NOTE 1 SIGNIFICANT ACCOUNTING POLICIES Company Overview Mahamaya Steel Industry a major industry in the group is a 15 years young company, manufacturing steel structures in the shape of Angles, Beams, Joist, Channels, Rounds, Flats, Railway sleepers etc. It has high capacity structural rolling mills with full fledged supportive SMS. Mahamaya has many brstigious customers ranging from BHEL, BHPV, MAHAGENCO, CSPDCL, TNEB, GETCO, MSPDCL, MPPDCL, ONGC, RAILWAYS, RELIANCE, JINDAL etc. It is also conversion agent of SAIL, JINDAL. Mahamaya is one of the few in the country who manufactures 600 MM joist and 250 MM angles . Mahamaya has kept pace with modern time, by continuously modernizing its plant and equipment so that its product confires to specification as required by different customers. The product are inspected by world renowned inspection agencies like – BIS,TUV,DNV,BUREAU VARITAS, SGS, LLOYDS, ABS, RDSO etc. The company is a public limited company incorporated and domiciled in India and has its registered office at Raipur, Chhattisgarh. The company is listed its shares on Bombay stock exchange ltd(BSE). 1) Basis of Preparation of Financial Statements The financial statements are brpared in accordance with Indian Generally Accepted Accounting principle(GAAP) under the historical cost convention on the accrual basis. GAAP comprises mandatory accounting standards as brscribed under section 133 of the Companies Act 2013('Act') read with Rule 7 of the Companies (Accounts) Rule 2014,the provision of the acts (to the extent notified) and guideline issued by the SEBI .Accounting policies have been consistently applied except where a newly accounting standard is initially adopted or to a revision to an AS requires a change in accounting policy hitherto in use. 2) Use of Estimates The brparation of financial statements require estimates & assumptions to be made that affect the reported amount of asset and liabilities on the date of financial statements and reported amount of revenues and expenses during the reporting period. Difference between actual results and estimates are recognized in the period in which the results are known / materialized 3) Fixed Assets Fixed Assets are stated at cost of acquisition inclusive of duties (net of credit under Cenvat / VAT schemes), taxes, incidental expenses, erection / commissioning expenses, including financing cost till commencement and regularization of commercial production, net charges on foreign exchange contracts and adjustments (if any) arising from exchange rate variation relating to borrowings attributable to the fixed assets are capitalized, less accumulated debrciation as per the Schedule-II. 4) Capital Work in progress It is stated at cost. 5) Debrciation and Amortisation I) Debrciation is provided based on useful life of the assets and scrape value (5% of the original cost) as brscribed in schedule II to the Companies Act, 2013 except, in respect of Rolls, where useful life taken for one year only as per technical advise. ii) Leasehold Land is amortised on straight line basis over the period of lease. 6) Impairment of Assets An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is normally charged to the Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount. 7) Foreign Currency Transactions i) Transactions denominated in foreign currencies are normally recorded at the exchange rate brvailing at the time of the transaction. ii) Monetary items denominated in foreign currencies at the year end rates. In case of monetary items which are covered by forward exchange contracts, the difference between the year end rate and rate on the date of the contract is recognized as exchange difference and the brmium paid on forward contracts has been recognized over the life of the contract. iii) Non monetary foreign currency items are carried at cost. iv) Any income or expense on account of exchange difference either on settlement or on translation is recognized in the profit and loss account except in cases where they relate to acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets. 8) Investments Long Term Investments are stated at cost. Provision for diminution in the value of long term investments is made only if such a decline is other than temporary in the opinion of the management. 9) Inventory Valuation Inventories are valued at lower of cost or net realizable value. Cost of Finished goods is determined by including direct materials, labour, other expenses and a proportion of overheads based on normal operating capacity. Cost of finished goods has been determined on weighted average and includes excise duty. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and to make the sale. Cost of raw materials stores and spares, are determined on FIFO basis. By products are valued at net realizable value. 10) Revenue Recognition Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. Turnover includes sale of goods, services, sales tax, service tax, excise duty and sales during trial run period, adjusted for discounts (net), Value Added Tax (VAT) and gain / loss on corresponding hedge contracts. Dividend income is recognized when right to receive is established. Interest income is recognized on time proportion basis taking into account the amount outstanding and rate applicable. 11) Excise Duty Excise Duty is accounted on the basis of, both, payments made in respect of goods cleared as also provision made for finished goods in stock. 12) Recognition of Income and Expenditure Mercantile method of accounting is employed unless otherwise specifically stated elsewhere in this schedule. However, where the amount is immaterial/negligible and/or establishment of accrual/determination of amount is not possible, no entries are made for the accruals. 13) Employee's Retirement Benefits i) Short-term employee benefits are recognized as an expense at the undiscounted amount in the profit and loss account of the year in which the related service is rendered. ii) Post employment and other long term employee benefits are recognized as an expense in the Profit and Loss account for the year in which the employee has rendered services. The expense is recognized at the brsent value of the amounts payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post employment and other long term benefits are charged to the Profit and Loss account. 14) Borrowing Costs Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as part of cost of such assets (if any). A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale. All other borrowing costs are recognized as expenses in the period in which they are incurred. 15) Provision for Current and Deferred Tax Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961. Deferred tax resulting from “timing differences” between book and taxable profit is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognized and carry forward only to the extent that there is a reasonable certainty that the asset will be realized in future. 16) Provisions, Contingent Liabilities and Contingent Assets Provisions involving substantial degree of estimation in measurement are recognized when there is a brsent obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are generally not provided for in books of account and separate disclosure is made in ‘Notes on Accounts”. Contingent Assets are neither recognized nor disclosed in the financial statements. 17) Finance Lease Assets leased by the Company in its capacity as a lessee, where substantially all the risks and rewards of ownership vest in the Company are classified as finance leases. Such leases are capitalised at the inception of the lease at the lower of the fair value and the brsent value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year. A leased assets is debrciated on Straight line over the useful life of the asset. NOTE 2 NOTES ON ACCOUNTS (A) Electricity Duty exemption: In the Financial year 2012-13 the company had applied for exemption of electricity duty in respect of electricity consumed in its SMS Plant. The company had been advised that under the Internal Policy of State of Chhattisgarh, it is entitled to get electricity duty exemption of an amount aggregating Rs.882.26 lacs. Out of this amount, an amount of Rs.104.96 lacs pertains to accounting year under review i.e. 2015-16 and the remaining amount i.e. Rs.777.31 lacs pertains to accounting year 2011-12, 2012-13, 2013-14 and 2014-15. The management is of the opinion that the same amount would be realized in the near future. (B) The exact impact of the earlier fraud(F.Y -2012-13) committed by one of the employee of the company is Rs. 114.56 lacs. The company had filed a legal suit against the employee and the same is subject to judicial proceedings. Considering the favorable position in the case as consulted with the legal advisor in the case the management has not make any provision in the books of accounts. (C) During the year under review, the company has charged interest on outstanding, where the payment was in arrears. The combined effect of interest so applied to the accounts of various Debtors is Rs. 3.14 lacs, recognized as amount due for a period less than 6 months as the recording of this interest has been done during the year. (D) Parties’ accounts are subject to confirmation. Consequential effects adjustment, brsently unascertainable, will be provided as and when confirmed. (E) Trade Receivables, Loans & Advances and Deposits include certain over due accounts. Balances in the accounts of certain debtors, loans and advances required to be confirmed / reconciled. However, in the opinion of the Board, all current assets, loans and advances would be realized in ordinary course of the business at the value as stated. (F) In the opinion of the Board, the provision for debrciation and all known liabilities is adequate and not in excess of the amount reasonably necessary. (G) The information required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company. There are no over dues to parties on account of principal amount and / or interest and accordingly no additional disclosures have been made. (H) Figures of the brvious year have been reworked, rearranged/regrouped and reclassified wherever considered necessary. Accordingly, the amount and other disclosures for brceding year are included as an integral part of current year’s financial statement and are to be read in relation to the amount and other disclosures relating to current year. The figures in financial statements are rounded off to the nearest lacs rupees. (I) Separate segment wise reporting is not called for in view of the fact that mostly the revenue of the Company is from structural manufacturing and all business activities are in India only. The operations of Gas Plant of company are mainly for captive use and the surplus have been sold to external parties amount of Rs. 101.78 lakhs; the same is not fulfilling the criteria of (Para 27 of AS-17 (Segment Reporting)) separate reportable segment. (J) The management has reviewed the impairment position of the assets disclosed in the financial statement for the year; and there is no indication of impairment (Assets carry cost is less than the recoverable value) loss for the year. (K) Unclaimed dividend of earlier years aggregating to Rs 4.61 lakhs deposited in separate bank account, an amount of Rs.2.68 lakhs which is liable to transferred to Investor Education Protection Fund(IEPF) has been duly transferred during the year . Inclusion of the said amount does not have any impact on the profitability of the company. (L) The figures in the financial statement have been rounded off to nearest Rupees. As per our report of even date attached For, R.K. Singhania & Associates Chartered Accountants Registration No. 004435C Ramesh Kumar Singhania Partner Membership No. 041880 For and on behalf of the Board Rajesh Agrawal Managing Director DIN - 00806417 Rekha Agrawal Director DIN - 00597156 Jaswinder Kaur Mission Company Secretary Praveen Kumar Chavda CFO Date: 28 May 2016 Place: Raipur |