SOLAR GRADE SILICONYour Company as a group is diversifyingby going into manufacturing of solargrade Silicon ingots and bricks, whichare the vital component of Solar cells.With the dying of natural resources,solar energy, though in its infancystill, has enormous potential to bethe leading energy supplier in thenear future. In this regard, we havetaken a few positive steps in assessingabout the need, the resources availableand various other factors which wouldinfluence the setting up of a manu-facturing facility for Silicon ingotsand bricks.In this regard a lot of groundworkhas gone into the appraisal of variousparameters and the requirementsfor setting up such a facility, Suchas the company have es tablishedcontact and have gone into vari-ous contracts with leading manufacturersof equipments required for the facilitylike GT Solar, Centrotherm, ALDVacuum Tech., Schmid Silicon, Cyberstarand various other reputed conglomettes& have detailed our project to themand have received instructive quotationsand estimates regarding the equipments.We have also visited colossal in-dustrial fairs and exhibit ions ca-tering to adhoc Solar technologyand its allied fields and have re-ceived a great deal of informationafter meeting up with the indus-try personnel at the fairs in Shanghaiin China and San Francisco in USAand Ontario, Montreal and Bencouverin Canada where we had definitediscussions with industry and ministry

officials in Ontario and Quebec districtsin Canada. We had also talked aboutthe establishment of our project intheir locality (which is very businessadvantageous) and we had manyconclusive possible funding and venturecapital from the Government.We have aproposition for collaborationwith a conglomerate name Calisolarthere in setting up of their Polysiliconproduction plant. This will give usa leading edge in Supply chain man-agement environs, as upgraded Polysiliconis the raw material and at the sametime we will procure the ingot manu-facturing furnaces .Thus in a nutshell this is the de-scription of the future plans for aprobable expansion and diversificationinto this vastly emerging solar energyindustry, by fist charting ahead witha solar ingot and brick manufac-turing plant , with Canadian col-laborat ion.

SEGMENT-WISE PERFORMANCE ANDOUTCOMEThe company is in the business of Manu-facturing & Trading of Steel Items and henceoperates in a single business segment. Performanceof the company has been dealt with in theDirectors’ Report.

OUTLOOKWith continued focus of the governmenton the infrastructure development & Powersector, the consumption of steel is ex-pected to increase, which is expected totranslate into demand growth for spongeiron and finished steel in form of rods,


18

bars and wires. Domestic demand is alsoexpected to remain robust because of sus-tained growth of major steel consumingsector such as construction, infrastruc-ture and capital goods, barring tempo-rary decline in the growth due to col-lapse of global financial markets.

INTERNAL CONTROLSThe company has in place an adequateand appropriate system of internal con-trol, commensurate with its size and natureof business to ensure efficacy of opera-tions and compliance with applicable leg-islations. The company has comprehen-sive budgetary control system. The managementregularly reviews actual performance. Thecompany has well defined organizationstructure, clear authority levels and de-tailed internal guidelines for conductingbusiness transactions. Besides this, the companyhas Audit Committee of the Board whichperiodically review the audit plans, evaluatesthe observations and recommendationsof the internal and external auditors withreference to significant risk areas and adequacyof the internal control systems.

INDUSTRIAL RELATIONS & HUMANRESOURCES MANAGEMENTSYour Company recognizes the fact that manpoweris one of the vital constituents of a successfulorganization. The growth of your Companyand execution of new projects places em-phasis on the recruitment process and yourCompany has been successful in attract-ing professional talent.

HEALTH & SAFETYThe Company continuously focuses onthe health and safety of all its workersand staff. Adequate safety measures havebeen taken at all the plants for the preventionof accidents or other untoward incident.

The necessary medical facilities are availablefor the workers, staff and their familymembers to enable them to maintain goodhealth. The Company has also obtainedGroup Medical Policy for its employee’sand their families.

CORPORATE SOCIAL RESPONSIBILITYThe Principles of Corporate Social Responsibility(CSR) are firmly embedded in Man’s phi-losophy and strategy as a business enter-prise. The company considers itself part ofsociety and therefore obligated to behaveas a responsible corporate citizen. As wecontinue to grow, it becomes increasinglyimportant to focus on our core values, namely:building a sustainable business and givingback to society. Our sustainability programguides us in supporting our employees andthe communities where they work.

CAUTIONARY STATEMENTStatements in this “Management Dis-cussion & Analysis” describing the Company’sobjectives, projections, es timates, ex-pectations or predictions may be ‘forwardlooking statements ’ within the mean-ing of applicable securit ies laws andregulations. Actual results could dif-fer materially from those expressed orimplied. Important factors that couldmake a difference to the Company’soperat ions include global and Indiandemand supply conditions, finished goodsprices , input availabil i ty and prices ,cyclical demand and pricing in the Company’sprincipal markets, changes in Governmentregulations, tax regimes, economic de-velopments within India and the countrieswithin which the Company conductsbusiness and other factors such as litigationand labour negotiations.


19

CORPORATE GOVERNANCEREPORT FOR THE YEAR 2011-2012

(pursuant to Clause 49 of the Listing Agreements entered into

with the Stock Exchanges)1. COMPANY’S CORPORATE

GOVERNANCE POLICYThe Company’s Corporate GovernancePolicy emphasis the need for full trans-parency and accountability in all itstransactions, in order to protect the interestof its stakeholders. The policies, proceduresand practices that are installed in theCompany ensure requisite care and dili-gence in functioning as well as pro-viding transparencies and accountabilityfor performance thereby enhancing thevalue of shareholders and safeguardingtheir interest. A Certificate from theAuditors of the Company regarding com-pliance of conditions of Corporate Gov-ernance as stipulated under Clause 49of the Listing Agreement with StockExchanges forms part of the AnnualReport. The Company combines theadvanced technology with sound en-vironment and application of superiorcustomer relationship.

2. BOARD OF DIRECTORS2.1 Appointment :

The Directors of the Company areappointed by shareholders at GeneralMeeting. All the directors are subjectto retirement by rotation and at everyAnnual General meeting 1/3 of suchDirectors are liable to retire by rotation,if eligible, generally offer themselvesfor reelection, in accordance withthe provisions of Section 256 and257 of the Companies Act, 1956 andthat of the Articles of Associationof the Company. The executive Di-rectors on the Board serve in ac-cordance with the terms of their con-tracts of service with the company.

2.2 The composition of and thecategory of directors were as under:The Company has a balanced blendof executive and non-executive in-dependent directors. As on 30-06-2012 the Board of Directors com-prises of 03 Non Independent Ex-ecutive Director and 03 Non ExecutiveIndependent Directors.

Name of the Director Portfolio Category Date of Joining the board

Mr. Vivek Agarwal Chairman and Non Independent 25-09-2006 Managing Director Executive Director

Mr. Umesh Kumar Sahu Director Non Independent 21-11-2011 Executive Director

Mr. Manish Kumar Mishra Director Non Independent 14-01-2012 Executive Director

Mr. T. N. Sivakumar Director Non Executive 21-11-2011 Independent Director

Mr. V. Manikandan Director Non Executive 23-04-2007 Independent Director

Mr.Thiagaraja Iyer Additional Director Non Executive 24-12-2009Venkatramani Independent Director


20

2.3 Details of Board Meetings

The Board of Directors met 7 times dur-ing the period under review on 13/08/2011,14/11/2011, 21/11/2011, 26/11/2011, 14/01/

2012, 13/02/2012 and 15/05/2012. Attendanceof each Director at the meeting of the Boardof directors held during the year and thelast Annual General Meeting held by themin other companies is indicated below.

# : Resigned from the board w.e.f. 14th January 2012##: Not a Director at the time of Last Annual General Meeting###: Resigned from the Board w.e.f. 21st November 2011

Mr. Vivek Agarwal 07 Yes 01 02 NIL NILMr. E. Sankaranarayana # 05 Yes NIL 02 NIL NILMr. Umesh Kumar Sahu 05 Yes NIL 01 NIL NILMr. Manish Kumar Mishra ## 03 No NIL 02 01 01Mr. V Manikandan 07 Yes NIL 02 01 02Mr. Thiagara Iyer Venkatramani 07 Yes NIL 05 01 02Mr. K.K. Agarwalla ### 04 Yes NIL 02 NIL NIL

No. of Committees( Including this

company)

Name of Director No. ofmeeting

Held/Attended

WhetherLast AGMAttended

No of Directorship(Including thisCompany)

AsChair-man

AsMember

AsChair-man

AsMember

3. BOARD COMMITTEES3.1 Audit Committees

In terms of Clause 49 of the ListingAgreement as well as Section 292Aof the Companies Act, 1956 the Boardhas constituted Audit Committee ofthe Board of Directors at its meetingheld on 17th March 2004. The AuditCommittee consist of Mr. VManikandan Mr. T.N. Sivakumar andMr. Thiagaraja Iyer Venkatramani. TheAudit Committee is chaired by Mr.V Manikandan who has vide expe-rience on economic and financial is-sues. All members of the Commit-tee are financial literate.

The broad terms of references are asfollows: -

1) Review of Company’s FinancialReporting process and its FinancialStatements.

2) Review of Internal control System.3) Reviewing with management the

annual and quarterly financial state-ments before submission to the Board.

4) Recommending the appointment /reappointment and replacement /removal of statutory auditor.

The Audit Committee held its meeting on11/08/2011, 09/11/2011, 10/02/2012 and11/05/2012.Attendance of members at the meeting of theAudit Committee held during the period.

Mr. T. N. Sivakumar 05 Yes NIL 01 NIL 01


21

The Shareholders/ Investor’s GrievanceCommittee comprises of Mr. ThiagarajaIyer Venkatramani as Chairman , Mr.Manikandan and Mr. Manish KumarMishra as members. The Committee,inter alia, approves issue of duplicatecertificates and overseas and reviewsall matters connected with transfer ofsecurities. The Committee also monitorsimplementation and compliance of theCompany’s code of conduct for Pro-hibition of Insider Trading in pursu-ance of SEBI (Prohibition of Insider Trading)Regulation,1992.The Shareholders/ In-

vestor Grievance Committee held itsmeetings on 19/08/2011 and 24/02/2012. The company has appointed AdroitCorporate Services Pvt Ltd to act asRegistrar and Transfer Agent of theCompany. As on 30/06/2012, there areno complaints, queries pending for reply.There was no share transfers pending.There were no share transfers pend-ing for registration for more than 30days as on the said date.Attendance of members at the meetingof the Shareholders/ Investors Griev-ance Committee held during the period.

Name of Members Category No of Meetings Held Attended

Mr. Thiagaraja Iyer Venkatramani Chairman Independent Non Executive 02 02

Mr. V Manikandan Independent Non Executive 02 02

Mr. E. Sankaranarayana # Non Independent Executive 02 01

Mr. Manishkumar Mishra Non Independent Executive 02 01

# Resigned from Commitee w.e.f 14th January 2012

Name of Members Category No of Meetings Held Attended

Mr. V Manikandan Chairman Independent Non Executive 04 04

Mr. T. N. Sivakumar Independent Non Executive 04 02

Mr. Thiagaraja Iyer Venkatramani Independent Non Executive 04 04

Mr. E. Sankaranarayana # Non Independent Executive 04 02

# Resigned from Commitee w.e.f 14th January 2012

3.2 Shareholders/Investors Grievance Committee


22

3.3 Remuneration CommitteeThe Remuneration Committee, which isa non- mandatory requirement of Clause49 constituted with the followingdirectors.The Remuneration Committeecomprises of Mr. Manish Kumar Mishraas Chairman of the Committee and Mr.Thiagaraja Iyer Venkatramani and Mr.V.Manikandan as members. The Committeeinter alia consider the process for selection

and appointment of new directors andsuccesion plans and the compensationstructure for directors. The committee heldits meeting on 17th June 2012.

4. GENERAL BODY MEETING4.1 Annual General Meetings :

Location and time for the last threeAnnual General Meeting:-

AGM Year Location Date Time No. of Special Resolutions

16 2010-2011 19/629(1) Sreyas 26/12/2011 11.30 AM 2 Wes Yakkara, Palakkad

15 2009-2010 19/629(1) Sreyas Wes Yakkara, Palakkad 27/12/2010 10.30 AM 6

14 2008-2009 19/629(1) Sreyas Wes Yakkara, Palakkad 29/09/2009 03.00 PM 6

5. DISCLOSURESThere are no materially significant trans-actions with related parties viz. Pro-moters, Directors of their management,their subsidiaries or relatives conflictingwith Company’s interest.a) Compliance with non-mandatory

requirements :Further the company comply with allthe mandatory requirements of clause49 of Listing Agreement and set upRemuneration Committee which isa Non mandatory requirement as perthe Clause 49 also being complied.

b) Non- instance of non compliance:There has been no instance of non com-pliance by the company on any matter

related to capital markets during thelast three years and hence no penaltiesor strictures have been imposed onthe Company by the Stock Exchangesor SEBI or any other statutory authority.

c) Subsidiaries :The Company have non-listed foreignsubsidiary company and hence ,it isnot required to have an independentdirector of the company on the boardof such subsidiary company.

d) Whistle blower policy :The Company lay down the mechanismfor making enquiry into whistle blowercompliant received by the company.Employees aware of any alleged wrong-ful conduct are encouraged to makea disclosure.


23

e) Code of Conduct :The Company has adopted the codeof conduct and ethics for directors.The code had been circulated to allthe members of the Board .The Boardof Directors have affirmed their com-pliance with the code and a decla-ration signed by the Managing Directorin terms of Clause 49-V of the list-ing agreement.

f) MD/CFO Certification :The Managing Director of the companyhas given the certification on the fi-nancial reporting , internal controlsand stated to the audit committeeand auditors about the financial re-porting and internal controls andplaced before the board such cer-tificate as required under clause 49(V)of the Listing Agreement.A copy ofthe certificate is annexed to this Cor-porate Governance eport.

6. MEANS OF COMMUNICATIONSThe Company is publishing quarterly un-audited results and notices to shareholdersin dailies within 48 hours of the conclusionof the meeting in which they are consideredand are also posted on the Company’swebsite www.southernispatltd.com andare sent to Stock exchanges immediatelyafter they are approved by the Board.

7. GENERAL SHAREHOLDER INFORMATION7.1 Annual General Meeting :

DATE: 26-12-2012TIME: 11.30 AMVENUE: 19/629(1), “ Sreyas”, NearYakkara School Bus Stop,West Yakkara, Palakkad-678 001

7.2 Financial Calendar 2011-12Unaudited Results of the Quarter ended30/09/2011 On or Before 15/11/2011

Unaudited Results of the Quarter ended31/12/2011 On or Before 15/02/2012Unaudited Results of the Quarterended 31/03/2012 On or Before 15/05/2012Unaudited Results of the Year ended30/06/2012 On or Before 15/08/2012Audited Results of the Year ended30/06/2012 On or Before 26/11/2012

7.3 Book Closure :Register of Members and Share Transferbooks will remain closed for 06 daysfrom 21-12-2012 to 26-12-2012 (bothdays inclusive)

7.4 Listing on Stock Exchanges :The Company’s shares are listed onMumbai /Cochin / Madras/ Ahmedabadand got trading permission on NationalStock Exchange w e f 01-10-2010 andthe GDR’s got listed in Luxembourg StockExchange on 11-08-2010 and 15-06-2011respectively.

8. STOCK MARKET DATABombay Stock Exchange Ltd.Scrip Code : 531645Month Month’s Month’s

High LowJuly 2011 8.63 8.00August 2011 8.28 6.28September 2011 7.10 3.81October 2011 5.00 4.03November 2011 4.30 3.08December 2011 3.94 3.03January 2012 4.20 2.85February 2012 5.11 3.32March 2012 4.75 3.52April 2012 5.30 3.80May 2012 4.15 3.30June 2012 3.78 3.20


24

9. REGISTRAR/ SHARE TRANSFER AGENT :

M/s Adroit Corporate Services Pvt. Ltd.17-20, Jafferbhoy Industrial Estate,1st Floor, Makhwana Road, Marol Naka,Andheri (East), Mumbai-400 059Ph : 022 – 42270400, 28596060Fax: 022-28503748Email: [email protected]

10. SHARE TRANSFER SYSTEM

Shareholders/Investors are requested tosend share transfer related documents directly

to our Registrar and Transfer Agent whoseaddress is given above. The Board has del-egated powers to the Share transfer Com-mittee of the company. On approval RTAto approve the transfers/ transmission/dematerailisation / rematerialisation.Thecompany obtains from a Company Sec-retary in Practice a half yearly certificateof compliance with the share transfer for-malities as required under Clause 47(c)of the Listing Agreement with Stock Ex-change and files a copy of the certificatewith the Stock exchanges.

11. DISTRIBUTION OF SHAREHOLDING AS ON 30/06/2012

Range No. of % of Amount(Rs) % of Shareholders Shareholders Shareholding

Upto 500 5856 48.13 14685550 1.11501 to 1,000 2475 20.34 22207730 1.681,001 to 2,000 1468 12.06 24218720 1.832,001 to 3,000 632 5.19 16802540 1.273,001 to 4,000 328 2.70 12039040 0.914,001 to 5,000 402 3.30 19408750 1.475,001 to 10,000 533 4.38 40690190 3.0810,001 & Above 474 3.90 1171438280 88.65TOTAL 12168 100.00 1321490800 100.00

12. DEMATERIALISATION OF SHARESThe shares of the Company are traded indemat form by all categories of investors.The Company has arrangement with bothNational Depositories Limited ( NSDL) andCentral Depository Services Limited (CDSL)to establish electronic connectivity of our sharesfor scripless trading. The ISIN allotted forthe shares of the Company is INE943B01011.As on 30/06/2012, 98.77 % of shares of theCompany were held in dematerialised form.

13. QUERIES ON ANNUAL REPORT

Queries on Annual Report may beaddressed to :

SOUTHERN ISPAT AND ENERGY LIMITED19/629 (1), SREYAS,NEAR YAKKARA SCHOOL BUS STOP,WEST YAKKARA, PALAKKAD,KERALA-678 001.


25

CERTIFICATE BY MANAGING DIRECTORON CORPORATE GOVERNANCE

a) I have reviewed financial statementsand the cash flow statements forthe year and that to the best of theirknowledge and belief:

i) these statements do not containany materially untrue statementor omit any material fact or con-tain statement that might be mis-leading

ii) these statements together presenta true and fair view of thecompany’s affairs and are incompliance with existing account-ing standards, applicable lawsand regulations

b) It is best of my knowledge and be-lief, no transactions entered intoby the company during the yearwhich are fraudulent, illegal orviolative of the company’s codeof conduct.

c) I accept responsibility for estab-lishing and maintaining internal

controls for financial reporting andthat they have evaluated the effective-ness of internal control systems of thecompany pertaining to financial re-porting and they have disclosed tothe auditors and the Audit Commit-tee, deficiencies in the design or op-eration of such internal controls, if any, of which they are aware and the stepsthey have taken or propose to taketo rectify these deficiencies.

d) The auditors and the audit commit-tee are informed ofi) significant changes in internal control

over financial reporting during the year.ii) significant changes in accounting

policies during the year and the samehave been disclosed in the notesto the financial statements; and

iii) there is no instance of significantfraud of which they become awareand the involvement therein, if any,of the management or an employeehaving significant role in the internalcontrol system over financial reporting.


Sd/-Vivek AgarwalChairman and Managing Director

Date : 26/11/2012

Place : Palakkad, Kerala


26

To,

The Members ofSouthern Ispat & Energy Limited

We have examined the compliance ofconditions of Corporate Governanceprocedures implemented by SouthernIspat & Energy Limited (“the Company”),for the period ended on June 30, 2012as stipulated in clause 49 of the listingagreement of the said company with thestock exchanges in India.

The compliance of conditions of corporategovernance is the responsibility of themanagement. Our examination was limitedto a review of procedures and imple-mentation thereof, adopted by the companyfor ensuring the compliance of the con-ditions of Corporate Governance. It is

AUDITORS’ CERTIFICATE

neither an audit nor an expression ofopinion on the financial statements ofthe Company.

In our opinion and to the best of ourinformation and according to the ex-planations given to us, we certify thatthe Company has complied with theconditions of Corporate Governance asstipulated in the above-mentioned ListingAgreement

We further state that such complianceis neither an assurance as to the futureviability of the Company nor the effi-ciency or effectiveness with which themanagement has conducted the affairsof the Company.

For SUNIL JOHRI & ASSOCIATESCHARTERED ACCOUNTANTSFRN 005960C

Sd/-(SUNIL JOHRI)PARTNERM. No. 074654

Date: 30/09/2012Place: Palakkad, Kerala


27

To the Members ofSouthern Ispat & Energy Limited

1) We have audited the attached consolidatedbalance sheet of M/s Southern Ispat & EnergyLimited and its subsidiary, as at 30th June 2012and also the consolidated Profit & Loss A/cand the consolidated Cash Flow Statement forthe year ended on that date annexed thereto.These consolidated financial statements arethe responsibility of the company’s manage-ment. Our responsibility is to express an opinionon these consolidated financial statements basedon our audit.

2) We conducted our audit in accordance withauditing standards generally accepted in In-dia. Those standards require that we plan andperform the audit to obtain reasonable assuranceabout whether the financial statements are freeof material misstatement. An audit includesexamining, on a test basis, evidence support-ing that amounts and disclosures in the financialstatements. An audit also includes assessingthe accounting principles used and significantestimates made by management, as well asevaluating the overall financial statement pre-sentation. We believe that our audit providesa reasonable basis for our opinion.

3) We did not audit the financial statements ofsubsidiaries, whose financial statements re-flect total assets of Rs 1436.03 Millions as at30th June 2012, Total Revenue of Rs 6741.59Million and net cash flow of Rs 407.22 Mil-lions for the year ended on 30th June 2012.

Auditors’ Report on Consolidated Financial Statements

These financial statements and other finan-cial information have been audited by otherauditors / compiled and approved by the man-agement whose report have been furnished tous, and our opinion is based solely on the reportof the other auditors and information providedby the management.

4) We report that the consolidation financial state-ments have been prepared by the company inaccordance with the requirements of AccountingStandard -21, “consolidated Financial State-ments” notified by the Companies (Account-ing Standards) Rules, 2006.

5) Based on our audit and on consideration ofother auditors on separate financial statementsand on the other financial statements and onthe other financial information of the compo-nents, and to the best of our information andaccording to the explanations given to us, weare of the opinion that the attached consoli-dated financial statements give a true and fairview in conformity with the accounting prin-ciples generally accepted in India.

i) In the case of consolidated balance sheet,of the state of affairs of the company as at30th June 2012.

ii) In the case of consolidated profit & lossaccount, of the Profit for the period endedon that date; and

iii) In the case of consolidated cash flow state-ment, of the cash flow for the period endedon that date.

Date: 30/09/ 2012Place: Palakkad, Kerala

For SUNIL JOHRI & ASSOCIATESCHARTERED ACCOUNTANTSFRN 005960C

Sd/-(SUNIL JOHRI)PARTNER


28

I. LIABILITIES :(1) Shareholder’s Funds :(a) Share Capital 1 1,321,490,800 1,321,490,800(b) Reserves and Surplus 2 1,311,635,835 664,143,087(c) Money received against share warrants - -

2,633,126,635 1,985,633,887(2) Share application money pending allotment : - 69,000,000(3) Non-Current Liabilities :(a) Long-term borrowings - -(b) Deferred tax liabilities (Net) 3 9,020,380 11,305,127(c) Other long term liabilities - -(d) Long term provisions - -

9,020,380 11,305,127(4) Current Liabilities :(a) Short-term borrowings 4 30,000,000 29,073,877(b) Trade payables 5 1,378,302,108 1,564,649,460(c) Other current liabilities 6 20,868,586 74,513,177(d) Short-term provisions - -

1,429,170,694 1,668,236,514TOTAL 4,071,317,709 3,734,175,528

II. ASSETS :(1) Non-current assets(a) Fixed assets 10 (i) Tangible assets 77,627,214 96,461,566 (ii) Intangible assets - - (iii) Capital work-in-progress 7,667,900 6,700,000 (iv) Misc.Expenditure to the extent not Written off 40,450,065 50,562,581(b) Non-current investments 11 5,800,000 5,800,000(c) Long term loans and advances 7 143,139,169 121,094,889(d) Other non-current assets 8 4,100,000 4,100,000

278,784,348 284,719,036(2) Current assets(a) Inventories 9 1,157,877,564 725,236,456(b) Trade receivables 12 1,590,437,586 1,820,708,869(c) Cash and cash equivalents 13 1,043,308,624 899,826,366(d) Short-term loans and advances 14 - -(e) Other current assets 15 909,587 3,684,802

3,792,533,361 3,449,456,493

TOTAL 4,071,317,709 3,734,175,529

CONSOLIDATED BALANCE SHEET AS AT 30TH JUNE 2012

NOTE NO.As at

30-Jun-12(In INR)

As at30-Jun-11

(In INR)

Notes to Consolidated Accounts referred above form an integral part of the financial statements

As per our attached report of even date

For Sunil Johri & AssociatesChartered AccountantsFirm Regn. No. 005960C

Sd/-Sunil JohriPartnerMembership No 074654Dated : 30/09/2012Pl ace : Palakkad, Kerala

Sd/-Manish MishraDirector

Sd/-Vivek AgarwalChairman & ManagingDirector

For and on behalf of the Board of Directoers


29

RevenueRevenue from Operations 16 10,011,639,121 8,055,929,726Other Income 17 179,718,901 (5,445,565)

TOTAL (A) 10,191,358,022 8,050,484,161

Cost of Material Consumed 18 9,577,754,126 7,554,018,979Changes in Inventory of FG, WIP & Stock In trade 19 (4,876,187) 6,887,605Employee Benefits 20 5,192,056 4,182,012Finance Cost 21 4,016,163 10,504,682Dpereciation and amortization expenses 10 19,272,103 24,053,971Other Expenses 22 179,108,296 62,049,367

TOTAL (B) 9,780,466,556 7,661,696,616

Profit before Taxation and Exceptional Item (C) = (A) - (B) 410,891,466 388,787,545Exceptional Items Expenses (D) - 339,977Prior Year Income/(Expenses) (H) - -

Profit before Taxation (E) = (C) + (D) 410,891,466 388,447,568

Less: Provision for TaxationCurrent tax 659,677 29,690,507Deferred tax (2,284,747) (6,602,326)

Profit after Tax (PAT) 412,516,536 365,359,387

Earning Per ShareBasic (Rs.) 3.12 8.15Diluted (Rs.) 3.12 8.15

STATEMENT OF CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30TH JUNE 2012

Notes to Consolidated Accounts referred above form an integral part of the financial statements





Sd/-Vivek AgarwalChairman & Managing Director


NOTE NO.As at

30-Jun-12(In INR)

As at30-Jun-11

(In INR)


30

1. SIGNIFICANT ACCOUNTINGPOLICIES :

A. BASIS OF ACCOUNTING :The consolidated financial statements havebeen prepared under the historical costconventional accrual basis of accounting,in conformity with accounting principlesgenerally accepted in India and complywith the accounting standard referred toin Sec.211 (3c) of the Companies Act, 1956.The financial statements are presentedin Indian rupees.

B. USE OF ESTIMATES :The preparation of financial statements arein conformity with Indian GAAP requiresmanagement to make estimates and as-sumptions that affect the reported amountsof assets and liabilities and disclosure ofcontingent liabilities on the date of thefinancial statements and the reported amountsof revenues and expenses during the re-porting period. Actual results could differfrom those estimates. Any revision to ac-counting estimates is recognized prospectivelyin current and future periods. Examplesof such estimates include provisions fordoubtful debts, provision for income taxesand the useful lives of fixed assets.However, the preparation of financial state-ments of subsidiary accounts is drawn inconfirmity with IFRS.

C. FIXED ASSETS :i) Fixed Assets are stated at cost

less depreciation. Cost comprises

the purchase price and any otherapplicable costs.

ii) Borrowing costs in respect of-loans acquired for acquisitionand construction of fixed assetsare capitalized upto the date theassets are ready for use.

D. DEPRECIATION :The company provides depreciation onFixed Assets on Written down Valuemethod on double shift basis at the ratesand in the manner prescribed in scheduleXIV to the Companies Act 1956.The Subsidiary company provides de-preciation on Fixed Assets on StraightLine method over their useful economiclife.

E. INVESTMENTS :Long term investments are carried atcost less provision, if any for perma-nent diminution in value of such in-vestments. Current investments arecarried at lower of cost and fair value.

F. INVENTORIES :Finished and semi-finished productsproduced and purchased by theCompany are carried at lower of costand net realisable value.Work-in-progress is carried at lowerof cost and net realisable value.The cost of inventories of Raw Materialpurchased by the Company is carried

Significant Accounting Policies forming part of theConsolidated Accounts for the F Y 2011-12


31

at lower of cost and net realisable value.

Stores and spare parts are carried at cost.Necessary provision is made and chargedto revenue in case of identified obsoleteand non-moving items.

Cost of inventories is generally ascertainedon the ‘weighted average’ basis. Work-in-progress and finished and semi-finished productsare valued on full absorption cost basis.

G. TAXES ON INCOME :

i) Indian Entities :

Current tax is determined as theamount of tax payable in respectof taxable income for the years.Deferred tax is recognised, on timingdifferences, being the differencebetween taxable incomes andaccounting income that originatein one period and are capable ofreversal in one or more subse-quentperiods.Where there is an unabsor-bed depreciation or carry forwardloss, deferred tax assets are recognisedonly if there is virtual certainty ofrealisation of such assets, otherdeferred tax assets are recognisedonly to the extent there is reasonablecertainty of realisation in future.

Minimum Alternate Tax (MAT) paidin accordance with the tax laws, whichgives rise to future economic benefitsin the form of adjustment of futureincome tax liability, is consideredas an asset if there is convincingevidence that the Company will paynormal tax after the tax holiday period.

Accordingly, it is recognized asan asset in the balance sheet whenit is probable that the futureeconomic benefit associated withit will flow to the Company andthe asset can be measured reliably.

ii) Foreign Entities :

Foreign Companies recognize taxliabilities and assets in accordancewith local laws.

H. REVENUE RECOGNITION :

a) Sale of goods is recognised ontransfer of property therein.

b) Insurance and other claims arerecognised only on acceptance ofclaims by the appropriate authorities.

I. RESEARCH AND DEVELOPMENTEXPENDITURE :

Revenue expenditure is charged to theProfit and Loss A/C and capitalexpenditure is added to the cost of FixedAssets in the year in which it is incurredand depreciation thereon is providedas per the rates prescribed in ScheduleXIV of the Companies Act, 1956.

J. CONTINGENT LIABILITIES :

Contingent liabilities are generally notaccounted for in the accounts and aredisclosed by Notes on Accounts. Provisionmade in the accounts in respect of thosecontingencies which are likely to becomea liability after the year-end but beforefinalisation of accounts and which mayhave material effect on the position statedin the balance sheet.


32

K. BORROWING COST :Borrowing costs that are attributable to theacquisition or construction of qualifyingassets are capitalized as part of the costof such assets. A qualifying asset is onethat necessarily takes a substantial periodof time to get ready for its intended useor sale. All other borrowings costs are chargedto revenue.

L. GOVERNMENT GRANTS :The grants are treated as Capital Reserve(and treated as a part of Shareholders funds),which can be neither distributed as dividendnor as deferred income.

M. EMPLOYEE BENEFITS :Short-term employee benefits (benefits whichare payable within twelve months after theend of the period in which the employeesrender service) are measured at cost andare recognised as an expense at theundiscounted amount in the profit and lossaccount of the year in which the relatedservice is rendered.Contributions to Provident Fund, a definedcontribution plan, are made in accordancewith the statute and are recognized as anexpense when employees have renderedservice entitling them to the contributions.Other long-term employee benefits (benefitswhich are payable after the end of twelvemonths from the end of the year in whichthe employees render service) are measuredon a discounted basis by the ProjectedUnit Credit Method on the basis of actuarialvaluation.Actuarial gains and losses are recognizedimmediately in the Profit and Loss Account

However, in Subsidiary accountsemployee terminal benefits are accountedon cash payment basis.

N. IMPAIRMENT OF ASSETS :At each balance sheet date the com-pany reviews whether there is any in-dication of impairment of the carry-ing amount of the company’s fixed assets.If any indication exists, an asset’s re-coverable amount is estimated. An im-pairment loss is recognized wheneverthe carrying amount of an asset ex-ceeds its recoverable amount. The re-coverable amount is the greater of thenet selling price and value in use. Inassessing value in use, the estimatedfuture cash flows are discounted totheir present value based on an ap-propriate discount factor.

O. LEASE :Finance leases, which effectively trans-fer to the Company substantially all therisks and benefits incidental to owner-ship of the leased item, are capitalizedat the lower of the fair value and presentvalue of the minimum lease paymentsat the inception of the lease term and dis-closed as leased assets. Lease paymentsare apportioned between the financecharges and reduction of the lease liabilitybased on the implicit rate of return. Fi-nance charges are charged directly againstincome. Lease management fees, legalcharges and other initial direct costs arecapitalized.If there is no reasonable certainty thatthe Company will obtain the owner-ship by the end of the lease term, capi-


33

talized leased assets are depreciated overthe shorter of the estimated useful life ofthe asset or the lease term.Leases where the lessor effectively retainssubstantially all the risks and benefits ofownership of the leased item are classi-fied as operating leases. Operating leasepayments are recognized as an expensein the Profit and Loss account on a straight-line basis over the lease term.P. FOREIGN CURRENCY TRANSACTIONS :Transactions in foreign currencies arerecorded at the exchange rates prevailingon the dates of transactions and in caseof purchase of materials and sale of goods,the exchange gains / losses on settlementsduring the year, are charged to Profit andLoss Account.Monetary assets and liabilities denomi-nated in foreign currencies are translatedat the rates prevailing on the date of BalanceSheet. Exchange gains / losses includ-ing those relating to fixed assets are dealtwith in the Profit and Loss Account.In case of foreign entities, revenue itemsare translated at the average rate prevailingduring the period and all assets and li-abilities at the rates prevailing at the endof the period. Any exchange difference arisingon consolidation is recognized in foreigncurrency translation reserve.Q. EARNINGS PER SHARE :The Company reports Basic and DilutedEarnings Per Share (EPS/DEPS) in accordancewith Accounting Standard 20 on “Earn-ings Per Share”. Basic EPS is computedby dividing the net profit or loss for theyear attributable to equity shareholdersby the weighted average number of eq-

uity shares outstanding during the year.Diluted EPS is computed by dividingthe net profit or loss for the year at-tributable to equity shareholders by theweighted average number of equityshares outstanding during the year asadjusted for the effects of all dilutivepotential equity shares, except wherethe results are anti-dilutive.

R. PROVISIONS, CONTINGENTLIABILITIES AND CONTINGENTASSETS :

The Company recognizes provisionswhen there is present obligation asa result of past event and it is probablethat there will be an outflow of re-sources and reliable estimate can bemade of the amount of the obligation.A disclosure for Contingent liabili-ties is made in the notes on accountswhen there is a possible obligationor present obligations that may, butprobably will not, require an outflowof resources. Contingent assets areneither recognized nor disclosed inthe financial statements.S. TRADE RECIEVABLE & PAYABLES :Sales made on credit are included intrade receivables at the balance sheetdate & reduced by appropriate allow-ances for estimated doubtful amounts.Trade payables are stated at their nominalvalue.T. CASH AND CASH EQUIVALENTS :For the purpose of the cash flows, cash& cash equivalents comprise cash onhand, balances with bank and depos-its with banks.


34

As at30-Jun-12(In Nos.)

As at30-Jun-12

(In INR)

As at30-Jun-11

(In Nos.)

As at30-Jun-11

(In INR)

AUTHORISEDEquity Shares of Rs. 10/- each. 160,000,000 1,600,000,000 160,000,000 1,600,000,000

TOTAL 160,000,000 1,600,000,000 160,000,000 1,600,000,000

ISSUEDEquity Shares of Rs. 10/- each. 132,149,080 1,321,490,800 132,149,080 1,321,490,800

SUBSCRIBED & PAID UPEquity Shares of Rs. 10/- each fully paid 132,149,080 1,321,490,800 132,149,080 1,321,490,800

TOTAL 132,149,080 1,321,490,800 132,149,080 1,321,490,800

The Company has issued one class of shares referred to as equity shares having a par value of Rs. 10/- Each holderof equity shares is entitled to one vote per share.

In the event of liquidation of Company , the holder of equity shares will be entitled to receive any of the remainingassets of the company, after distribution of all preferential amounts. However no such pref rential amounts exist cur-rently. The distribution will be in proportion to the number of equity shares held by the shareholders.

Company is yet to file various e-forms as required under Companies Act, 1956

Reconciliation of the number of shares outstanding

Number of shares at the beginning 132,149,080 1,321,490,800 132,149,080 1,321,490,800Add: Shares issued on exercise of employee stock options

Number of shares at the end of the year 132,149,080 1,321,490,800 132,149,080 1,321,490,800

Details of Shareholder holding more than 5 % sharesNo. of Shareholder No. of Shares % of Holding No. of Shares % of Holding

held held

NIL NIL NIL NIL NIL

Capital ReserveOpening balance 32,351,400 6,201,400Add:- Current Year 69,000,000 26,150,000

Closing Balance 101,351,400 32,351,400

During the Year, Company has forfeited the share warrant money received against One Crore Sharesof Rs.10 each with a Premium of Rs.22 due to the non receipt of 75% remaining amount. The amountforfeited has been transferred to Capital ReserveGeneral ReserveOpening Balance 191,591,527 15,375,674Security Premium 155,972,217Foreign Currency Translation Reserve 165,976,212 (572,423)Add:- Current Year 85,271,670 20,816,058Closing Balance 442,839,408 191,591,527

NOTES TO CONSOLIDATED BALANCE SHEET AS AT 30TH JUNE 2012

NOTE 1 : SHARE CAPITAL

As at30-Jun-12 (In Nos.)

As at30-Jun-12 (In INR)


As at30-Jun-11

(In INR)

NOTE 2 : RESERVE AND SURPLUSAs at

30-Jun-12(In INR)

As at30-Jun-11

(In INR)


35

SurplusOpening balance 440,200,160 95,656,832Add:- Current Year 412,516,536 365,359,387Less:- Transfer to General Reserve 85,271,670 20,816,058

Closing Balance 767,445,027 440,200,160

TOTAL 1,311,635,835 664,143,087

Deferred Tax LiabilityDifference in Net Block of Fixed Assets 15,547,096 17,711,908

Deferred Tax AssetDisallowance under Section 43 B of the Income tax Act, 1961 2,413,970 2,482,977

Disallowance under Section 40 (a) (ia) of the Income tax Act, 1961 4,112,746 3,923,804

Deferred Tax (Assets)/ Liability 9,020,380 11,305,127

Secured- from banksCash Credit Limit From SBI 30,000,000 29,073,877(Secured by Hypothecation of Company’s Raw Material, Finished Goods, Stock in Process, Stores,Spares and Book Debts and Equitable Mortgage on the Fixed Assets of the Company. Interest rate onsuch Secured Demand Loan from Banks is linked with the base rate of respective banks. Overdueamount as on Balance Sheet date is Rs.22.90 Lacs which has been shown under other Current Liability.)

TOTAL 30,000,000 29,073,877

Creditors for Services 15,234,765 39,578,425Creditors for Capital Goods 1,111,148 1,318,628Creditor For Raw Materials 1,361,956,195 1,523,752,407(None of the enterprises supplying goods or rendering services to the company who are engaged inmanufacturing or production of goods are rendering or providing services have given any information asrequired under “The Micro, Small and Medium Enterprises Development Act 2006” Hence the company isnot in a position to disclose the required information nor provided any liabilities as required under the said Act.)

TOTAL 1,378,302,108 1,564,649,460

Accrued salaries & benefits 90,170 68,307For other Liabilities -Taxes payable 14,138,693 72,540,585 -Provision for expenses 4,311,686 1,889,590 -Book overdraft from Banks 2,290,901 -Other Payables 37,136 14,695(All Liabilities payable with in 12 months are grouped under current liabilities.)

TOTAL 20,868,586 74,513,177

NOTES TO CONSOLIDATED BALANCE SHEET AS AT 30TH JUNE 2012As at

30-Jun-12(In INR)

As at30-Jun-11

(In INR)

NOTE 3 : DEFERRED TAXES AND LIABILITIES

NOTE 4 : SHORT TERM BORROWINGS

NOTE 5 : TRADE PAYABLES

NOTE 6 : OTHER CURRENT LIABILITIES


36

Capital AdvancesUnsecured , Considered Good -Rent, Electricity and other deposits 901,440 1,907,404 -Capital Advances 128,358,880 102,262,748 -Deposits with Statutory Authorities 13,878,849 16,924,737

TOTAL 143,139,169 121,094,889

Balances shown Under Capital Advances are subject to confirmation.

(unsecured and considered good unless otherwise mentioned )a) Long term trade receivables :

Secured 4,100,000 4,100,000UnsecuredDoubtful

b) Others :

TOTAL 4,100,000 4,100,000

a) Finished Goods 465,554 614,987b) Trading Goods 1,132,297,753 716,271,620c) Work In Progress 8,682,620 3,657,000d) Raw Materials 15,281,637 3,767,849e) Stores & Spares 600,000 450,000f) Consumables 550,000 475,000

TOTAL 1,157,877,564 725,236,456


Contingent Liabilit ies not provided for: (In Lacs)Claims against the company not acknowledged as debts : Tax demands under Appeal by the Commercial Taxes Department 166.85 166.85Bank Guarantee to KSEB (against 100% Margin Money Deposit) 51.50 51.50Security Deposit with Sales Tax 5.20 5.20

As at30-Jun-12

(In INR)

As at30-Jun-11

(In INR)

NOTE 7 : LONG TERM LOANS & ADVANCES

NOTE 8 : OTHER NON CURRENT ASSETS

NOTE 9 : INVENTORIES

La

nd

& S

ite

De

ve

lop

me

nt

2,2

56,7

40

2,2

56,7

40

-

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2,2

56,7

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2,2

56,7

40

Co

mp

ute

rs &

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nte

rs687,7

48

81,8

10

769,5

58

40.0

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512,8

63

98,9

61

611,8

24

157,7

33

174,8

84

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m C

on

tain

er

10,4

00

10,4

00

30.0

0%

9,8

48

165

10,0

13

387

552

Ve

hic

les

2,5

33,1

91

2,5

33,1

91

25.8

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2,2

93,9

88

61,9

30

2,3

55,9

18

177,2

72

239,2

02

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NA

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10,8

84

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10,8

84

20.8

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4,0

92,3

51

233,4

38

4,3

25,7

89

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95

1,1

18,5

33

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ctr

ica

l In

sta

llatio

ns

4,4

36,9

47

200,0

00

4,2

36,9

47

20.8

7%

4,1

82,7

55

53,0

50

4,2

35,8

05

1,1

42

254,1

92

Pla

nt &

Ma

ch

ine

ry74,4

05,3

84

74,4

05,3

84

20.8

7%

38,2

41,6

47

7,5

47,3

72

45,7

89,0

19

28,6

16,3

65

36,1

63,7

37

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llutio

n C

on

tro

l E

qu

ipm

en

ts73,9

87,4

14

528,4

40

74,5

15,8

54

20.8

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22,9

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06

10,7

03,6

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33,6

14,2

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40,9

01,6

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51,0

76,8

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EP

BA

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43,3

50

43,3

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0%

38,5

83

863

39,4

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3,9

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4,7

67

Fu

rnitu

re &

Fix

ture

s120,6

20

11,2

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131,8

80

18.1

0%

105,9

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4,1

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110,1

00

21,7

80

14,6

39

Xe

rox M

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ine

50,0

00

50,0

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18.1

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43,1

60

1,2

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44,3

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5,6

02

6,8

40

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us F

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sse

ts62,5

69

62,5

69

18.1

0%

53,7

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1,5

92

55,3

63

7,2

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8,7

98

Off

ice

Eq

uip

me

nt

711,1

65

2,4

50

713,6

15

18.1

0%

115,0

48

108,3

22

223,3

70

490,2

45

596,1

17

Air

Co

nd

itio

ne

r

60,3

00

13,7

91

74,0

91

13.9

1%

27,4

88

5,0

32

32,5

20

41,5

71

32,8

12

To

ols

& T

ackle

s176,1

51

176,1

51

13.9

1%

148,3

24

3,8

71

152,1

95

23,9

56

27,8

27

Bu

ildin

g

16,6

03,0

67

16,6

03,0

67

10.0

0%

12,1

17,9

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448,5

12

12,5

66,4

61

4,0

36,6

06

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85,1

18

181,3

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200,0

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181,7

93,6

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62

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61,5

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pita

l W

ork

in

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gre

ss

6,7

00,0

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967,9

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-

7,6

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EV

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S Y

EA

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180,4

60,8

31

9,0

85,0

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1,4

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55,9

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40,3

91

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53,9

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61,5

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32,2

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TO

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lock a

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of

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l

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L

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RN

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ITE

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) S

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38

Uns

ecur

ed,

Con

side

red

Goo

da.

) O

utst

andi

ng f

or a

per

iod

mor

e th

an s

ix m

onth

s fr

om t

he d

ate

they

are

due

for

pay

men

t

6

41,3

84,5

10

375,

968,

773

b.)

Out

stan

ding

for

a p

erio

d le

ss t

han

six

mon

ths

from

the

dat

e th

ey a

re d

ue f

or p

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ent

94

9,05

3,07

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stan

ding

for

a p

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six

mon

ths

from

the

dat

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re d

ue f

or p

aym

ent

b.)

Out

stan

ding

for

a p

erio

d le

ss t

han

six

mon

ths

from

the

dat

e th

ey a

re d

ue f

or p

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ent

TO

TAL

1,59

0,43

7,58

6

1,

820,

708,

869

Bal

ance

s sh

own

Uns

ecur

ed T

rade

Rec

ieva

bles

are

sub

ject

to

conf

irm

atio

n.

a)

Inve

stm

ent i

n Eq

uity

Inst

rum

ents

Sub

sidi

ary

Unq

uote

d

Fully

pai

d

Oth

ers

Unq

uote

d

Fully

pai

d

5

,800

,000

5,

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000

b)

Inve

stm

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in P

refe

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e Sh

ares

c)

Inve

stm

ents

in p

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ip fi

rms

d)

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in D

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s or

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l

5,

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5,

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rega

te a

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f qu

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inve

stm

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ket

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quo

ted

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stm

ents

Nil

Agg

rega

te a

mou

nt o

f un

quot

ed in

vest

men

ts58

0000

0

Agg

rega

te p

rovi

sion

for

dim

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ion

in v

alue

of

inve

stm

ent

Nil

NO

TE 1

1: N

ON

CU

RR

ENT

INVE

STM

ENTS

(AT

CO

ST)

Sr.

No.

Nam

e of

the

Bod

y C

orpo

rate

Subs

idia

ry /

Ass

ocia

te /

JV/

Con

trolle

dEn

tity/

Oth

ers

No.

of S

hare

s / U

nits

Quo

ted

/U

nquo

ted

Part

ly P

aid

Fully

pai

dEx

tent

of

Hol

ding

(%)

As

at30

-Jun

-12

(In IN

R)

As

at30

-Jun

-11

(In IN

R)

2012

2

011

As

at30

-Jun

-12

As

at30

-Jun

-11

As

at30

-Ju

n-11

(In

INR

)NO

TE 1

2 : T

RADE

REC

EIVA

BLES

As

at30

-Ju

n-1

2(I

n IN

R)


39


Cash and Cash Equivalents Cash on hand 273,832,836 1,471,254 Balance with banks In current accounts 272,977 (9,111,626)Fixed Deposit (less than 3 month Maturity) 769,202,811 907,466,738

TOTAL 1,043,308,624 899,826,366

Fixed Deposit Receipt under lien to exchangeFixed Deposit Receipt lien with banks against borrowings 3,200,000 5,150,284

Loans and advances to related parties - -Unsecured Advances,Considered Good - -

TOTAL - -

Interest Accrued on Fixed Deposit 514,001 2,296,051Service Tax Recievable 214,776 152,576Modvat Recievable 180,810 86,175Insurance Claim Recievable 1,150,000

TOTAL 909,587 3,684,802

As at30-Jun-12

(In INR)

As at30-Jun-11 (In INR)

NOTE 13 : CASH AND BANK BALANCES

NOTE 15 : OTHER CURRENT ASSETS

NOTE 14 : SHORT TERM LOANS AND ADVANCES


40

NOTE 18 : COST OF MATERIAL CONSUMED

NOTE 19 : CHANGES IN INVENTORY OF FINISHED GOODSWORK IN PROGRESS AND STOCK IN TRADE

Sales of Steel Products 10,011,535,321 7,860,593,735

Other Operating Revenue :Income from Conversion / Job work 103,800 922,110 Income from Commision / Services - 194,413,881

TOTAL 10,011,639,121 8,055,929,726

Interest Income on Deposits 5,321,354 2,535,803Other non operating Income 706,541 13,287Foreign Exchange Gain / (Loss) 173,691,006 (7,994,655)

TOTAL 179,718,901 (5,445,565)

GROSS REVENUE 10,191,358,022 8,050,484,161

Raw Material 113,152,180 84,844,995Stock In Trade 9,464,019,516 7,468,826,184Consumables 232,430 147,800Stores & Spares 350,000 200,000

TOTAL 9,577,754,126 7,554,018,979

Opening StockFinished Goods 4,271,987 11,159,592Work in Progress - -

Closing StockFinished Goods 9,148,174 4,271,987Work in Progress - -

Increase / (Decrease) in Stock (4,876,187) 6,887,605

NOTES TO CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR PERIOD ENDED ON 30TH JUNE 2012 FOR THE FOR THE YEAR ENDED YEAR ENDED 30-Jun-12 30-Jun-11 (In INR) (In INR)

NOTE 16 : REVENUE FOR OPERATION

NOTE 17 : OTHER INCOME


41

NOTE 21 : FINANCE COST

Salary, Bonus and Allowances 5,043,755 3,980,100Contribution to provident & other Funds 98,005 92,777Staff Welfare Expenses 50,296 109,135

TOTAL 5,192,056 4,182,012

There was no employee at any time during the year drawing Rs.200000/- or more per month.

Interest Expenses 3,383,181 9,515,169Other Borrowing Cost 632,982 989,513

TOTAL 4,016,163 10,504,682

Advertisement Expenses 902,649 6,418,639Remuneration to Auditors 500,000 500,000Secretarial Affairs 163,546 708,154Insurance Expenses 136,918 57,646Donations - 5,000Duties & Taxes 3,952,954 7,235,812Power and Fuel 35,990,814 30,725,893Carriage Inward 2,724,769 1,499,481Repairs 523,037 182,887Listing Fees 1,053,815 1,385,631News Paper & Periodicals 9,444 -Office Maintainance Expenses 5,389,907 3,065,209Postage & Couriers 123,666 42,345Printing & Stationery 63,776 31,039Professional Tax 7,050 4,000Regn. & Lisence Fees 182,637 94,025Communication Expenses 579,051 248,119Travelling Expenses 1,187,730 789,157Preliminary Expenses Written Off 10,112,516 -Misc. Expenses 115,504,017 9,056,330

TOTAL 179,108,296 62,049,367

NOTE 20 : EMPLOYEE BENEFITS

NOTE 22 : OTHER EXPENSES

NOTES TO CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR PERIOD ENDED ON 30TH JUNE 2012 FOR THE FOR THE YEAR ENDED YEAR ENDED 30-Jun-12 30-Jun-11 (In INR) (In INR)


42

Note: 23GENERAL NOTES TOCONSOLIDATED ACCOUNTS :-

1. Principles of Consolidation :The Consolidated Financial Statementsrelate to Southern Ispat & Energy Lim-ited (“the Company”) and its subsidiarycompanies (“the Group”). The Con-solidated Financial Statements havebeen prepared on the following basis.a) The financial statements of the Com-

pany and its subsidiary companieshave been consolidated on a line-by-line basis by adding togetherthe book values of like items ofassets, liabilities, income and ex-penses, after fully eliminating intra-group balances and unrealized prof-its or losses on intra-group trans-actions as per Accounting Standard21 - “Consolidated Financial State-ments” notified by the Companies(Accounting Standards) Rules, 2006.

b) In case of foreign subsidiaries beingnon-integral foreign operations, revenueitems are consolidated at the averagerate prevailing during the period. Allassets and liabilities are converted atthe rates prevailing at the end of theperiod. Any exchange difference arisingon consolidation is recognized in ‘’For-

eign Currency Translation Reserve’’.

c) The excess of cost to the Company,of its investment in the subsidiar-ies over the Company’s share of equityis recognized in the financial state-ments as Goodwill and tested forimpairment annually.

d) Minority interest in the net assetsof the consolidated subsidiaries isidentified and presented in consoli-dated balance sheet separately fromcurrent liabilities and the equity ofthe Company’s share holders. Mi-nority interest in the net assets ofthe in the consolidated subsidiar-ies consists of:

i) The amount of equity attributableto minorities at the date on which in-vestment in a subsidiary is made; and

ii) The minorities share of movementsin the equity since the date the parentsubsidiary relationship came into existence.

e) Minority interest share of net profitfor the period of consolidated sub-sidiaries is identified and adjustedagainst profit after tax of the group.

f) The list of Subsidiary companies whichare included in the consolidation and theCompany’s holdings therein are as under.

Subsidiary Name Origin Country Holding %

SIEL, FZE Free Zone Entity, UAE 100.00


43

The Financial Statement of Subsidiary usedin the consolidation is drawn up to the samereporting date as that of the Company i.e.June 30, 2012.However accounts of the sub-sidiary is audited only up to 31st March 2012.2. The Accounts for the Financial Year

2011-12 have been prepared for the periodof 12 Months from 1st July, 2011 to 30th June,2012. (Previous Year 1st July 2010 to 30thJune 2011 for the period of 12 Months )

3. Segment Reporting :a) Business Segment : The Company

has considered business segment as

the primary segment to disclose.The company is engaged in themanu-facturing of MS Ingots /trading of Steel Products, whichthe context of AS-17 is issued bythe Institute of CharteredAccountants of India, is consideredthe only business segments.

b) Geographical Segment : The companysell its products within India & UAE,accordingly segment reporting basedon operations in India & UAEseparately are presented below

(Rs. In Millions)

Particular India UAE TotalSales / Income 3449.76 6741.59 10191.35Segment Result 5.28 407.27 412.55Fixed Assets 85.30 — 85.30Investments / (Capital) 7.65 (1.85) 5.80Current Assets 1786.15 2006.40 3792.55Other Advances 147.18 — 147.18Advances / (Loans) to Subsidiary 695.19 (695.19) —Current Liabilities 858.81 570.36 1429.17

4. Operating Lease :

Within one year Rs. 9.20 Lakhs Rs. 46.20 LakhsLater than one year but lessthan Five years Rs. 50.00 Lakhs Rs. 2.40 LakhsLater than Five years NIL NILTotal Rs. 59.20 Lakhs Rs. 48.60 Lakhs

Future obligations towardslease rentals

Current Year Previous Year


44

5. Earning per share :

Earning for Shareholders for the period Rs. 4125.17 Lakhs Rs. 3653.59 LakhsNo. of Equity Share (Weighted) 13,21,49,080 4,48,27,502Potential No. of Equity Share Outstanding NIL NILEarning per share ( Basic) Rs. 3.12 Rs. 8.15Earning per share ( Dilutive) Rs. 3.12 Rs. 8.15

6. Deferred Tax :

In accordance with the Accounting Standard-22 “Accounting for taxes on Income”issued by the Institute of Chartered Ac-countants of India, the company hasaccounted for deferred tax during the

period. The cumulative net deferredtax liability of Rs. 113.05 Lakhs as on30th June 2012 has been recognized.Consequently the excess Deferred TaxLiability of Rs 22.85 Lakhs has beenrecognized & credited to Profit & Lossaccount.

Rs. in LakhsParticulars As at 30.06.2012 As at 30.06.2011Deferred Tax Liabilities :Difference in Accumulated Book Depreciation &Accumulated Depreciation under Income Tax Act. 457.40 521.09Deferred Tax Assets :Unabsorbed Depreciation & disallowanceAllowable expenses on payment basis 192.01 188.49Net Timing Difference 265.38 332.60Total Deferred Tax Liability to be recognised 90.20 113.05

Deferred Tax Liability previously recognized 113.05 179.07Net Deferred Tax Liability provided / (Reversed)during the period (22.85) (66.02)

7. Details of Audit fees are as follows :

Company Audit Fees 3,50,000.00 3,50,000.00Tax audit Fees 1,00,000.00 1,00,000.00Consultation & Other Services 50,000.00 50,000.00Reimbursement of Expenses NIL NIL


45

8. Related Party disclosure :

Disclosures as required by account-ing standard 18 (AS-18) related partydisclosures issued by the Institute ofchartered accountants of India are asfollows and description of relationship.a) Name of related parties1) Subsidiaries - SIEL, FZEii) Key management personal

1) Shri Vivek Agarwal, Chairman & Managing Director

2) Shri Manish Kumar Mishra, Director3) Shri Umesh Kumar Sahu, Director4) Shri E Sankaranarayana, Ex - Director

iii) Relative of key management person-nel where transaction have been takenplace during the year.1) Kerala Sponge Iron Ltd.2) Sree Enterprises3) K K Agarwalla

iii) Transaction with related parties referredto above in ordinary course of business.

Rs in LakhsNature of Transactions Referred in Referred in Referred in

20(a)(i) above 20(a)(ii) above 20(a)(iii) aboveRemuneration Paid / Salary NIL 9.34 3.68Rent NIL NIL 1.20Purchase NIL NIL 3.21Loan or Deposit taken NIL NIL 6.56Loan or Advance Given / Repaid 3153.35 NIL 2.00Investment NIL NIL NILReceivable to Company 6951.48 NIL NILPayable by Company NIL 1.08 13.629. Information as per Schedule VI Part II 4A,4B,4C and 4D of the Companies Act, 1956.1. Remuneration paid to Directors - Rs. 9.34 Lakhs(Rs. 10.15 Lakhs)2. Payment to Auditors - Rs. 5.00 Lakhs (Rs. 5.00 Lakhs)3. Licensed and installed capacity :Particulars Licensed Capacity Installed Capacity ProductionCTD Bars, Angle 24000 TPA

(24000 TPA) — —Shots & Grits 4000 TPA 4000 TPA —

(4000 TPA) (4000 TPA)M.S. Ingots 24000 TPA 16000 TPA 4735.580

(24000 TPA) (16000 TPA) (4651.070)


46

4. Finished Goods details :Item M S IngotsParticulars Qty (MT) Value (Rs. in lacs)Op. Stock 20.455 0.00

(0.000) (7.33)Sales (consumption) 4741.010 1549.33

(4630.615) (1247.06)Closing Stock 15.025 4.50

(20.445) (5.71)





Sd/-Vivek AgarwalChairman & Managing Director



47

To the Members ofSouthern Ispat & Energy Limited

1) We have audited the attached bal ance sheetof M/s Southern Ispat & Energy Limited, asat 30th June 2012 and also the Profit & LossA/c and the Cash Flow Statement for the yearended on that date annexed thereto. Thesefinancial statements are the responsibility ofthe company’s management. Our responsi-bility is to express an opinion on these fi-nancial statements based on our audit.

2) We conducted our audit in accordance withauditing standards generally accepted in India.Those standards require that we plan andperform the audit to obtain reasonable as-surance about whether the financial state-ments are free of material misstatement. Anaudit includes examining, on a test basis,evidence supporting that amounts and dis-closures in the financial statements. An au-dit also includes assessing the accountingprinciples used and significant estimates madeby management, as well as evaluating theoverall financial statement presentation. Webelieve that our audit provides a reasonablebasis for our opinion.

3) As required by the Companies (Auditor’sReport) Order, 2003 including Companies(Auditor’s Report) (Amendment) Order’ 2004issued by the Central Government of In-dia in terms of Sub-section (4A) of section227 of the companies Act, 1956, we en-close in the Annexure-II, a Statement onthe matters specified in paragraphs 4 &5 of the said order.

4) Further to our comments in the annexurereferred to above, we report that :

a) We have obtained all the information andexplanations, which to the best of ourknowledge and belief were necessary forthe purposes of our audit.

b) In our opinion, proper books of accountas required by law have been kept by thecompany as far as appears from our ex-amination of those books.

AUDITORS’ REPORT

DATE: 30/09/2012

PLACE: PALAKKAD, KERALA

c) The Balance sheet and profit & loss ac-count and cash flow statement dealt withthis report are in agreement with the booksof account.

d)In our opinion the Balance Sheet and Profit& Loss account dealt with by this reportcomply with the accounting standards referredto in sub-section (3C) of section 211of thecompanies Act, 1956.

e) On the basis of written representation receivedfrom the Directors, as on 30th June 2012,and taken on record by the Board of Di-rectors, we report that none of the Directorsare disqualified as on 30th June 2012 frombeing appointed as Directors in terms ofClause (g) of sub-section (1) of section 274of the companies Act, 1956.

f) In our opinion and to the best of our in-formation and according to the explanations given to us, and the said accountsgive the information required by the Com-panies Act, 1956, in the manner so requiredand give a true and fair view in confor-mity with the accounting principles gen-erally accepted in India.

I) In the case of balance sheet, of the stateof affairs of the company as at 30thJune 2012.

II) In the case of profit & loss ac count, ofthe Profit for the period ended on thatdate; and

III) In the case of cash flow state ment,of the cash flow for the period endedon that date.

For SUNIL JOHRI & ASSOCIATESCHARTERED ACCOUNTANTSFRN 005960CSd/-

(SUNIL JOHRI)PARTNERM. No. 074654


48

1. a) In respect of fixed assets, the com-pany has maintained records show-ing full particulars including quan-titative details and situation in mostcases of such assets.b) As explained to us, the assets havebeen physically verified by the man-agement, in accordance with the es-tablished system of periodical veri-fication of fixed assets once in 2/3months. In our opinion, the frequencyof verification is reasonable, consideringthe size of the operations of the com-pany. No material discrepancies be-tween the book records and the physicalrecords were noticed in respect of theassets physically verified.c) In our opinion and according tothe information and explanations givento us, a substantial part of fixed as-sets has not been disposed of by thecompany during the year.

2. a) As explained to us, the inventoryof the company has been physicallyverified during the financial year bythe management. In our opinion thefrequency of verification is reasonable.b) According to the information andexplanations given to us, in our opinion,the procedures of physical verifica-tion of stocks followed by the man-agement are reasonable and adequatein relation to the size of the Companyand the nature of its business.c) On the basis of our examinationof records of inventory, in our opinion,the Company has maintained properrecords of inventory and the discrep-ancies noted on physical verification

Annexure referred to in paragraph (3) of our report of evendate on the accounts of Southern Ispat & Energy Limited

for the year ended on 30-06-2012between the physical stocks and bookrecords were not material, having re-gard to the size of the operations ofthe company.

3. a) In our opinion and according tothe information and explanations givento us, the Company has granted un-secured loans to one Company coveredin the register maintained under section301 of the Company Act, 1956. TheMaximum amount involved duringthe year was Rs 6.93 Lacs and theyearend balance is NIL.b) In our opinion and according tothe information and explanation givento us, the rate of Interest and otherterms and condition for such loan areprima facie, prejudicial to the interestof the company.c) The Party has repaid the princi-pal amount to the company.d) There is no overdue amount of loansgranted to companies covered in theregister maintained under section 301of the Company Act, 1956.e) According to the information andexplanations given to us, during theperiod covered by audit report theCompany has not taken any unsecuredloans to / from the Company cov-ered in the register maintained un-der section 301 of the Company Act,1956. Accordingly, the provisions ofclause 4(iii) (e) to (g) of the Compa-nies (Auditor’s Report) Order, 2003(as amended) are not applicable tothe Company.

4. In our opinion and according to the


49

information and explanations given tous, there exists an adequate internalcontrol system commensurate with thesize of the Company and the natureof its business with regard to purchaseof inventory, fixed assets and with regardto the sale of goods and services. Duringthe course of our audit, we have notobserved any continuing failure to correctweakness in internal control system ofthe company.

5. In our opinion and according to theinformation and explanations given tous, the transactions made in pursuanceof such contracts or arrangements ex-ceeding value of Rupees five lakhs havebeen entered into during the financialyear at prices which are reasonable havingregard to the prevailing market pricesat the relevant time.

6. In our opinion and according to theinformation and explanations givento us the Company has not acceptedany deposits during the year from thePublic within the meaning of Section58A and 58AA of the Companies Actand the rules framed there under.

7. In our opinion, the Company shouldmaintain an internal audit system.

8. Company has not maintained costrecords under Section 209 (1) (d) ofthe Companies Act 1956 as prescribedby the Central Government.

9. a) According to the information andexplanations given to us and accordingto the books and records as producedand examined by us, in our opin-ion, undisputed statutory dues in-cluding provident fund, investor edu-cation and protection fund, employee’sstate insurance, income tax, sales tax,wealth tax, service tax, customs duty,excise duty, cess and other materialstatutory dues applicable to the Com-pany have generally been regularlydeposited with the appropriate au-thorities. According to the informationand explanations given to us, no un-disputed amounts payable in respectof income tax, wealth tax, sales tax,customs duty, excise duty and cesswere in arrears, as at 30th June 2012for a period of more than six monthsfrom the date they became payableexcept Fringe Benefit Tax Rs 0.24 Lacs,TDS Rs 13.76 Lacs, Listing Fees Rs5.58 Lacs & MCA Filing Fee Rs 71.03Lacs.b) As at 30th June 2012, according tothe records of the Company and theinformation and explanations givento us, the following are the particu-lars of disputed dues on account ofexcise duty and cess matters, com-mercial tax and income tax that havenot been deposited :

Name ofthe statute

CommercialTax & CST

Nature ofthe dues

CommercialTax & CST

Amount(Rs. In Lacs)

15.66 30.74 120.45

Period to which theamounts release

2004-052005-062006-07

Forum where pending

Sales Tax AppellateTribunal Additional

Bench Palakkad Kerala


50

10. The Company does not have accumulated losses as at the end of thefinancial year. There are no cash lossesduring the financial year under re-port and in the immediately precedingfinancial year.

11. In our opinion and according to theinformation and explanations givento us, the Company has not defaultedin repayment of dues to any finan-cial institution or bank during theperiod. There are no debenture holdersin the company.

12. In our opinion and according to theinformation and explanations givento us, the Company has not grantedany loans and advances on the basisof security by way of pledge of shares,debentures and other securities.

13. The Company does not fall withinthe category of Chit fund / Nidhi /Mutual Benefit fund / Society andhence the related reporting require-ments of the Order are not applicable.

14. According to the information andexplanations given to us, the Com-pany is not dealing or trading in shares,securities, debentures and other in-vestments and hence the related re-porting requirements of the Orderare not applicable.

15. In our opinion and according to theinformation and explanations givento us, the Company has not givenguarantees for loans taken by oth-ers from bank or financial institutions.

16. Company has not taken any termloan from any banks or Financial Institutions.

17. According to the information andexplanations given to us and on an overallexamination of the balance sheet of thecompany, we report that the Companyhas used no funds raised on short-termbasis for long-term investment.

18. The Company has not made pref-erential allotment of shares to par-ties covered in the Register maintainedunder Section 301 of the CompaniesAct, 1956 during the financial year,

19. The company has not issued deben-tures; hence question of creation ofsecurities does not arise.

20. According to the information andexplanations given to us, during theperiod covered by audit report thecompany has not raised any moneyby public issue. Accordingly, the pro-visions of clause 4(xiv) of the Com-panies (Auditor’s Report) Order, 2003(as amended) are not applicable tothe Company.

21. During the course of our examina-tion of the books and records of theCompany carried out in accordancewith the generally accepted audit-ing practices in India, we have nei-ther come across any instance of fraudon or by the Company, noticed andreported during the year, nor havewe been informed of such case bythe management.

For SUNIL JOHRI & ASSOCIATESCHARTERED ACCOUNTANTSFRN 005960 C

Sd/-(SUNIL JOHRI)PARTNER

Date: 30/09/ 2012Place: Palakkad, Kerala


51

I. LIABILITIES :(1) Shareholder’s Funds :(a) Share Capital 1 1,321,490,800 1,321,490,800(b) Reserves and Surplus 2 572,597,482 411,859,876(c) Money received against share warrants - -

1,894,088,282 1,773,350,676(2) Share application money pending allotment : - 69,000,000(2) Non-Current Liabilities :(a) Long-term borrowings - -(b) Deferred tax liabilities (Net) 3 9,020,380 11,305,127(c) Other long term liabilities - -(d) Long term provisions - -

9,020,380 11,305,127(3) Current Liabilities :(a) Short-term borrowings 4 30,000,000 29,073,877(b) Trade payables 5 812,153,231 1,045,594,561(c) Other current liabilities 6 16,654,337 73,844,944(d) Short-term provisions

858,807,568 1,148,513,382TOTAL 2,761,916,230 2,962,169,185

II. ASSETS :(1) Non-current assets(a) Fixed assets 10(i) Tangible assets 77,627,214 96,461,566(ii) Intangible assets(iii) Capital work-in-progress 7,667,900 6,700,000(iv) Misc.Expenditure to the extent not Written off 40,450,065 50,562,581(b) Non-current investments 11 7,651,060 7,651,060(c) Long term loans and advances 7 143,077,240 121,043,059(d) Other non-current assets 8 4,100,000 4,100,000

280,573,479 286,518,266(2) Current assets(a) Inventories 9 25,579,811 8,964,836(b) Trade receivables 12 987,239,103 1,434,698,291(c) Cash and cash equivalents 13 772,466,123 899,587,297(d) Short-term loans and advances 14 695,148,127 328,715,694(e) Other current assets 15 909,587 3,684,802

2,481,342,751 2,675,650,920TOTAL 2,761,916,230 2,962,169,186

NOTE NO.

STANDALONE BALANCE SHEET AS AT 30TH JUNE 2012As at

30- Jun-12(In INR)

As at30- Jun-11(In INR)

Notes to Standalone Accounts referred above form an integral part of the financial statements



Sd/-Sunil JohriPartnerMembership No 074654Dated : 30/09/2012Place : Palakkad, Kerala





5261

RevenueRevenue from Operations 16 3,270,052,330 4,523,910,353Other Income 17 179,714,083 (5,458,852)

TOTAL (A) 3,449,766,413 4,518,451,501

Cost of Material Consumed 18 3,250,248,513 4,279,869,972Changes in Inventory of FG, WIP & Stock In trade 19 (4,876,187) 6,887,605Employee Benefits 20 2,720,116 2,532,748Finance Cost 21 3,863,392 10,430,767Dpereciation and amortization expenses 10 19,272,103 24,053,971Other Expenses 22 174,873,607 58,744,527

TOTAL (B) 3,446,101,543 4,382,519,590

Profit before Taxation and Exceptional Item (C) = (A) - (B) 3,664,870 135,931,911Exceptional Items Expenses (D) - 339,977Prior Year Income/(Expenses) (H) - -

Profit before Taxation (E) = (C) + (D) 3,664,870 135,591,934

Less: Provision for TaxationCurrent tax 659,677 29,690,507Deferred tax (2,284,747) (6,602,326)

Profit after Tax (PAT) 5,289,940 112,503,753

Earning Per ShareBasic (Rs.) 0.04 2.51Diluted (Rs.) 0.04 2.51

STATEMENT OF STANDALONE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30TH JUNE 2012

FOR THE YEAR FOR THE YEAR NOTE NO. ENDED 30-Jun-12 ENDED 30-Jun-11

(In INR) (In INR)

Notes to Standalone Accounts referred above form an integral part of the financial statements








53

A. BASIS OF ACCOUNTING :

The financial statements have been prepared underthe historical cost conventional accrual basis of acc-ounting, in conformity with accounting principlesgenerally accepted in India and comply with theaccounting standard referred to in Sec.211 (3c) of theCompanies Act, 1956. The financial statements arepresented in Indian rupees.

B. USE OF ESTIMATES :

The preparation of financial statements arein conformity with Indian GAAP requires man-agement to make estimates and assumptionsthat affect the reported amounts of assets andliabilities and disclosure of contingent liabilitieson the date of the financial statements andthe reported amounts of revenues and expensesduring the reporting period. Actual resultscould differ from those estimates. Any revi-sion to accounting estimates is recognized pro-spectively in current and future periods. Ex-amples of such estimates include provisionsfor doubtful debts, provision for income taxesand the useful lives of fixed assets.

C. FIXED ASSETS :

i) Fixed Assets are stated at cost less

depreciation. Cost comprises the purchaseprice and any other applicable costs.

ii) Borrowing costs in respect of loans

acquired for acquisition and construction offixed assets are capitalized upto the date theassets are ready for use.

D. DEPRECIATION :

The company provides depreciation on Fixed Assetson Written down Value method on double shiftbasis at the rates and in the manner prescribedin schedule XIV to the Companies Act 1956.

E. INVESTMENTS :

Long term investments are carried at cost lessprovision, if any for permanent diminution invalue of such investments. Current investmentsare carried at lower of cost and fair value.

F. INVENTORIES :

Finished and semi-finished products producedand purchased by the Company are carried atlower of cost and net realisable value.

Work-in-progress is carried at lower of cost andnet realisable value.

Significant Accounting Policies forming part of the Standalone Accountsfor the Financial Year 2011-12

The cost of inventories of Raw Material purchasedby the Company is carried at lower of costand net realisable value.

Stores and spare parts are carried at cost. Necessaryprovision is made and charged to revenue incase of identified obsolete and non-moving items.

Cost of inventories is generally ascertainedon the ‘weighted average’ basis. Work-in-progressand finished and semi-finished products arevalued on full absorption cost basis.

G. TAXES ON INCOME :Current tax is determined as the amount oftax payable in respect of taxable income forthe years. Deferred tax is recognised, on timingdifferences, being the difference between taxableincomes and accounting income that originatein one period and are capable of reversal inone or more subsequent periods. Where thereis an unabsorbed depreciation or carry forwardloss, deferred tax assets are recognised onlyif there is virtual certainty of realisation ofsuch assets, other deferred tax assets are recognisedonly to the extent there is reasonable certaintyof realisation in future.

Minimum Alternate Tax (MAT) paid in accordancewith the tax laws, which gives rise to futureeconomic benefits in the form of adjustmentof future income tax liability, is consideredas an asset if there is convincing evidence thatthe Company will pay normal tax after thetax holiday period. Accordingly, it is recognizedas an asset in the balance sheet when it is probablethat the future economic benefit associatedwith it will flow to the Company and the assetcan be measured reliably.

H. REVENUE RECOGNITION :

a) Sale of goods is recognised on

transfer of property therein.

b) Insurance and other claims arerecognised only on acceptance of claimsby the appropriate authorities.

I. RESEARCH AND DEVELOPMENTEXPENDITURE :

Revenue expenditure is charged to the Profitand Loss A/C and capital expenditure is addedto the cost of Fixed Assets in the year in whichit is incurred and depreciation thereon is providedas per the rates prescribed in Schedule XIVof the Companies Act, 1956.


54

J. CONTINGENT LIABILITIES :Contingent liabilities are generally not accountedfor in the accounts and are disclosed by Notes onAccounts. Provision made in the accounts in respectof those contingencies which are likely to becomea liability after the year end but before finalisationof accounts and which may have material effecton the position stated in the balance sheet.

K. BORROWING COST :Borrowing costs that are attributable to the acquisitionor construction of qualifying assets are capitalizedas part of the cost of such assets. A qualifying as-set is one that necessarily takes a substantial pe-riod of time to get ready for its intended use orsale. All other borrowings costs are charged to revenue.

L. GOVERNMENT GRANTS :The grants are treated as Capital Reserve (and treatedas a part of Shareholders funds), which can be neitherdistributed as dividend nor as deferred income.

M. EMPLOYEE BENEFITS :Short-term employee benefits (benefits which arepayable within twelve months after the end of theperiod in which the employees render service) aremeasured at cost and are recognised as an expenseat the undiscounted amount in the profit and lossaccount in the profit and loss account of the yearin which the related service is rendered.Contributions to Provident Fund, a defined contributionplan, are made in accordance with the statute andare recognized as an expense when employees haverendered service entitling them to the contributions.Other long-term employee benefits (benefits whichare payable after the end of twelve months fromthe end of the year in which the employees renderservice) are measured on a discounted basis by theProjected Unit Credit Method on the basis of actuarialvaluation.Actuarial gains and losses are recognized immediatelyin the Profit and Loss Account

N. IMPAIRMENT OF ASSETS :At each balance sheet date the company reviewswhether there is any indication of impairment ofthe carrying amount of the company’s fixed as-sets. If any indication exists, an asset’s recover-able amount is estimated. An impairment loss isrecognized whenever the carrying amount of anasset exceeds its recoverable amount. The recov-erable amount is the greater of the net selling priceand value in use. In assessing value in use, the esti-mated future cash flows are discounted to their presentvalue based on an appropriate discount factor.

O. LEASE :Finance leases, which effectively transfer to theCompany substantially all the risks and benefitsincidental to ownership of the leased item, are capi-talized at the lower of the fair value and presentvalue of the minimum lease payments at the in-ception of the lease term and disclosed as leased

assets. Lease payments are apportioned be-tween the finance charges and reduction ofthe lease liability based on the implicit rateof return. Finance charges are charged directlyagainst income. Lease management fees, le-gal charges and other initial direct costs arecapitalized.If there is no reasonable certainty that the Com-pany will obtain the ownership by the endof the lease term, capitalized leased assets aredepreciated over the shorter of the estimateduseful life of the asset or the lease term.Leases where the lessor effectively retains sub-stantially all the risks and benefits of own-ership of the leased item, are classified as operatingleases. Operating lease payments are recog-nized as an expense in the Profit and Loss accounton a straight-line basis over the lease term.

P. FOREIGN CURRENCY TRANSACTIONS :Transactions in foreign currencies are recordedat the exchange rates prevailing on the datesof transactions and in case of purchase of ma-terials and sale of goods, the exchange gains/ losses on settlements during the year, arecharged to Profit and Loss Account.Monetary assets and liabilities denominatedin foreign currencies are translated at the ratesprevailing on the date of Balance Sheet. Ex-change gains / losses including those relat-ing to fixed assets are dealt with in the Profitand Loss Account.

Q. EARNINGS PER SHARE :The Company reports Basic and Diluted EarningsPer Share (EPS/DEPS) in accordance with Ac-counting Standard 20 on “Earnings Per Share”.Basic EPS is computed by dividing the netprofit or loss for the year attributable to equityshareholders by the weighted average numberof equity shares outstanding during the year.Diluted EPS is computed by dividing the netprofit or loss for the year attributable to equityshareholders by the weighted average numberof equity shares outstanding during the yearas adjusted for the effects of all dilutive po-tential equity shares, except where the re-sults are anti-dilutive.

R. PROVISIONS, CONTINGENTLIABILITIES AND CONTINGENTASSETS :The Company recognizes provisions whenthere is present obligation as a result of pastevent and it is probable that there will bean outflow of resources and reliable estimatecan be made of the amount of the obliga-tion. A disclosure for Contingent liabilitiesis made in the notes on accounts when thereis a possible obligation or present obliga-tions that may, but probably will not, requirean outflow of resources. Contingent assetsare neither recognised nor disclosed in thefinancial statements.


55


As at30-Jun-12

(In INR)


As at30-Jun-11

(In INR)

AUTHORISEDEquity Shares of Rs. 10/- each. 160,000,000 1,600,000,000 160,000,000 1,600,000,000

TOTAL 160,000,000 1,600,000,000 160,000,000 1,600,000,000

ISSUEDEquity Shares of Rs. 10/- each. 132,149,080 1,321,490,800 132,149,080 1,321,490,800

SUBSCRIBED & PAID UPEquity Shares of Rs. 10/- each fully paid 132,149,080 1,321,490,800 132,149,080 1,321,490,800

TOTAL 132,149,080 1,321,490,800 132,149,080 1,321,490,800

The Company has issued one class of shares referred to as equity shares having a par value of Rs. 10/- Each holderof equity shares is entitled to one vote per share.

In the event of liquidation of Company , the holder of equity shares will be entitled to receive any of the remainingassets of the company, after distribution of all preferential amounts. However no such pref rential amounts exist cur-rently. The distribution will be in proportion to the number of equity shares held by the shareholders.

Company is yet to file various e-forms as required under Companies Act, 1956

Reconciliation of the number of shares outstanding

Number of shares at the beginning 132,149,080 1,321,490,800 132,149,080 1,321,490,800Add: Shares issued on exercise of employee stock options

Number of shares at the end of the year 132,149,080 1,321,490,800 132,149,080 1,321,490,800

Details of Shareholder holding more than 5 % sharesNo. of Shareholder No. of Shares % of Holding No. of Shares % of Holding

held held

NIL

Capital ReserveOpening balance 32,351,400 6,201,400Add:- Current Year 69,000,000 26,150,000

Closing Balance 101,351,400 32,351,400

During the Year, Company has forfeited the share warrant money received against One Crore Shares ofRs.10 each with a Premium of Rs.22 due to the non receipt of 75% remaining amount. The amountforfeited has been transferred to Capital Reserve.General ReserveOpening balance 192,163,949 15,375,674Security Premium - 155,972,217Foreign Currency Translation Reserve 86,447,666 -Add:- Current Year 19,263,447 20,816,058Closing Balance 297,875,062 192,163,949

NOTES TO STANDALONE BALANCE SHEET AS AT 30TH JUNE 2012

NOTE 1 : SHARE CAPITAL

As at30-Jun-12 (In Nos.)

As at30-Jun-12

(In INR)


As at30-Jun-11

(In INR)

As at30-Jun-12

(In INR)

As at30-Jun-11

(In INR)NOTE 2 : RESERVE AND SURPLUS


56

SurplusOpening balance 187,344,526 95,656,832Add:- Current Year 5,289,940 112,503,753Less:- Transfer to General Reserve 19,263,447 20,816,058

Closing Balance 173,371,019 187,344,526

TOTAL 572,597,482 411,859,876

Deferred Tax LiabilityDifference in Net Block of Fixed Assets 15,547,096 17,711,908

Deferred Tax AssetDisallowance under Section 43 B of the Income tax Act, 1961 2,413,970 2,482,977

Disallowance under Section 40 (a) (ia) of the Income tax Act, 1961 4,112,746 3,923,804

Deferred Tax (Assets)/ Liability 9,020,380 11,305,127

Secured- from banksCash Credit Limit From SBI 30,000,000 29,073,877(Secured by Hypothecation of Company’s Raw Material, Finished Goods, Stock in Process, Stores,Spares and Book Debts and Equitable Mortgage on the Fixed Assets of the Company. Interest rate onsuch Secured Demand Loan from Banks is linked with the base rate of respective banks. Overdueamount as on Balance Sheet date is Rs.22.90 Lacs which has been shown under other Current Liability.)

TOTAL 30,000,000 29,073,877

Creditors for Services 15,234,765 39,578,425Creditors for Capital Goods 1,111,148 1,318,628Creditor For Raw Materials 795,807,318 1,004,697,508(None of the enterprises supplying goods or rendering services to the company who are engaged inmanufacturing or production of goods are rendering or providing services have given any information asrequired under “The Micro, Small and Medium Enterprises Development Act 2006” Hence the company isnot in a position to disclose the required information nor provided any liabilities as required under the said Act.)

TOTAL 812,153,231 1,045,594,561

Accrued salaries & benefits 90,170 68,307For other Liabilities -Taxes payable 14,138,693 72,540,585 -Provision for expenses 97,437 1,221,357 -Book overdraft from Banks 2,290,901 -Other Payables 37,136 14,695(All Liabilities payable with in 12 months are grouped under current liabilities.)

TOTAL 16,654,337 73,844,944

NOTES TO STANDALONE BALANCE SHEET AS AT 30TH JUNE 2012As at

30-Jun-12(In INR)

As at30-Jun-11

(In INR)

NOTE 3 : DEFERRED TAXES AND LIABILITIES

NOTE 4 : SHORT TERM BORROWINGS

NOTE 5 : TRADE PAYABLES

NOTE 6 : OTHER CURRENT LIABILITIES


57

NOTE 8 : OTHER NON CURRENT ASSETS

Capital AdvancesUnsecured , Considered Good -Rent, Electricity and other deposits 901,440 1,907,404 -Capital Advances 128,358,880 102,262,748 -Deposits with Statutory Authorities 13,816,920 16,872,907

TOTAL 143,077,240 121,043,059

Balances shown Under Capital Advances are subject to confirmation.

(unsecured and considered good unless otherwise mentioned )a) Long term trade receivables :

Secured 4,100,000 4,100,000Unsecured - -Doubtful - -

b) Others : - -

TOTAL 4,100,000 4,100,000

Finished Goods 465,554 614,987Work In Progress 8,682,620 3,657,000Raw Materials 15,281,637 3,767,849Stores & Spares 600,000 450,000Consumables 550,000 475,000

TOTAL 25,579,811 8,964,836


:

Contingent Liabilities not provided for (In Lacs.)Claims against the company not acknowledged as debtsTax demands under Appeal by the Commercial Taxes Department 166.85 166.85Bank Guarantee to KSEB (against 100% Margin Money Deposit) 51.50 51.50Security Deposit with Sales Tax 5.20 5.20

NOTE 7 : LONG TERM LOANS & ADVANCES

NOTE 9 : INVENTORIES

As at30-Jun-12

(In INR)

As at30-Jun-11

(In INR)

La

nd

& S

ite

De

ve

lop

me

nt

2,2

56,7

40

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56,7

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56,7

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56,7

40

Co

mp

ute

rs &

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48

81,8

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769,5

58

40.0

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512,8

63

98,9

61

611,8

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157,7

33

174,8

84

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10,4

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9,8

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10,0

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552

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2,5

33,1

91

2,5

33,1

91

25.8

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2,2

93,9

88

61,9

30

2,3

55,9

18

177,2

72

239,2

02

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10,8

84

5,2

10,8

84

20.8

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4,0

92,3

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233,4

38

4,3

25,7

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95

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33

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ica

l In

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ns

4,4

36,9

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200,0

00

4,2

36,9

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4,1

82,7

55

53,0

50

4,2

35,8

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1,1

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254,1

92

Pla

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Ma

ch

ine

ry74,4

05,3

84

74,4

05,3

84

20.8

7%

38,2

41,6

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7,5

47,3

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45,7

89,0

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28,6

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65

36,1

63,7

37

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l E

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87,4

14

528,4

40

74,5

15,8

54

20.8

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22,9

10,6

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10,7

03,6

38

33,6

14,2

44

40,9

01,6

10

51,0

76,8

08

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BA

X

43,3

50

43,3

50

18.1

0%

38,5

83

863

39,4

46

3,9

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4,7

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rnitu

re &

Fix

ture

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20

11,2

60

131,8

80

18.1

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105,9

81

4,1

19

110,1

00

21,7

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14,6

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50,0

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50,0

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18.1

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43,1

60

1,2

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44,3

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5,6

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6,8

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ce

llan

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us F

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ts62,5

69

62,5

69

18.1

0%

53,7

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1,5

92

55,3

63

7,2

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8,7

98

Off

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Eq

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me

nt

711,1

65

2,4

50

713,6

15

18.1

0%

115,0

48

108,3

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223,3

70

490,2

45

596,1

17

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nd

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ne

r

60,3

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13,7

91

74,0

91

13.9

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27,4

88

5,0

32

32,5

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41,5

71

32,8

12

To

ols

& T

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176,1

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148,3

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152,1

95

23,9

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g

16,6

03,0

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12,1

17,9

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448,5

12

12,5

66,4

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85,1

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181,3

55,9

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637,7

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200,0

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181,7

93,6

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84,8

94,3

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59

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No.


60

Cash and Cash Equivalents Cash on hand 2,990,335 1,471,254 Balance with banks In current accounts 272,977 (9,350,695)Fixed Deposit (less than 3 month Maturity) 769,202,811 907,466,738

TOTAL 772,466,123 899,587,297

Fixed Deposit Receipt under lien to exchangeFixed Deposit Receipt lien with banks against borrowings 3,200,000 5,150,284

Loans and advances to related partiesUnsecured, Considered Good Advances -Subsidiaries 695,148,127 328,715,694

TOTAL 695,148,127 328,715,694

Interest Accrued on Fixed Deposit 514,001 2,296,051Service Tax Recievable 214,776 152,576Modvat Recievable 180,810 86,175Insurance Claim Recievable - 1,150,000

TOTAL 909,587 3,684,802

NOTE 13 : CASH AND BANK BALANCES

NOTE 14 : SHORT TERM LOANS AND ADVANCES

NOTE 15 : OTHER CURRENT ASSETS

As at30-Jun-12

(In INR)

As at30-Jun-11

(In INR)NOTE 12 : TRADE RECEIVABLES

Unsecured, Considered Gooda.) Outstanding for a period more than six months from the date they are due for payment 641,384,510 375,968,773b.) Outstanding for a period less than six months from the date they are due for payment 345,854,593 1,058,729,518

Secured, Considered Gooda.) Outstanding for a period more than six months from the date they are due for paymentb.) Outstanding for a period less than six months from the date they are due for payment

TOTAL 987,239,103 1,434,698,291Balances shown Unsecured Trade Recievables are subject to confirmation.



61

NOTE 18 : COST OF MATERIAL CONSUMED

NOTE 19 : CHANGES IN INVENTORY OF FINISHED GOODSWORK IN PROGRESS AND STOCK IN TRADE

Sales of Steel Products 3,269,948,530 4,328,574,362

Other Operating Revenue :Income from Conversion / Job work 103,800 922,110 Income from Commision / Services - 194,413,881

TOTAL 3,270,052,330 4,523,910,353

Interest Income on Deposits 5,321,354 2,535,803Other non operating Income 701,723 -Foreign Exchange Gain / (Loss) 173,691,006 (7,994,655)

TOTAL 179,714,083 (5,458,852)

GROSS REVENUE 3,449,766,413 4,518,451,501

Raw Material 113,152,180 84,844,995Stock In Trade 3,136,513,903 4,194,677,177Consumables 232,430 147,800Stores & Spares 350,000 200,000

TOTAL 3,250,248,513 4,279,869,972

Opening StockFinished Goods 4,271,987 11,159,592Work in Progress - -

Closing StockFinished Goods 9,148,174 4,271,987Work in Progress - -

Increase / (Decrease) in Stock (4,876,187) 6,887,605

NOTES TO STANDALONE PROFIT AND LOSS ACCOUNT FOR PERIOD ENDED ON 30TH JUNE 2012 FOR THE FOR THE YEAR ENDED YEAR ENDED 30-Jun-12 (In INR) 30-Jun-11 (In INR)NOTE 16 : REVENUE FOR OPERATION

NOTE 17 : OTHER INCOME


62

NOTE 21 : FINANCE COST

Salary, Bonus and Allowances 2,571,815 2,330,836Contribution to provident & other Funds 98,005 92,777Staff Welfare Expenses 50,296 109,135

TOTAL 2,720,116 2,532,748

There was no employee at any time during the year drawing Rs.200000/- or more per month.

Interest Expenses 3,383,181 9,515,169Other Borrowing Cost 480,211 915,598

TOTAL 3,863,392 10,430,767

Advertisement Expenses 902,649 6,418,639Remuneration to Auditors 500,000 500,000Secretarial Affairs 163,546 708,154Insurance Expenses 136,918 57,646Donations - 5,000Duties & Taxes 382,576 4,678,632Power and Fuel 35,830,271 30,494,676Carriage Inward 2,724,769 1,499,481Repairs 523,037 182,887Listing Fees 1,053,815 1,385,631News Paper & Periodicals 9,444 -Office Maintainance Expenses 5,177,821 2,919,015Postage & Couriers 123,666 42,345Printing & Stationery 63,776 31,039Professional Tax 7,050 4,000Regn. & Lisence Fees 182,637 94,025Communication Expenses 393,147 159,870Travelling Expenses 1,081,952 507,157Preliminary Expenses Written Off 10,112,516 -Misc. Expenses 115,504,017 9,056,330

TOTAL 174,873,607 58,744,527

FOR THE FOR THE YEAR ENDED YEAR ENDED 30-Jun-12 (In INR) 30-Jun-11 (In INR)

NOTE 20 : EMPLOYEE BENEFITS

NOTE 22 : OTHER EXPENSES


63

Note: 23GENERAL NOTES TO ACCOUNTS :1. The Accounts for the Financial Year

2011-12 have been prepared for the periodof 12 Months from 1st July, 2011 to 30th June,2012. (Previous Year 1st July 2010 to 30thJune 2011 for the period of 12 Months )

2. Previous year’s figures have been re-grouped wherever necessary to confirmto this year’s classifications.

3. Segment Reporting :a) Business Segment : The Company

has considered business segment as

the primary segment to disclose. Thecompany is engaged in the manu-facturing of MS Ingots / trading of SteelProducts, which the context of AS-17is issued by the Institute of CharteredAccountants of India, is consideredthe only business segments.

b) Geographical Segment : The Com-pany sell its products within India.The condition prevailing in India beinguniform No Separate geographicalsegment disclosure is considerednecessary.

4. Operating Lease :Future obligations towards lease rentals Current Year Previous YearWithin one year Rs. 7.20 Lakhs Rs. 46.20 LakhsLater than one year but less than Five years Rs. 40.00 Lakhs Rs. 2.40 LakhsLater than Five years NIL NILTotal Rs. 47.20 Lakhs Rs. 48.60 Lakhs5. Earnings per share :Earning for Shareholders for the period Rs. 52.89 Lakhs Rs. 1125.04 LakhsNo. of Equity Share (Weighted) 132149080 44827502Potential No. of Equity Share Outstanding NIL NILEarnings per share ( Basic) Rs 0.04 Rs. 2.51Earnings per share ( Dilutive) Rs 0.04 Rs. 2.516. Deferred Tax :

In accordance with the Accounting Stan-dard -22 “Accounting for taxes on In-come” issued by the Institute of Char-tered Accountants of India, the companyhas accounted for deferred tax dur-ing the period. The cumulative net

deferred tax liability of Rs. 113.05 Lakhsas on 30th June 2012 has been rec-ognized. Consequently the excessDeferred Tax Liability of Rs. 22.85Lakhs has been recognized & cred-ited to Profit & Loss account.


64

Rs in LakhsParticulars As at As at

30.06.2012 30.06.2011Deferred Tax Liabilities :Difference in Accumulated Book Depreciation &Accumulated Depreciation under Income Tax Act. 457.40 521.09Deferred Tax Assets :Unabsorbed Depreciation & disallowanceAllowable expenses on payment basis 192.01 188.49Net Timing Difference 265.38 332.60Total Deferred Tax Liability to be recognised 90.20 113.05Deferred Tax Liability previously recognized 113.05 179.07Net Deferred Tax Liability provided / (Reversed) duringthe period (22.85) (66.02)7. Details of Audit fees are as follows :

Company Audit Fees 3,50,000.00 3,50,000.00Tax audit Fees 1,00,000.00 1,00,000.00Consultation & Other Services 50,000.00 50,000.00Reimbursement of Expenses NIL NIL

8. Related Party disclosure :Disclosures as required by account-ing standard 18 (AS-18) related partydisclosures issued by the institute ofchartered accountants of India are asfollows and description of relation-ship.a) Name of related partiesi) Subsidiaries - SIEL, FZE

ii) Key management personal1) Shri Vivek Agarwal, Chairman

& Managing Director2) Shri Manish Kr. Mishra,

Director

3) Shri Umesh Kumar Sahu,Director

4) Shri E Sankaranarayana,Ex-Director

iii) Relative of key management per-sonnel where transaction have beentaken place during the year.1) Kerala Sponge Iron Ltd.2) Sree Enterprises3) K. K. Agarwalla

iii) Transaction with related parties re-ferred to above in ordinary courseof business.


65

(Rs. in Lakhs)Nature of Transactions Referred in Referred in Referred in

20(a)(i) above 20(a)(ii) above 20(a)(iii) aboveRemuneration Paid / Salary NIL 9.34 3.68Rent NIL NIL 1.20Purchase NIL NIL 3.21Loan or Deposit taken NIL NIL 6.56Loan or Advance Given / Repaid 3153.35 NIL 2.00Investment NIL NIL NILReceivable to Company 6951.48 NIL NILPayable by Company NIL 1.08 13.62

9. As required under section 212 of theCompanies Act Statement on Companiesinterest in the subsidiary is given below

:

There is no change in the share-holding Interest between the endof the financial year of the subsidiary& the end of the company’s finan-cial year.

No Material changes have occurredbetween the end of the financial yearof the Subsidiary company & the

end of the company’s financial yearin respect of Subsidiary’s fixed as-sets, investments, moneys lent byit and moneys borrowed by it forany purpose other than that of meetingcurrent liabilities.

Subsidiary Company’s Brief un au-dited Financial Information as on30.06.2012 & 30.06.2011 are asfollows :

(Amount in Lacs)Particulars 2011-12 2010-11

A Paid-up capital 18.51 18.51B Reserve & Surplus 7390.38 2528.56C Loans 6951.48 3287.16D Net Current Assets 14360.38 5834.23E Turnover 67415.92 35320.33F Total Expenditure 63343.65 32791.77G Profit 4072.26 2528.56


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10. Information as per Schedule VI Part II 4A,4B,4C and 4D of the CompaniesAct, 1956.

1. Remuneration paid to Directors Rs. 9.34 Lakhs (Rs. 10.15 Lakhs)2. Payment to Auditors Rs. 5.00 Lakhs (Rs. 5.00 Lakhs)3. Licensed and installed capacity :

Particulars Licensed Capacity Installed Capacity ProductionCTD Bars, Angle 24000 TPA

(24000 TPA)Shots & Grits 4000 TPA 4000 TPA

(4000 TPA) (4000 TPA)

M.S. Ingots 24000 TPA 16000 TPA 4735.580 (24000 TPA) (16000 TPA) (4651.070)

4. Finished Goods details :

Item M S IngotsParticulars Qty (MT) Value (Rs in lacs)Op. Stock 20.455 0.00

(0.000) (7.33)Sales (consumption) 4741.010 1549.33

(4630.615) (1247.06)Closing Stock 15.025 4.50

(20.445) (5.71)







CONSOLIDATED CASH FLOW STATEMENT (Rs. Million)

Particulars Current Year Previous Year Cash Flow From Operating Activities Profit Before Taxation 410.89

388.45 Add 1) Depreciation 19.27 24.05 2) Interest Paid / Borrowing cost 4.02 10.50 3) Provision for doubtful debt - - 4) bad debt w/off 108.01 131.30 - 34.56 OPERATING PROFIT 542.19

423.01 Adjustment For: 1) (Increase)/Decrease In Trade Receivables 230.27 (1585.21) 2) (Increase)/Decrease In Stock-in-trade (432.64) (713.27) 3) (Increase)/Decrease In Short Term Loans & Advances - - 4) (Increase)/Decrease In Long Term Loans & Advances (22.04) - 5) (Increase)/Decrease In Interest Accrued/ Other Current Assets 2.78 - 6 Increase/(Decrease) in Other Trade Payable (186.35) 1535.36 7) Increase/(Decrease) in Other Current Liabilities (53.64) - (461.63)

(763.12) Cash Generated From Operations 80.56

(340.12) Taxes Paid 0.66 (6.60) Net Cash Generated From Operation Before Extraordinary Items 79.90

(346.72) Less Extraordinary items (net of tax) - - Net Cash Generated From /(Used) From/In Operating Activities (A) 79.90

(346.72) Cash Flow From Investing Activities Purchase of Fixed Assets (Net of increase in CWIP) (1.61)

(7.60) Purchase of Investments - - Sale of Fixed Assets 0.20

- Net Cash Generated From /(Used) From/In Investing Activities (B) (1.41)

(7.60) Cash Flow From Financing Activities Proceeds/Repayment of Borrowing 69.00 1,248.31 Final Dividend and DDT Interest Paid (4.02)

(10.50) Net Cash Generated From /(Used) From/In Financing Activities (C) 64.98

1,237.81 Net Cash Flow Generated For The Period (A+B+C) 143.48

883.50 Cash & Cash Equivalents as at beginning of year Cash on hand 1.47

0.08 Bank balance in current account (9.11) 16.25

Fixed Deposit (less than 3 month Maturity) 907.47 - Total Cash & Cash Equivalents as at beginning of year 899.83 16.33 Cash & Cash Equivalents as at end of year Cash on hand 273.83

1.47 Bank balance in current account 0.27 (9.11)

Fixed Deposit (less than 3 month Maturity) 769.20 907.47

Total Cash & Cash Equivalents as at end of year 1,043.31 899.83

Note : Previous Year Figures have been regrouped / rearranged to confirm current year classification.

As per our attached report of even date For Sunil Johri & Associates Chartered Accountants Firm Regn. No. 005960C Sd/- Sunil Johri Partner Membership No 074654 Dated : 30/09/2012 Place : Palakkad, Kerala

Sd/- Vivek Agarwal

Chairman & Managing Director

For and on behalf of the Board of Directors

Sd/- Manish Mishra

Director

AUDITORS’ REPORT We have examined the above Consolidated Cash Flow of Southern Ispat & Energy Limited for the period ended 30th June 2012 and certify that this is based on and is in agreement with the corresponding Balance sheet and profit & loss account of the company covered by our report dated 30/09/2012 to the members of the company.

For SUNIL JOHRI & ASSOCIATES CHARTERED ACCOUNTANTS

FRN 005960C DATE: 30/09/2012 PLACE: PALAKKAD, KERALA Sd/-

SUNIL JOHRI

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STANDALONE CASH FLOW STATEMENT (Rs. Million)

Particulars Current Year Previous Year Cash Flow From Operating Activities Profit Before Taxation 3.66

135.92 Add 1) Depreciation 19.27 24.05 2) Interest Paid / Borrowing cost 3.86 10.43 3) Provision for doubtful debt - - 4) bad debt w/off 108.01 131.15 - 34.48 OPERATING PROFIT 134.81

170.40 Adjustment For: 1) (Increase)/Decrease In Trade Receivables 447.46 (1527.86) 2) (Increase)/Decrease In Stock-in-trade (16.61) 3.00 3) (Increase)/Decrease In Short Term Loans & Advances (445.96) - 4) (Increase)/Decrease In Long Term Loans & Advances (22.03) - 5) (Increase)/Decrease In Interest Accrued/ Other Current Assets 2.78 - 6 Increase/(Decrease) in Other Trade Payable (233.44) 1015.64 7) Increase/(Decrease) in Other Current Liabilities (57.19) - (325.01)

(509.23) Cash Generated From Operations (190.19)

(338.82) Taxes Paid 0.66 6.60 Net Cash Generated From Operation Before Extraordinary Items (190.85)

(345.42) Less Extraordinary items (net of tax) - - Net Cash Generated From /(Used) From/In Operating Activities (A) (190.85)

(345.42) Cash Flow From Investing Activities Purchase of Fixed Assets (Net of increase in CWIP) (1.61)

(7.60) Purchase of Investments (1.85) Sale of Fixed Assets 0.20

- Net Cash Generated From /(Used) From/In Investing Activities (B) (1.41)

(9.45) Cash Flow From Financing Activities Proceeds/Repayment of Borrowing 69.00 1,248.55 Final Dividend and DDT Interest Paid (3.86)

(10.43) Net Cash Generated From /(Used) From/In Financing Activities (C) 65.14

1,238.12 Net Cash Flow Generated For The Period (A+B+C) (127.12)

883.26 Cash & Cash Equivalents as at beginning of year Cash on hand 1.47

0.08 Bank balance in current account (9.35) 16.25

Fixed Deposit (less than 3 month Maturity) 907.47 - Total Cash & Cash Equivalents as at beginning of year 899.59 16.33 Cash & Cash Equivalents as at end of year Cash on hand 2.99

1.47 Bank balance in current account 0.27 (9.35)

Fixed Deposit (less than 3 month Maturity) 769.20 907.47

Total Cash & Cash Equivalents as at end of year 772.47 899.59

Note : Previous Year Figures have been regrouped / rearranged to confirm current year classification.

As per our attached report of even date For Sunil Johri & Associates Chartered Accountants Firm Regn. No. 005960C Sd/- Sunil Johri Partner Membership No 074654 Dated : 30/09/2012 Place : Palakkad, Kerala

Sd/- Vivek Agarwal

Chairman & Managing Director

For and on behalf of the Board of Directors

Sd/- Manish Mishra

Director

AUDITORS’ REPORT We have examined the above Standalone Cash Flow of Southern Ispat & Energy Limited for the period ended 30th June 2012 and certify that this is based on and is in agreement with the corresponding Balance sheet and profit & loss account of the company covered by our report dated 30/09/2012 to the members of the company.

For SUNIL JOHRI & ASSOCIATES CHARTERED ACCOUNTANTS

FRN 005960C DATE: 30/09/2012 PLACE: PALAKKAD, KERALA Sd/-

SUNIL JOHRI PARTNER

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71

Southern Ispat & Energy LtdRegd. Office: 19/629 (1), “Sreyas”, Near Yakkara School Bus stop, West Yakkara, Palakkad-678 001

ATTENDANCE SLIP(To be handed over at the entrance of the meeting hall)

Full name of the Member attending……………………………………………………………………

(To be filled in if first named joint holder does not attend the Meeting)

Name of Proxy………………………………………………………………………………………….

I hereby register my presence at the ANNUAL GENERAL MEETING held at 19/629 (1), “Sreyas”,Near Yakkara School Bus Stop, West Yakkara, Palakkad-678 001 on 26th December 2012 at 11:30 A.M.

…………………………………………………… (Member’s/Proxy’s Signature)

(To be signed at the time of handing over this slip)

………………………………………………………………………………………………………………….

Southern Ispat & Energy LtdRegd. Office: 19/629 (1), “Sreyas”, Near Yakkara School Bus stop, West Yakkara, Palakkad-678 001

PROXY FORMI/We ……………………………………………………………………………………………………………………............................................................ being a member/members of the above named Com-pany hereby appoint………………………………………………………………………………………asmy/our proxy to vote for me/us on my/our behalf at the Annual General Meeting of the Company to beheld on 26th December, 2012 at 11:30 A.M. and at any adjournment thereof*in favour/against of the reso-lutions.

Signed this……………………………day of……………………2012

Registered Folio No.:……………………………………

No. of Shares held:……………………………………..

Signature………………………………………………….

NB: The instrument appointing proxy should be deposited at the Registered Office ofthe Company not later than 48 hours before the commencement of the meeting.

Re. 1Revenue

Stamp


72

Printed Matter

If undelivered, please return to :

118 Atlanta Estate, near Virwani Industrial area,Opp. W.E.highway, Goregaon (East) Mumbai - 400 063

Southern Ispat & Energy Limited

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