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NOTES TO ACCOUNTS

Prakash Steelage Ltd.

You can view the entire text of Notes to accounts of the company for the latest year
Market Cap. (₹) 3.50 Cr. P/BV -0.01 Book Value (₹) -15.32
52 Week High/Low (₹) 1/0 FV/ML 1/1 P/E(X) 0.25
Bookclosure 28/09/2018 EPS (₹) 0.79 Div Yield (%) 0.00
Year End :2015-03 
1 Disclosure under Revised Accounting Standard 15 on Employee Benefits:

Consequent to Accounting Standard 15 "Employee Benefits" (Revised 2005) becoming effective, the Company has made the provision for Defined Contribution Plan and Defined Benefit Plan.

Defined Contribution Plan

During the year, the Company has recognized Rs. 3,489,560/- (Previous Year Rs. 3,500,521/- ) towards Provident Fund and Employees, State Insurance Corporation as Defined Contribution Plan Obligation.

Defined Benefit Plan Gratuity & Leave Encashment

Liability is computed on the basis of Gratuity & Leave Encashment payable on retirement, death and other withdrawals as per the Act and already accrued for past service, with the qualifying wages/salaries appropriately projected, as per the Projected Unit Credit Method.

2 Segment Reporting

The Company's operations predominantly relates to manufacturing and trading of "Stainless Steel Tubes & Pipes", Hence there is no separate reporting segment as per Accounting Standard 17 "Segment Reporting" as prescribed under section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014.

3 Related Party Disclosure

Disclosure requirement as per Accounting Standard 18 (AS-18) "Related Party Disclosure" as prescribed under section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014.

The information has been given in respect of such vendors to the extent they could be identified as "Micro, Small and Medium" Enterprises on the basis of information available with the Company.

4 Some of the balances of Trade Receivables, Deposits, Loans & Advances, Advances received from customers, Liability for expenses and Trade Payables are subject to confirmation from the respective parties and consequential reconciliation/adjustment arising there from, if any. The management, however, does not expect any material variation.

5 In the opinion of the Management, Current Assets, Loans & Advances are approximately of the value stated, if realized, in the ordinary course of business. The provision for all known and determined liability is adequate and not in the excess of the amount reasonably required.

6 Sundry balances (net) written off amounting to Rs. 20,010,323/- are net of sundry credit balances written back amounting to Rs.4,527,680/- (in previous year sundry balances (net) written off amounting to Rs. 31,326,734/- are net of sundry credit balances written back amounting to Rs.85,65,196/-)

7 Prior period adjustment (Net) amounting to Rs 35,805/- (credit) {Previous year Rs. 31,090/- (credit)} includes income of Rs. 37,864/- (Previous year Rs. 290,025/- ) and expenses Rs. 2,059/- (Previous year Rs.258,935/-).

8 During the year, the Company has written off Bad debts amounting to Rs.102,592,154/-. This being a material amount, the same has been shown as 'Exceptional Item' for the year. ('Exceptional Item' for the previous year ended 31st March, 2014 represents gain of Rs.17,500,000/- on account of forfeiture of advance due to cancellation of sale contract by the customer as per terms of contract.)

9 Discolosures of derivative instruments

The Company has entered into the following derivative instruments. All the forward contracts are accounted for as per Accounting Policies stated in Note 1(i) annexed to Balance Sheet and Statement of Profit and Loss.

The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations. The Company does not use forward contracts for speculative purposes.

10 During the year, pursuant to the notification of Schedule II to the Companies Act, 2013 with effect from 1 April, 2014, the Company has revised the useful life of its assets to the useful life specified in Schedule II whereas previously the Company was providing the depreciation on its fixed assets at the rates specified in Schedule XIV of the Companies Act, 1956. Accordingly, the carrying amount of the fixed assets as on 1st April, 2014 has been depreciated over the remaining revised useful life of the fixed assets. As a result, the depreciation charge for year ended 31st March, 2015 is higher by Rs.23,621,956/- and profit before tax year ended 31st March, 2015 is lower to the said extent. Further, based on the transitional provisions provided in note 7(b) of the Schedule II, fixed assets whose useful life has already been completed as on 1st April, 2014, the carrying value of those fixed assets amounting to Rs. 9,070,071/- and the corresponding deferred tax thereon amounting to Rs. 3,082,917/- have been debited and credited respectively to the opening balance of 'Retained Earnings'.

11 The Company has entered into a Joint Venture Agreement with Tubacex S. A. on February 13, 2015. Pursuant to the joint ventured agreement, the Company proposes to transfer its Seamless Stainless Steel Tubes and Pipes business (herein after referred as "seamless business" or "discontinued operations") to the new Joint Venture Company (JVC) (incorporated on April 22, 2015) at a net consideration of Rs. 209.16 crores and sell additional land measuring about 16,188 sq. metres for an additional consideration of about Rs.20 crores subject to fulfilment of various terms & condition based on which the execution of the business transfer agreement will take place. The JVC has been incorporated as a wholly owned subsidiary and subsequently the 67.53% of the shareholding in the JVC will be held by Tubacex S.A and 32.47% by the Company. The effect of the said transaction will be given on fulfilment of various terms and conditions of joint venture agreement.

The Company operates under a single business segment i.e. 'Stainless Steel Tubes & Pipes' within the meaning of Accounting Standard - 17 'Segment Reporting'. The transfer of the seamless business would involve transfer of assets and liabilities as are related to the seamless business and as the same are identified by the parties to the transaction. For this purpose, employees, tangible and intangible assets, current assets, market territories, other liabilities etc. are being identified as are related to the seamless business. In view of common employees, marketing expenses, operating expenses, finance cost, common customers, common suppliers, logistics & distribution arrangements and general corporate overheads, which are not separately identifiable for seamless business, the Company is unable to determine the income, expenses, assets and liabilities clearly attributable to the discontinued operations. As per the practice followed by the Company for preparation of its financial statements for financial reporting purposes, its present system of maintenance of books of account and other relevant records do not provide clearly identifiable details of income and expenditure as are related to the seamless business. Under the circumstances, the management is of the view that seamless business, a component of the enterprise, cannot be distinguished operationally and for financial reporting purposes and also in view of the fact that the binding agreement for the transfer of the seamless business is pending, the initial disclosures, namely total assets, total liabilities, revenue, expenses, net cash flows and pre-tax profit or loss in respect of the ordinary activities attributable to the discontinuing operation and the income tax expense related thereto pertaining to the discontinuing operations as required by Accounting Standard (AS) 24 'Discontinuing Operations' are not given.

12 The Company's pending litigations comprise of claims against the Company and proceedings pending with Statutory and Ta x Authorities. The Company has reviewed all its pending litigations and proceedings and has made adequate provisions, whenever required and disclosed the contingent liabilities, wherever applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a material impact on its financial position (Refer note no 28 for details on contingent liabilities).

13 The Company periodically reviews all its long term contracts including derivative contracts to assess for any material foreseeable losses. Based on such review, the Company has made adequate provisions for these long term contracts in the books of account as required under any applicable law/ accounting standard.

14 For the year ended march 31, 2015. the Company is not required to transfer any amount into the investor education & protection fund.

15 Disclosure in respect of Corporate Social Responsibility Expenditure ( CSR ) is as under. (a) Gross amount required to be spent by the company during the year is Rs 4,850,465/- (b) Amount spent during the year is Rs Nil

16 Disclosure pursuant to clause 32 of the Listing Agreement:

17 Details of loans given , Investments made and guarantee given covered u/s 186 (4) of the Companies Act, 2013:

Details of the loans are given in note 45 above and details of investment are given in note no 10 above.

18 During the previous year, Company had initiated the development of the "Industrial Park Project" on its idle land at Palgam (Umbergaon) and accordingly, it had converted the Land from Fixed Assets into Stock-in- Trade at lower of cost or net realizable value i.e. at cost of Rs. 88,18,164/-. It had passed a special resolution for including real estate business activities as one of the main object and obtained approval from shareholders. However, the Company could not alter the main object clause of memorandum and articles of association as the Registrar of the Companies (ROC) has approved the same subject to change of name of the Company in line with proposed new business. Accordingly, during the year, it has reconverted the Land from stock-in-trade to Fixed Assets.

19 During the previous year, Company has incorporated on 10th April, 2013, wholly-owned foreign subsidiary viz. Pioneer Stainless & Alloy - F.Z.C. at Ajman, United Arab Emirates for doing trade activities internationally in ferrous and non ferrous metal items.

20 Figures of the previous year have been re-grouped, re-classified and re-arranged, wherever necessary.

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