Section B:
Revision of Financial Statements pursuant to Composite Scheme of Arrangement
Jindal Stainless Ltd . (year ended 31st March 2015)
From Notes to Financial Statements
27. Composite Scheme of Arrangement
1. A Composite Scheme of Arrangement (here in after referred to as ‘Scheme’) amongst Jindal Stainless Limited (the Company/Transferor Company) and its three wholly owned subsidiaries namely Jindal Stainless (Hisar) Limited (JSHL), Jindal United Steel Limited (JUSL) and Jindal Coke Limited (JCL) under the provision of section 391-394 read with section 100- 103 of the Companies Act, 1956 and other relevant provision of Companies Act, 1956 and/or Companies Act, 2013 has been sanctioned by the Hon’ble High Court of Punjab & Haryana, Chandigarh vide its Order dated 21st September 2015, modified by Order dated 12th October, 2015. The Schemes inter-alia includes:-
a) Demerger of the Demerged Undertakings (as defined in the scheme) of the Company comprising of the Ferro Alloys Division located at Jindal Nagar, Kothavalasa (AP) and the Mining Division of the Company and vesting of the same in Jindal Stainless (Hisar) Limited (JSHL) w.e.f. appointed date i.e. close of business hours before midnight of March 31, 2014. (Section I of the Scheme)
b) Transfer of the Business undertaking 1 (as defined in the scheme) of the Company comprising of the Stainless Steel Manufacturing Facilities of the Company located at Hisar, Haryana and vesting of the same with Resultant Company (JSHL) on Going Concern basis by way of Slump Sale along with investments in the domestic subsidiaries (listed in Part B of schedule 2 of the Scheme) of the company w.e.f. appointed date i.e. close of business hours before midnight of 31st March, 2014. (Section II of the Scheme)
c) Transfer of the Business undertaking 2 (as defined in the scheme) of the Company comprising, interalia, of the Hot Strip Plant of the Company located at Odisha and vesting of the same in Jindal United Steel Limited on Going Concern basis by way of Slump Sale w.e.f. appointed date i.e. close of business hours before midnight of March 31, 2015. (Section III of the Scheme)
d) Transfer of the Business Undertaking 3 (as defined in the Scheme) of the Company comprising, interalia ,of the Coke Oven Plant of the Company Located at Odisha and vesting of the same with Jindal Coke Limited on Going Concern basis by way of Slump Sale w.e.f. appointed date i.e. close of business hours before midnight of March 31, 2015. (Section IV of the Scheme)
Section I and Section II of the Scheme became effective on 1st November, 2015, operative from the said appointed date as stated in sub-para (a) and (b) above and Section III and Section IV (for section III and IV appointed date as stated in sub-para (c) & (d) above) of the Scheme will become effective on receipt of necessary approvals from the OIIDCO or any other concerned authorities for transfer/ grant of the right to use in the land on which Hot Strip & Coke Oven Plants are located as specified in the Scheme.
2. Pursuant to the Section I and Section II of the Scheme becoming effective:
a) Demerged Undertakings and Business undertaking 1 has been transferred to and vested in JSHL with effect from the said Appointed Date and the same has been given effect to in these accounts.
b) The difference of Rs. 58,512.65 lakh between the book values of assets and liabilities pertaining to the Demerged Undertakings transferred has been adjusted against Security Premium Account.
c) Share capital of JSHL comprising of 2,50,000 equity shares having face value of Rs. 2 each, 100% held by the Company deemed to has been cancelled. Accordingly the said investment amounting to Rs. 5.00 lakh has been charged off in the Statement of Profit & Loss and has been included under Exceptional Item.
d) Business Undertaking 1 (as defined in sub-para (b) of 1 above) has been transferred at a lump sum consideration of Rs. 280,979.52 lakh; out of this, Rs. 260,000.00 lakh shall be paid by JSHL and Rs. 20,979.52 lakh has been adjusted against sum of Rs. 57,598.19 lakh lying payable to JSHL in the books of the Company.
Against the balance amount of Rs. 36,618.67 lakh, the company is to issue equity shares to JSHL at a price to be determined with the record date to be fixed as specified in the Scheme. Pending allotment, the same has been shown as “Share Capital Suspense Account”.
e) On transfer of Business Undertaking 1, the differential between the book values of assets & liabilities transferred and the lump sum consideration received as stated above amounting to Rs. 116,021.85 lakh has been credited in the Statement of profit & loss and included under Exceptional Item. (Note no. 30)
f) In terms of the Scheme, all the business and activities of Demerged Undertakings and Business Undertaking 1 carried on by the company on and after the appointed date, as stated above, are deemed to have been carried on behalf of JSHL. Accordingly, necessary effects have been given in these accounts on the Scheme becoming effective.
g) The necessary steps and formalities in respect of transfer of properties, licenses, approvals and investments in favour of JSHL and modification of charges etc. are under implementation. Further transfer of Mining Rights to Demerged Undertakings (as referred in para 1 (a) above) is subject to necessary approvals of the concerned authorities.
3. Pursuant to the Scheme the effects on the financial statements of operations carried out by the company for on behalf of JSHL post the said appointed date have been given in these accounts from the effective date (for the close of business hours before midnight of 31st March, 2014) are as summarised below :
As stated in note no. 1 above, section I and section II of the Scheme became effective from the appointed date i.e. from close of business hours before midnight of 31st March, 2014.
4. The financial statements of the Company for the year ended 31st March, 2015 were earlier approved by the Board of Directors at their meeting held on 30th May, 2015 on which the Statutory Auditors of the Company had issued their report dated 30th May, 2015. These financial statements have been reopened and revised to give effect to the Scheme as stated in note 1 & 2 herein above.
From Auditors’ Report
Report on the Standalone Financial Statements (REVISED)
We have audited the accompanying REVISED standalone financial statements of Jindal Stainless Limited (“the Company”), which comprise the REVISED Balance Sheet as at 31st March, 2015, the REVISED Statement of Profit and Loss, the REVISED Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information in which are incorporated the REVISED Return for the year ended on that date audited by the branch auditors of the Company’s branch at Jindal Nagar, Kothavalsa, Dist. Vizianagaram (A.P.) in which impact of the Scheme (as stated in Note no. 27) have been incorporated.
Other Matters
The financial statements of the Company for the year ended 31st March, 2015 were earlier approved by the Board of Directors at their meeting held on 30th May, 2015, on which the Statutory Auditors of the Company had issued their report dated 30th May, 2015. These financial statements have been reopened and revised to give effect to the Scheme as explained in Note No. 27(4).
Our opinion is not modified in respect of these matters.
