rd Karma Ispat Limited - Bombay Stock Exchange33rd Annual Report 2009–2010 Karma Ispat Limited...
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Dear Shareholders,
The global economy has witnessed a sharp recovery due to the huge fiscal stimulus andinfusion of liquidity. Whilst the developed economies are yet to emerge out of the crisis, thegrowth has been stronger and more sustainable in the BRIC economies, especially India. Theconcentration of economic growth rates, manufacturing capacities, market size andcontrol over natural resources will shift noticeably towards Asia, Latin America and theCIS countries. Over the next few decades China, India and Brazil will become importantcenters of economic growth.
It is a matter of pride and deep satisfaction that the Company has emerged triumphant outof the worst global financial crisis and extra-ordinary economic environment that we witnessedin the fiscal 2008-09. In the year ended March 31, 2010, the Company achieved a stupendousturnover of Rs. 428.40 Crores which is reflective of the Company’s performance in the yearsahead. As the economies of several nations return to normalcy, the demand for iron andsteel-based goods will assume new growth levels. This is already starting to be evident inlarge construction activity and various infrastructure projects. Steel has been and will alwaysbe the basic requirement for India’s growth story and will be the backbone of Indianindustry for economic recovery. Keeping these in mind I am confident that the Company willscale new heights in the years ahead.
In the coming years KARMA ISPAT plans to shift it focus from trading to manufacturing. Inthis direction the Company has acquired land at Valsad for manufacturing ferrous & non-ferrous metals products more particularly Lead Ingots and Billets. The Company has embarkedupon the growth trajectory and will focus on its strategy to grow in the value added steelproducts. Karma Ispat shall continue to create value and deliver sustainable growth whileachieving best standards of safety, corporate governance, corporate social responsibility andinvestor communication.
The Company is looking forward to the opportunity of fulfilling its objective of being a viableand innovative manufacturer and stockiest in ferrous & non-ferrous metals in the yearsahead.
RAJESH MEHTAChairman & Managing Director
Mumbai,31st May, 2010
Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
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Board of Directors
Managing Director Rajesh Mehta
Whole Time Director Bhavna Mehta
Independent Directors Hemang SampatNarendra Sampat
Auditors Arvind Darji Associates,Chartered Accountants
Company Secretary Martinho Ferrao & Associates,Company Secretaries
Bankers Union Bank of India
Registered Office ‘H’ Wing, Office No. 131, Raj Arcade,Mahavir Nagar, Kandivali (W),Near Kamla Vihar Sports Club,Mumbai 400 067
Equity Shares Listed on The Bombay Stock ExchangeThe Ahmedabad Stock ExchangeThe Hyderabad Stock Exchange
Registrar and Transfer Agent System Support Services209, Shivai Industrial Estate,89, Andheri Kurla Road,Sakinaka, Andheri (E),Mumbai 400 072
Day & Date of A. G. M Saturday, September 25th 2010
Venue Kamla Vihar Sports ClubNear Sukh Sagar Hotel, Mahavir Nagar,Kandivali (W), Mumbai 400 067.
Time 11.30 AM
Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
NOTICE TO THE MEMBERS
NOTICE is hereby given that the 33rd Annual General Meeting of the members of KARMA ISPATLIMITED will be held on Saturday, the 25th day of September, 2010 at 11.30 am at Kamala ViharSports Complex, Near Sukh Sagar Hotel, Mahavir Nagar, Kandivali West, Mumbai –400067 to transactthe following business:
ORDINARY BUSINESS:1. To receive, consider and adopt the Audited Balance Sheet as at March 31, 2010 and Profit and
Loss Account for the year ended March 31, 2010 together with the Reports of the Directorsand Auditors thereon.
2. To appoint a Director in place of Mr. Narendra Sampat who retires from the office by rotation andbeing eligible offers himself for re-appointment.
3. To appoint Auditors, to hold the office from the conclusion of this Annual General meeting untilthe conclusion of the next Annual General Meeting.
For and behalf of the Board of DirectorsFor Karma Ispat Limited
Sd/-Rajesh Mehta
Managing DirectorRegistered OfficeKARMA ISPAT LIMITEDH Wing, Office No. 131,Raj Arcade, Mahavir Nagar,Kandivali West, Mumbai –400067
Date: 31st May, 2010
NOTES:
1] A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT ONE OR MORE PROXIESTO ATTEND AND VOTE INSTEAD OF HIMSELF / HERSELF AND THAT PROXY NEED NOT BE A MEMBER. OF THECOMPANY.THE INSTRUMENT APPOINTING A PROXY SHOULD HOWEVER BE DEPOSITED AT THE REGISTERED OFFICE OF THECOMPANY DULY COMPLETED NOT LESS THAN FORTY-EIGHTY HOURS BEFORE THE COMMENCEMENT OF THEMEETING.
2] The register of Members and the Share Transfer Books of the Company will remain closed from Saturday, September18th, 2010 to Saturday, September 25th, 2010 [both days inclusive].
3] Members who desire to seek any information concerning the Accounts of the Company are requested to addresstheir queries in writing to the Company at least seven days before the date of the meeting so that the requestedinformation can be made available at the time of the meeting.
4] Members / Proxies are requested to please bring their copies of the Annual Report to the meeting since copies ofthe Annual Report will not be distributed at the meeting.
5] The Company its shares are listed on The Stock Exchange, Mumbai, The Stock Exchange, Ahmedabad and TheStock Exchange, Hyderabad.
6] Members holding Shares in Physical form are requested to notify immediately any change in their address withPIN CODE to the Registrar and Transfer Agent of the Company at the address given below and in case their sharesare held in Demat, this information should be passed on directly to their respective Depository Participants andnot to the Company.
7] All documents referred to in the Notice are open for inspection at the Registered Office of the Company duringoffice hours on all working days except public holidays between 11.00 am and 1.00 pm upto the date of the AnnualGeneral Meeting.
8] Members / Proxies holding their Shares in Physical mode are requested to fill the enclosed attendance slip andhandover the same at the entrance with signature. In the absence thereof, they may not be admitted to themeeting venue.
9] Members who are holding shares in dematerialized form are requested to being their Client ID and DP IDnumbers for easy identification at the meeting.
10] In all correspondence with the Company, members are requested to quote their Folio No. and in case their sharesare held in Demat form, they must quote their DP ID and Client ID Number.
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
DIRECTORS’ REPORT TO THE SHAREHOLDERS
Your Directors have great pleasure in presenting the 33rd Annual Report together with the AuditedAccounts for the year ended on March 31, 2010.
FINANCIAL RESULTS
Year Ended Year Ended31.03.2010 31.03.2009Amt in Rs. Amt in Rs.
Sales & Other Income 4,288,510,321 2,773,557,443Less : Expenditure 4,272,124,111 2,757,793,683Depreciation. 3,806,832 3,377,396Profit / (Loss) before tax andappropriations 12,579,378 12,386,353Profit / (Loss) after tax 9,935,109 7,505,187Add: Balance brought forward fromprevious year 496,547 (7,008,640)Surplus carried to Balance Sheet 10,431,656 496,547
DIVIDENDWith a view to conserve the resources of the company the Board of Director’s have not recommendedany dividend for the year ended 31st March, 2010.
OPERATIONSThe Company is presently trading in broad range of steel products, including C.R. Coils & Sheets,C.T.D. Bars, H.R. Sheets & Plates and Hot Rolled Steel Plates, Ingot irons M.S. Plates, Angles, Channels,Chequered Plates, Wires, T.M.T Bars, Rebars and Tor Steel, Stainless Steel and other Alloy Steels andhad a good year in terms of turnover and performance. The Company would be starting manufacturingactivity shortly, the land for manufacturing facility is already purchase by the company.
The turnover of the Company rose from Rs. 2,773,557,443/- in the previous year to Rs. 4,288,510,321/- in the year under review. However the Profit after tax marginally increased from Rs. 7,505,187/- inthe previous year to Rs. 9,935,109/- for the year ended March 31, 2010, due to high material costand tight margins arising out of the global recession.
CAPITALThe Company’s present paid up capital stands at Rs.33,00,00,000/- comprising 3,30,00,000 equityshares of Rs. 10/- which is listed on Bombay, Ahmedabad and Hyderabad Stock Exchange..
BOARD OF DIRECTORSThe Board of Directors of the company is duly constituted and has a combination of Executive andNon-executive directors.
Mr. Narendra Sampat, Director of the Company retires by rotation at the ensuing Annual GeneralMeeting and being eligible offer himself for re- appointment.
SUBSIDIARIESYour company has the following Two wholly-owned subsidiaries namely M/s. Karma Commodities Ltd.,M/s. KIL Infrastructure Ltd. and a subsidiary M/s. Karma Stock Trade Limited where company hold60% of Paid up share capital of the company.
1. KIL Infrastructure Limited which was incorporated to carry out the business of construction,development, repairing, roads, path, streets, bridge etc.
2. Karma Commodities Limited was incorporated to do the business of commodity trading with theCommodity Exchanges. The Company in is the process of starting its operations shortly. TheCompany has taken membership of MCX/NMCE/ICEX/Reliance Spot Exchange. The Company has
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
also applied for the Membership of NCDEX & NCDEX Spot.
3. Karma Stock Trade Limited which was incorporated to carry out the business as share and stockbroker, sub-broker, finance broker, dealer, jobber, market maker,portfolio manager, underwriter,sub-underwriter, dealers or broker or agent in any shares, securities, financial instruments, capitalmarket money market instruments of all kinds. However the company has not started its operationsyet and is in the process of starting its operations. The Company has taken membership of DepositBase Trading Membership of BSE and also Membership of NSE.
The consolidated financial Statements of the subsidiaries are attached with the Annual Report.
CORPORATE GOVERNANCEThe Company has taken proactive steps to ensure that the conditions of Corporate Governance stipulatedin Clause 49 of the Listing Agreement with the Stock Exchange are complied with. A separate reporton Corporate Governance together with Auditors’ Certificate on its compliance are included in theAnnual Report.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956 the Directors confirm that:
1] In the preparation of the annual accounts, the applicable accounting standards have beenfollowed along with proper explanations relating to material departures.
2] Appropriate accounting policies have been selected and applied reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at the March 31, 2010.
3] Proper and sufficient care has been taken for the maintenance of adequate accounting records inaccordance with the provisions of the Companies Act, 1956 for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities.
4] The Annual Accounts have been prepared on a going concern basis.
AUDITORSMessrs. Arvind Darji Associates, Chartered Accountants, the retiring Auditors have not sought re-appointment. It has been proposed to appoint Messrs. AMD & Company, Chartered Accountants asAuditors of the Company. The Company has received a Certificate from them that they are qualifiedunder Section 224 (1) of the Companies Act, 1956 for appointment as Auditors of the Company.Members are requested to consider their appointment at a remuneration to be decided by the Boardof Directors for the financial year ending March 31, 2010 as set out in the Notice convening theMeeting.
AUDITORS’ OBSERVATIONSThe observations of the Auditors contained in their Report are self explanatory and does not requireany clarification.
AUDIT COMMITTEEIn accordance with the provisions of the Section 292A of the Companies Act, 1956 and the CorporateGovernance requirements as per the Listing Agreement of the Company, the Audit Committee comprisesof the following Directors viz., Mr. Hemang Sampat, as Chairman, Mr. Rajesh Mehta and Mr. NarendraSampat as members. The Audit Committee acts in accordance with the terms of reference specifiedfrom time to time by the Board.
PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION ANDFOREIGN EXCHANGE EARNINGS AND OUTGO:The Company has taken effective steps to conserve and minimize power and fuel consumption andhas also installed capacitor for minimizing the power consumption. No Technology was importedduring the year by the Company. Foreign Exchange Earning and Outgoing was NIL.
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
PARTICULARS OF EMPLOYEESNone of the employees of the Company come within the purview of the information required u/s217[2A] of the Companies Act, 1956 read with the Companies [particulars of Employees] Rules, 1975as amended.
RESEARCH & DEVELOPMENTThe Company has been arduously working to improve the R & D so as to provide quality and value formoney to the customers in keeping with market trends.
FIXED DEPOSITSYour Company has not accepted any deposit within the meaning of Section 58A of the Companies Act,1956 from Public and the rules made there under.
SAFETY, ENVIRONMENTAL CONTROL AND PROTECTIONThe Company has taken all the necessary steps for safety and environmental control and protection.
ACKNOWLEDGMENTThe Directors wish to convey their appreciation to the Company’s Shareholders, Customers, Suppliers,Bankers, and Distributors for their support they have given to the Company over the past years andthe confidence, which they have reposed in its management and the employees for the commitmentand dedication shown by them.
For and behalf of the Board of DirectorsFor Karma Ispat Limited
Sd/-Director
Registered OfficeKARMA ISPAT LIMITEDH Wing, Office No. 131,Raj Arcade, Mahavir Nagar,Kandivali West,Mumbai –400067
Date: 31st May, 2010
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
MANAGEMENT DISCUSSION AND ANALYSIS
OVERVIEW
(1) Global EconomyThe global economy has witnessed a sharp recovery largely driven by the large stimulus packagesannounced by various countries which has created liquidity and stimulated demand, leading to thespeedy recovery of the world GDP growth. The Chinese and Indian economies have been the fastesteconomies to recover.
The steel industry has also seen a strong recovery in demand and increase in production volumesespecially in China and India.
In contrast to most developed and emerging economies, China and India were able to avoid recessionand recorded GDP growth of around 10% and 7.2% respectively in spite of a slowdown from pre-crisisgrowth rates as export demand collapsed across many sectors.
The Eurozone economy declined by 2.7% in 2009-10 following a contraction of 1.3% in 2008-09 andemerged from recession in the third quarter of calendar year 2009.
The IMF estimates suggest a positive economic rebound in 2010 with the Global economy registeringa 4.2% growth; Advanced economies and the Emerging world growing by 2.3% & 6.3% respectively.Further the WTO projects world trade to expand by 9.5% with the Advanced world growing by 7.5%and the Emerging world by 11%.
(2) Global Steel IndustrySteel being at the core of economic progress witnessed an unprecedented downturn in 2009. Advancedeconomies buckled under pressure of large inventories coupled with stand still demand; the rest ofthe world (excluding China and India) suffocated under low domestic demand; their high degree ofexport dependency on the advanced world added to their woes. This reconfirmed the concept ofincreasing global integration and global trade coupling (except China and India).
The impact of the global crisis loomed large on global trade of steel which declined about 30%(estimated at 300 mn tonnes). This was largely due to the relatively high dependence of the emergingworld on advanced world which collapsed under the pressure of the global meltdown. As a result, theexport dependency on the advanced world declined substantially which was compensated by stimulateddomestic demand in emerging economies especially China and India.
Top 10 Steel Producing
Nations (Mn tonnes)
Rank Nation 2009 2008 Variance
1 China 567.8 500.3 +13.5%2 Japan 87.5 118.7 -26.3%3 Russia 59.9 68.5 -12.5%4 The US 58.1 91.4 -36.4%5 India 60.2 57.8 4.2%6 RoK 48.6 53.6 -9.4%7 Germany 32.7 45.8 -28.7%8 Ukraine 29.8 37.3 -20.2%9 Brazil 26.5 33.7 -21.4%10 Turkey 25.3 26.8 -5.6%
Top-10 992.8 1,031.2 -3.7%World 1,223 1,329 -8.0%
(Source: Worldsteel)
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
(4) Indian Economic ReviewIndia registered a strong come-back in 2009-10. This was largely due to the timely economic stimulusfueling investment and consumption. The key drivers to India’s economic growth during the year2009-10 were:• Strong IIP Growth: 10.4%• Core Infrastructure Industry Growth: 5.5%• Automobile Production: 26%
(5) The Indian Steel IndustryOverviewIndian steel industry stood out in the global steel industry due to its resilience during the downturn.While the steel production in the world dipped by 8% in 2009, it registered a growth of around 4% inthis period. This clearly demonstrates India’s strong domestic consumption story. Even though thereal estate and housing sector showed marked decline during this period, the same was compensatedby sustained growth in sectors like infrastructure, manufacturing and automobile. Governmentintervention in the form of fiscal stimulus helped to propel growth in the end user industry.
India is the 5th Largest producer of steel in the world and it was expected that it will become 2ndlargest by 2015 on the back of the capacity addition. India is also the world’s largest producer of DRIwith around 21 Mn tonnes of production during 2009-10. India’s per capita steel consumption is 48 kgin F.Y. 2009-10 compared to the world average of 190 kg. Within the country the semi-urban and ruralsector has significant growth opportunities due to its low per capita consumption as compared tourban area.
Per capita consumptionIndia’s per capita steel consumption is 48 kg in F.Y. 2009-10 compared to the world average of 190kg. Within the country the semi-urban and rural sector has significant growth opportunities due to itslow per capita consumption as compared to urban area.(Source: Worldsteel)
OPPORTUNITIES, THREATS, RISKS, CONCERNS AND OUTLOOK
OpportunitiesDomestic demand is expected to grow at a rate of 7.5% on a compounded basis Over the next decade.Additionally, global demand is expected to grow by over 6%, creating enormous opportunities forbeing explored by main-line steelmakers. The positive growth outlook is expected to propel additionalinvestment and production of high-grade value-added steel products to meet the growing needs ofend-users.
Consolidation has enabled steel Companies to lower production costs and has also allowed stringentsupply-side discipline. Value added approach to steel would ensure concentration of efforts onmanufacture of high-end products with resultant positive multiplier effect on margins. Better demandforecasting and availability of suitable information on capacity development would enable steelmakersto rapidly change and adjust their product portfolios.
ThreatsIndian Steel Industry faces the following threats :-
a) Tightening of monetary policy to contain rising inflationary pressures, with consequent impact onspending on infrastructure etc.
b) Per capital consumption of steel continuing to remain low.c) Strengthening Rupee denominating lower export realizations.d) Continuing exports of iron ore and implications thereof on domestic availability and prices.e) High transportation costs.f) Higher duties of Excise on Finished Steel Products.g) Shortening business cycles and volatile economies.h) Growing steel capacity in China and resultant concerns of overcapacity.
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
i) Volatility in long-term supplies of raw materials.j) Surge in prices of oil.
PERFORMANCE OF THE COMPANYThe Company had an overall good performance in the year ended March 31, 2010. The current businessof the company is trading in steel and iron products including C.R. Coils & Sheets, C.T.D. Bars, H.R.Sheets & Plates and Hot Rolled Steel Plates, Ingot irons M.S. Plates, Angles, Channels, ChequeredPlates, Wires, T.M.T Bars, Rebars and Tor Steel, Stainless Steel and other Alloy Steels. The Companyplans to enter into manufacturing of Iron and Steel products to maintain sustainability in the longrun.
The Company plans to achieve these long term objectives through the following strategic initiativeswhich is discussed below:
India is one of the best countries to produce steel at a competitive cost by virtue of availability of keyraw materials viz. iron-ore, coal (to some extent) and skilled labour. Steel consumption in India islikely to increase at a rapid pace in the future due to large investments planned in infrastructuredevelopment, increased urbanization and growth in key steel consuming sectors viz. automotive,construction, capital goods and other manufacturing sectors. The per capita steel consumption inIndia is quite low compared to the world average and also compared to the countries like China, USA,Europe, Japan and others. Considering the future economic climate in India, the per capita consumptionof steel in the next decade is expected to increase significantly from the current levels. As part of itsstrategy to retain its pre-eminent position in the Indian markets, the Company has drawn elaborateplans to significantly enhance its presence in India in the near future.
The Company’s plan to set up its factory at Valsad for manufacturing Iron and Steel products.
HUMAN RESOURCESThe Company recognizes the need for continuous growth and development of its employees in orderto provide greater job satisfaction and also to equip them to meet growing organizational challenges.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:Internal Control Systems are designed to ensure the reliability of financial and other record andaccountability of executive action to the management’s authorization. The Statutory Auditors haveevaluated the system of internal controls of the Company and have reported that the same areadequate and commensurate with the size of the Company and nature of its business.
The internal control systems are reviewed by the top Management and by the Audit Committee of theBoard and proper follow up action ensured wherever required.
CAUTIONARY STATEMENTStatement in the Management Discussion and Analysis describing the Company’s objectives,expectations, estimates or predictions may be forward looking within the meaning of applicablesecurities laws and regulations. Actual results may differ materially from those expressed in thestatement. Important factors that could influence the Company’s operations include global and domesticsupply and demand conditions affecting selling prices of finished goods, input availability and prices,changes in Government regulations, tax laws, economic developments with in the country and otherincidental factors. The Company assumes no responsibility to publicly amend, modify or revise anyforward-looking statements, on the basis, of any subsequent developments, events or information.
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
REPORT ON CORPORATE GOVERNANCE
1] COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCEThe main object of Corporate Governance is to create transparency and full disclosure regardingthe working of the Company. Corporate Governance’s aim is to create long-term value for allstakeholders viz. investors, employees, creditors, customers, Government and society at large. Itis crucial to the progress of every business enterprise as it builds confidence and trust, whicheventually leads to a more stable and sustained resource flow and long-term partnership with itsinvestors and other stakeholders. The Company firmly believes in and continues to practice goodcorporate Governance. The Company’s essential character is shaped by the very values oftransparency, professionalism and accountability. The Company continuously endeavors to improveon these aspects on an ongoing basis. The disclosures required by Clause 49 of the Listing Agreementare as under:
2] BOARD OF DIRECTORSAs per the listing Agreement the Board should have an optimum combination of both Executiveand Non-Executive Directors, and at least one half of the Board has to comprise of independentDirectors where the Chairman is Executive.
The Board of your Company as on March 31, 2010 has 2 Executive Director and 2 Non-ExecutiveDirectors.The number of independent Directors are 2.
The details of composition of the Board, category, attendance of Directors at Board Meetings andlast Annual General Meeting, number of other Directorships and other Committee Membershipsare given below:
CategoryNo.ofBoard
MeetingAttended
Atten- denceAt LastAGM
No. of OtherDirectorships Held
PositionAs on 31.03.10
OutsideCommittee
HeldAs on 31.03.10
Public Private Mem. Chmn.Mr. Rajesh MehtaMr. Hemang SampatMr. Bhavna Mehta
Mr. Narendra Sampat
MDIND/NED
ED
IND/NED
101010
10
YESYESYES
NO
25
NO
NO
NONO5
NO
NONONO
NO
NONONO
NO
• MD stands for Managing Director.• NED stands for Non Executive Director AND IND for Independent Director.• During the financial year ended March 31, 2010, Board meetings were held on 04.04.2009,
30.06.2009, 31.07.2009, 31.10.2009, 16.11.2009, 18.11.2009, 16.01.2010, 22.01.2010,29.01.2010, 06.03.2010.
3] COMMITTEES OF DIRECTORSNon Executive Directors provide guidance to operating management on policy matters as well asin monitoring the actions of operating management. This involvement provides regular exchangeof information and ideas between the non-executive Directors and the operating management.
To conform to the requirement of clause 49 of the Listing Agreement with the Stock Exchange andCompanies Act, 1956, the Board has constituted the required Committees.
3.1]AUDIT COMMITTEEThe Company has a qualified and independent Audit Committee comprising of 2 Non ExecutiveDirector. The broad terms of reference of the Audit Committee are in consonance with the provisionsof Clause 49 of the Listing Agreement.
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
The Committee held meetings during the year on 30.04.2009, 30.06.2009, 31.07.2009,31.10.2009,the minutes are being prepared by you, so request you to incorporate the same.
The names of Members of the present Committee and their attendance are as follows:
Name of the Members Status No. of MeetingsAttended
Mr. Hemang Sampat CHAIRMAN 4
Mr. Narendra Sampat MEMBER 4
Mr. Rajesh Mehta MEMBER 4
Terms of reference:
All the members of Audit Committee are financial literate and have accounting and financialmanagement knowledge.
The Committee invites Senior Management personnel and statutory auditors to attend these meetings.
The functions of the Audit Committee include the following:1. Oversight of the company’s financial reporting process and the disclosure of its financial information
to ensure that the financial statement is correct, sufficient and credible.2. Oversight of the company’s financial reporting process and the disclosure of its financial information
to ensure that the financial statement is correct, sufficient and credible.3. Recommending to the Board, the appointment, re-appointment and, if required, the replacement
or removal of the statutory auditor and the fixation of audit fees.4. Approval of payment to statutory auditors for any other services rendered by the statutory auditors.5. Reviewing, with the management, the annual financial statements before submission to the board
for approval, with particular reference to:a. Matters required to be included in the Director’s Responsibility Statement to be included in
the Board’s report in terms of clause (2AA) of section 217 of the Companies Act, 1956b. Changes, if any, in accounting policies and practices and reasons for the samec. Major accounting entries involving estimates based on the exercise of judgment by managementd. Significant adjustments made in the financial statements arising out of audit findingse. Compliance with listing and other legal requirements relating to financial statementsf. Disclosure of any related party transactionsg. Qualifications in the draft audit report.
6. Reviewing, with the management, the quarterly financial statements before submission to theboard for approval.
7. Reviewing, with the management, performance of statutory and internal auditors, adequacy ofthe internal control systems.
8. Reviewing the adequacy of internal audit function, if any, including the structure of the internalaudit department, staffing and seniority of the official heading the department, reporting structurecoverage and frequency of internal audit.
9. Discussion with internal auditors any significant findings and follow up there on.
10. Reviewing the findings of any internal investigations by the internal auditors into matters wherethere is suspected fraud or irregularity or a failure of internal control systems of a material natureand reporting the matter to the board.
11. Discussion with statutory auditors before the audit commences, about the nature and scope ofaudit as well as post-audit discussion to ascertain any area of concern.
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
12. To look into the reasons for substantial defaults in the payment to the depositors, debentureholders, shareholders (in case of non payment of declared dividends) and creditors.
13. To review the functioning of the Whistle Blower mechanism, in case the same is existing.
14. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.
The Audit Committee has reviewed the following information:1. Management Discussion & Analysis of financial condition and results of operations.
2. Statement of significant related party transactions (as defined by the audit committee), submittedby management
3. Internal Audit Reports relating to internal control weaknesses
3.2]REMUNERATIONAlthough Remuneration Committee has been constituted by the Company, all matters relating toreview and approval of compensation payable to the Executive and Non Executive Directors areconsidered by the Board within the overall limits approved by the Members.
The Managing Director is entitled to Salary, perquisites and allowances. Salary is paid within therange as approved by the Shareholders. However considering the present situation of the Companythe Managing Director has not drawing any salary for the financial year under consideration. TheCommittee approves all the revisions in salary, allowances and perquisites subject to the overallceiling prescribed by Section 198, 309 and Schedule XIII of the Companies Act, 1956
Given below are the details of remuneration paid to Directors during the financial year 2009-10:
Director Sitting Fees Salary & Perquisitesallowances
Rs. Rs. Rs.
SHRI RAJESH MEHTA NIL 29,11,786 -SMT. BHAVNA MEHTA NIL 28,00,000 -SHRI NARENDRA SAMPAT NIL - -SHRI HEMANG SAMPAT NIL - -
Note: The Directors have voluntarily waived the sitting fees for attending meeting
3.3]SHAREHOLDERS’ GRIEVANCE COMMITTEEThe Company has constituted a Shareholders’ Committee to specifically look into Investors’complaints, if any, and to redress the same expeditiously. The Committee redresses complaints ofinvestors like transfer of shares, non-receipt of Balance Sheet and non-receipt of declared Dividendetc. The Shareholder’s Grievance Committee met 1 [Once] during the year ended March 31, 2010.
The composition of the Shareholder’s Grievances Committee and details of the meetingsattended by the Directors are given below:
Name of Members Category No. Of Meetings attendedduring the year
2009-2010
SHRI HEMANG SAMPAT CHAIRMAN 1
SHRI NARENDRA SAMPAT MEMBER 1
SHRI RAJESH MEHTA MEMBER 1
Mr. Krishnat Desai is the Compliance Officer of the Company.
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
4] DETAILS OF INVESTORS COMPLAINTS RECEIVED DURING THE YEAR
Sr.No Nature of Complaints Received Disposed Pending1. Non-receipt of Dividend Warrants. NIL NIL NIL2. Non-receipt of Share Certificate
after Transfer 4 4 NIL3. Non-receipts of annual report 3 3 NIL
TOTAL 7 7 NIL
5] GENERAL BODY MEETINGS
The last three Annual General Meetings were held as under:
Financial Year Date Time Venue31.03.2009 26.09.2009 11.30 A.M Kamla Vihar Sports Complex,
Near Sukh Sagar Hotel,Mahavir Nagar, Kandivali (W),Mumbai - 400 067
31.03.2008 27.09.2008 11.30 A.M. Registered Office31.03.2007 29.09.2007 11.30 A.M. Registered Office
All the matters as set out in the respective notices were passed by the Shareholders.
No Special resolutions passed in the last three Annual General meetings.
EXTRA ORDINARY GENERAL MEETINGNo Extra Ordinary General Meetings were held during the lastfinancial year.
6] DISCLOSURESDuring the year, the Company did not enter into any materially significant related party transactionswith its Promoters, Directors or the Management, their Subsidiaries or relatives etc., which mayhave a potential conflict with the interest of the Company at large.
Transaction with related parties as per the requirements of Accounting Standards 18 are disclosedin the Schedule to the balance sheet
The company has complied with the requirements of the Stock Exchange, SEBI, and other StatutoryAuthorities on all matters relating to Capital Markets during the last three years. The Companyhas paid its listing fees for the 2009-10.
The Company has a Whistle Blower Policy. During the year, no unethical behavior has been reported.Further the Company has not denied any personnel access to the Audit Committee and it willprovide protection to whistle blower, if any, from adverse personnel action.
7] CODE OF CONDUCT, CORPORATE ETHICS AND SOCIAL RESPONSIBILITY,
Code Of Business Conduct And EthicsKarma Ispat Limited believes that Good Corporate Governance is the key to the Conduct ofCompany’s Business in a transparent, reliable and vibrant manner. It is of paramount importancefor any Company to create an atmosphere of faith, integrity, accountability, responsibility andfinancial stability by adhering to commitment, ethical business conduct, a high degree oftransparency thereby unlocking the individual intellectual capabilities and enabling its Board ofDirectors to conduct its duties under a moral authority, which ultimately leads to enhance legitimateneeds and value of the stake holders.
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
Code of Conduct for Prevention of Insider TradingThe Company has a comprehensive code of conduct for its management, staff and directors forprevention of insider trading. The code lays down the guidelines and procedures to be followedand disclosures to be made while dealing with the shares of the Company and cautioning them onthe consequences of non – compliances. The pieces of the price sensitive information aredisseminated to the stock exchanges timely, adequately and promptly on continuous basis forprevention of insider trading. The Company has a compliance officer and is responsible for adherenceto Code for prevention of insider trading.
Social ResponsibilityKarma Ispat Limited has also contributed to society especially the needy persons in our specialways. The Company has adopted safety, health, and environment (SHE) policy with a commitmentto provide a safe and healthy working environment, preservation of the environment of the territoryin which the organization operates, preventing the wasteful use of natural resources and minimizeany hazardous impact of development, production, use and disposal of any of the organizationproducts and services on ecological environment, maintained highest standard of environmentalmanagement and ensure for all its members, consultants , contractors and customers a safe andhealthy environment, free from injury and disease.
8] MEANS OF COMMUNICATIONQuarterly results are published in prominent daily newspapers viz., Free Press & Nav Shakti/Economics Times/Maharashtra Times
All items required to be covered in the Management Discussion and Analysis have been includedin the Management Discussion and Analysis as attached to this Report.
The Company has its own website and all the vital information relating to the Company and itsproducts are displayed on the web site. Address of the website is www.karmaispat.com
The Company has published all its financial results on the website.
9] GENERAL SHAREHOLDERS INFORMATION
ANNUAL GENERAL MEETING : 33rd Annual General MeetingDAY & DATE : Saturday, 25th September, 2010TIME : 11.30 A.M.VENUE : Kamala Vihar Sports Complex,
Near Sukh Sagar Hotel,Mahavir Nagar, Kandivali West, Mumbai –400067.
10] FINANCIAL CALENDAR* Financial reporting for the quarter ended June 30, 2010: End of July, 2010* Financial reporting for the quarter ended Sept. 30, 2010: End of Oct, 2010* Financial reporting for the quarter ended Dec. 31, 2010: End of Jan, 2011* Financial reporting for the Year ended March 31, 2011: End of April, 2011
11] DATE OF BOOK CLOSURE:18th September, 2010 to 25th September, 2010 [Both days inclusive] Dividend payment date –not applicable
12] SHARE TRANSFER SYSTEMThe turnaround time for completion of transfer of shares in physical mode is generally 15 days, ifthe documents are clear in all respects. The Board has delegated the responsibility of ShareTransfers to Share Transfer Committee & Registrar & transfer agent under Demat modes aretransferred by the Registrar for this purpose within 15 days.
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
13] TRANSFER UNDER PHYSICAL AND DEMAT MODEM/S. SYSTEM SUPPORT SERVICES,[Unit: Karma Ispat Limited]209, Shivai Industrial Estate, 89, Andheri Kurla Road, Sakinaka, Andheri [East],Mumbai – 400 072. Telephone No. 022-28500835
14] COMPLIANCE OFFICERMr. Krishnat DesaiH -Wing, Office No. 131, Raj Arcade, Mahavir Nagar,Kandivali West, Mumbai –400067.E-mail: [email protected] No.022-42687000/01
15] ADDRESS FOR CORRESPONDENCEKARMA ISPAT LIMITEDH Wing, Office No. 131, Raj Arcade, Mahavir Nagar, Kandivali West, Mumbai –400067.E-mail: [email protected] No. 022-42687000/01 Fax No. 022-28092455
16] LISTINGThe Bombay Stock Exchange.The Ahmedabad Stock ExchangeThe Hyderabad Stock Exchange
17] STOCK CODE OF THE COMPANYThe Stock Exchange, MumbaiScript Name: KARMA ISPAT LIMITED Script Code : 512585
18] DEPOSITORY CONNECTIVITY:NSDL & CDSL.
19] ISIN NO. FOR THE COMPANY’S SECURITY:INE416F01019.
20] DEMATERIALISATION OF SHARESAs on March 31, 2010, 1,27,14,755 Shares representing 38.53% and 1,65,07,435 Sharesrepresenting 50.02% of the total equity share were held dematreliazed from in CDSL and NSDLrespectively. Member can hold shares in electronic forms and trade the same in Depository System.However, they may hold the same in physical form also.
21] STOCK PRICE DATA:Stock Market price data for the year
Company’s Share
Month High (Rs.) Low (Rs.) No.ofShares
April 2009 46.50 33.45 27,547May 2009 37.30 29.45 21,980June 2009 34.40 26.65 38,387July 2009 29.60 16.65 3,68,701August 2009 18.70 13.80 6,07,641September 2009 26.00 16.00 5,58,218October 2009 25.50 21.70 14,21,266November 2009 33.00 23.60 28,12,291December 2009 42.00 32.30 22,12,240January 2010 35.50 29.00 12,23,275February 2010 46.70 30.20 19,40,697March, 2010 54.25 34.90 33,10,124
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
22] SHAREHOLDING PATTERN AS ON MARCH 31, 2010:
Category No. of Shares held % of Share holdingPromoters 48,37,500 14.66Private Bodies Corporate 70,02,980 21.22Banking / Financial Inst. 1,500 0.00Indian Public 2,11,57,170 64.12NRI / OCBs 850 0.00Total 3,30,00,000 100.00
23] DISTRIBUTION OF SHAREHOLDING AS ON MARCH 31, 2010 :
No. of Equity No. of Share No. of % of EquityShares held Holders Shares held CapitalUpto 500 4968 779953 2.363500 - 1000 169 147097 0.4461001 - 2000 66 100232 0.3042001 - 3000 26 67422 0.2043001 - 4000 8 28808 0.0874001 - 5000 14 68960 0.2095001 - 10000 22 194647 0.59010001 - 100000 57 2101688 6.369100001 & Above 33 29511193 89.428Total 5363 33000000 100
24] COMPLIANCEA certificate has been obtained from the Statutory Auditors of the Company regarding complianceof conditions of Corporate Governance and is attached to this report.
For and behalf of the Board of DirectorsFor Karma Ispat Limited
Sd/-(Rajesh Mehta)
Managing Director
Registered OfficeKARMA ISPAT LIMITEDH Wing, Office No. 131,Raj Arcade, Mahavir Nagar,Kandivali West,Mumbai –400067
Date: 31st May, 2010
NOTE: Non-mandatory requirements not implemented.
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
MANAGING DIRECTOR CERTIFICATION
We hereby certify that, to the best of our knowledge and belief.
a) We have reviewed the financial statements and cash flow statement for the year and thatto the best of our knowledge and belief :
i. These statements do not contain any materially untrue statement or omit any materialfact nor do they contain statements that might be misleading.
ii. These statements together present a true and fair view of the company’s affairs andare in compliance with the existing accounting standards, applicable laws andregulations.
b) There are, to the best of our knowledge and belief, no transactions entered into by thecompany during the year that are fraudulent, illegal or violative of the Company’s code ofconduct.
c) We accept responsibility for establishing and maintaining internal controls for financialreporting and have evaluated the effectiveness of internal control systems of the companypertaining to financial reporting and have disclosed to the Auditors and the AuditCommittee, deficiencies in the design or operation of such internal controls, if any ofwhich we are aware and the steps we have taken or proposed to take to rectify thesedeficiencies.
d) We have indicated to the Auditors and the Audit Committee that :
i. There are no significant changes in internal control over financial reporting during theyear
ii. There are no significant changes in accounting policies during the year; and
iii. There are no instances of significant fraud, of which we have become aware and theinvolvement therein, of the management or an employee having a significant role inthe Company’s Internal Control Systems over financial reporting.
For Karma Ispat Limited
Sd/-Rajesh Mehta
Managing Director
Mumbai, 31st May, 2010
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
DECLARATION ON CODE OF CONDUCT
ToThe Members ofKARMA ISPAT LIMITED,Mumbai
I, Rajesh Mehta, Managing Director of Karma Ispat Limited declare that to the best of myknowledge and belief, all the members of the Board of Directors and the designated personnelin the senior management of the Company have affirmed compliance with the Code of Conductfor the financial year ended 31st March 2010.
For Karma Ispat Limited
Sd/-Rajesh Mehta
Managing Director
Mumbai, 31st May, 2010
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
COMPLIANCE CERTIFICATE ON CORPORATE GOVERNANCE
The Members ofKARMA ISPAT LIMITED
We have examined the compliance of the condition of Corporate Governance by Karma IspatLimited, for the year ended March 31, 2010 as stipulated in Clause 49 of Listing Agreementof the Company with the Stock Exchanges in India.
The compliance of conditions of Corporate Governance is responsibility of the management.Our examination was limited to procedures and implementation thereof, adopted by theCompany for ensuring the compliance of the condition of Corporate Governance. It is neitheran audit nor an expression of opinion on the financial statement of the Company.
In our opinion and to the based of our information and according to the explanation given tous, we certify that the Company has complied with the conditions of Corporate Governanceas stipulated in the Listing Agreement. We state that no investors grievances are pending forthe period exceeding one month against the Company as per the records maintained by theShareholder / Investor Grievances Committee. We further state that such compliance isneither an assurance as to the future liability of the Company nor the efficiency or effectivenesswith which the management has conducted the affairs of the Company.
For Arvind Darji AssociatesChartered Accountants
Sd/-Arvind M DarjiProprietorMembership No.: 41748
Place: MumbaiDate: 31st May, 2010
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
AUDITORS’ REPORT
Auditors’ Report to the Members of KARMA ISPAT LIMITED
We have audited the attached Balance Sheet of KARMA ISPAT LIMITED, as at 31st March 2010, andalso the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexedthereto. These financial statements are the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the auditing standards generally accepted in India. ThoseStandards require that we plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free of material misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significant estimates made by management, aswell as evaluating the overall financial statement presentation. We believe that our audit provides areasonable basis for our opinion.
As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government ofIndia in terms of sub section (4A) of section 227 of the Companies Act, 1956, we enclose in theAnnexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order.
Further to our comments in the Annexure referred to above, we report that:
(i) we have obtained all the information and explanations, which to the best of our knowledge andbelief were necessary for the purpose of our audit;
(ii) in our opinion, proper books of account as required by law have been kept by the company so faras appears from our examination of those books;
(iii)the Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this reportare in agreement with the books of account;
(iv)in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealtwith by this report comply with the accounting standards referred to in sub section (3C) of section211 of the Companies Act, 1956;
(v) On the basis of written representations received from the directors, as on 31st March, 2010 andtaken on record by the Board of Directors, we report that none of the directors is disqualified as on31st March, 2010 from being appointed as a director in terms of clause (g) of sub section (1) ofsection 274 of the Companies Act, 1956;
(vi)in our opinion and to the best of our information and according to the explanations given to us,the said accounts give the information required by the Companies Act, 1956, in the manner sorequired and give a true and fair view in conformity with the accounting principles generallyaccepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the company as at 31st March, 2010;(b) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and(c) in the case of the Cash Flow Statement, of the Cash Flows for the year ended on that date.
FOR ARVIND DARJI ASSOCIATESChartered AccountantsFirm Registration No. 100576WSd/-ARVIND M DARJIProprietorMembership No.: 41748
Place: MUMBAIDate : 31st May, 2010
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
ANNEXURE TO THE AUDITORS’ REPORT
The Annexure referred to in the auditors’ report to the members of Karma Ispat Limited for theyear ended 31st March, 2010. We report that:
(i) (a) The company has maintained proper records showing full particulars, including quantitativedetails and situation of fixed assets.
(b)The fixed assets have been physically verified by the management, in accordance with aphased programme of verification which, in our opinion, is reasonable, considering the size ofthe Company and nature of its assets. No material discrepancies were noticed on suchverification.
(c) During the year, the company has not disposed off any part of the fixed assets.
(ii) (a)As explained to us, the inventories have been physically verified by the management at theend of the year. Considering the nature of the Company’s business, the frequency of suchverification is reasonable.
(b)As per information given to us, the procedures of physical verification of inventory followedby management are, in our opinion, reasonable and adequate in relation to the size of theCompany and the nature of its business.
(c) The Company is maintaining proper records of inventory. There were no discrepancies betweenphysical stock and book stocks.
(iii) (a) The Company has granted unsecured interest free loans to 2 parties listed in the registermaintained under Section 301 of the Companies Act, 1956. The maximum amount outstandingduring the year is Rs. 27,50,420 and the year end balance was Rs. 2,75,440.
(b) In our opinion, and according to the information and explanations given to us, the terms andconditions of the aforesaid loans are prima facie not prejudicial to the interest of the Company.
(c) There is no stipulation as regards payment of principal amounts.
(d) In respect of the said loans, since there is no stipulation as regards payment of principalamount, the question of overdue amounts does not arise.
(e) The Company has not taken any secured or unsecured loan from any party listed in theregister under section 301 of the Companies Act, 1956.
(iv) In our opinion and according to the information and explanations given to us, there are adequateinternal control procedures commensurate with the size of the company and the nature of itsbusiness. During the course of our audit, we have not observed any continuing failure to correctmajor weaknesses in internal control systems.
(v) (a) In our opinion and according to the information and explanations given to us, the particularsof contract or arrangements referred to in Section 301 of the Act have been so entered in theregister required to be maintained under that section.
(b) In our opinion and according to the information and explanations given to us, the Companydoes not have any transaction made in pursuance of contracts or arrangements entered in theregister maintained under section 301 of the Companies Act, 1956 and exceeding the value ofrupees five lakhs in respect of any party during the year.
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
(vi) The company has not accepted any deposits under the provisions of Sections 58A and 58AA ofthe Act and the rules framed there under.
(vii) The Company does not have formal internal audit system. Internal audit is carried out by inhouse staff. In our opinion, there is a scope for further improvement in the internal auditsystem.
(viii)To the best of our knowledge and according to the information and explanations given to us, theCentral Government has not prescribed any rules for the maintenance of cost records undersection 209(1)(d) of the Companies Act, 1956.
(ix) (a) According to the information and explanations given to us, and the records of the Companyexamined by us, in our opinion, the company is generally regular in depositing the undisputedstatutory dues, including provident fund, investor education and protection fund, employees’state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty,cess and other material statutory dues as applicable, with appropriate authorities.
(b) (i) According to the information and explanations given to us and the records of the Companyexamined by us, no undisputed statutory amounts payable were in arrears, as at 31stMarch 2010 for a period of more than six months from the date they became payable.
(ii) According to the information and explanations given to us, there are no statutory dueswhich have not been deposited on account of any dispute.
(x) The Company has no accumulated losses as at 31st March, 2010 and has not incurred any cashlosses in the financial year ended on that date or in the immediately preceding financial year.
(xi) In our opinion and according to the information and explanations given to us, the company hasnot defaulted in repayment of dues to a financial institution, bank or debenture holders.
(xii) The Company has not granted loans and advances on the basis of security by way of pledge ofshares, debentures and other securities.
(xiii)In our opinion the Company is not a Chit Fund Company or Nidhi / Mutual Benefit Fund / Society.Therefore paragraph 4 (xiii) of the Order is not applicable to the Company.
(xiv)In our opinion, the Company has maintained proper records of transactions and contracts relatingto dealing or trading in shares, securities, debentures and other investments during the year andtimely entries have been made therein. Further, such securities have been held by the Companyin its own name.
(xv) According to the information and explanations given to us, the Company has not given anyguarantee for loans taken by others from banks or financial institutions, during the year.
(xvi)The Company has not raised any term loan during the year under consideration.
(xvii)According to the information and explanations given to us, and on an overall examination of thebalance sheet of the company, we report that no fund raised on short basis have been used forlong term investment during the year.
(xviii) According to the information and explanations given to us, the Company has not made preferentialallotment of shares to parties and companies covered in the Register maintained under Section301 of the Companies Act, 1956.
(xix)As per the information and explanations given to us, the Company has not issued any debentureduring the year under review.
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
(xx) The company has not raised any money by public issue during the year, and hence paragraph4(xx) of the Order is not applicable.
(xxi)During the course of our examination of the books and records of the Company, carried out inaccordance with generally accepted auditing practices in India, and according to the informationand explanations given to us, we have neither come across any instances of material fraud on orby the Company, noticed or reported during the year, nor have been informed of such case bymanagement.
FOR ARVIND DARJI ASSOCIATESChartered AccountantsFirm Registration No. 100576W
Sd/-ARVIND M DARJIProprietorMembership No.: 41748
Place: MUMBAIDate : 31st May, 2010
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
FOR ARVIND DARJI ASSOCIATES
Chartered AccountantsFirm Registration No.: 100576WSd/-ARVIND M DARJIProprietorMembership No.: 41748
Place :MUMBAIDate : 31st May, 2010
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Sd/-RAJESH MEHTAManaging DirectorSd/-HEMANG SAMPATDirector
Place :MUMBAIDate : 31st May, 2010
BALANCE SHEET AS AT 31ST MARCH, 2010
Significant Accounting Policies & 15
Notes to the Accounts
As per Our Report of even date attached
As at 31stMarch,2010
As at 31stMarch,2009
Sources of FundsShareholders Funds
Share Capital 1 330,000,000 330,000,000Reserves and Surplus 2 210,200,715 200,265,606Deferred Tax (Net) 1,022,255 1,287,986
Loan FundsSecured Loan 3 21,716,393 4,592,741Unsecured Loans 4 50,806,837 25,170,943TOTAL 613,746,200 561,317,276
Application Of FundsFixed Assets
Gross Block 5 86,837,509 77,094,570Less:Depreciation 60,911,754 57,104,922 Net Block 25,925,755 19,989,648
Investments 6 125,905,110 47,260,000
Current Assets, Loans and AdvancesStock in Hand 38,182,483 9,678,083Sundry Debtors 7 759,552,045 551,601,713Cash and Bank Balance 8 45,658,630 22,334,853Loans and Advances 9 74,217,197 55,974,742
917,610,355 639,589,390Current Liabilities and ProvisionsLess: Current Liabilities 10 446,910,402 140,067,335
Provisions 11 9,625,000 6,715,000456,535,402 146,782,335
Net Current Assets 461,074,953 492,807,055
Miscelleneous Expenditure(To the extent not written off)Share Issue Expenses 840,382 1,260,573
TOTAL 613,746,200 561,317,276
Schedules
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 ST MARCH, 2010
Significant Accounting Policies & 15
Notes to the Accounts
As per Our Report of even date attached
2010 2009
Income
Sales 4,284,088,432 2,766,954,225
Other Income 12 4,421,889 6,603,218
4,288,510,321 2,773,557,443
Expenditure
Material Cost 13 4,229,657,480 2,734,647,394
Administrative and Other Expenses 14 38,527,251 14,120,416
Interest 3,519,189 8,605,682
Preliminary Expenses written off 420,191 420,191
4,272,124,111 2,757,793,683
Profit before Depreciation 16,386,210 15,763,759
Less: Depreciation 3,806,832 3,377,396
Profit Before Tax 12,579,378 12,386,363
Less: Provision for Taxation 2,910,000 5,100,000
Provision for FBT - 90,000
9,669,378 7,196,363
Add : Deferred Tax (reversal) 265,731 308,823
Profit/(Loss) after Tax 9,935,109 7,505,187
Balance in P & L Account B/F 496,547 (7,008,640)
Surplus/(Deficit) carried to Balance Sheet 10,431,656 496,547
Earning Per Share (Rs.) 0.30 0.23
Schedules
FOR ARVIND DARJI ASSOCIATES
Chartered AccountantsFirm Registration No.: 100576WSd/-ARVIND M DARJIProprietorMembership No.: 41748
Place :MUMBAIDate : 31st May, 2010
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Sd/-RAJESH MEHTAManaging DirectorSd/-HEMANG SAMPATDirector
Place :MUMBAIDate : 31st May, 2010
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
Cash flow statement pursuant to Clause 32 of the Listing Agreementfor the year ended 31st March,2010
(Rs./Thousand) (Rs./Thousand)A) CASH FLOW FROM OPERATING ACTIVITIES
Net Profit before Taxes and Extra ordinary item 12,579 5,886AdjustmentsAmortisation of Expenses 420 420Depreciation 3,807 3,377Interest 3,519 8,606Share Trading Profit (3,545) (34)Operating Profit before Working Capital Changes 16,780 18,255Adjustments(Increase) / Decrease in Inventory (28,504) 12,370(Increase) / Decrease in trade & Other receivable (207,950) (260,558)(Increase) / Decrease in Loan & Advances (18,242) (51,990)Increase / (Decrease) in Sundry Creditors & Provisions 306,843 (54,847)Cash generated from operations 68,927 (336,770)Extra ordinary income - 6,500Interest Paid (3,519) (8,606)
65,408 (338,876)
B) CASH FLOW FROM INVESTING ACTIVITIESPurchase of Fixed Assets (9,743) (16,104)Purchase of Investments (78,645) (47,260)Share Trading Profit 3,545 34
(84,843) (63,330)
C) CASH FLOW FROM FINANCING ACTIVITIESIssue of share capital - 380,512Increase/(Decrease) Long Term borrowing 42,760 29,474
42,760 409,986
NET CHANGE IN CASH AND CASH EQUIVALENT (A+B+C) 23,325 7,780CASH AND CASH EQUIVALENT AS AT 01.04.2009 22,334 14,554CASH AND CASH EQUIVALENT AS AT 31.03.2010 45,659 22,334
Year Ended 31st March 2010
Year Ended 31st March 2009
FOR ARVIND DARJI ASSOCIATES
Chartered AccountantsFirm Registration No.: 100576WSd/-ARVIND M DARJIProprietorMembership No.: 41748
Place :MUMBAIDate : 31st May, 2010
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Sd/-RAJESH MEHTAManaging DirectorSd/-HEMANG SAMPATDirector
Place :MUMBAIDate : 31st May, 2010
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEETAS AT 31ST MARCH,2010
SCHEDULE 1
SHARE CAPITALAuthorised332,50,000 Equity Shares of Rs. 10/- each 332,500,000 332,500,000
Issued, Subscried and Paid-up:330,00,000 Equity Shares of Rs. 10/- each 330,000,000 330,000,000
330,000,000 330,000,000SCHEDULE 2RESERVE AND SURPLUSShare Premium Account 195,500,000 195,500,000General Reserve 4,067,445 4,067,445Investment Allowance Reserve Utilised 201,614 201,614Balance in Profit and Loss A/c 10,431,656 496,547
210,200,715 200,265,606SCHEDULE - 3SECURED LOANCar Loan 1,322,862 71,283(secured against motor car)Property Loan - 4,521,458(secured against property)Bank OD 20,393,531 -(Secured against hypothecation of stock & receivables)
21,716,393 4,592,741SCHEDULE - 4UNSECURED LOANSIntercorporate Loan 50,450,000 -Loan from others 356,837 25,170,943
50,806,837 25,170,943
As at 31st March,2010
As at 31st March,2009
SCHEDULE - 5
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEETAS AT 31ST MARCH,2010
Investment in subsidiary companiesKarma Commodities Limited 10 1,000,000 10,000,000 - -Kil Infrastructure Limited 10 50,000 500,000 - -Karma Stock Trade Ltd 10 3,108,000 60,360,000 - -Investment in other companiesCondot systems pvt ltd (Equity Shares) 100 - - 5,000 5,000,000Elpro Packaging ltd (Pref Shares) 100 150,000 5,045,110 1,316,000 42,260,000Ashapura Garments Ltd 10 166,667 15,000,000Cal Chean Construction P.Ltd 10 10,000 6,000,000Kaviraj Finstock Pvt Ltd 10 200,000 2,000,000Swati Spentose Pvt Ltd 10 14,000 27,000,000TOTAL 125,905,110 47,260,000
As at 31st March, 2009FaceValue
As at 31st March, 2010Rs.NosRs.Nos
SCHEDULE 7SUNDRY DEBTORS(Unsecured but considered good)Debts Outstanding For a Period Exceeding 6 mths 175,349,450 438,881,835Other Debts 584,202,595 112,719,878
759,552,045 551,601,713SCHEDULE 8CASH AND BANK BALANCESCash In Hand 436,511 433,954Balance with Schedule Bank in Current Account 22,249,119 19,900,899Fixed Deposits 20,973,000 2,000,000Recurring Deposits with Bank 2,000,000 -
45,658,630 22,334,853SCHEDULE 9
DEPOSITS, LOANS AND ADVANCES(Unsecured Considered Good )Advance Tax 11,261,164 3,836,933Advance for office building 8,500,000 6,100,000Advance for Capital Expenditure 295,770 6,300,000Loans and advances 2,486,950 1,499,456Deposits 44,880 24,670Advance to Supplier 9,374,964 25,776,886Prepaid Expenses 40,657 11,774,770Input Vat 4% carried forward - 399,690MVAT carried forward - 227,510Accrued Int on FD 497,372 27,330Amount to be receivable in cash or kind or for value to be received 41,715,440 7,497
74,217,197 55,974,742
As at 31st March,2010
As at 31st March,2009
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
SCHEDULE 10
CURRENT LIABILITIESSundry Creditors 316,981,106 138,811,518Creditors for Expenses 597,642 1,255,817Advance from Customers 129,331,654 -
446,910,402 140,067,335
SCHEDULE 11PROVISIONSProvision for IncomeTax 9,520,000 6,610,000Provision for Fringe Benefit Tax 105,000 105,000
9,625,000 6,715,000
SCHEDULE 12OTHER INCOMEMiscellaneous Income 4,421,889 6,603,218
4,421,889 6,603,218
SCHEDULE 13MATERIAL COSTOpening Stock 9,678,083 22,047,853Add : Purchases 4,209,580,630 2,690,748,487Carriage Inward 23,360,618 12,570,434Freight Charges - 157,130Loading & Unloading Charges 25,220,632 18,801,573
4,267,839,963 2,744,325,477
Less: Closing Stock 38,182,483 9,678,083
4,229,657,480 2,734,647,394
As at 31st March,2010
As at 31st March,2009
SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEETAS AT 31ST MARCH,2010
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
As at 31st March,2010
As at 31st March,2009
SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEETAS AT 31ST MARCH,2010
SCHEDULE 14
ADMINISTRATION & OTHER EXPENSESSalaries, Bonus 5,121,255 2,038,443Directors Remuneration 5,711,786 3,431,983Sitting Fees 316,000 -Meeting Expenses 5,714 -Bank Charges 2,239,936 609,696Staff Welfare Expenses 171,285 163,402Sales Tax 802,555 -Seminar Expenses 5,400 -Business & Promotion Expenses 24,128 -Brokerage & Commission 650,068 2,157,902Computers Maintenance charges 26,410 28,920Computer Software Expenses 34,998 166,453Office expense 117,465 29,671Office Rent 120,000 -Postage and Courier Expenses 85,450 104,213Printing and stationery 270,010 278,643Discount Allowed 102,153 -Donations 1,530,201 25,000Electricity Charges 431,005 283,562Entertainment - 52,534Advertisment Expenses 16,040,247 120,165Subscription & Membership Fees 3,950 550Telephone Expenses 694,512 607,380Pest control expense 17,300 14,045Warehousing Charges 1,886,283 1,336,101CDSL & NSDL Fees - 40,098Internet Charges - 43,079Club Membership - 19,388Miscelleneous Expenses 23,144 43,435Insurance Expenses 28,580 14,045Web Designing Expenses 15,000 -Travelling and conveyance Expenses 185,835 243,968Motar car Expense 391,907 404,304Repairs & Maintainence Charges 95,779 141,610Legal fees 938,894 1,245,442Listing Fees 164,251 366,084Payment to Auditors 275,750 110,300
38,527,251 14,120,416
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
SCHEDULES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2010 (continued)
SCHEDULE 15: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS
15.1.1 Basis of preparation of financial statementsThe financial statements are prepared under the historical cost convention on an accrual basis in accordance withthe Generally Accepted Accounting Principles in India (“GAAP”). GAAP comprises accounting standards as specifiedin Rule 3 of the Companies (Accounting Standards) Rules 2006, and the relevant provisions of the Companies Act,1956 to the extent applicable.
15.1.2 Use of EstimatesThe preparation of financial statements in conformity with the generally accepted accounting principles requiresmanagement to make estimates and assumptions to be made that affect the reported amount of assets and liabilitieson the date of financial statements and the reported amount of revenues and expenses during the reporting period.The difference between the actual results and estimates are recognized in the period in which results are known /materialized.
15.1.3 Revenue RecognitionRevenue is recognized when it is earned and no significant uncertainty exists as to its ultimate collection. Interestincome is recognized on a time proportion basis. Dividend is recognized when right to receive is established.
15.1.4 Fixed Assets and DepreciationFixed Assets are stated at cost, after reducing accumulated depreciation and impairment upto the date of BalanceSheet. Direct costs are capitalized until the assets are ready for use and include financing costs relating to anyborrowing attributable to acquisition or construction of those fixed assets which necessarily take substantial periodof time to get ready for its intended use. Intangible assets are recorded at the consideration paid for acquisition ofsuch assets. Depreciation on fixed assets is provided at the rates and in the manner specified in Schedule XIV of theCompanies Act, 1956, on SLM Method.
15.1.5 Taxes on IncomeTax on income for the current period is determined on the basis of estimated taxable income and tax creditscomputed in accordance with the provisions of the Income Tax Act, 1961 and based on the expected outcome ofassessments / appeals.
Deferred tax is recognized on timing differences between the accounting income and the estimated taxable incomefor the year and quantified using the tax rates and laws enacted or substantially enacted as on the balance sheetdate. Deferred tax assets/liabilities, other than brought forward business loss and unabsorbed depreciation arerecognized and carried forward to the extent there is reasonable certainty that sufficient future taxable income willbe available against which deferred tax assets/liabilities can be adjusted.
15.1.6 Provisions, Contingent Liabilities and Contingent AssetsThe company recognizes a provision when there is a present obligation as a result of a past event that probablyrequires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosurefor a contingent liability is made when there is a present obligation that cannot be estimated reliably or a possibleor present obligation that may, but probably will not, require an outflow of resources. When there is a possibleobligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure ismade. Provisions are made for all known losses and liabilities and future unforeseeable factors that may affect theprofit of the entity. Accounting for contingencies (gains and losses) arising out of contractual obligation, are accountedon the basis of mutual acceptances. Contingent Assets are neither recognized nor disclosed. Provisions, ContingentLiabilities and Contingent Assets are reviewed at each Balance Sheet date.
15.1.7 Events Occurring After the Balance Sheet DateWhere material, events occurring after the date of the Balance Sheet are considered upto the date of approval ofaccounts by the Board of Directors
15.1.8 Impairment of AssetsManagement periodically assesses using, external and internal sources, whether there is an indication that an asset
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
may be impaired. An impairment loss is recognized wherever the carrying value of an asset exceeds its recoverableamount. The recoverable amount is higher of the asset’s net selling price and value in use i.e. the present value offuture cash flows expected to arise from the continuing use of the asset and its eventual disposal. An impairmentloss for an asset is reversed if there has been a change in the estimates used to determine the recoverable amountsince the last impairment loss was recognised.
15.1.9 Earnings per shareIn determining earnings per share, the company considers the net profit after tax. The number of shares used incomputing basic earnings per share is the weighted average number of shares outstanding during the period.Diluted earnings per share are computed using the weighted average number of basic and diluted common equivalentshares outstanding during the period except where the result would be anti dilutive.
15.1.10 Cash Flow StatementCash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactionsof a non cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows fromoperating, financing and investing activities of the company are segregated.
15.1.11 InvestmentsInvestments that are readily realizable and intended to be held for not more than a year are classified as currentinvestments. All other investments are classified as long term investments.
Current investments are carried at lower of cost and fair value determined on an individual investment basis. Longterm investments are carried at cost. However, provision for diminution is made to recognize a decline, other thantemporary in nature, in the carrying amount of such long term investments.
15.1.12 InventoriesInventories are valued at lower of cost and net realizable value.
15.1.13 Borrowing Costi) Borrowing costs on working capital is charged to profit and loss statement in the year of incurrence.ii) Borrowing costs that are attributable to the acquisition of tangible fixed assets are capitalized till the date of
substantial completion of the activities necessary to prepare the relevant asset for its intended use.iii) Borrowing costs that are attributable to the acquisition or development of intangible assets are capitalized till
the date they are put to use.
15.1.14 Employees Benefiti) Bonus is paid to all employees on yearly basis. The liability on account of bonus is provided on actual basisii) Incentives such as mediclaim and insurance are paid for permanent employees by the Company. The liability
on account of such incentives is provided on actual basis. iii) The rules of the company do not provide forencashment of unutilized leave.
15.2 NOTES TO FINANCIAL STATEMENTS
15.2.1 There are no Micro, Small and Medium Enterprises, as defined in the Micro, Small and Medium EnterprisesDevelopment Act, 2006 to whom the Company owes dues on account of principal amount together with interest andaccordingly no additional disclosures have been made. The above information regarding Micro, Small and MediumEnterprises has been determined to the extent such parties have been identified on the basis of the informationavailable with the company.
15.2.2 As per the best estimate of the management, no provision is required to be made as per AccountingStandard (AS 29) as notified by Companies (Accounting Standard) Rules, 2006 in respect of any present obligationas a result of a past event that could lead to probable outflow of resources, which would be required to settle theobligation.
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
15.2.3 Earnings per share(In Rs.)
Particulars Year ended 31stMarch, 2010a) Numerator Profit after tax and taxation adjustments of earlier years 99,35,109b) Denominator Weighted average number of equity shares 330,00,000c) Earnings per equity share (EPS) (Basic and diluted) Numerator EPS = ……………… Denominator 0.30d) Nominal value of equity share 10
15.2.4 Outstanding dues to the Company’s under same management(In Rs.)
Name of the Company Relationship Balance as at MaximumMarch 31, 2010 Outstanding
March 31, 2010
Karma Commodities Ltd Wholly owned 50,220 25,25,200Subsidiary Company
Karma Stock Trade Ltd Subsidiary Company 2,25,220 2,25,220
15.2.5 In the opinion of the Board, the provisions for known liabilities are adequate and current assets in theordinary course of business have a value at least equal to the amount at which they are stated.
15.2.6 The disclosure requirements in respect of Accounting Standard 18 on “Related Party Disclosures” are asunder:
List of Related Parties
Name of the related party Relationship
Karma Commodities Limited Wholly owned Subsidiary Company
Karma Stock Trade Ltd Subsidiary Company
The details of related party transactions entered into by the company, for the yearended March 31st, 2010 are as follows:
Particulars Maximum Outstanding Year endedMarch 31, 2010 March 31, 2010
Capital transactions:Financial transactions Loans
Karma Commodities Ltd 25,25,200 50,220
Karma Stock Trade Ltd 2,25,220 2,25,220
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
15.2.7 Reconciliation between basic and dilutive shares
The reconciliation between basic and dilutive shares
Particulars Year endedMarch 31, 2010
Weighted average shares used in computing basic earnings per share 330,00,000Dilutive effect of stocks NilWeighted average shares used in computing diluted earnings per share 330,00,000
15.2.8 In accordance with the Accounting Standard (AS 28) on “Impairment of Assets” the Management duringthe year carried out an exercise of identifying the assets that may have been impaired. On the basis of this reviewcarried out by the management, there was no impairment loss on fixed assets during the year ended March 31,2010.
15.2.9 Deferred Taxation
Particulars As at March 31,2010 As at March 31,2009Deferred Tax LiabilityRelated to Fixed Assets 12,87,986 12,87,986Less: Deferred Tax Liability (Reversal) (2,65,731) 10,22,255Net Deferred Tax Liability / (Asset) Nil 12,87,986
15.2.10 There were no contingent liabilities during the period under review which were not provided for.
15.2.11 There are no amounts due and outstanding to be credited to Investor Education and Protection Fund.
15.2.12 Sundry debtors, Loans and Advances and creditors balances are subject to confirmation, reconciliation andconsequent adjustments, if any.
15.2.13 Auditors Remuneration
Particulars 2009-10 2008-09Audit Fees 1,93,025 77,210Tax Audit Fees 82,725 33,090Total 2,75,750 1,10,300
15.2.14 Vehicle loan are secured by hypothecation of related Vehicle and Bank overdraft is secured againsthypothecation of stock and receivables.
15.2.15 Managerial Remuneration charged to accounts (included in employee cost):
Particulars 2009-10 2008 09
Rajesh Mehta 29,11,786 20,87,120Bhavna Mehta 28,00,000 9,49,825Hemang Sampat - 1,65,038Amish Modi - 2,30,000
15.2.16 Figures for the previous year have been regrouped / reclassified wherever necessary.
15.2.17 Additional Information as required under Part IV of Schedule VI to the Companies Act, 1956.
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
I Registration Details
Registration No. 019837
Balance Sheet Date 31/03/2010 State Code 011
II Capital raised during the year (Amount in Rs. Thousands)
Public Issue NIL Rights Issue NIL
Bonus Issue NIL Preferential Allottment NIL
III Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)
Total Liabilities 6,13,746.20 Total Assets 6,13,746.20
Sources of Funds Application of Funds
Paid up Capital 3,30,000.00 Fixed Assets 25,925.76
Reserves & Surplus 2,10,200.72 Investments 1,25,905.11
Secured Loans 21,716.39 Net Current Assets 4,61,074.95
Unsecured Loans 50,806.84 Misc Expenses 840.38
Deferred Tax 1022.26 Accumulated Losses 0
IV Performance of the Company
Turnover (including other income) 42,88,510.32 Total Expenditure 42,75,930.94
Profit / (Loss) Before Tax 12,579.38 Profit / (Loss) After Tax 9,935.11
Earning Per Share in Rs. 0.30 Dividend rate % NIL
V Generic Names of Three Principal Products / Services of Company (as per Monetary Terms) NA
Products Description ITEM CODE NO. (ITC CODE)
Land Procurement NIL
BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE:
FOR ARVIND DARJI ASSOCIATESSd/-Chartered AccountantsFirm Registration No.: 100576W
ARVIND M DARJIProprietorMembership No.: 41748
Place :MUMBAIDate : 31st May, 2010
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Sd/-RAJESH MEHTAManaging DirectorSd/-HEMANG SAMPATDirector
Place :MUMBAIDate : 31st May, 2010
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
AUDITORS’ REPORT
Auditors’ Report to the Board of Directors of KARMA ISPAT LIMITED on the Consolidated FinancialStatements of Karma Ispat Limited and its Subsidiaries
We have examined the attached Consolidated Balance Sheet of KARMA ISPAT LIMITED and its subsidiaries(hereinafter referred to as Karma Group), as at 31st March 2010, and also the Consolidated Profit and LossAccount and the Consolidated Cash Flow Statement for the year ended on that date annexed thereto.
These financial statements are the responsibility of the Company’s management. Our responsibility is to express anopinion on these financial statements based on our audit. We have conducted our audit in accordance with theauditing standards generally accepted in India. Those Standards require that we plan and perform the audit toobtain reasonable assurance about whether the financial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.An audit also includes assessing the accounting principles used and significant estimates made by management, aswell as evaluating the overall financial statement presentation. We believe that our audit provides a reasonablebasis for our opinion.
We report that consolidated financial statements have been prepared by the Company in accordance with therequirements of the Accounting Standard 21 – Consolidated Financial Statements, issued by The Institute of CharteredAccountants of India and on the basis of separate audited financial statements of Karma Ispat Limited and itssubsidiaries included in the consolidated financial statements.
Based on our audit and to the best of our information and according to the explanations given to us, we are of theopinion that the attached consolidated financial statements give a true a true and fair view in conformity with theaccounting principles generally accepted in India:
(a) in the case of the consolidated Balance Sheet, of the state of affairs of the Group as at 31st March, 2010;(b) in the case of the consolidated Profit and Loss Account, of the profit of the Group for the year ended on that
date; and(c) in the case of the consolidated Cash Flow Statement, of the Cash Flows of the Group for the year ended on that
date.
FOR ARVIND DARJI ASSOCIATESCHARTERED ACCOUNTANTSFirm Registration No. 100576W
Sd/-ARVIND M DARJIPROPRIETORMembership No.: 41748
Place: MUMBAI
Date : 31st May, 2010
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2010
Significant Accounting Policies & 16
Notes to the Accounts
As per Our Report of even date attached
As at 31stMarch,2010
Sources of FundsShareholders Funds
Share Capital 1 330,000,000Reserves and Surplus 2 258,862,791Deferred Tax (Net) 851,903
Loan FundsSecured Loan 3 21,716,393Unsecured Loans 4 52,412,521
Minority Interest 20,881,147
TOTAL 684,724,755
Application Of FundsFixed Assets
Gross Block 5 122,976,474Less:Depreciation 61,112,586 Net Block 61,863,888
Investments 6 85,045,110
Current Assets, Loans and AdvancesStock in Hand 38,182,483Sundry Debtors 7 759,552,045Cash and Bank Balance 8 56,890,869Loans and Advances 9 138,698,463
993,323,860Current Liabilities and ProvisionsLess: Current Liabilities 10 447,582,410
Provisions 11 9,651,000457,233,410
Net Current Assets 536,090,450
Miscelleneous Expenditure(To the extent not written off) 12 1,725,307
TOTAL 684,724,755
Schedules
FOR ARVIND DARJI ASSOCIATES
Chartered AccountantsFirm Registration No.: 100576WSd/-ARVIND M DARJIProprietorMembership No.: 41748
Place :MUMBAIDate : 31st May, 2010
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Sd/-RAJESH MEHTAManaging DirectorSd/-HEMANG SAMPATDirector
Place :MUMBAIDate : 31st May, 2010
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31st MARCH, 2010
Significant Accounting Policies & 16
Notes to the Accounts
As per Our Report of even date attached
As at 31stMarch,2010
Income
Sales 4,284,089,632
Other Income 13 5,052,964
4,289,142,596
Expenditure
Material Cost 14 4,229,657,480
Administrative and Other Expenses 15 38,928,736
Interest 3,519,189
Preliminary Expenses written off 571,279
4,272,676,684
Profit before Depreciation 16,465,912
Less: Depreciation 4,007,664
Profit Before Tax 12,458,248
Less: Provision for Taxation 2,936,000
Provision for FBT -
9,522,248
Less: Deferred Tax Liability 71,344
Add : Deferred Tax 507,427
Profit/(Loss) after Tax 9,958,331
Less: Minority Interest 708
Balance in P & L Account B/F 496,547
Surplus/(Deficit) carried to Balance Sheet 10,454,170
Earning Per Share (Rs.) 0.30
Schedules
FOR ARVIND DARJI ASSOCIATES
Chartered AccountantsFirm Registration No.: 100576WSd/-ARVIND M DARJIProprietorMembership No.: 41748
Place :MUMBAIDate : 31st May, 2010
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Sd/-RAJESH MEHTAManaging DirectorSd/-HEMANG SAMPATDirector
Place :MUMBAIDate : 31st May, 2010
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2010
Significant Accounting Policies & 16
Notes to the Accounts
As per Our Report of even date attached
As at 31stMarch,2010
(Rs./Thousand)A) CASH FLOW FROM OPERATING ACTIVITIES
Net Profit before Taxes 12,458.25AdjustmentsDepreciation 4,007.67Deffered Tax 436.08Share Trading Profit (3,545.11)Interest Income (1,185.34)Expenditure prior to commencement of business (464.74)Preliminary Expenses incurred 571.28Operating Profit before Working Capital Changes 12,278.09Less: Provision for Tax (2,936.00)Net Operating Profit before Working Capital Changes 9,342.09AdjustmentsIncrease / Decrease in Inventory (28,504.40)Increase / Decrease in Trade & Other receivable (207,950.34)Increase / Decrease in Loan & Advances (82,723.72)Increase / Decrease in Sundry Creditors 307,515.07Net Cash generated from operations (2,321.30)
B) CASH FLOW FROM INVESTING ACTIVITIESPurchase of Fixed Assets (45,881.90)Purchase of Investments (40,785.11)Share Trading Profit 3,545.11Minority Interest contribution 20,880.44Net Cash generated from investing activities (62,241.46)
C) CASH FLOW FROM FINANCING ACTIVITIESIncrease/(Decrease) of borrowing (3,269.88)Increase/(Decrease) Long Term borrowing 27,241.58Share Premium 48,639.56Interest income 1,185.34Net Cash from financing activities 73,796.60
NET CHANGE IN CASH AND CASH EQUIVALENT (A+B+C) 9,233.84CASH AND CASH EQUIVALENT AS AT 01.04.2009 22,334.85CASH AND CASH EQUIVALENT AS AT 31.03.2010 31,568.69
FOR ARVIND DARJI ASSOCIATES
Chartered AccountantsFirm Registration No.: 100576WSd/-ARVIND M DARJIProprietorMembership No.: 41748
Place :MUMBAIDate : 31st May, 2010
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Sd/-RAJESH MEHTAManaging DirectorSd/-HEMANG SAMPATDirector
Place :MUMBAIDate : 31st May, 2010
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
SCHEDULES ANNEXED TO AND FORMING PART OFCONSOLIDATED BALANCE SHEET AS AT 31ST MARCH,2010
As at 31stMarch,2010
SCHEDULE 1
SHARE CAPITALAuthorised332,50,000 Equity Shares of Rs. 10/- each 332,500,000
Issued, Subscried and Paid-up:330,00,000 Equity Shares of Rs. 10/- each 330,000,000
330,000,000SCHEDULE 2RESERVE AND SURPLUSShare Premium Account 244,139,562General Reserve 4,067,445Investment Allowance Reserve Utilised 201,614Balance in Profit and Loss A/c 10,454,170
258,862,791SCHEDULE - 3SECURED LOANCar Loan 1,322,862(secured against motor car)Bank OD 20,393,531(Secured against hypothecation of stock & receivables)
21,716,393SCHEDULE - 4UNSECURED LOANS Loan from Directors and others 356,837 Intercorporate Loan 52,055,684
52,412,521
SCHEDULE - 5
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
SCHEDULES ANNEXED TO AND FORMING PART OFCONSOLIDATED BALANCE SHEET AS AT 31ST MARCH,2010
SCHEDULE 6
INVESTMENTS As at 31st March, 2010
Investment in Unquoted shares Face Value Nos Rs.
Investment in companiesElpro Packaging ltd (Pref Shares) 100 150,000 5,045,110Ashapura Garments Ltd 10 166,667 45,000,000Cal Chean Construction P.Ltd 10 10,000 6,000,000Kaviraj Finstock Pvt Ltd 10 200,000 2,000,000Swati Spentose Pvt Ltd 10 14,000 27,000,000TOTAL 85,045,110
As at 31stMarch,2010
As at 31stMarch,2010
SCHEDULE 7
SUNDRY DEBTORS(Unsecured but considered good)Debts Outstanding For a Period Exceeding 6 mths 175,349,450Other Debts 584,202,595
759,552,045SCHEDULE 8
CASH AND BANK BALANCESCash In Hand 690,592Balance with Schedule Bank in Current Account 22,719,316Fixed Deposits 31,480,961Recurring Deposits with Bank 2,000,000
56,890,869SCHEDULE 9
DEPOSITS, LOANS AND ADVANCES(Unsecured Considered Good )Advance Tax 11,261,164Advance for office building 8,500,000Advance for Capital Expenditure 295,770Loans and advances 2,486,950Deposits 67,429,888Advance to Supplier 6,374,964Prepaid Expenses 349,249Accrued Int on FD 497,372Amount to be receivable in cash or kind or for value to be received 41,440,000TDS on interest 63,106
138,698,463
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
As at 31stMarch,2010
SCHEDULE 10
CURRENT LIABILITIESSundry Creditors 316,981,106Capital Goods 470,378Expenditure 178,767Creditors for Expenses 597,642Duties and Taxes 22,863Advance from Customers 129,331,654
447,582,410SCHEDULE 11
PROVISIONSProvision for IncomeTax 9,546,000Provision for Fringe Benefit Tax 105,000
9,651,000SCHEDULE 12
MISCELLANEOUS EXPENDITURE(to the extent not writtern off / adjusted)Share Issue Expenses 1,651,614Expenditure Prior to Commencement of Business 73,693
1,725,307
SCHEDULES ANNEXED TO AND FORMING PART OFCONSOLIDATED BALANCE SHEET AS AT 31ST MARCH,2010
SCHEDULE 13
OTHER INCOMEBank Interest 92,193Discount received 36,325Office Rent Received 194,000Share trading Profit 3,545,110Interest Income 1,185,336
5,052,964SCHEDULE 14
MATERIAL COSTOpening Stock 9,678,083Add : Purchases 4,209,580,630Carriage Inward 23,360,618Loading & Unloading Charges 25,220,632
4,267,839,963Less: Closing Stock 38,182,483
4,229,657,480
2009-10
SCHEDULE FORMING PART OF CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED ON 31ST MARCH 2010
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
As at 31stMarch,2010
SCHEDULE 15
ADMINISTRATION & OTHER EXPENSES
Salaries, Bonus 5,121,255Directors Remuneration 5,711,786Sitting Fees 316,000Meeting Expenses 5,714Bank Charges 2,292,511Staff Welfare Expenses 171,285Sales Tax 802,555Seminar Expenses 5,400Business & Promotion Expenses 24,128Brokerage & Commission 650,068Computers Maintenance charges 94,397Computer Software Expenses 34,998Office expense 117,465Office Rent 120,000Postage and Courier Expenses 85,450Printing and stationery 340,130Discount Allowed 102,153Donations 1,530,201Electricity Charges 431,005Advertisment Expenses 16,040,247Subscription & Membership Fees 4,990Telephone Expenses 694,512Pest control expense 17,300Warehousing Charges 1,886,283Miscelleneous Expenses 24,943Insurance Expenses 31,150Web Designing Expenses 81,180Travelling and conveyance Expenses 185,835Motar car Expense 391,907Repairs & Maintainence Charges 95,779Legal & professional Charges 940,784Listing & Processing Charges 191,275Payment to Auditors 386,050
38,928,736
SCHEDULES ANNEXED TO AND FORMING PART OFCONSOLIDATED BALANCE SHEET AS AT 31ST MARCH,2010
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2010(continued)
SCHEDULE: 16 SIGNIFICANT ACCOUNTING POLICIES
1. The consolidated financial statement (CFS) pertains to Karma Ispat Limited and its three subsidiaries. Inthe CFS, the term “Parent” refers to Karma Ispat Limited and “Group” refers to the Parent along with itssubsidiaries.
2. The CFS envisages combining of financial statements of Karma Ispat limited and its following subsidiaries.
Sr. No. Name of Subsidiary Company % voting power held by Parentas on March 31st, 2010
1. Karma Stock Trade Limited 602. Karma Commodities Limited 1003. KIL Infrastructures Limited 100
3. SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS
16.3 SIGNIFICANT ACCOUNTING POLICIES
16.3.1 Basis for Preparation of Financial StatementsThe financial statements of the Parent and its Subsidiaries have been prepared under the historical cost conventionon an accrual basis in accordance with the Generally Accepted Accounting Principles in India (“GAAP”). GAAPcomprises accounting standards as specified in Rule 3 of the Companies (Accounting Standards) Rules 2006, andthe relevant provisions of the Companies Act, 1956 to the extent applicable.
16.3.2 Use of EstimatesThe preparation of financial statements in conformity with the generally accepted accounting principles requiresmanagement to make estimates and assumptions to be made that affect the reported amount of assets and liabilitieson the date of financial statements and the reported amount of revenues and expenses during the reporting period.The difference between the actual results and estimates are recognized in the period in which results are known /materialized.
16.3.3 Principles of Consolidationi) The financial statements of the parent and its subsidiaries have been consolidated on a line by line
basis by adding together the book value of like item of assets, liabilities, income and expenses, aftereliminating intra group balance and unrealized profit/ losses on intra group transaction, and arepresented to the extent possible, in the same manner as the Parent’s independent financial statements.
ii) The excess / deficit of cost to the Parent of its investment over its portion of equity in the Subsidiaryat the respective dates on which the investment in such Subsidiary was made is recognized in CFS asgoodwill / capital reserve.
iii) Minority interest in the net assets of consolidated subsidiaries consists of the amount of equityattributable to the minority shareholders at the date on which investment are made by the companyin the subsidiary companies and further movement in their share in the equity, subsequent to the dateof investment.
16.3.4 Revenue RecognitionRevenue is recognized when it is earned and no significant uncertainty exists as to its ultimate collection. Interestincome is recognized on a time proportion basis. Dividend is recognized when right to receive is established.
16.3.5 Fixed Assets and DepreciationFixed Assets are stated at cost, after reducing accumulated depreciation and impairment upto the date of BalanceSheet. Direct costs are capitalized until the assets are ready for use and include financing costs relating to anyborrowing attributable to acquisition or construction of those fixed assets which necessarily take substantial periodof time to get ready for its intended use. Intangible assets are recorded at the consideration paid for acquisition ofsuch assets. Depreciation on fixed assets is provided at the rates and in the manner specified in Schedule XIV of the
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
Companies Act, 1956, on WDV Method by its subsidiaries and on SLM Method by the Holding Company.
16.3.6 Taxes on IncomeTax on income for the current period is determined on the basis of estimated taxable income and tax creditscomputed in accordance with the provisions of the Income Tax Act, 1961 and based on the expected outcome ofassessments / appeals.
Deferred tax is recognized on timing differences between the accounting income and the estimated taxable incomefor the year and quantified using the tax rates and laws enacted or substantially enacted as on the balance sheetdate. Deferred tax assets/Liabilities, other than brought forward business loss and unabsorbed depreciation arerecognized and carried forward to the extent there is reasonable certainty that sufficient future taxable income willbe available against which deferred tax assets/Liabilities can be adjusted.
16.3.7 Provisions, Contingent Liabilities and Contingent AssetsThe company recognizes a provision when there is a present obligation as a result of a past event that probablyrequires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosurefor a contingent liability is made when there is a present obligation that cannot be estimated reliably or a possibleor present obligation that may, but probably will not, require an outflow of resources. When there is a possibleobligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure ismade. Provisions are made for all known losses and liabilities and future unforeseeable factors that may affect theprofit of the entity. Accounting for contingencies (gains and losses) arising out of contractual obligation, are accountedon the basis of mutual acceptances. Contingent Assets are neither recognized nor disclosed. Provisions, ContingentLiabilities and Contingent Assets are reviewed at each Balance Sheet date.
16.3.8 Events Occurring After the Balance Sheet DateWhere material, events occurring after the date of the Balance Sheet are considered upto the date of approval ofaccounts by the Board of Directors
16.3.9 Impairment of AssetsManagement periodically assesses using, external and internal sources, whether there is an indication that an assetmay be impaired. An impairment loss is recognized wherever the carrying value of an asset exceeds its recoverableamount. The recoverable amount is higher of the asset’s net selling price and value in use i.e. the present value ofestimated future cash flows expected to arise from the continuing use of the asset and its eventual disposal. Animpairment loss for an asset is reversed if there has been a change in the estimates used to determine the recoverableamount since the last impairment loss was recognised. The carrying amount of an asset is increased to its revisedrecoverable amount, provided that this amount does not exceed the carrying amount that would have been determined(net of any accumulated amortization or depreciation) had no impairment loss been recognised for the asset in prioryears.
16.3.10 Earnings per shareIn determining earnings per share, the company considers the net profit after tax. The number of shares used incomputing basic earnings per share is the weighted average number of shares outstanding during the period.Diluted earnings per share are computed using the weighted average number of basic and diluted common equivalentshares outstanding during the period except where the result would be anti dilutive.
16.3.11 Cash Flow StatementCash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactionsof a non cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows fromoperating, financing and investing activities of the company are segregated.
16.3.12 InvestmentsInvestments that are readily realizable and intended to be held for not more than a year are classified as currentinvestments. All other investments are classified as long term investments.
Current investments are carried at lower of cost and fair value determined on an individual investment basis. Longterm investments are carried at cost. However, provision for diminution is made to recognize a decline, other thantemporary in nature, in the carrying amount of such long term investments.
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
16.3.13 InventoriesInventories are valued at lower of cost and net realizable value.
16.3.14 Borrowing Costi) Borrowing costs on working capital is charged to profit and loss statement in the year of incurrence.ii) Borrowing costs that are attributable to the acquisition of tangible fixed assets are capitalized till the
date of substantial completion of the activities necessary to prepare the relevant asset for its intendeduse.
iii) Borrowing costs that are attributable to the acquisition or development of intangible assets arecapitalized till the date they are put to use.
16.3.15 Employees Benefiti) Bonus is paid to all employees on yearly basis. The liability on account of bonus is provided on actual
basisii) Incentives such as mediclaim and insurance are paid for permanent employees by the Company. The
liability on account of such incentives is provided on actual basis. iii) The rules of the company do notprovide for encashment of unutilized leave.
16.4 NOTES TO FINANCIAL STATEMENTS
16.4.1 There are no Micro, Small and Medium Enterprises, as defined in the Micro, Small and Medium EnterprisesDevelopment Act, 2006 to whom the Company owes dues on account of principal amount together with interest andaccordingly no additional disclosures have been made. The above information regarding Micro, Small and MediumEnterprises has been determined to the extent such parties have been identified on the basis of the informationavailable with the company.
16.4.2 As per the best estimate of the management, no provision is required to be made as per AccountingStandard (AS 29) as notified by Companies (Accounting Standard) Rules, 2006 in respect of any present obligationas a result of a past event that could lead to probable outflow of resources, which would be required to settle theobligation.
16.4.3 Earnings per share(In Rs.)
Particulars Year ended 31stMarch, 2010a) Numerator
Profit after tax and taxation adjustments of earlieryears 99,58,331b) Denominator
Weighted average number of equity shares 330,00,000c) Earnings per equity share (EPS)
(Basic and diluted) NumeratorEPS = ……………… Denominator 0.30
d) Nominal value of equity share 10
16.4.4 In the opinion of the Board, the provisions for known liabilities are adequate and current assets in theordinary course of business have a value at least equal to the amount at which they are stated.
16.4.5 The disclosure requirements in respect of Accounting Standard 18 on “Related Party Disclosures” are asunder:List of Related PartiesName of the related party RelationshipKarma Commodities Limited Wholly owned Subsidiary CompanyKarma Stock Trade Limited Subsidiary CompanyKil Infrastructure Limited Wholly owned Subsidiary Company
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Karma Ispat Limited33rd Annual Report 2009–2010
[email protected] www.karmaispat.com
Key Management Personnel Mr. Rajesh Mehta
Individuals having control or significant influence over the Group:1. Mr. Rajesh Mehta2. Mr. Abhishek Mehta
The details of related party transactions entered into by the company, for the year ended March 31st,2010 are as follows:
Particulars Maximum Outstanding Year endedMarch 31, 2010 March 31, 2010
Capital transactions:Financial transactions LoansKarma Commodities Limited 25,25,200 50,220Karma Stock Trade Limited 2,25,220 2,25,220
16.4.6 Reconciliation between basic and dilutive shares
The reconciliation between basic and dilutive shares
ParticularsYear Year ended March 31, 2010Weighted average shares used in computing basic earnings per share 330,00,000Dilutive effect of stocks NilWeighted average shares used in computing diluted earnings per share 330,00,000
16.4.7 In accordance with the Accounting Standard (AS 28) on “Impairment of Assets” the Management during theyear carried out an exercise of identifying the assets that may have been impaired. On the basis of this reviewcarried out by the management, there was no impairment loss on fixed assets during the year ended March 31,2010.
16.4.8 There were no contingent liabilities during the period under review which were not provided for.
16.4.9 Deferred Taxation
Particulars As at March 31, 2010Opening Deferred Tax Liability 12,87,986Less: Deferred Tax Liability (Reversal) (2,65,731)Related to Fixed Assets
Add: Deferred Tax Liability 71,344Unabsorbed Depreciation
Less: Deferred Tax Asset (2,41,696)Unabsorbed Depreciation and Business Loss
Net Deferred Tax Liability / (Asset) 8,51,903
16.4.10 There are no amounts due and outstanding to be credited to Investor Education and Protection Fund.
16.4.11 Sundry debtors, Loans and Advances and creditors balances are subject to confirmation, reconciliation andconsequent adjustments, if any.
16.4.12 Auditors RemunerationParticulars 2009-10Audit Fees 1,93,025Tax Audit Fees 82,725Total 2,75,750
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Karma Ispat Limited33rd Annual Report 2009–2010
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16.4.13 Vehicle loan are secured by hypothecation of related Vehicle and Bank overdraft is secured againsthypothecation of stock and receivables.
16.4.14 Being the first year of consolidation, previous year’s figures are not provided.
FOR ARVIND DARJI ASSOCIATES
Chartered AccountantsFirm Registration No.: 100576WSd/-ARVIND M DARJIProprietorMembership No.: 41748
Place :MUMBAIDate : 31st May, 2010
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Sd/-RAJESH MEHTAManaging DirectorSd/-HEMANG SAMPATDirector
Place :MUMBAIDate : 31st May, 2010
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Karma Ispat Limited33rd Annual Report 2009–2010
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Statement pursuant to section 212 of the Companies Act 1956Relating to subsidiary companies for the financial year
Name of Subsidiary KarmaCommodities Ltd
Karma StockTrade Ltd
KILInfrastructure Ltd
Financial period ended
Holding company’s interest as at 31st March2010
Shares held by the holding company in thesubsidiary
Net aggregate profits / losses of thesubsidiary for the current period so far as itconcerns the members of the holdingcompany
Dealt with or provided for in the accounts ofthe holding company
Not dealt with or provided for in the accountsof the holding company
Net aggregate profits / losses for previousfinancial years of the subsidiary so far as itconcerns the members of the holdingcompany
Dealt with or provided for in the accounts ofthe holding company
Not dealt with or provided for in the accountsof the holding company
1
2
3
4
a)
b)
5
a)
b)
March 31,2010
100%
50,000
-
-
-
-
-
-
March 31,2010
100%
1,000,000
-
-
215,287
-
-
-
March 31,2010
60%
3,180,000
-
-
(192,065)
-
-
-
FOR ARVIND DARJI ASSOCIATES
Chartered AccountantsFirm Registration No.: 100576WSd/-ARVIND M DARJIProprietorMembership No.: 41748
Place :MUMBAIDate : 31st May, 2010
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Sd/-RAJESH MEHTAManaging DirectorSd/-HEMANG SAMPATDirector
Place :MUMBAIDate : 31st May, 2010
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Annual Report 2009–2010
[email protected] www.karmaispat.com
Karma Commodities Limited
AUDITORS’ REPORT
Auditors’ Report to the Members of KARMA COMMODITIES LIMITED We have audited the attachedBalance Sheet of KARMA COMMODITIES LIMITED, as at 31st March 2010, the Profit and LossAccount for the period ended on that date annexed thereto. These financial statements are theresponsibility of the Company’s management. Our responsibility is to express an opinion on thesefinancial statements based on our audit.
We conducted our audit in accordance with the auditing standards generally accepted in India. ThoseStandards require that we plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free of material misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significant estimates made by management, aswell as evaluating the overall financial statement presentation. We believe that our audit provides areasonable basis for our opinion.
As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government ofIndia in terms of sub section (4A) of section 227 of the Companies Act, 1956, we enclose in theAnnexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order.
Further to our comments in the Annexure referred to above, we report that:
(i) We have obtained all the information and explanations, which to the best of our knowledge andbelief were necessary for the purpose of our audit;
(ii) In our opinion, proper books of account as required by law have been kept by the company so faras appears from our examination of those books;
(iii)The Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this reportare in agreement with the books of account;
(iv)In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealtwith by this report comply with the accounting standards referred to in sub section (3C) of section211 of the Companies Act, 1956;
(v) On the basis of written representations received from the directors, as on 31st March, 2010 andtaken on record by the Board of Directors, we report that none of the directors is disqualified as on31st March, 2010 from being appointed as a director in terms of clause (g) of sub section (1) ofsection 274 of the Companies Act, 1956;
(vi)In our opinion and to the best of our information and according to the explanations given to us,the said accounts give the information required by the Companies Act, 1956, in the manner sorequired and give a true and fair view in conformity with the accounting principles generallyaccepted in India:
(a) In the case of the Balance Sheet, of the state of affairs of the company as at 31st March, 2010;(b) In the case of the Profit and Loss Account, of the loss for the period ended on that date.(c) In the case of the Cash Flow Statement, of the Cash Flows for the period ended on that date.
FOR ARVIND DARJI ASSOCIATESChartered AccountantsFirm Registration No. 100576WSd/-ARVIND M DARJIProprietorMembership No.: 41748
Place: MUMBAIDate : 30th April, 2010
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Annual Report 2009–2010
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Karma Commodities Limited
ANNEXURE TO THE AUDITORS’ REPORT
The Annexure referred to in the auditors’ report to the members of Karma Commodities Limited for theperiod ended 31st March, 2010. We report that:
(i) (a) The company has maintained proper records showing full particulars, including quantitative detailsand situation of fixed assets.
(b) The fixed assets have been physically verified by the management, in accordance with a phasedprogramme of verification which, in our opinion, is reasonable, considering the size of the Companyand nature of its assets. No material discrepancies were noticed on such verification.
(c) During the year, the company has not disposed off any part of the fixed assets.
(ii) According to the information and explanations given to us, the Company did not have any inventoryduring the year.
(iii) (a) The Company has not granted any loan, secured and unsecured, to companies, firms or otherparties covered in the register maintained under section 301 of the Companies Act, 1956.
(b) The Company has taken an unsecured interest free loan from 3 parties listed in the registerunder section 301 of the Companies Act, 1956. The total maximum amount outstanding duringthe year is Rs. 35,42,220 and the balance as at year end is Rs 67,220.
(c) In our opinion, and according to the information and explanations given to us, the terms andconditions of the aforesaid loans are prima facie not prejudicial to the interest of the Company.
(d) There is no stipulation as regards payment of principal amounts.
(iv) In our opinion and according to the information and explanations given to us, there are adequateinternal control procedures commensurate with the size of the company and the nature of its business.During the course of our audit, we have not observed any continuing failure to correct major weaknessesin internal control systems.
(v) (a) In our opinion and according to the information and explanations given to us, the particulars ofcontract or arrangements referred to in Section 301 of the Act have been so entered in theregister required to be maintained under that section.
(b) In our opinion and according to the information and explanations given to us, the Company doesnot have any transaction made in pursuance of contracts or arrangements entered in the registermaintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees fivelakhs in respect of any party during the year.
(vi) The company has not accepted any deposits under the provisions of Sections 58A and 58AA of theAct and the rules framed there under.
(vii) The Company does not have formal internal audit system. Internal audit is carried out by in housestaff. In our opinion, there is a scope for further improvement in the internal audit system.
(viii) To the best of our knowledge and according to the information and explanations given to us, theCentral Government has not prescribed any rules for the maintenance of cost records under section209(1) (d) of the Companies Act, 1956.
(ix) (a) According to the information and explanations given to us, and the records of the Companyexamined by us, in our opinion, the company is generally regular in depositing the undisputedstatutory dues, including provident fund, investor education and protection fund, employees’state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cessand other material statutory dues as applicable, with appropriate authorities.
(b) (i) According to the information and explanations given to us and the records of the Companyexamined by us, no undisputed amounts payable in respect of income tax, and cess were in
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Annual Report 2009–2010
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arrears, as at 31st March 2010 for a period of more than six months from the date theybecame payable.
(ii) According to the information and explanations given to us, there are no dues of sales tax,income tax, custom duty, wealth tax, excise duty and cess which have not been deposited onaccount of any dispute.
(x) The Company has not yet completed a period of 5 years since incorporation; accordingly reportingunder this clause is not applicable.
(xi) In our opinion and according to the information and explanations given to us, the Company has notobtained any borrowings from banks, financial institutions or by way of debentures.
(xii) The Company has not granted loans and advances on the basis of security by way of pledge ofshares, debentures and other securities.
(xiii) In our opinion the Company is not a Chit Fund Company or Nidhi / Mutual Benefit Fund / Society.Therefore the paragraph 4 (xiii) Order is not applicable to the Company.
(xiv) In our opinion, the Company has maintained proper records of transactions and contracts relating todealing or trading in shares, securities, debentures and other investments during the year and timelyentries have been made therein. Further, such securities have been held by the Company in its ownname.
(xv) According to the information and explanations given to us, the Company has not given any guaranteefor loans taken by others from banks or financial institutions, during the year.
(xvi) The Company has not raised any term loan during the year under consideration.
(xvii) According to the information and explanations given to us, and on an overall examination of thebalance sheet of the company, we report that no fund raised on short basis have been used for longterm investment during the year.
(xviii) According to the information and explanations given to us, the Company has made preferentialallotment of shares to parties and companies covered in the Register maintained under Section 301of the Companies Act, 1956. The details of the same are as under:
Name of the relatedparty Relationship Number of equity sharesKarma Ispat Limited Holding Company 10,00,000
In our opinion, the prices at which the shares have been issued are not prejudicial to the interest of theCompany.(xix) As per the information and explanations given to us, the Company has not issued any debenture.
(xx) The company has not raised any money by public issue during the year, and hence paragraph 4(xx)of the Order is not applicable.
(xxi) During the course of our examination of the books and records of the Company, carried out inaccordance with generally accepted auditing practices in India, and according to the information andexplanations given to us, we have neither come across any instances of material fraud on or by theCompany, noticed or reported during the year, nor have been informed of such case by management.
For Arvind Darji AssociatesChartered AccountantsFirm Registration No.: 100576WSd/-Arvind M DarjiProprietorMembership No. 041748Place: MumbaiDate : 30th April, 2010
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Annual Report 2009–2010
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Karma Commodities Limited
Balance Sheet as at 31st March 2010
Particulars Schedules As At 31/03/2010
SOURCES OF FUNDS
Shareholders’ Fund :Share Capital A 10,000,000
Borrowed FundsUnsecured Loans B 244,343
10,244,343APPLICATION OF FUNDSFixed Assets COriginal Cost 5,773,064Less: Accumulated Depreciation 109,143Net book value 5,663,921
Deferred Tax Asset 241,696
Current Assets, Loans and AdvancesCash and Bank balances D 1,432,676Loans and Advances E 3,105,317
4,537,993Less: Current Liabilities and ProvisionsCurrent Liabilities F 547,508
547,508
Net Current Assets 3,990,485
Miscelleneous Expenditure(To the extent not written off)Preliminary Expenses 156,176Profit And Loss Account (Debit Balance) 192,066
10,244,343
Significant Accounting Policies and Notes to Accounts H
FOR ARVIND DARJI ASSOCIATES
Chartered AccountantsFirm Registration No.: 100576WSd/-ARVIND M DARJIProprietorMembership No.: 41748
Place :MUMBAIDate : 30th April, 2010
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Sd/-ABHISHEK MEHTADirectorSd/-ASHWIN SHAHDirector
Place :MUMBAIDate : 30th April, 2010
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Annual Report 2009–2010
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Karma Commodities Limited
Profit and Loss Account for the period ended 31st March 2010
Particulars Schedules 2009-10
Income
Revenues from business activity 1,200
Other income 8,846
TOTAL 10,046
Less: Expenditure
General and Administration Expenses G 295,620
Preliminary Expenses W/Off 39,044
TOTAL 334,664
Net Profit/ (Loss) Before Depreciation (324,618)
Less: Depreciation 109,143
Net Profit/(Loss) before Tax (433,762)
Add: Provision for Deferrred Tax Asset 241,696
Net Profit/(Loss) after Tax (192,066)
Balance Brought Forward -
Net Profit/(Loss) carried to Balancesheet (192,066)
EARNING PER SHARE
Basic (Rs.) (0.19)
Diluted (Rs.) (0.19)
Face value per share of Rs. 10
Significant Accounting Policies and Notes to Accounts H
FOR ARVIND DARJI ASSOCIATES
Chartered AccountantsFirm Registration No.: 100576WSd/-ARVIND M DARJIProprietorMembership No.: 41748
Place :MUMBAIDate : 30th April, 2010
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Sd/-ABHISHEK MEHTADirectorSd/-ASHWIN SHAHDirector
Place :MUMBAIDate : 30th April, 2010
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Annual Report 2009–2010
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Karma Commodities Limited
A) CASH FLOW FROM OPERATING ACTIVITIESNet Profit / (loss) before Taxes (192,066)Adjustments forDepreciation 109,143Deferred Tax Asset (241,696)Preliminary Expenses W/Off (156,176)Interest Income (8,846)
Operating Profit before Working Capital Changes (489,640)Adjustments forLoan & Advances (3,105,317)Sundry Creditors 547,508Net cash from operating activities (3,047,449)
B) CASH FLOW FROM INVESTING ACTIVITIESPurchase of Fixed Assets (5,773,064)Interest Income 8,846Net cash from investing activities (5,764,218)
C) CASH FLOW FROM FINANCING ACTIVITIESIncrease/(Decrease) Long Term borrowing 244,343Issue of Equity Shares 10,000,000
Net cash from financing activities 10,244,343
NET CHANGE IN CASH AND CASH EQUIVALENT (A+B+C) 1,432,676CASH AND CASH EQUIVALENT AS AT 11.12.2008 -CASH AND CASH EQUIVALENT AS AT 31.03.2010 1,432,676
Cash Flow Statement for the period ended 31st March,2010
Particulars Period Ended31st March 2010
FOR ARVIND DARJI ASSOCIATES
Chartered AccountantsFirm Registration No.: 100576WSd/-ARVIND M DARJIProprietorMembership No.: 41748
Place :MUMBAIDate : 30th April, 2010
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Sd/-ABHISHEK MEHTADirectorSd/-ASHWIN SHAHDirector
Place :MUMBAIDate : 30th April, 2010
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Annual Report 2009–2010
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Karma Commodities Limited
Schedule to Balance Sheet as at 31st March 2010
A. Share CapitalAuthorised10,00,000 Equity Shares of Rs.10/ each 10,000,000
Issued, Subscribed and Paid up10,00,000 Equity Shares of Rs.10/ each fully paid up 10,000,000(Of the above all shares are held by Karma Ispat Ltd,the company’s holding company)
10,000,000B. Unsecured LoansIntercorporate Loan* 244,343(* Of the above Rs 50,220, are received from Karma Ispat Ltd,the company’s holding company)
244,343
Particulars As at 31/3/2010
SCHEDULE - C
FIXED ASSETS
D. Cash and Bank BalancesCash on Hand 1,000Balance with Schedule Banksa) in current account 423,715b) in deposit account 1,007,961
1,432,676E. Loans and AdvancesPrepaid Expenses 304,432Deposits with Exchanges 2,800,000TDS on interest 885
3,105,317
F. Current LiabilitiesSundry CreditorsFor capital goods 456,178For expenses 79,497For other liabilitiesTaxes and other payables 11,833
547,508
Particulars As at 31/3/2010
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Annual Report 2009–2010
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Schedule G: General and Administration ExpensesBank Charges 50,816Annual Maintenance charges (AMC) 67,987Printing & Stationery 35,124Audit fees Exam 55,150fees Insurance 1,800Charges 2,570Processing Fees 15,994Website Development & Designing Expenses 66,180
295,620
Particulars 2009-10
Schedule to Profit and Loss Account for the period ended 31st March 2010
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Annual Report 2009–2010
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SCHEDULES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED MARCH 31, 2010 (continued)
SCHEDULE H: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS
Company Overview
Karma Commodities Ltd (“KCL”) was incorporated on December 11, 2008 to carry on the business in all kinds ofcommodity trading and act as broker on the bourses or stock exchanges in India and other countries of the world forthe sale and purchase of all kinds of commodities, futures, options, forward contract, hedging, arbitrage, and allother kinds of commodity trading and products dealt on the exchanges like gold, silver, precious metals, spices andothers commodities and their index. KCL is wholly owned and controlled subsidiary of Karma Ispat Ltd. During theperiod under consideration, KCL has obtained membership from MCX and from Indian Commodity Exchange Limited(ICEX) as a trading cum clearing member.
H. 1 SIGNIFICANT ACCOUTING POLICIES
H.1.1 Basis of preparation of financial statementsThe financial statements are prepared under the historical cost convention on an accrual basis in accordance withthe Generally Accepted Accounting Principles in India (“GAAP”). GAAP comprises accounting standards as specifiedin Rule 3 of the Companies (Accounting Standards) Rules 2006, and the relevant provisions of the Companies Act,1956 to the extent applicable.
H.1.2 Use of EstimatesThe preparation of financial statements in conformity with the generally accepted accounting principles requiresmanagement to make estimates and assumptions to be made that affect the reported amount of assets and liabilitieson the date of financial statements and the reported amount of revenues and expenses during the reporting period.The difference between the actual results and estimates are recognized in the period in which results are known /materialized.
H.1.3 Revenue RecognitionRevenue is recognized when it is earned and no significant uncertainty exists as to its ultimate collection. Interestincome is recognized on a time proportion basis. Dividend is recognized when right to receive is established.
H.1.4 Fixed Assets and DepreciationFixed Assets are stated at cost, after reducing accumulated depreciation and impairment upto the date of BalanceSheet. Direct costs are capitalized until the assets are ready for use and include financing costs relating to anyborrowing attributable to acquisition or construction of those fixed assets which necessarily take substantial periodof time to get ready for its intended use. Intangible assets are recorded at the consideration paid for acquisition ofsuch assets. Depreciation on fixed assets is provided at the rates and in the manner specified in Schedule XIV of theCompanies Act, 1956, on WDV Method.
H.1.5 Taxes on IncomeTax on income for the current period is determined on the basis of estimated taxable income and tax creditscomputed in accordance with the provisions of the Income Tax Act, 1961 and based on the expected outcome ofassessments / appeals.
Deferred tax is recognized on timing differences between the accounting income and the estimated taxable incomefor the year and quantified using the tax rates and laws enacted or substantially enacted as on the balance sheetdate. Deferred tax assets/Liabilities, other than brought forward business loss and unabsorbed depreciation arerecognized and carried forward to the extent there is reasonable certainty that sufficient future taxable income willbe available against which deferred tax assets/Liabilities can be adjusted.
H.1.6 Provisions, Contingent Liabilities and Contingent AssetsThe company recognizes a provision when there is a present obligation as a result of a past event that probablyrequires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosurefor a contingent liability is made when there is a present obligation that cannot be estimated reliably or a possibleor present obligation that may, but probably will not, require an outflow of resources. When there is a possible
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Annual Report 2009–2010
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obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure ismade. Provisions are made for all known losses and liabilities and future unforeseeable factors that may affect theprofit of the entity. Accounting for contingencies (gains and losses) arising out of contractual obligation, are accountedon the basis of mutual acceptances. Contingent Assets are neither recognized nor disclosed. Provisions, ContingentLiabilities and Contingent Assets are reviewed at each Balance Sheet date.
H.1.7 Events Occurring After the Balance Sheet DateWhere material, events occurring after the date of the Balance Sheet are considered upto the date of approval ofaccounts by the Board of Directors
H.1.8 Impairment of AssetsManagement periodically assesses using, external and internal sources, whether there is an indication that an assetmay be impaired. An impairment loss is recognized wherever the carrying value of an asset exceeds its recoverableamount. The recoverable amount is higher of the asset’s net selling price and value in use i.e. the present value offuture cash flows expected to arise from the continuing use of the asset and its eventual disposal. An impairmentloss for an asset is reversed if there has been a change in the estimates used to determine the recoverable amountsince the last impairment loss was recognised. The carrying amount of an asset is increased to its revised recoverableamount, provided that this amount does not exceed the carrying amount that would have been determined (net ofany accumulated amortization or depreciation) had no impairment loss been recognised for the asset in prior years.
H.1.9 Earnings per shareIn determining earnings per share, the company considers the net profit after tax. The number of shares used incomputing basic earnings per share is the weighted average number of shares outstanding during the period.Diluted earnings per share are computed using the weighted average number of basic and diluted common equivalentshares outstanding during the period except where the result would be anti dilutive.
H.1.10 Cash Flow StatementCash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactionsof a non cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows fromoperating, financing and investing activities of the company are segregated.
H.2 NOTES TO FINANCIAL STATEMENTS
H.2.1 There are no Micro, Small and Medium Enterprises, as defined in the Micro, Small and Medium EnterprisesDevelopment Act, 2006 to whom the Company owes dues on account of principalamount together with interest and accordingly no additional disclosures have been made. The above informationregarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identifiedon the basis of the information available with the company.
H.2.2 The timing differences relates to unabsorbed depreciation and carried forward losses, results in a deferredtax asset as per AS 22 on “Accounting for taxes on Income”. Deferred tax asset has been recognised in respect ofbusiness losses as there is virtual certainty supported by convincing evidence that sufficient future taxable incomewill be available against which deferred tax asset can be realized.
Particulars As at March 31, 2010Deferred Tax Assets:Unabsorbed Depreciation 3,48,425Unabsorbed Business loss 4,33,762Total 7,82,187Net Deferred Tax Liability / (Asset) (2,41,696)
H.2.3 As per the best estimate of the management, no provision is required to be made as per AccountingStandard (AS 29) as notified by Companies (Accounting Standard) Rules, 2006 in respect of any present obligationas a result of a past event that could lead to probable outflow of resources, which would be required to settle theobligation.
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Annual Report 2009–2010
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H.2.4 Earnings per share(In Rs.)
Particulars Period ended31stMarch, 2010
a) Numerator Profit after tax and taxation adjustments of earlier years (1,92,066)b) Denominator Weighted average number of equity shares 10,00,000c) Earnings per equity share (EPS) (Basic and diluted) Numerator EPS = ……………… Denominator (0.19)d) Nominal value of equity share 10
H.2.5 Outstanding dues from the Company’s under same management(In Rs.)
Name of the Relationship Balance as at MaximumCompany March 31, 2010 Outstanding
March 31, 2010Karma Ispat Ltd Holding Company 50,220 25,25,200KIL Infrastructure Ltd Subsidiary of 17,000 17,000
Holding Company
H.2.6 Intangibles The intangibles comprises of the following:
(In Rs.)Particulars AmountLife Membership Fees MCX 32,71,661Membership Application Money ICX 1,93,025Membership Application NCDEX sport exchange Ltd 1,10,000Membership Application NMCE 1,00,000Membership Reliance spot exchange Ltd 11,000National Commodity & Derivatives Exchange Ltd 5,51,500TOTAL 42,37,186
The management is of opinion that above assets are having enduring life and hence amortization is not done.
H.2.7 In the opinion of the Board, the provisions for known liabilities are adequate and current assets in theordinary course of business have a value at least equal to the amount at which they are stated.
H.2.8 The disclosure requirements in respect of Accounting Standard 18 on “Related Party 2Disclosures” are asunder:
List of Related PartiesName of the related party RelationshipKarma Ispat Limited Holding CompanyKarma Stock Trade Ltd Subsidiary of Holding CompanyKil Infrastructure Ltd# Subsidiary of Holding Company# wholly owned subsidiary company of Karma Ispat Ltd
List of Key Management PersonnelName of the related party DesignationAbhishek Mehta Director
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Annual Report 2009–2010
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The details of related party transactions entered into by the company, for the period endedMarch 31st, 2010 are as follows:
Particulars Maximum Outstanding Period endedMarch 31, 2010 31st March, 2010
Capital transactions:Financial transactionsLoans takenKarma Ispat Ltd 25,25,200 50,220KIL Infrastructure Ltd 17,000 17,000Abhishek Mehta 10,00,000 Nil
H.2.9 Reconciliation between basic and dilutive shares
The reconciliation between basic and dilutive shares
Particulars Period ended31st March, 2010
Weighted average shares used in computing basic earnings per share 10,00,000Dilutive effect of stocks NilWeighted average shares used in computing diluted earnings per share 10,00,000
H.2.10 In accordance with the Accounting Standard (AS 28) on “Impairment of Assets” the Management during theyear carried out an exercise of identifying the assets that may have been impaired. On the basis of this reviewcarried out by the management, there was no impairment loss on fixed assets during the year ended March 31,2010.
H.2.11 Loans and advancesLoans and advances majorly comprises of deposits with exchanges. The break up of which comprises of:
Particulars Period ended31st March, 2010
Indian Commodities Exchange Limited 2,50,000Multi Commodities Exchange Limited 18,50,000National Multi Commodity Exchange of India 7,00,000
H.2.12 As mentioned earlier (refer first paragraph to the notes to account), during the year company has obtainedmembership from MCX and Indian Commodity Exchange Limited (ICEX). As per stipulations with Exchanges, theCompany has made fixed deposits with the Bank. However, no clarity has been made towards entitlement of interestand hence the same is not recognized by the Company.
H.2.13 Being the first year of Company, previous year’s figures are not provided.
H.2.14 Additional Information as required under Part IV of Schedule VI to the Companies Act, 1956.
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Annual Report 2009–2010
[email protected] www.karmaispat.com
Karma Commodities Limited
I Registration Details
Registration No. 188814
Balance Sheet Date 31/03/2010 State Code 011
II Capital raised during the year (Amount in Rs. Thousands)
Public Issue NIL Rights Issue NIL
Bonus Issue NIL Private Placement 10,000
III Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)
Total Liabilities 10244 Total Assets 10244
Sources of Funds Application of Funds
Paid up Capital 10,000.00 Fixed Assets 5,663.92
Reserves & Surplus NIL Investments NIL
Secured Loans NIL Deferred Tax 241.70
Unsecured Loans 244.34 Net Current Assets 3,990.49
Misc Expenses 156.18
Accumulated Losses 192.07
IV Performance of the Company
Turnover (including other income) 10.05 Total Expenditure 443.81
Profit / (Loss) Before Tax (433.76) Profit / (Loss) After Tax (192.07)
Earning Per Share in Rs. (0.19) Dividend rate % NIL
V Generic Names of Three Principal Products / Services of Company (as per Monetary Terms) NA
Products Description ITEM CODE NO. (ITC CODE)
Land Procurement NIL
Balance Sheet Abstract and Company’s General Business Profile:
FOR ARVIND DARJI ASSOCIATES
Chartered AccountantsFirm Registration No.: 100576WSd/-ARVIND M DARJIProprietorMembership No.: 41748
Place :MUMBAIDate : 30th April, 2010
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Sd/-ABHISHEK MEHTADirectorSd/-ASHWIN SHAHDirector
Place :MUMBAIDate : 30th April, 2010
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Annual Report 2009–2010
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KIL Infrastructure Limited
AUDITORS’ REPORT
Auditors' Report to the Members of KIL INFRASTRUCTURES LIMITED
We have audited the attached Balance Sheet of KIL INFRASTRUCTURES LIMITED, as at 31st March2010, and the Cash Flow for the period ended on that date annexed thereto. These financial statementsare the responsibility of the Company's management. Our responsibility is to express an opinion onthese financial statements based on our audit.
We conducted our audit in accordance with the auditing standards generally accepted in India. ThoseStandards require that we plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free of material misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significant estimates made by management, aswell as evaluating the overall financial statement presentation. We believe that our audit provides areasonable basis for our opinion.
As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government ofIndia in terms of sub?section (4A) of section 227 of the Companies Act, 1956, we enclose in theAnnexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order.
Further to our comments in the Annexure referred to above, we report that:
(i) We have obtained all the information and explanations, which to the best of our knowledge andbelief were necessary for the purpose of our audit;
(ii) In our opinion, proper books of account as required by law have been kept by the company so faras appears from our examination of those books;
(iii)The Balance Sheet and the Cash Flow Statement dealt with by this report are in agreement withthe books of account;
(iv)In our opinion, the Balance Sheet and the Cash Flow Statement dealt with by this report complywith the accounting standards referred to in sub?section (3C) of section 211 of the CompaniesAct, 1956;
(v) On the basis of written representations received from the directors, as on 31st March, 2010 andtaken on record by the Board of Directors, we report that none of the directors is disqualified as on31st March, 2010 from being appointed as a director in terms of clause (g) of sub?section (1) ofsection 274 of the Companies Act, 1956;
(vi)In our opinion and to the best of our information and according to the explanations given to us,the said accounts give the information required by the Companies Act, 1956, in the manner sorequired and give a true and fair view in conformity with the accounting principles generallyaccepted in India:
(a) In the case of the Balance Sheet, of the state of affairs of the company as at 31st March, 2010;(b) in the case of the Cash Flow Statement, of the Cash Flows for the period ended on that date.
FOR ARVIND DARJI ASSOCIATESChartered AccountantsFirm Registration No. 100576WSd/-ARVIND M DARJIProprietorMembership No.: 41748
Place: MUMBAIDate : 31st May, 2010
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Annual Report 2009–2010
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KIL Infrastructure Limited
ANNEXURE TO THE AUDITORS’ REPORT
The Annexure referred to in the auditors' report to the members of Kil Infrastructures Limited for theperiod ended 31st March, 2010. We report that:
(i) Having regard to the nature of the Company's business / activities / result, clauses (i), (ii) of CAROare not applicable.
(iii) (a) The Company has granted unsecured interest free loan to 1 party covered in the register maintainedunder section 301 of the Companies Act, 1956. The maximum amount involved during the yearwas Rs 17,000 and the year end balance of loans granted to such parties was Rs 17,000.
(b) In our opinion, and according to the information and explanations given to us, the terms andconditions of the aforesaid loans are prima facie not prejudicial to the interest of the Company.
(c) There is no stipulation as regards payment of principal amounts.
(d) Since the overdue amount is not more than rupees one lakh, this clause is not applicable to theCompany.
(e) The Company has not taken any loans, secured and unsecured, from companies, firm or otherparties covered in the register maintained under section 301 of the Companies Act, 1956 andhence reporting under clause (iii) (f) and (g) are not applicable.
(iv) In our opinion and according to the information and explanations given to us, there are adequateinternal control procedures commensurate with the size of the company and the nature of its business.During the course of our audit, we have not observed any continuing failure to correct major weaknessesin internal control systems.
(v) (a) In our opinion and according to the information and explanations given to us, the particulars ofcontract or arrangements referred to in Section 301 of the Act have been so entered in theregister required to be maintained under that section.
(b) In our opinion and according to the information and explanations given to us, the Company doesnot have any transaction made in pursuance of contracts or arrangements entered in the registermaintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees fivelakhs in respect of any party during the year.
(vi) The company has not accepted any deposits under the provisions of Sections 58A and 58AA of theAct and the rules framed there under.
(vii) The Company does not have formal internal audit system. Internal audit is carried out by in housestaff.
(viii) To the best of our knowledge and according to the information and explanations given to us, theCentral Government has not prescribed any rules for the maintenance of cost records under section209(1)(d) of the Companies Act, 1956.
(ix) The Company has not yet started its operational activities and hence reporting under this clause isnot applicable.
(x) The Company has not yet completed a period of 5 years since incorporation; accordingly reportingunder this clause is not applicable.
(xi) In our opinion and according to the information and explanations given to us, the Company has notobtained any borrowings from banks, financial institutions or by way of debentures.
(xii)The Company has not granted loans and advances on the basis of security by way of pledge of shares,debentures and other securities.
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Annual Report 2009–2010
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KIL Infrastructure Limited
(xiii) In our opinion the Company is not a Chit Fund Company or Nidhi / Mutual Benefit Fund / Society.Therefore the paragraph 4 (xiii) Order is not applicable to the Company.
(xiv) The Company has not yet started its operational activities and hence reporting under this clause isnot applicable.
(xv) According to the information and explanations given to us, the Company has not given any guaranteefor loans taken by others from banks or financial institutions, during the year.
(xvi) The Company has not raised any term loan during the year under consideration.
(xvii) According to the information and explanations given to us, and on an overall examination of thebalance sheet of the company, we report that no fund raised on short basis have been used for longterm investment during the year.
(xviii) The Company has not made any preferential allotment of shares to parties and companies coveredin the register maintained under section 301 of the Act during the year.
(xix) As per the information and explanations given to us, the Company has not issued any debenture.
(xx) The company has not raised any money by public issue during the period, and hence paragraph 4(xx)of the Order is not applicable.
(xxi) During the course of our examination of the books and records of the Company, carried out inaccordance with generally accepted auditing practices in India, and according to the information andexplanations given to us, we have neither come across any instances of material fraud on or by theCompany, noticed or reported during the year, nor have been informed of such case by management.
FOR ARVIND DARJI ASSOCIATESChartered AccountantsFirm Registration No. 100576W
Sd/-ARVIND M DARJIProprietorMembership No.: 41748
Place: MUMBAIDate : 31st May, 2010
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Annual Report 2009–2010
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KIL Infrastructure Limited
Balance Sheet as at 31st March 2010
Particulars Schedules As At 31/03/2010
I. SOURCES OF FUNDSShareholders’ FundShare Capital A 500,000
500,000
II. APPLICATION OF FUNDSCurrent Assets, Loans and AdvancesCurrent AssetsLoans & Advances B 257,577
17,000274,577
Less: Current Liabilities and ProvisionsCurrent Liabilities C 55,150
55,150
Net Current Assets 219,427
Miscellaneous Expenditure(To the extent not written off or adjusted)Preliminary Expenses 206,880Expenditure prior to commencement of Business D 73,693
500,000
Significant Accounting Policies and Notes to Accounts E
FOR ARVIND DARJI ASSOCIATES
Chartered AccountantsFirm Registration No.: 100576WSd/-ARVIND M DARJIProprietorMembership No.: 41748
Place :MUMBAIDate : 31st May, 2010
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Sd/-RAJESH MEHTADirectorSd/-HEMANG SAMPATDirector
Place :MUMBAIDate : 31st May, 2010
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Annual Report 2009–2010
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KIL Infrastructure Limited
Cash Flow Statement for the period ended 31st March,2010
Particulars
A) CASH FLOW FROM OPERATING ACTIVITIES
Net Profit / (loss) before Taxes -
Adjustments for
Preliminary Expenses W/Off (206,880)
Expenditure prior to commencement of Business (73,693)
Loan & Advances (17,000)
Sundry Creditors 55,150
Net cash from operating activities (242,423)
B) CASH FLOW FROM FINANCING ACTIVITIES
Issue of Equity Shares 500,000
Net cash from financing activities 500,000
C) NET CHANGE IN CASH AND CASH EQUIVALENT (A+B) 257,577
CASH AND CASH EQUIVALENT AS AT Incorporation of the Company -
CASH AND CASH EQUIVALENT AS AT 31.03.2010 257,577
As At 31/03/2010
FOR ARVIND DARJI ASSOCIATES
Chartered AccountantsFirm Registration No.: 100576WSd/-ARVIND M DARJIProprietorMembership No.: 41748
Place :MUMBAIDate : 31st May, 2010
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Sd/-RAJESH MEHTADirectorSd/-HEMANG SAMPATDirector
Place :MUMBAIDate : 31st May, 2010
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Annual Report 2009–2010
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KIL Infrastructure Limited
Schedule to Balance Sheet as at 31st March 2010
A. SHARE CAPITAL
Authorised :
10,00,000 Equity Shares of Rs.10/- each 10,000,000
Issued, Subscribed and Paid up
50,000 Equity Shares of Rs.10/ each fully paid up 500,000
500,000
B. Current Assets, Loans and Advances
Current Assets
Balance in Schedule Bank in Current Account 29,497
Cash in hand 228,080
257,577
Loans & Advances
Loan to corporates 17,000
17,000
C. Current Liabilities and Provisions
Current Liabilities
Tds Payable 5,515
Creditors for Expenses 49,635
55,150
D. Expenditure prior to Commencement of Business
Audit Fees 55,150
Bank Charges 179
Digital Signature 2,400
Printing & Stationery 15,964
73,693
Particulars As at 31/3/2010
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Annual Report 2009–2010
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KIL Infrastructure Limited
SCHEDULES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED MARCH 31, 2010 (continued)
SCHEDULE E: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS Company OverviewKil Infrastructures Limited (“KIL”) was incorporated on 24 July, 2009 to carry on infrastructure activity. KIL is whollyowned and controlled by Karma Ispat Ltd. During the period under consideration, KIL has not started any operationalactivity.
E. 1 SIGNIFICANT ACCOUTING POLICIES
E.1.1 Basis of preparation of financial statementsThe financial statements are prepared under the historical cost convention on an accrual basis in accordance withthe Generally Accepted Accounting Principles in India (“GAAP”). GAAP comprises accounting standards as specifiedin Rule 3 of the Companies (Accounting Standards) Rules 2006, and the relevant provisions of the Companies Act,1956 to the extent applicable.
E.1.2 Use of EstimatesThe preparation of financial statements in conformity with the generally accepted accounting principles requiresmanagement to make estimates and assumptions to be made that affect the reported amount of assets and liabilitieson the date of financial statements and the reported amount of revenues and expenses during the reporting period.The difference between the actual results and estimates are recognized in the period in which results are known /materialized.
E.1.3 Provisions, Contingent Liabilities and Contingent AssetsThe company recognizes a provision when there is a present obligation as a result of a past event that probablyrequires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosurefor a contingent liability is made when there is a present obligation that cannot be estimated reliably or a possibleor present obligation that may, but probably will not, require an outflow of resources. When there is a possibleobligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure ismade. Provisions are made for all known losses and liabilities and future unforeseeable factors that may affect theprofit of the entity. Accounting for contingencies (gains and losses) arising out of contractual obligation, are accountedon the basis of mutual acceptances. Contingent Assets are neither recognized nor disclosed. Provisions, ContingentLiabilities and Contingent Assets are reviewed at each Balance Sheet date.
E.1.4 Events Occurring After the Balance Sheet DateWhere material, events occurring after the date of the Balance Sheet are considered upto the date of approval ofaccounts by the Board of Directors
E.1.5 Cash Flow StatementCash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactionsof a non cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows fromoperating, financing and investing activities of the company are segregated.
E.2 NOTES TO FINANCIAL STATEMENTS
E.2.1 There are no Micro, Small and Medium Enterprises, as defined in the Micro, Small and Medium EnterprisesDevelopment Act, 2006 to whom the Company owes dues on account of principal amount together with interest andaccordingly no additional disclosures have been made. The above information regarding Micro, Small and MediumEnterprises has been determined to the extent such parties have been identified on the basis of the informationavailable with the company.
E.2.2 As per the best estimate of the management, no provision is required to be made as per AccountingStandard (AS 29) as notified by Companies (Accounting Standard) Rules, 2006 in respect of any present obligationas a result of a past event that could lead to probable outflow of resources, which would be required to settle theobligation.
E.2.3 In the opinion of the Board, the provisions for known liabilities are adequate and current assets in theordinary course of business have a value at least equal to the amount at which they are stated.
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Annual Report 2009–2010
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KIL Infrastructure Limited
E.2.4 The disclosure requirements in respect of Accounting Standard 18 on “Related Party Disclosures” are asunder:
List of Related Parties
Name of the Related Party RelationshipKarma Ispat Limited Holding CompanyKarma Commodities Ltd Subsidiary of Holding Company
List of Key Management Personnel
Name of the Related Party DesignationRajesh Mehta DirectorHemang Sampat Director
The details of related party transactions entered into by the company, for the period ended March31st, 2010 are as follows:
Particulars Maximum Outstanding Closing balance for Periodfor the period ended ended 31st March, 2010March 31, 2010
Capital transactions:Financial transactionsLoan takenKarma Commodities 17,000 17,000
E.2.5 Being the first year of Company, previous year’s figures are not provided.
E.2.6 Additional Information as required under Part IV of Schedule VI to the Companies Act, 1956.
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Annual Report 2009–2010
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KIL Infrastructure Limited
I Registration Details
Registration No. 194365
Balance Sheet Date 31/03/2010 State Code 011
II Capital raised during the year (Amount in Rs. Thousands)
Public Issue NIL Rights Issue NIL
Bonus Issue NIL Private Placement NIL
III Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)
Total Liabilities 500 Total Assets 500
Sources of Funds Application of Funds
Paid up Capital 500 Fixed Assets NIL
Reserves & Surplus NIL Investments NIL
Secured Loans NIL Net Current Assets 219.43
Unsecured Loans NIL Misc Expenses 280.57
Deferred Tax Liability NIL Accumulated Losses NIL
IV Performance of the Company
Turnover (including other income) NIL Total Expenditure NIL
Profit / (Loss) Before Tax NIL Profit / (Loss) After Tax NIL
Earning Per Share in Rs. NIL Dividend rate % NIL
V Generic Names of Three Principal Products / Services of Company (as per Monetary Terms) NA
Products Description ITEM CODE NO. (ITC CODE)
Land Procurement NIL
Balance Sheet Abstract and Company’s General Business Profile:
FOR ARVIND DARJI ASSOCIATES
Chartered AccountantsFirm Registration No.: 100576WSd/-ARVIND M DARJIProprietorMembership No.: 41748
Place :MUMBAIDate : 31st May, 2010
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Sd/-RAJESH MEHTADirectorSd/-HEMANG SAMPATDirector
Place :MUMBAIDate : 31st May, 2010
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Annual Report 2009–2010
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Karma Stock Trade Limited
AUDITORS’ REPORT
Auditors’ Report to the Members of KARMA STOCK TRADE LIMITED
We have audited the attached Balance Sheet of KARMA STOCK TRADE LIMITED, as at 31st March 2010, theProfit and Loss Account for the period ended on that date annexed thereto. These financial statements are theresponsibility of the Company’s management. Our responsibility is to express an opinion on these financial statementsbased on our audit.
We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statementsare free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation. Webelieve that our audit provides a reasonable basis for our opinion.
As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms ofsub section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure, a statement on thematters specified in paragraphs 4 and 5 of the said Order.
Further to our comments in the Annexure referred to above, we report that:
(i) We have obtained all the information and explanations, which to the best of our knowledge and belief werenecessary for the purpose of our audit;
(ii) In our opinion, proper books of account as required by law have been kept by the company so far as appearsfrom our examination of those books;
(iii) The Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this report are inagreement with the books of account;
(iv) In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by thisreport comply with the accounting standards referred to in sub section (3C) of section 211 of the CompaniesAct, 1956;
(v) On the basis of written representations received from the directors, as on 31st March, 2010 and taken on recordby the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2010 from beingappointed as a director in terms of clause (g) of sub section (1) of section 274 of the Companies Act, 1956;
(vi) In our opinion and to the best of our information and according to the explanations given to us, the saidaccounts give the information required by the Companies Act, 1956, in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India:
(a) In the case of the Balance Sheet, of the state of affairs of the company as at 31st March, 2010;(b) In the case of the Profit and Loss Account, of the profit for the period ended on that date.(c) In the case of the Cash Flow Statement, of the Cash Flows for the period ended on that date.
FOR ARVIND DARJI ASSOCIATESChartered AccountantsFirm Registration No. 100576WSd/-ARVIND M DARJIProprietorMembership No.: 41748
Place: MUMBAI.Date: 30th April, 2010
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Annual Report 2009–2010
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Karma Stock Trade Limited
ANNEXURE TO THE AUDITORS’ REPORT
The Annexure referred to in the auditors’ report to the members of Karma Stock Trade Limited for the periodended 31st March, 2010. We report that:
(i) (a) The company has maintained proper records showing full particulars, including quantitative details andsituation of fixed assets.
(b) The fixed assets have been physically verified by the management, in accordance with a phased programmeof verification which, in our opinion, is reasonable, considering the size of the Company and nature of itsassets. No material discrepancies were noticed on such verification.
(c) During the year, the company has not disposed off any part of the fixed assets.
(ii) According to the information and explanations given to us, the Company did not have any inventory duringthe year.
(iii) (a) The Company has not granted any loan, secured and unsecured, to companies, firms or other partiescovered in the register maintained under section 301 of the Companies Act, 1956.
(b) The Company has taken an unsecured interest free loan from 4 parties listed in the register under section301 of the Companies Act, 1956. The total maximum amount outstanding during the year is Rs. 2,63,520/and the balance as at year end is Rs.2,25,220/ .
(c) In our opinion, and according to the information and explanations given to us, the terms and conditionsof the aforesaid loans are prima facie not prejudicial to the interest of the Company.
(d) There is no stipulation as regards payment of principal amounts.
(iv) In our opinion and according to the information and explanations given to us, there are adequate internalcontrol procedures commensurate with the size of the company and the nature of its business. During thecourse of our audit, we have not observed any continuing failure to correct major weaknesses in internalcontrol systems.
(v) (a) In our opinion and according to the information and explanations given to us, the particulars of contractor arrangements referred to in Section 301 of the Act have been so entered in the register required to bemaintained under that section.
(b) In our opinion and according to the information and explanations given to us, the Company does not haveany transaction made in pursuance of contracts or arrangements entered in the register maintainedunder section 301 of the Companies Act, 1956 and exceeding the value of rupees five lakhs in respect ofany party during the year.
(vi) The company has not accepted any deposits under the provisions of Sections 58A and 58AA of the Act andthe rules framed there under.
(vii) The Company does not have formal internal audit system. Internal audit is carried out by in house staff. Inour opinion, there is a scope for further improvement in the internal audit system.
(viii) To the best of our knowledge and according to the information and explanations given to us, the CentralGovernment has not prescribed any rules for the maintenance of cost records under section 209(1) (d) of theCompanies Act, 1956.
(ix) (a) According to the information and explanations given to us, and the records of the Company examined byus, in our opinion, the company is generally regular in depositing the undisputed statutory dues, includingprovident fund, investor education and protection fund, employees’ state insurance, income tax, salestax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues as applicable,with appropriate authorities.
(b) (i) According to the information and explanations given to us and the records of the Company examinedby us, no undisputed amounts payable in respect of income tax, and cess were in arrears, as at 31st
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Annual Report 2009–2010
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Karma Stock Trade Limited
March 2010 for a period of more than six months from the date they became payable.
(ii) According to the information and explanations given to us, there are no dues of sales tax, income tax,custom duty, wealth tax, excise duty and cess which have not been deposited on account of any dispute.
(x) The Company has not yet completed a period of 5 years since incorporation; accordingly reporting underthis clause is not applicable.
(xi) In our opinion and according to the information and explanations given to us, the Company has not obtainedany borrowings from banks, financial institutions or by way of debentures.
(xii) The Company has not granted loans and advances on the basis of security by way of pledge of shares,debentures and other securities.
(xiii) In our opinion the Company is not a Chit Fund Company or Nidhi / Mutual Benefit Fund / Society. Thereforethe paragraph 4 (xiii) Order is not applicable to the Company.
(xiv) In our opinion, the Company has maintained proper records of transactions and contracts relating to dealingor trading in shares, securities, debentures and other investments during the year and timely entries havebeen made therein. Further, such securities have been held by the Company in its own name.
(xv) According to the information and explanations given to us, the Company has not given any guarantee forloans taken by others from banks or financial institutions, during the year.
(xvi) The Company has not raised any term loan during the year under consideration.
(xvii) According to the information and explanations given to us, and on an overall examination of the balancesheet of the company, we report that no fund raised on short basis have been used for long term investmentduring the year.
(xviii) According to the information and explanations given to us, the Company has made preferential allotment ofshares to parties and companies covered in the Register maintained under Section 301 of the Companies Act,1956. The details of the same are as under:
Name of the Relationship Number of equity Face valuerelated party shares of sharesKarma Ispat Limited Holding Company 51,80,000 Rs 10/-
In our opinion, the prices at which the shares have been issued are not prejudicial to the interest of theCompany.
(xix) As per the information and explanations given to us, the Company has not issued any debenture.
(xx) The company has not raised any money by public issue during the year, and hence paragraph 4(xx) of theOrder is not applicable.
(xxi) During the course of our examination of the books and records of the Company, carried out in accordancewith generally accepted auditing practices in India, and according to the information and explanations givento us, we have neither come across any instances of material fraud on or by the Company, noticed or reportedduring the year, nor have been informed of such case by management.
FOR ARVIND DARJI ASSOCIATESChartered AccountantsRegistration No.: 100576WSd/-ARVIND M DARJIProprietorMembership No. 041748
Place: MumbaiDate: 30th April, 2010
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Annual Report 2009–2010
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Karma Stock Trade Limited
BALANCE SHEET AS AT 31ST MARCH 2010
Particulars Schedules As At 31/03/2010
SOURCES OF FUNDShareholders’ FundShare Capital 1 51,800,000Reserves & Surplus 2 49,015,287
Borrowed FundsUnsecured Loans 3 1,653,781
Deferred Tax Liability 71,344102,540,412
APPLICATION OF FUNDSFixed Assets 4Original Cost 1,085,901Less : Accumulated Depreciation 91,689Net Book value 994,212
Investments 5 30,000,000
Current Assets, Loans and Advances 6Current Assets 6-A 9,541,985Loans and Advances 6-B 61,651,389
71,193,374
Less: Current Liabilities and Provisions 7Current Liabilities 7-A 69,350Provisions 7-B 26,000
95,350
Net Current Assets 71,098,024
Miscelleneous Expenditure(To the extent not written off)Preliminary Expenses 448,176
102,540,412
Significant Accounting Policies and Notes to Accounts 9
FOR ARVIND DARJI ASSOCIATES
Chartered AccountantsFirm Registration No.: 100576WSd/-ARVIND M DARJIProprietorMembership No.: 41748
Place :MUMBAIDate : 30th April, 2010
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Sd/-ABHISHEK MEHTADirectorSd/-ASHWIN SHAHDirector
Place :MUMBAIDate : 30th April, 2010
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Annual Report 2009–2010
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Karma Stock Trade Limited
PROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDED 31ST MARCH 2010
Particulars Schedules As At 31/03/2010
Income
Interest Received 622,229
622,229
Expenditure
Administrative Expenses 8 105,865
Preliminary Expenses W/off 112,044
Depreciation 91,689
309,598
Net Profit/(Loss) before Tax 312,631
Less: Provision for Tax 26,000
Less: Provision for Deferred Tax Liability 71,344
Net Profit/(Loss) after Tax 215,287
Balance Brought Forward -
Net Profit/(Loss) carried to Balancesheet 215,287
EARNINGS PER SHARE
Basic (Rs.) 0.04
Diluted (Rs.) 0.04
Face value per share of Rs. 10/
FOR ARVIND DARJI ASSOCIATES
Chartered AccountantsFirm Registration No.: 100576WSd/-ARVIND M DARJIProprietorMembership No.: 41748
Place :MUMBAIDate : 30th April, 2010
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Sd/-ABHISHEK MEHTADirectorSd/-ASHWIN SHAHDirector
Place :MUMBAIDate : 30th April, 2010
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CASH FLOW STATEMENT FOR THE PERIOD ENDED 31ST MARCH,2010
Particulars
A) CASH FLOW FROM OPERATING ACTIVITIESNet Profit after Taxes 215,287
Adjustments for
Depreciation 91,689
Deferred Tax Liability 71,344
Preliminary Expenses W/Off 112,044
Interest Income -
Operating Loss before Working Capital Changes 490,364
Less: Taxes Paid 26,000
Net Operating Loss before Working Capital Changes 516,364
Adjustments for
Loan & Advances (61,651,389)
Current Liabilities 69,350
Preliminary Expenses incurred (560,220)
Net cash from operating activities (61,625,895)
B) CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed Assets (1,085,901)
Investment in corporates (30,000,000)
Net cash from investing activities (31,085,901)
C) CASH FLOW FROM FINANCING ACTIVITIES
Increase/(Decrease) Long Term borrowing 1,653,781
Issue of Equity Shares 51,800,000
Share Premium 48,000,000
Net cash from financing activities 102,253,781
NET CHANGE IN CASH AND CASH EQUIVALENT (A+B+C) 9,541,985
CASH AND CASH EQUIVALENT AS AT 01.01.2009 -
CASH AND CASH EQUIVALENT AS AT 31.03.2010 9,541,985
As At 31/03/2010
FOR ARVIND DARJI ASSOCIATES
Chartered AccountantsFirm Registration No.: 100576WSd/-ARVIND M DARJIProprietorMembership No.: 41748
Place :MUMBAIDate : 30th April, 2010
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Sd/-ABHISHEK MEHTADirectorSd/-ASHWIN SHAHDirector
Place :MUMBAIDate : 30th April, 2010
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Karma Stock Trade Limited
1. Share CapitalAuthorised :60,00,000 Equity Shares of Rs.10/ each 60,000,000
Issued, Subscribed and Paid up51,80,000 Equity Shares of Rs.10/ each fully paid up 51,800,000(of the above, 31,80,000 Equity Shares of Rs.10/ each fully paid up areheld by Karma Ispat Limited, the Company’s Holding Company)
51,800,000
2. Reserves & SurplusShare Premium 48,800,000Profit & Loss A/c 215,287
49,015,287
3. Unsecured LoansLoan from Intercorporates* 1,653,781(* Of the above, Rs 225,220 amount is received from Karma IspatLimited,the Company’s Holding Company)
1,653,781
SCHEDULE TO BALANCE SHEET AS AT 31ST MARCH 2010
Particulars Period Ended31st March 2010
SCHEDULE 4
FIXED ASSETS
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Karma Stock Trade Limited
5. Investments
In Unqouted Equity Shares
Ashapura Garments Limited 30,000,000
(3,33,334 Equity Shares of Rs.10/ each, at premium of Rs 80 per share)
30,000,000
6. Current Assets, Loans and Advances
6 A. Current Assets
Cash on Hand 25,000
Balance in Schedule Banks
a) in current account 16,985
b) in deposit account 9,500,000
9,541,985
6 B. Loans and Advances
Intercorporate Deposits 61,085,008
Other Deposits 500,000
Prepaid Expenses 4,160
Tds on Interest 62,221
61,651,389
7. Current Liabilities, Provisions
7 A. Current LiabilitiesCreditors for Capital Goods 14,200
Creditors for Expenses 49,635
Duties and Taxes 5,515
69,350
7 B. ProvisionsProvision for Tax 26,000
26,000
SCHEDULE TO BALANCE SHEET AS AT 31ST MARCH 2010
Particulars Period Ended31st March 2010
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Karma Stock Trade Limited
Schedule 8: Administrative Expenses
Audit fees 55,150
Bank Charges 1,759
Capital Market Magazine Subscribtion 1,040
Processing Charges 11,030
Printing & Stationery 34,996
Professional Charges 1,890
105,865
Schedule to Profit and Loss Account for the period ended 31st March 2010
Particulars 2009-10
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SCHEDULES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED MARCH 31, 2010 (continued)
SCHEDULE 9: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS Company OverviewKarma Stock Trade Ltd (“KSTL”) was incorporated on December 16, 2008 to carry on the business in all kinds oftrading and act as broker on the bourses or stock exchanges in India and other countries of the world for the saleand purchase of shares, securities, financial instruments, capital and money market instruments of all kinds, companydeposits, national saving certificates and other securities. KSTL is majorly owned and controlled by Karma Ispat Ltd.During the period under consideration, KSTL has obtained membership from NSE as a trading cum clearing memberand as a stock broker and with BSE as a stock broker.
9. 1 SIGNIFICANT ACCOUTING POLICIES
9.1.1 Basis of preparation of financial statements
The financial statements are prepared under the historical cost convention on an accrual basis in accordance withthe Generally Accepted Accounting Principles in India (“GAAP”). GAAP comprises accounting standards as specifiedin Rule 3 of the Companies (Accounting Standards) Rules 2006, and the relevant provisions of the Companies Act,1956 to the extent applicable.
9.1.2 Use of Estimates
The preparation of financial statements in conformity with the generally accepted accounting principles requiresmanagement to make estimates and assumptions to be made that affect the reported amount of assets and liabilitieson the date of financial statements and the reported amount of revenues and expenses during the reporting period.The difference between the actual results and estimates are recognized in the period in which results are known /materialized.
9.1.3 Revenue Recognition
Revenue is recognized when it is earned and no significant uncertainty exists as to its ultimate collection. Interestincome is recognized on a time proportion basis. Dividend is recognized when right to receive is established.
9.1.4 Fixed Assets and Depreciation
Fixed Assets are stated at cost, after reducing accumulated depreciation and impairment upto the date of BalanceSheet. Direct costs are capitalized until the assets are ready for use and include financing costs relating to anyborrowing attributable to acquisition or construction of those fixed assets which necessarily take substantial periodof time to get ready for its intended use. Intangible assets are recorded at the consideration paid for acquisition ofsuch assets. Depreciation on fixed assets is provided at the rates and in the manner specified in Schedule XIV of theCompanies Act, 1956, on WDV Method.
9.1.5 Taxes on Income
Tax on income for the current period is determined on the basis of estimated taxable income and tax creditscomputed in accordance with the provisions of the Income Tax Act, 1961 and based on the expected outcome ofassessments / appeals.
Deferred tax is recognized on timing differences between the accounting income and the estimated taxable incomefor the year and quantified using the tax rates and laws enacted or substantially enacted as on the balance sheetdate. Deferred tax assets/Liabilities, other than brought forward business loss and unabsorbed depreciation arerecognized and carried forward to the extent there is reasonable certainty that sufficient future taxable income willbe available against which deferred tax assets/Liabilities can be adjusted.
9.1.6 Provisions, Contingent Liabilities and Contingent Assets
The company recognizes a provision when there is a present obligation as a result of a past event that probablyrequires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosurefor a contingent liability is made when there is a present obligation that cannot be estimated reliably or a possibleor present obligation that may, but probably will not, require an outflow of resources. When there is a possibleobligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure ismade. Provisions are made for all known losses and liabilities and future unforeseeable factors that may affect theprofit of the entity. Accounting for contingencies (gains and losses) arising out of contractual obligation, are accountedon the basis of mutual acceptances. Contingent Assets are neither recognized nor disclosed. Provisions, ContingentLiabilities and Contingent Assets are reviewed at each Balance Sheet date.
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9.1.7 Events Occurring After the Balance Sheet Date
Where material, events occurring after the date of the Balance Sheet are considered upto the date of approval ofaccounts by the Board of Directors
9.1.8 Impairment of Assets
Management periodically assesses using, external and internal sources, whether there is an indication that an assetmay be impaired. An impairment loss is recognized wherever the carrying value of an asset exceeds its recoverableamount. The recoverable amount is higher of the asset’s net selling price and value in use i.e. the present value offuture cash flows expected to arise from the continuing use of the asset and its eventual disposal. An impairmentloss for an asset is reversed if there has been a change in the estimates used to determine the recoverable amountsince the last impairment loss was recognised. The carrying amount of an asset is increased to its revised recoverableamount, provided that this amount does not exceed the carrying amount that would have been determined (net ofany accumulated amortization or depreciation) had no impairment loss been recognised for the asset in prior years.
9.1.9 Earnings per share
In determining earnings per share, the company considers the net profit after tax. The number of shares used incomputing basic earnings per share is the weighted average number of shares outstanding during the period.Diluted earnings per share are computed using the weighted average number of basic and diluted common equivalentshares outstanding during the period except where the result would be anti dilutive.
9.1.10 Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactionsof a non cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows fromoperating, financing and investing activities of the company are segregated.
9.2 NOTES TO FINANCIAL STATEMENTS
9.2.1 There are no Micro, Small and Medium Enterprises, as defined in the Micro, Small and Medium EnterprisesDevelopment Act, 2006 to whom the Company owes dues on account of principal amount together with interest andaccordingly no additional disclosures have been made. The above information regarding Micro, Small and MediumEnterprises has been determined to the extent such parties have been identified on the basis of the informationavailable with the company.
9.2.2 The timing differences relates to unabsorbed depreciation resulting in a deferred tax asset as per AS 22 on“Accounting for taxes on Income”.
Particulars As at March 31, 2010
Deferred Tax Assets:Unabsorbed Depreciation 2,30,886
Net Deferred Tax Asset / (Liability) (71,344)
9.2.3 As per the best estimate of the management, no provision is required to be made as per AccountingStandard (AS 29) as notified by Companies (Accounting Standard) Rules, 2006 in respect of any present obligationas a result of a past event that could lead to probable outflow of resources, which would be required to settle theobligation.
9.2.4 Earnings per share(In Rs.)
Particulars Period ended 31stMarch, 2010a) Numerator Profit after tax and taxation adjustments of earlier years 2,15,287b) Denominator Weighted average number of equity shares 51,80,000c) Earnings per equity share (EPS) (Basic and diluted) Numerator EPS = ……………… Denominator 0.04d) Nominal value of equity share 10
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9.2.5 Outstanding dues from the Company’s under same management(In Rs.)
Name of the Relationship Balance as at MaximumCompany March 31, 2010 Outstanding
March 31, 2010Karma Ispat Ltd Holding Company 50,220 25,25,200
9.2.6 In the opinion of the Board, the provisions for known liabilities are adequate and current assets in theordinary course of business have a value at least equal to the amount at which they are stated.
9.2.7 The disclosure requirements in respect of Accounting Standard 18 on “Related Party are as under:
List of Related Parties
Name of the related party RelationshipKarma Ispat Limited Holding CompanyKarma Commodities Ltd.# Subsidiary of Holding CompanyKil Infrastructure Ltd# Subsidiary of Holding Company# wholly owned subsidiary company of Karma Ispat Ltd
List of Key Management Personnel
Name of the related party DesignationAbhishek Mehta DirectorAshwin Shah DirectorHemang Sampat Director
The details of related party transactions entered into by the company, for the period ended March31st, 2010 are as follows:
Particulars Maximum Outstanding Period endedMarch 31, 2010 31st March, 2010
Capital transactions:Financial transactionsLoans takenKarma Ispat Ltd 2,25,220 2,25,220Abhishek Mehta 13,000 NilHemang Sampat 13,200 NilAshwin Shah 12,100 Nil
9.2.8 Reconciliation between basic and dilutive shares
The reconciliation between basic and dilutive shares
Particulars Period ended31st March, 2010
Weighted average shares used in computing basic earnings per share 51,80,000Dilutive effect of stocks NilWeighted average shares used in computing diluted earnings per share 51,80,000
9.2.9 In accordance with the Accounting Standard (AS 28) on “Impairment of Assets” the Management duringthe year carried out an exercise of identifying the assets that may have been impaired. On the basis of this reviewcarried out by the management, there was no impairment loss on fixed assets during the period ended March 31,2010.
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9.2.10 Loans and advances
Loans and advances majorly comprises of inter corporate deposits and deposits with exchange. The break up ofwhich comprises of:
Particulars Period ended31st March, 2010
Ceeplast Trading Co. Pvt. Ltd 2,01,94,795Multi Plast Trading Co. Pvt. Ltd 50,62,976Parkes Multi Trade Pvt. Ltd 3,58,27,237Deposit with Bombay Stock Exchange 5,00,000
9.2.11 As mentioned earlier (refer first paragraph to the notes to account), during the year company has obtainedmembership from NSE as a trading cum clearing member and as a stock broker and with BSE as a stock broker. Asper stipulations with Exchanges, the Company has made fixed deposits with the Bank. However, no clarity has beenmade towards entitlement of interest and hence the same is not recognized by the Company.
9.2.12 The Company was incorporated on 16th December, 2008. Since the financials have exceeded 15 Months, thecompany has obtained special permission from Registrar of Companies for extension of the financials for a periodexceeding 15 months and the same has been obtained and taken on record.
9.2.13 Being the first year of Company, previous year’s figures are not provided.
9.2.14 Additional Information as required under Part IV of Schedule VI to the Companies Act, 1956.
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Annual Report 2009–2010
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I Registration Details
Registration No. 188934
Balance Sheet Date 31/03/2010 State Code 011
II Capital raised during the year (Amount in Rs. Thousands)
Public Issue NIL Rights Issue NIL
Bonus Issue NIL Private Placement 51,800
III Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)
Total Liabilities 102,540.41 Total Assets 102,540.41
Sources of Funds Application of Funds
Paid up Capital 51,800.00 Fixed Assets 994.21
Reserves & Surplus 49,015.28 Investments 30,000.00
Secured Loans NIL Net Current Assets 71,098.02
Unsecured Loans 1653.78 Misc Expenses 448.18
Deferred Tax Liability 71.34 Accumulated Losses NIL
IV Performance of the Company
Turnover (including other income) 622.23 Total Expenditure 309.60
Profit / (Loss) Before Tax 312.63 Profit / (Loss) After Tax 215.28
Earning Per Share in Rs. 0.04 Dividend rate % NIL
V Generic Names of Three Principal Products / Services of Company (as per Monetary Terms) NA
Products Description ITEM CODE NO. (ITC CODE)
Land Procurement NIL
Balance Sheet Abstract and Company’s General Business Profile:
FOR ARVIND DARJI ASSOCIATES
Chartered AccountantsFirm Registration No.: 100576WSd/-ARVIND M DARJIProprietorMembership No.: 41748
Place :MUMBAIDate : 30th April, 2010
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Sd/-ABHISHEK MEHTADirectorSd/-ASHWIN SHAHDirector
Place :MUMBAIDate : 30th April, 2010
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KARMA ISPAT LIMITEDRegd. Office: "H" Wing, Office # 131, Raj Arcade, Mahavir Nagar, Kandivali (W), Mumbai-400 067, Maharashtra, India
Attendance Slip 33rd Annual General Meeting
Share Holder Details
Name: DP Id :
Address: Registered Folio :
Client Id:
No. of Shares held:
I hereby record my presence at the 33rd Annual General Meeting of the company held on Saturday,25th September, 2010 at 11.30 a.m. at the Kamla Vihar Sports Club, Mahavir Nagar, Kandivali (West),Mumbai 400 067.
———————————————Signature of the Share holder / Proxy
KARMA ISPAT LIMITEDRegd. Office: "H" Wing, Office # 131, Raj Arcade, Mahavir Nagar, Kandivali (W), Mumbai-400 067, Maharashtra, India
Attendance Slip 33rd Annual General Meeting
Share Holder Details
Name: DP Id :
Address: Registered Folio :
Client Id:
No. of Shares held:
I / We [ Name of the Proxy (s)]………………………………………………………of being a member (s) ofM/s. Karma Ispat Limited hereby appoint ………………………………………….of …………………………..……………..orfailing him ………………………………………….of…………………………………………..As my/our proxy to vote for me/us and on my/our behalf at the 33rd Annual Genral Meeting to be held onSaturday, 25th September, 2010 at 11.30 a.m. and at any adjournment thereof.
———————————————Date:- SignaturePlace:-
Note: For this from to be effective, form should be:• Duly filled• Stamped & Signed• Sent to the Registered Address of the office before 48 hours of the meeting• The proxy should not be a member of the company• Please fill this slip and return it at the entrance of the meeting hall, Thank you.
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