VISA Steel Limited Annual Report 2007-08

VISA Steel Limitedschedulesto the CONSOLIDATED accounts(g) SalesSales represent the invoiced value of goods and services supplied, net of value added tax (VAT)/sales tax but inclusiveof excise duty.(h) Transactions in Foreign CurrenciesTransactions in foreign currencies are recorded in rupees by applying the exchange rate prevailing on the date oftransaction. Transactions remaining unsettled are translated at the rate of exchange ruling at the end of the year.Exchange gain or loss arising on settlement/translation is recognised in the Profit and Loss Account.(i) Employee Benefits(I) Post Retirement Benefits :In respect of Holding CompanyProvident FundContributions to the recognised Provident Fund maintained by the Regional Provident Fund Commissioner arecharged to the Profit & Loss Account.GratuityThe Company has taken out a policy with Life Insurance Corporation of India (LICI) for future payment of gratuityliability to its employees. Till last year, the Holding Company used to provide for the annual premium determined byLICI in these accounts. In the current year, consequent to the adoption of Accounting Standard 15 (Revised 2005)(AS 15 Revised) on “Employee Benefits”, gratuity liability has been determined as at 31 March 2008 by LICI inaccordance with the method stated in the said standard and such liability has been provided for in these accounts.However, consequent to such change there has been no impact on the profit for the prrevious years and currentyear as certified by LICI. Annual Premium determined by LICI has been contributed.Leave EncashmentLeave encashment benefit on retirement has been determined on the basis of actuarial valuation as at 31 March2008 in accordance with the method stated in AS 15 (Revised) and such liability has been provided for in theseaccounts. Hitherto, provision for leave encashment was done on accrual basis.Actuarial gains and losses, where applicable, are recognised in the Profit and Loss Account.(II) Other Employee Benefits :Other Employee Benefits are accounted for on accrual basis.(j) Deferred TaxDeferred Tax is recognised using the liability method, at the current rate of taxation, on all timing differences to theextent it is probable that a liability or asset will crystallise. Deferred Tax assets are recognised subject to considerationof prudence and are periodically reviewed to reassess realisation thereof.(k) Borrowing CostBorrowing costs attributable to acquisition and/or construction of qualifying assets are capitalized as a part of the costof such assets upto the date when such assets are ready for its intended use. Other borrowing costs are charged toProfit & loss Account.(l) Miscellaneous Expenditure - To the extent not written off or adjustedPublic issue expenses in respect of Holding Company are being amortized over a period of five years.VISA Steel Limitedschedulesto the CONSOLIDATED accounts2 (a) Contingent liability not provided for in respect of Holding Company :31 March 2008 31 March 2007(i) Bank Guarantee 65.26 72.26(ii) Income Tax matter on Appeal 15.65 -(iii) Sales Tax matter on Appeal 9.05 1.70(iv) Value Added Tax matter on Appeal 20.37 -(v) Entry Tax matter on Appeal 47.75 -(b) Estimated amount of Contractsremaining to be executed on Capital Accountand not provided for in respect of holding company 883.32 1,928.76(c) Claim against the Holding Company not acknowledged as debt :(i) Transfield Shipping Inc., Panama, owner of the vessel has filed a civil suit in the Hon’ble Calcutta High Courtclaiming that under a Charter Party Agreement dated 27 August 2004 with VISA Comtrade (Asia) Limited, the saidTransfield Shipping Inc. had allowed the use of their vessel to VISA Comtrade (Asia) Limited for shipment of coaland has alleged that during the lighterage operation at the Cochin port, the vessel was damaged by the lighteringvessel due to inadequate fendering on the lightering vessel and it was the duty of the company and VISA Comtrade(Asia) Limited to ensure that the lightering vessel was well equipped with necessary fendering equipment and thedelay caused in the cargo discharge operations was due to the negligence and default of the company and VISAComtrade (Asia) Limited and claimed the relief for a decree for US$ 0.30 million to be expressed in Indian Currencyat such rate of exchange and/or on such terms as the Court may deem fit and proper, Interest pendente lite, Interestupon judgment, Receiver and Attachment before judgment, Injunction, Costs and further or other reliefs.The Holding Company has not accepted the claim as the Holding Company was not a party to the said agreementand hence cannot be made a party to this suit. The Hon’ble Calcutta High Court passed interim order dated 11 May2005 and 20 June 2005, restraining the Holding Company and VISA Comtrade (Asia) Limited from withdrawingany amount from a specified bank account number without leaving a balance for a sum of Rs. 12.50 Million, whichhas been set aside by the bank from the cash credit limit of the company. The suit is currently pending before theHon’ble Calcutta High Court.(ii) Applications have been filed by the legal heirs of a deceased employee of the Holding Company and his sisterrespectively, who died in a road accident while traveling in the Holding Company’s vehicle for their personal work,claiming a compensation of Rs. 6.05 Million and interest @ 18% per annum and Rs. 0.55 Million respectively. TheHolding Company has contested the claims, which are currently pending before the Motor Accident Claims Tribunal,Bhubaneswar and the Additional District Judge cum 3rd Motor Accident Claims Tribunal, Rourkela respectively.(d) The Holding Company has obtained licences from the Government of India under EPCG Scheme for import ofmachineries for its Blast Furnace and Coke Oven Plant at Orissa at a reduced Customs Duty and thereby savedan amount of Rs. 473.73 Million towards duty upto 31 March 2008. As per the requirement under the said Scheme,the company is required to export amounting to Rs. 1,069.56 Million within the specified periods, failing which, thecompany has to make payment to the Government of India equivalent to the duty benefit enjoyed along with interest.The Company is confident that the above export obligation will be met during the specified period.3 (a) In respect of the Holding Company working capital facilities from banks are secured by way of first hypothecationcharge ranking pari-passu with other banks on the whole of the current assets, namely, stocks of raw material, stock inprocess, semi finished & finished goods, stores & spares not relating to plant & machinery (i.e. consumable stores &spares), bills receivable & book debts and all other movables, both present and future, whether installed or not providedthat the charge in favour of the banks on the moveable plant & machinery, machinery spares, tools & accessories shallbe subject to the charges created and/or to be created thereon in favour of the term lenders to secure the long termborrowing/loans for capital expenditure. The working capital facilities are also secured by second mortgage chargeon the land situated at Kalinganagar Industrial Complex , District Jajpur, Orissa together with building and structuresthereon and all plant & machinery attached to the earth or permanently fastened to anything attached to the earth alongwith corporate guarantee of VISA International Limited and personal guarantee of Managing Director.(b) In respect of the Holding Company Term Loan from bank is secured by first mortgage charge on the land situatedAnnual Report 2007-08101