KAMDHENU ISPAT LIMITED - Securities and Exchange Board of India

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Annexure - III Significant Accounting Policies: A. ACCOUNTING POLICES The accounts are prepared and complied with the accounting standards issued by The Institute of chartered Accountants of India and requirement of the companies Act, 1956. the significant accounting policies followed by the company are below: a) Valuation of Inventories 1. Raw Material, stores &Spares, Packing Material, Fuel, Stock in process are valued at cost 2. Finished goods are valued at cost or realizable value whichever is less. 3. Waste & scrap and Runner &Riser are valued at realizable value. b) Sales Sales are stated net of sales returns. c) Fixed Assets : 1. Fixed Assets are stated at cost .Cost includes installations and expenditure during construction period wherever applicable. 2. Depreciation on fixed assets has been provided on straight-line method at the rate prescribed under Schedule XIV of the companies Act.1956 on pro-rata & actual shift working basis. The amount of deprecation on fixed assets of Orissa project under implementation has been charged to Pre-operative Expenses. However the company was charging depreciation on written down value method up to financial year 31.03.2003, thereafter it has changed the method of depreciation from Written Down Value to Straight Line Method. The amount of depreciation has been restated as per Straight Line Method in the respective effective years. d) Misc. Expenditure 1. Preliminary expenses incurred up to 31.03.1998 are being written off over a period of 10years. 2. Expenses for increasing of authorized share capital incurred after 31.03.1998 are being written off over a period of 5 years. 3. Preliminary &Pre-operative expenses incurred during the year for the new project at Orissa will be written off/ allocated to fixed assets after commencement of commercial production. e) Investments are valued at cost. Profit &Loss is being accounted for on actual realization. f) CENVAT Cenvat claimed on Plant & Machinery is reduced from the cost of Plant& Machinery. Cenvat claimed on purchases of raw materials and other materials reduced from the cost of such materials. g) PROVISION FOR CURRENT AND DEFFERED TAX Provision for current tax is made after taking into consideration benefits admissible under the provision of income tax Act, 1961. Deferred tax resulting from “timing difference” between book profit and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the dare of balance sheet. The deferred tax liability is recognized and carried forward only to the extent that there is a reasonable certainty that the same will be realized in future. Annexure - IV B. NOTES ON THE ACCOUNTS 1 The Loan from ICICI are secured against hypothecation of cars. 2 Working capital Loan from State Bank of Bikaner & Jaipur is secured against hypothecation of goods & Debtors and Second charge over Land, Building and Plant & Machinery mortgaged with RIICO Limited as first charge and personal guarantee of the Directors. It is also secured against first charge by way of equitable mortgage of Land & Building at plot noA-1112, R.I.A. Bhiwadi and two residential flats of the company. 3 Term Loan are secured against first charge by way of equitable mortgage of land &building at plot no-1114,R.I.A. Bhiwadi and by hypothecation of all other moveable assets machinery and all other moveable assets(save except book debts)present and future and personal guarantee of Directors. 4 Stores & Spares and salary and wage incurred during the year of repairs and maintenance of Plant & Machinery etc. has been charged to the former accounts and not has been shown separately. 5 Balance of Sundry Debtors , creditors, advances and unsecured loan as on are subject to confirmation. The balance of sundry debtors and creditors are arrived after netting of advances from debtors and advance to creditors respectively. 6 Contingent Liabilities not provided for as on 31.03.2005. (i) On account of pending appeals of the Income Tax, Excise Duty, Sales Tax assessment Rs.47.10Lac. (ii) On account of estimated accrued amount of gratuity to the employees who have not completed qualifying period of service as on 31.03.2005 is worked out of Rs. 0.66 lac. 74
7 The company is manufacturing CTD/TMT Bars and M.S.Ingot. But MS Ingot used as raw material of CTD/TMT Bars i.e. captively consumed, as both the product are interrelated covered in a single segment of Iron &Steel hence Accounting Standard-17 ”Segment Reporting” issued by ICAI is not applicable on the company. 8 As per Accounting Standard -18 “Related Party disclosure” issued by The Institute of Chartered Accountant of India, the disclosures of transactions with the related parties as defined in the Accounting Standard are given below: (Rs in Lac) Nature of Transactions Key Mgt.Personnel Others 2004-05 2003-04 2004-05 2003-04 Remuneration to KMP:- Sh. Satish Kumar Agarwal 4.50 3.00 Sh.Pradeep Kumar Agarwal 4.50 3.00 Sh. Sunil Kumar Agarwal 4.50 3.00 — — Sh.Saurab Agarwal 2.40 1.80 — — Sh. Vineet Agarwal 0.58 0.54 — — Sh. Satish Kumar Kabu Purchase of Raw Material:- 1.20 0.72 — — M/s Raghuveer Metal Ind. Ltd. Sales of Goods :- — — 511.60 240.08 M/s Raghuveer Metal Ind. Ltd. Notes of related parties and description of relationship — — — 8.11 Nature of Relationship Name of Related Party Key Management Personnel Sh.Satish Kumar Agarwal,Managing Director Sh.Pradeep Kumar Agarwal,Whole Time Director Sh.Sunil Kumar Agarwal,Whole Time Director Sh.Saurabh Kumar Agarwal, Whole Time Director Sh.Vineet Agarwal, Director Sh.Satish Kumar Kabu,Whole Time Director Others M/s Raghuveer Metal Ind. Ltd. 9. Current Tax figure shown in the Statement of Profit & Loss Account has not been restated due to the effect of change in method of Depreciation. Annexure – V Cash Flow Statement: Rs. in lacs Particulars 01/04/2005 to Year Ended Year Ended 31/08/2005 March 31, 2005 March 31, 2004 CASH FLOW FROM OPERATING ACTIVITIES Net Profit Before Tax and Extraordinary Items 132.60 263.08 180.22 Adjustments for: Depreciation 29.12 69.95 55.70 Other Income Interest Expenses 20.60 59.32 34.26 Loss on Sale of Assets - - 2.29 Miscellaneous expenses written off - 1.11 1.11 Operating profits before working capital changes 182.31 393.48 273.58 Adjustments for: Inventories 78.13 (234.10) 215.93 Trade & Other Receivables 35.54 (878.18) (118.06) Trade Payable & Other Liabilities (150.75) 549.17 (195.69) Cash generated from operations Income tax paid (46.08) (87.53) (52.19 Interest Paid - (2.25) (0.83 Cash Flow Before Extraordinary Items 99.15 259.42 122.7 Extraordinary items (Prior Year Adjustment) - 1.94 0.8 Net cash from Operating Activities (A) 99.15 75
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KAMDHENU ISPAT LIMITED DRAFT PROSPE
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DEFINITIONS AND ABBREVIATIONS Gener
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Abbreviations Abbreviation Full For
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RISK FACTORS An investment in equit
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mentioned under Class 1 to 42 cover
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(b) Any disruption/ discontinuance
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affect our operating results. We ar
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The central and state tax scheme in
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SUMMARY The following summary is qu
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THE ISSUE Equity Shares offered by
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of the Stabilisation Period allot,
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For the year ended August March Mar
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LEGAL ADVISOR TO THE ISSUE Luthra &
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2. Capital Buildup: The existing sh
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B. Promoter Group 1. Saurabh Agarwa
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Sl. Name of Date of Consid- No. of
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Sl. Name of Date of Consid- No. of
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7. The Pre-issue and Post-issue sha
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(b) Our top ten shareholders and sh
Page 39 and 40: OBJECTS OF THE ISSUE The proceeds f
Page 41 and 42: BASIS FOR ISSUE PRICE QUALITATIVE F
Page 43 and 44: STATEMENT OF TAX BENEFITS The Compa
Page 45 and 46: loss, such long -term capital loss
Page 47 and 48: Benefit available to Mutual Funds I
Page 49 and 50: Restrictions in external trade, bot
Page 51 and 52: to compete with the likes of China,
Page 53 and 54: III. Flat Products Flat products in
Page 55 and 56: · In China and other Asian countri
Page 57 and 58: BUSINESS OVERVIEW Kamdhenu Ispat Li
Page 59 and 60: PROCESS PROCESS FLOW CHART FOR PROD
Page 61 and 62: POWER The Company sources Power fro
Page 63 and 64: The sponge iron is one of the raw m
Page 65 and 66: We help them to get right people to
Page 67 and 68: 23. A.S. CEMENT INDUSTRIES, Patiala
Page 69 and 70: PROPERTY A. Properties owned by the
Page 71 and 72: S No. 6. 7. 8. Date & Tenure Name &
Page 73 and 74: OUR INDEBTEDNESS Sr. No 1 Lender &
Page 75 and 76: Main Objects The main objects of th
Page 77 and 78: OUR MANAGEMENT As per the Articles
Page 79 and 80: C. MR. SUNIL KUMAR AGARWAL Designat
Page 81 and 82: Company Secretary Secretarial & Leg
Page 83 and 84: PROMOTERS OUR PROMOTERS MR. SATISH
Page 85 and 86: 2. and accessories, automobile part
Page 87 and 88: The Board of Directors Kamdhenu Isp
Page 89: Annexure - II Statement of Assets a
Page 93 and 94: Annexure - VII Performance Ratios:
Page 95 and 96: Principal Terms of Sanctioned Loans
Page 97 and 98: Financial Statements of Group Compa
Page 99 and 100: The Board of Directors of the Compa
Page 101 and 102: List of Shareholders as on 30.9.200
Page 103 and 104: MANAGEMENT’S DISCUSSION AND ANALY
Page 105 and 106: DEPRECIATION Depreciation on fixed
Page 107 and 108: of excise duty was 8% thereafter up
Page 109 and 110: Administrative and Other Expenses W
Page 111 and 112: Cost Of Goods Traded In The company
Page 113 and 114: Information required as per clause
Page 115 and 116: SL. NO. 5 6 7 8 9 10 11 12 ASSESSME
Page 117 and 118: 3.2 CENTRAL EXCISE Commissioner of
Page 119 and 120: 4.2 M/s. Kamdhenu Ispat Limited vs.
Page 121 and 122: II Outstanding litigations involvin
Page 123 and 124: Sales Tax ASSESSMENT YEAR PARTICULA
Page 125 and 126: 11. The Company has obtained consen
Page 127 and 128: BEHALF AND TOWARDS THIS PURPOSE, TH
Page 129 and 130: Public Issue expenses are estimated
Page 131 and 132: ISSUE INFORMATION Terms of the Issu
Page 133 and 134: Applications by Hindu Undivided Fam
Page 135 and 136: Payment Instructions 1. Payments sh
Page 137 and 138: 5. Investors can contact the Compli
Page 139 and 140: for public subscription and the bal
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POWER TO MODIFY RIGHT 11. (i) If at
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without any deduction or allowance
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there be no such Chairman or if at
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69. The Director shall not be requi
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fit and any such appointment may (i
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present and entitled to vote there
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MATERIAL CONTRACTS AND DOCUMENTS FO
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DECLARATION All the relevant provis
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KAMDHENU ISPAT LIMITED - Securities and Exchange Board of India

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