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Notes to Accounts of Ador Fontech Ltd.

Mar 31, 2018

Note 1 COMPANY OVERVIEW

Ador Fontech Limited (‘the Company’) was incorporated in India on August 22, 1974 under the provisions of the Companies Act applicable in India and is a frontrunner organisation that operates on the philosophy of ‘partnering’ with its clients in recommending and implementing value-added fusion, surfacing, spraying and environmental solutions. The Company is dedicated to the supply of products, services and solutions that meet and exceed the needs of its end-users under the broad gamut of ‘Life enhancement of industrial components’.

The Company is a public limited company [CIN: L31909KA1974PLC020010] domiciled in India and is listed on the Bombay Stock Exchange (BSE). The registered and corporate office of the Company is located at Belview 7 Haudin Road Bengaluru 560 042.

The financial statements were authorised for issue in accordance with the resolution of the Board of Directors on May 29, 2018.

BASIS OF PREPARATION

(i) Compliance with IND-AS

These financial statements have been prepared in accordance with the Indian Accounting Standards (Ind-AS) as per the Companies (Indian Accounting Standards) Rules, 2015 (as amended) notified under Section 133 of the Companies Act, 2013 (the ‘Act’) and other applicable Enactments, Rules and Regulations.

The financial statements up to and for the year ended March 31, 2017 were prepared in accordance with accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Act (Indian GAAP/Previous GAAP).

These are the first set of financial statements of the Company prepared in accordance with Ind-AS and the ‘First-time Adoption of Indian Accounting Standards’ as per Ind -AS-101 has been applied. Kindly refer to detailed explanation note on how the transition from Indian GAAP to Ind-AS, has effected the Company’s financial position, financial performance and cash flows.

These financial statements have been prepared on a historical cost and accrual basis, except for certain financial assets & liabilities and defined benefit plan assets & liabilities, that are measured at fair value.

(ii) Use of estimates and critical accounting judgements

The preparation of financial statements is in conformity with Ind-AS which requires the Management to make estimates, assumptions and exercise judgements in applying the accounting policies that affect the reported amount of assets, liabilities and disclosure of contingent liabilities as at the date of the financial statements and the reported amounts of income and expenses during the year.

The Management believes that these estimates are prudent, reasonable and are based upon the Management’s best knowledge of current events and actions. Actual results could differ from these estimates. Differences between actual results and estimates are recognised in the periods in which the results are known or materialised.

This note along with the next provides an overview of areas that involved a higher degree of judgement or complexity and of items adjusted or which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed/estimated.

(iii) Basis of measurements

The Ind-AS financial statements have been prepared on a going concern basis using historical cost convention and on an accrual method of accounting, except for certain financial assets and liabilities, including derivative financial instruments which have been measured at fair value as described below and defined benefit plans which have been measured at actuarial valuation as required by relevant Ind-AS.

FAIR VALUE MEASUREMENT

The Company measures financial instruments at fair value at each Balance Sheet date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that transaction to sell the asset or transfer the liability takes place either:

- In the principal market for the asset or liability or

- In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible to the Company.

The fair value of an asset or a liability is measured using assumptions that market participants would use their economic best interest, when pricing the asset or liability.

A fair value measurement of a non-financial-asset takes in to account a market participant’s ability to generate economic benefits by using the asset to its highest and best use or by selling it to another market participant that would use the asset to its highest and best use.

Fair value for measurement and/or for disclosure purpose in these financial statements is determined on the above basis, except for share based payment transactions that are within the scope of Ind-AS-102, leasing transactions that are within the scope of Ind-AS-17 and measurements that have some similarities to fair value, such as net realisable value in Ind-AS-2 or value in use in Ind-AS-36.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole.

Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

Level 2: Valuation techniques for which the lowest level input that is significant to the fair value is directly or indirectly observable.

Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of nature, characteristics and risks of the asset or liability and the level of fair value hierarchy as explained above.

MEASUREMENT OF DEBT INSTRUMENTS

Subsequent measurement of debt instruments depends on the Company’s business model for managing the asset and cash flow characteristics of the asset. There are three measurement categories into which the Company classifies its debt instruments:

Amortised cost: Assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in profit or loss, when the asset is derecognised or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method.

Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the asset’s cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in the profit and loss account. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is re-classified from equity to profit or loss and recognised in other gains/(losses). Interest income from these financial assets is included in other income using the effective interest rate method.

Fair value through profit or loss (FVTPL): Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognised in profit or loss and presented in the statement of profit and loss within other gains/(losses) in the period in which it arises. Interest income from these financial assets is included in other income.

FUNCTIONAL AND PRESENTATION CURRENCY

These Ind-AS financial statements are prepared in Indian Rupees which is the Company’s functional currency and presented in lakhs.

Notes:

As part of Ind-AS transition provisions and fair value concept:

- An amount of rupees nine lakhs only has been enhanced in office premises and

- An amount of rupees nineteen lakhs, eighty six thousand, four hundred and eighty eight only has been retired from fixed assets as at 31.03.2017. However, as the books of accounts cannot be revised/changed, entries have been passed on April 01, 2017 as transitional adjustment.

- The earmarked investments (*) have been provided as collateral security (lien in favour of the HDFC Bank Limited) for grant of loan (be it in the nature of working capital/term loan) to 3D Future Technologies Private Limited (wholly owned subsidiary of Ador Fontech Limited).

- As at March 31, 2018, 3D Future Technologies Private Limited had a liability of rupees one hundred and eighty nine lakhs (previous year rupees two hundred and twenty four lakhs) with regard to loan availed from the HDFC Bank Limited.

- The earmarked investments (*) have been provided as collateral security (lien in favour of the HDFC Bank Limited) for grant of loan (be it in the nature of working capital/term loan) to 3D Future Technologies Private Limited (wholly owned subsidiary of Ador Fontech Limited).

- As at March 31, 2018, 3D Future Technologies Private Limited had a liability of rupees one hundred and eighty nine lakhs (previous year rupees two hundred and twenty four lakhs) with regard to loan availed from the HDFC Bank Limited.

- Cash and cash equivalents as of March 31, 2018 and March 31, 2017 include restricted cash and bank balances of rupees three hundred and sixty one lakhs and rupees two hundred and eighty one lakhs, respectively. The restrictions are primarily on account of cash and bank balances held as margin money deposits against guarantees and unclaimed dividends. The deposit maintained by the Company with banks comprise time deposit.

- Disclosure of specified bank notes: The disclosure requirements relating to holdings as well as dealings in specified bank notes were applicable for the period from November 8, 2016 to December 30, 2016 are not relevant for the financial year 2017-18. Details of SBN held and transacted during the period from November 8, 2016 to December 30, 2016 are as follows: Closing cash in hand as on November 8, 2016: Rs.1 lakh, Permitted receipts: Rs.7 lakhs, Permitted payments: Rs.7 lakhs and amount deposited in banks: Nil, Closing cash in hand as on December 30, 2016: Rs.1 lakh.

(ii) Rights, preferences and restrictions

The Company has only one class of shares, referred to as equity shares having a par value of Rs.2/- per share. Each holder of equity share is entitled to one vote per share and dividend as may be declared at the Annual General Meeting.

Note: In view ofJ B Advani and Company Private Limited’s shareholding being 26.32%, it will be treated as an Associate by Ador Fontech Limited in terms of the Companies Act, 2013 and amendments thereon.

However, in view of Ind-AS regulations, we have been informed that JBA will aggregate the accounts of Ador Fontech Limited as a subsidiary for the purpose of its consolidated financial statements.

(iv) As on the date of the Balance Sheet

- The Company has not issued any equity share as fully paid pursuant to contracts without payment being received in cash.

- The Company has not issued any fully paid bonus share.

- The Company also did not buy back any equity share.

(v) Issue/conversion of equity shares

As on the date of the Balance Sheet, the Company has not issued securities like convertible preference shares, convertible debentures etc., which are convertible in to equity/preference shares.

Note: Trade payables include creditors for capital goods, raw materials, consumables, traded goods and other materials as well as expenses, be it in the nature of capital or revenue. The Company has not received any information from its vendors regarding their status under Micro, Small and Medium Enterprises Development Act, 2006. Hence, it is deemed that there are no amounts outstanding in respect of such entities to be categorised under ‘MSME’ in the books of accounts.

Notes:

- FVTPL - Fair value through profit and loss.

- (a) Fair value hierarchy

The fair values of financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Judgements and estimates are made in determining fair values of financial instruments. They are broadly classified in to

(i) recognised and measured at fair value and

(ii) measured at amortised cost, for which fair values are disclosed in the financial statements.

To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments in to three levels prescribed under the Accounting Standards. An explanation of each level follows underneath the table.

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. For example: Listed equity instruments that have quoted market price.

Level 2: The fair value of financial instruments that are not traded in an active market (For example: traded bonds, over-the-counter derivatives) are determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities, contingent consideration and indemnification asset included in level 3.

The carrying amounts of trade receivables, cash and bank balances, other bank balances, non-current loans, current loans, trade payables and other current financial liabilities are considered to be approximately equal to their fair values.

Note 2 FINANCIAL RISK MANAGEMENT

The Company’s principal financial liabilities comprise deposits, trade and other payables. The main purpose of these financial liabilities is to finance the Company’s operations. The Company’s principal financial assets include current loans, trade and other receivables, cash and cash equivalents that derive directly from its operations. The Company also holds FVTPL investments in mutual funds.

The Company is exposed to credit risk, market risk and liquidity risk. The Company’s senior management oversees the management of these risks.

(i) Credit risk

The Company is exposed to credit risk from its operating activities (primarily in respect of trade receivables) and from its financing activities (deposits with banks and other financial instruments).

Credit risk management

To manage credit risk, the Company follows a policy of providing 30-180 days credit to its domestic customers based on the nature of the customers. The credit limit policy is established considering the current economic trends of the industry in which the Company is operating.

However, trade receivables are monitored on a periodic basis for assessing any significant risk of non-recoverability of dues and provision is created accordingly.

Bank balances are held with only high rated banks and majority of other security deposits are placed majorly with Governmental agencies/public sector undertakings.

(ii) Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. For the Company, liquidity risk arises from obligations on account of financial liabilities — trade payables and other financial liabilities.

Liquidity risk management

The Company’s management is responsible for liquidity and funding as well as settlement. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company’s net liquidity position through rolling forecasts on the basis of expected cash flows.

(iii) Market risk

(A) FOREIGN CURRENCY RISK

The Company is exposed to foreign exchange risk on their receivables, payables which are held in USD, EUR and SEK.

The fluctuation in the exchange rate of INR relative to USD, EUR and SEK may have a material impact on the Company''s assets and liabilities.

FOREIGN CURRENCY RISK MANAGEMENT

In respect of the foreign currency transactions, the Company does not hedge the exposures since the Management believes that the same is insignificant in nature and also that it will offset to some extent, the corresponding receivables and payables. The Company''s exposure to foreign currency risk at the end of reporting period are as under:

SENSITIVITY TO FOREIGN CURRENCY RISK

The following table demonstrates the sensitivity to USD, EURO and SEK with all other variables held constant. The below impact on the Company''s profit before tax is based on changes in the fair value of unhedged foreign currency monetary assets and liabilities as at date of the Balance Sheet.

(B) PRICE RISK

The Company is exposed to price risk from its investment in mutual fund classified in the balance sheet at fair value through profit and loss.

To manage its price risk arising from the investment, the Company has invested in the mutual fund after considering the risk and return profile of the mutual funds i.e. the debt profile of the mutual fund indicates that the debt has been given to credit worthy banks and other institutional parties and equity investment is made after considering the performance of the stock. However, the entity being risk averse has opted to invest its substantial funds in debt oriented mutual funds.

Note 3 CAPITAL MANAGEMENT

(i) Risk management

The Company’s objectives when managing capital are to:

- Safeguard its ability to continue as a going concern, so that it can continue to provide returns to its shareholders and also benefit other stakeholders and

- Maintain an optimal capital structure to reduce its cost of capital.

Apart from trade payables and other current liabilities, there is no debt on the Company. Therefore, the Company manages its capital and return to shareholders by adequately investing in mutual funds and adjusting the amount of dividend paid to the Shareholders.

(iii) General reserve

In terms of the proviso to Section 123 of the Companies Act, 2013, the Board has elected to transfer an amount of rupees one crore to the General reserve for the financial year 2017-18, being the same as in the previous year.

Note 4 DETAILS OF JOINT VENTURE & SUBSIDIARY

Joint venture

In view of significant business performance and consistent year on year losses, the Board on the basis of commercial viability has decided to exit from the joint venture — Dualrank Fontech (M) Sdn.Bhd. vide meeting of the Board of Directors dated January 30, 2017. Further, the nominee Directors representing the Company also exited from the Board. Consequently, Ador Fontech Limited does not have any representation in the management of the joint venture. With only an investment proposition in terms of accounting standard, aggregation of accounts of Dualrank Fontech (M) Sdn.Bhd. has not been facilitated. The process for exit has been initiated and it is expected to be completed before the end of the financial year 2018-19.

- *External liabilities are liabilities payable to other than the venture companies.

- MYR-Malaysian Ringgits

- Audited financial statements of Dualrank Fontech (M) Sdn. Bhd. as at December 31, 2017 has been uploaded on the website of the Company.

Note 5 EMPLOYEE BENEFITS

As per Indian Accounting Standard-19 ‘Employee Benefits’, the disclosure of Employee benefits as defined in the Standard are given below:

Brief description of the plans

The Company has various schemes for employee benefits such as provident fund, gratuity and superannuation. In case of funded schemes, the funds are administered through Trustees/appropriate authorities.

(i) The Company''s defined contribution plans are provident fund and superannuation. The Company''s defined benefit plan consists of gratuity. The Company has no further obligation beyond making the contributions.

(ii) The employees of the Company are entitled to compensated absences as per the Company’s policy, which is determined as per Actuarial valuation.

(i) Defined contribution plan

- Provident fund

- Superannuation fund

Sensitivity analysis:

Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate, expected salary increase and mortality. The sensitivity analysis below have been determined based on reasonable possible changes of the assumptions occuring at the end of the reporting period, while holding all other assumptions constant. The results of sensitivity analysis is given below:

Note: The Company contemplates to move leave encashment from being unfunded to funded through the aegis of the Life Insurance Corporation of India, with a sixty day carry forward of earned leave for encashment being made available to the employees, during and from the financial year 2018-19.

- Remuneration has been reckoned as per the provisions of the Income tax.

- Provision for gratuity and leave encashment are determined for the Company as a whole and with liability not crystalising on the individuals, it is not possible to identify the amounts of KMPs separately.

Note 6 LEASE ARRANGEMENTS

The Company has entered in to cancellable operating lease with an option to renew in respect of certain godowns, offices and residential premises. The expenditure incurred thereon amounting to Rs.74,44,934/- (Previous year Rs. 68,40,437/-) has been charged to the Statement of Profit and Loss.

Note 7 CONTRACTUAL LIABILITIES

All contractual liabilities connected with business operations of the Company have been appropriately provided for.

Note 8 REALISATIONS

In the opinion of the Board and to the best of its knowledge and belief, the value on realisation of current assets, loans and advances, will in the ordinary course of business be not less than the amounts at which they are stated in the Balance Sheet.

Note 9 TRANSFER PRICING

The Management is of the opinion that its transactions are at arm’s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for tax.

Note 10 SEGMENT REPORTING

As per para 12 of Ind-AS-108, two or more operating segments may be aggregated in to a single operating system, if aggregation is consistent with the core principle of Ind-AS, with the segments having similar economic characteristics and are similar in each of the following respects:

- The nature of products and services

- The nature of production process

- The type or class of customers for the products and services

- The methods used to distribute products or provide services

- The nature of their regulatory environment, if applicable

Based on the same, the Company views its business operations in a holistic manner and not as segments. Hence ''Segment Reporting'' being not applicable, has not been presented. Further, it would be suffice to state that in terms of geographical operations, the Company’s operations are concentrated in India with only a minor portion of revenue coming in as part of commission on export services.

Note 11 AMOUNTS IN THE FINANCIAL STATEMENTS

Amounts in the financial statements are rounded off to the nearest lakh and have been re-grouped whenever necessary.


Mar 31, 2017

1. As on the date of the Balance Sheet: (i) The Company has not issued any equity share as fully paid pursuant to contracts without payment being received in cash. (ii) The Company has not issued any fully paid bonus share. (iii) The Company also did not buy back any equity share.

2. Issue/conversion of equity shares: As on the date of the Balance Sheet, the Company has not issued securities like convertible preference shares, convertible debentures etc., which are convertible in to equity/preference shares.

3. Segment reporting

a. Segment policies: Revenues and identifiable operating expenses in relation to the segments are categorized based on items that are individually identifiable to that segment. In cases, where the management believes it is not practical to provide disclosure relating to some expenses, then these expenses are separately disclosed as ‘unallocated'' and adjusted against the total income

4. Contractual liabilities

All contractual liabilities connected with business operations of the Company have been appropriately provided for.

5. Realizations

In the opinion of the Board and to the best of its knowledge and belief, the value on realization of current assets, loans and advances, will in the ordinary course of business be not less than the amounts at which they are stated in the Balance Sheet. of the Company. The accounting policies adopted for segment reporting are in line with accounting policies adopted by the Company for the purpose of financial statements.

6. Business segments: For Management reporting purpose, there are two major operating segments: (i) Products and (ii) Services.

7. The above segments have been identified taking in to account the organization’s structure as well as differing risks and returns of these segments.

8. Transfer pricing

The Management is of the opinion that its transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for tax.

9. Amounts in the financial statements

Amounts in the financial statements are rounded off to the nearest lakh and have been re-grouped whenever necessary.


Mar 31, 2016

1. Disclosure under Micro, Small and Medium Enterprises Development Act, 2006

The Company has not received any information from its vendors regarding their status under Micro, Small and Medium Enterprises Development Act, 2006. Nonetheless, there are no amounts outstanding for a period beyond the stipulated period as specified under the said Act.

2. Related party transactions

a. Names of related parties and description of relationship with the Company

i. Associate companies

J B Advani and Company Private Limited, Ador Welding Limited, Ador Welding Academy Private Limited, Ador Multiproducts Limited and Ador Powertron Limited.

ii. Related personnel (by virtue of shareholding in associate companies): Mr. Deep A Lalvani

iii. Joint venture: Dualrank Fontech (M) Sdn. Bhd.

iv. Wholly owned subsidiary: 3D Future Technologies Private Limited.

v. Key management personnel: Mr. A T Malkani and Mr. H P Ledwani

vi. Relatives of key management personnel: Mrs. Sunila H Ledwani.

3 Defined contribution scheme

Superannuation: The amounts are determined and defrayed to a trust fund, year on year and hence no further liability accrues to the Company on this account as on the date of the Balance Sheet.

4 Defined benefit obligation

Leave encashment: Cumulative defined benefit obligation of compensated absences (unfunded) amounts to '' 530/- lakhs (Rupees five hundred and thirty lakhs) as per actuarial valuation. The same has been provided for in the books of account.

5 Information on joint venture and wholly owned subsidiary

The Company has the following Joint venture and Wholly owned subsidiary as on March 31, 2016 and its proportionate share in the Assets, Liabilities, Income and Expenditure of Joint venture and Wholly owned subsidiary are given below: (Rs. in lakhs)

6 Segment reporting

a. Segment policies: Revenues and identifiable operating expenses in relation to the segments are categorized based on items that are individually identifiable to that segment. In cases, where the Management believes it is not practical to provide disclosure relating to some expenses, then these expenses are separately disclosed as ''unallocated'' and adjusted against the total income of the Company. The accounting policies adopted for segment reporting are in line with accounting policies adopted by the Company for the purpose of financial statements.

b. Business segments: For Management reporting purpose, the Company is organised in to two major operating segments:

c. The above segments have been identified taking in to account the organisation''s structure as well as differing risks and returns of these segments.

7 Contractual liabilities

All other contractual liabilities connected with business operations of the Company have been appropriately provided for other than those referred in Note no. 2.26.

8 Realizations

In the opinion of the Board and to the best of its knowledge and belief, the value on realisation of current assets, loans and advances, will in the ordinary course of business be not less than the amounts at which they are stated in the Balance Sheet.

9 Transfer pricing

Transfer pricing report duly audited was filed for the Assessment Year 2015-16. Similar compliance shall be made by the Company for the Assessment Year 2016-17.

Further, the Management is of the opinion that its transactions are on arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for tax.

10 Amounts in the financial statement

Amounts in the financial statements are rounded off to the nearest lakh and have been re-grouped whenever necessary.


Mar 31, 2015

1. General information

Ador Fontech Limited was incorporated on August 22, 1974 and is a front runner organisation that operates on the philosophy of 'partnering' with its clients in recommending and implementing value-added fusion, surfacing, spraying & environmental solutions. The Company is dedicated to the supply of products, services and solutions that meet and exceed the needs of its end-users under the broad gamut of 'Life enhancement of industrial components'.

2 Related party transactions

a. Names of related parties and description of relationship with the Company

(i) Associate companies: J B Advani and Company Pvt. Ltd., Ador Welding Ltd., Ador Welding Academy Pvt. Ltd., and Ador Powertron Ltd.

(ii) Related personnel (by virtue of shareholding in associate companies): Mrs. Vimla A Lalvani and Mr. Deep A Lalvani

(iii) Joint venture entity: Dualrank Fontech (M) Sdn. Bhd.

(iv) Wholly owned subsidiary: 3 D Future Technologies Private Limited

(v) Whole time Directors(WTD): Mr. H P Ledwani and Mr. A T Malkani

(vi) Relative of WTD/MD: Mrs. Sunila H Ledwani.

3. Defined contribution scheme

Superannuation: The amounts are determined and defrayed to a trust fund, year on year and hence no further liability accrues to the Company on this account as on the date of the Balance Sheet.

4. Defined benefit obligation

Leave encashment: Cumulative defined benefit obligation of compensated absences (unfunded) amounts to Rs. 536/- lakhs (Rupees five hundred and thirty six lakhs) as per actuarial valuation. The same has been provided for in the books of account.

5. Segment reporting

a. Segment policies: Revenues and identifiable operating expenses in relation to the segments are categorised based on items that are individually identifiable to that segment. In cases, where the management believes it is not practical to provide disclosure relating to some expenses, then these expenses are separately disclosed as 'unallocated' & adjusted against the total income of the Company. The accounting policies adopted for segment reporting are in line with accounting policies adopted by the Company for the purpose of financial statements.

6. Contractual liabilities

All other contractual liabilities connected with business operations of the Company have been appropriately provided for.

7. Realisations

In the opinion of the Board and to the best of its knowledge and belief, the value on realisation of current assets, loans and advances, will in the ordinary course of business be not less than the amounts at which they are stated in the Balance Sheet.

8. Transfer pricing

Transfer pricing report duly audited were filed for the Assessment Year 2014-15. Similar compliance shall be made by the Company for the Assessment Year 2015-16. Further, the Management is of the opinion that its transactions are on arm's length basis so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for tax.


Mar 31, 2014

2. Disclosure under Micro, Small and Medium Enterprises Development Act, 2006

The Company has not received any information from its vendors regarding their status under Micro, Small and Medium Enterprises Development Act, 2006. Nonetheless, there are no amounts outstanding for a period beyond the stipulated period as specified under the said Act.

1.2 Related party transactions

a. Names of related parties and description of relationship with the Company

(i) Associate companies:J B Advani and Company Private Limited, Ador Welding Limited, Ador Welding Academy Private Limited and Ador Powertron Limited (ii) Related personnel (by virtue of shareholding in associate companies): Mrs. Vimla A Lalvani and Mr. Deep A Lalvani (iii) Joint venture: Dualrank Fontech (M) Sdn. Bhd. (iv) Key management/managerial personnel (KMP): Mrs. N Malkani Nagpal, Mr. H P Ledwani and Mr. A T Malkani (v) Relatives of KMP: Mrs. Sunila H Ledwani.

1.3 Defined contribution scheme

Superannuation: The amounts are determined and defrayed to a trust fund, year on year and hence no further liability accrues to the Company on this account as on the date of the Balance Sheet.

1.4 Defined benefit obligation

Leave encashment: Cumulative defined benefit obligation of compensated absences (unfunded) amounts to Rs. 535/- lakhs (Rupees five hundred and thirty five lakhs) as per actuarial valuation. The same has been provided for in the books of account.

1.5 Segment reporting

a. Segment policies: Revenues and identifiable operating expenses in relation to the segments are categorised based on items that are individually identifiable to that segment. In cases, where the management believes it is not practical to provide disclosure relating to some expenses, then these expenses are separately disclosed as ''unallocated'' & adjusted against the total income of the Company. The accounting policies adopted for segment reporting are in line with accounting policies adopted by the Company for the purpose of financial statements.

b. Business segments: For Management reporting purpose, the Company is organised in to two major operating segments: (i) Products (ii) Services

1.6 Contractual liabilities

All other contractual liabilities connected with business operations of the Company have been appropriately provided for.

1.7 Realisations

In the opinion of the Board and to the best of its knowledge and belief, the value on realisation of current assets, loans and advances, will in the ordinary course of business be not less than the amounts at which they are stated in the Balance Sheet.

1.8 Transfer pricing

Transfer pricing report duly audited were filed for the Assessment Year 2013–14. Similar compliance will be made by the Company, for the Assessment Year 2014–15. Further, the Management is of the opinion that its transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for tax.

In compliance with the provisions of Section 108 of the Companies Act, 2013 and Rule 20 of the Companies (Management and Administration) Rules, 2014, the Company is pleased to provide its Members facility to exercise their right to vote at the 39th Annual General Meeting (AGM) by electronic means and the business to be transacted through e-voting services provided by National Securities Depository Limited (NSDL).

The instructions for e-voting are as under:

1. In case a Member receives an email from NSDL [for Members whose email ids are registered with the Company/Depository Participant(s)]:

a. Open email and open PDF file ''Ador Fontech – e-voting.pdf'' with your Client ID or Folio No. as password. The said PDF file contains your user ID and password/PIN. Please note that the password is an initial password.

b. Launch the internet browser and type the URL https://www.evoting.nsdl.com.

c. Click on Shareholder-Login.

d. Input User ID, Password and Click Login.

e. Password change menu appears. Change the password/PIN with a new password of your choice with minimum 8 digits/characters or combination thereof. Please note down the new password. It is strongly recommended not to share your password with any other person and take utmost care to keep your password confidential.

f. Home page of e-voting opens. Click on e-voting – Active voting cycles.

g. Select "EVEN" of Ador Fontech Limited.

h. Now you are ready for e-voting as ''Cast Vote'' page opens.

i. Cast your vote by selecting the appropriate option and click on ''Submit'' and also ''Confirm'' when prompted.

j. Upon confirmation, the message ''Vote cast successfully'' will be displayed.

k. Once you have voted on the resolutions, you will not be allowed to modify your vote.

l. Institutional shareholders (Corporate/FIs/FIIs/Trust/Mutual Funds/Banks, etc.) are required to send scanned (PDF/JPEG format) of the relevant Board resolution/Authority letter, etc. together with attested specimen signature of duly authorised signatory(ies) who are authorised to vote, to the Scrutiniser through e-mail ''[email protected]'' with a copy marked to ''[email protected]''.

2. In case a Member receives physical copy of the Notice to the AGM [for Member(s) whose email ids are not registered with the Company/Depository Participant(s) or who have requested for physical copy]:

a. Kindly refer User ID and Password provided in the enclosed ''Attendance Slip''

EVEN (E Voting Event Number) USER ID PASSWORD/PIN

b. Please follow all steps from Sl No. (b) to Sl No. (i) of point no. 1 above, to cast vote.

c. If you are already registered with NSDL for e-voting then you can use your existing user ID and password/PIN for casting your vote.

d. You can also update your mobile number and e-mail id in the user profile details of the folio which may be used for sending future communication(s).

e. The e-voting period commences from 14.08.2014 (9:30 hours) and ends on 16.08.2014 (16.30 hours). During this period, the Shareholders'' of the Company, holding shares either in physical form or in dematerialised form, as on the cut-off date - July 18, 2014, may cast their vote electronically. Once the vote on a resolution is cast by the Shareholder(s), it shall not be allowed to change subsequently.

f. The voting rights of the Shareholder(s) shall be in proportion to their shares reckoned on the paid-up equity share capital of the Company as on the cut off date – July 18, 2014.

g. Mr. Mahesh Shenoy, Company Secretary (FCS Membership#5647 and CP#4262) having office at No. 152, 2/3, 1st floor, 9th Cross, 80 Feet Main Road, J P Nagar 1st Phase, Bangalore 560 078 and failing him, Ms. Manjula Narayan (ACS Membership#28374 and CP#10150), having office at No. 22/A, 4th Cross, Venkateshwara Theatre Road, Devasandra, Krishnarajapuram, Bangalore 560 036; Company Secretary(ies) in practice have been appointed as the Scrutiniser(s) to scrutinise the e-voting process in a fair and transparent manner.

h. The Scrutiniser(s) shall from the conclusion of the e-voting period unblock the votes in the presence of at least two (2) witnesses not in the employment of the Company, make a Scrutiniser''s Report of the votes cast in favour or against and submit it to the Chairman of the Company.

In case of any queries, you may refer to the Frequently Asked Questions (FAQs) for Members and e-voting User Manual available at the download section of https://www.evoting.nsdl.com or contact NSDL – Tel: (022) 24994600.

POLL AT THE MEETING

At the end of the AGM, the Chairman will order for a poll in respect of the items provided in the Notice. Poll will be conducted and supervised by the Scrutiniser(s) to be appointed for this purpose. After conclusion of the poll, the results (including consolidated result of e-voting and poll) will be announced and thereafter the meeting will be declared as closed.


Mar 31, 2013

Note 1

Basis of preparation of financial statements

These financial statements are prepared under the historical cost basis of accounting and evaluated on a going concern basis, with revenues recognised and expenses accounted for on their accrual to comply in all material aspects with the applicable Accounting Principles and applicable Accounting Standards notified u/s. 211 (3C) of the Companies Act, 1956, other relevant provisions of the Companies Act, 1956 and the guidelines issued by the Securities and Exchange Board of India (SEBI).

Use of estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported balances of assets and liabilities as on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. All the assets and liabilities have been classified as current or non current as per the Company''s normal operating cycle and other criteria set out in Schedule VI to the Companies Act, 1956. Accounting estimates could change from period to period. Actual results could differ from these estimates. Appropriate changes in estimates are made as and when the Management becomes aware of the changes in the circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which the changes are made and if material, their effects are disclosed in the notes to the financial statements. The following significant accounting policies have been adopted in the preparation and presentation of the financial statements:

2.1 Disclosure under Micro, Small and Medium Enterprises Development Act, 2006

The Company has not received any information from its vendors regarding their status under Micro, Small and Medium Enterprises Development Act, 2006. Nonetheless, there are no amounts outstanding for a period beyond the stipulated period as specified under Micro, Small and Medium Enterprises Development Act, 2006.

2.2 Related party transactions

(a) Names of related parties and description of relationship with the Company

(i) Associate companies:J B Advani and Company Private Limited, Ador Welding Limited, Ador Welding Academy Private Limited, Ador Multiproducts Limited and Ador Powertron Limited

(ii) Related personnel (by virtue of shareholding in associate companies):

Mrs. Vimla A Lalvani and Mr. Deep A Lalvani

(iii) Joint venture : Dualrank Fontech (M) Sdn. Bhd.

(iv) Key managerial personnel: Mrs. N Malkani Nagpal

Mr. H P Ledwani

Mr. A T Malkani (v) Relatives of key management personnel: Mrs. Sunila H Ledwani

2.3 Defined contribution scheme

Superannuation:

The amounts are determined and defrayed to a trust fund, year on year and hence no further liability accrues to the Company on this account as on the date of the Balance Sheet.

2.4 Defined benefit obligation

Leave encashment:

Cumulative defined benefit obligation of compensated absences (unfunded) amounts to Rs.536/- lakhs (Rupees five hundred and thirty six lakhs) as per actuarial valuation. The same has been provided for in the books of account.

2.5 Segment reporting

(a) Segment policies

Revenues and identifiable operating expenses in relation to the segments are categorised based on items that are individually identifiable to that segment. In cases, where the management believes it is not practical to provide disclosure relating to some expenses, then these expenses are separately disclosed as ‘unallocated'' and adjusted against the total income of the Company. The accounting policies adopted for segment reporting are in line with accounting policies adopted by the Company for the purpose of financial statements.

(b) Business segments

For Management reporting purpose, the Company is organised in to two major operating segments: (i) Products

(ii) Services

2.6 Contractual liabilities

All other contractual liabilities connected with business operations of the Company have been appropriately provided for.

2.7 Realisations

In the opinion of the Board and to the best of its knowledge and belief, the value on realisation of current assets, loans and advances, will in the ordinary course of business be not less than the amounts at which they are stated in the Balance Sheet.

2.8 Transfer pricing

A comprehensive system of maintenance of information and documents is required by the transfer pricing legislation under sections 92-92F of the Income-tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company is in the process of documentation of international transactions entered in to with associate enterprises during the financial year and expects such records to be in existence at the time of filing of the income-tax return. Management is of the opinion that its international transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for tax.


Mar 31, 2012

The financial statements for the year ended March 31, 201 1 was prepared as per the then-applicable pre-revised Schedule of the Companies Act, 1956. Consequent to the notification of the revised schedule VI under the Companies Act, 1956, the financial statements for the year ended March 31, 2012 are prepared as per the revised schedule VI. Accordingly, the previous year's figures have also been re-classified to conform to this year's classification. The adoption of revised schedule VI for the previous year's figures does not impact recognition and measurement principles followed for the preparation of these financial statements.

NOTE 1: Notes on accounts as per revised schedule Shareholders' Fund

The Company has only one class of shares, referred to as equity shares having a par value of Rs 2/- per share. Each holder of equity shares is entitled to one vote per share and dividend as may be declared at the Annual General Meeting. The right of the shareholders is governed by the Articles of Association and the Companies Act.

(c) (i) As on the Balance sheet date (a) The Company did not issue any equity shares as fully paid pursuant to contracts, without payment being received in cash (b) The Company did not issue any fully paid bonus shares.

(ii) The Company also did not buy back any equity shares as on the date of the Balance sheet.

(d) Issue/conversion of equity shares:

As on the date of the Balance sheet, the Company has not issued any securities like convertible preference shares, convertible debentures etc., which are convertible in to equity/preference shares.

1.2 Deferred tax

Deferred tax is recognized subject to consideration of prudence on timing difference, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

Deferred tax assets and deferred tax liabilities are offset when there is a legal enforceable right to set off assets against liabilities representing current tax and where the deferred tax assets and deferred tax liabilities relate to taxes on income levied by the same governing taxation laws.

1.3Operating lease

The Company has entered in to cancellable operating lease with an option to renew in respect of certain god owns, offices and residential premises. The expenditure incurred thereon amounting to Rs 62,21,948 (Previous year Rs 72,96,013) has been charged to the Statement of profit and loss.

1.4 Disclosure under Micro, Small and Medium Enterprises Development Act, 2006

The Company has not received any information from its vendors regarding their status under Micro, Small and Medium Enterprises Development Act, 2006. Nonetheless, there are no amounts outstanding for a period beyond the stipulated period as specified under Micro, Small and Medium Enterprises Development Act, 2006.

1.5Defined contribution scheme

Superannuation: The amounts are determined and defrayed to a trust fund year on year and hence no further liability accrues to the Company on this account as on the date of the Balance sheet.

1.6Defined benefit obligation

Leave Encashment: Defined benefit obligation of compensated absence (unfunded) amounts to Rs.477 lakh (Rupees four hundred and seventy seven lakh) as per actuarial valuation. The same has been provided for in the books of account.

(a) *Inter-corporate-deposit provided by Ador Fontech Limited to Ador Powertron Limited has been repaid in full during the year.

(b) As regards related parties there are no balances due or outstanding as at March 31, 2012.

(c) Previous year's data have been reflected in brackets.

1.7Segment reporting

(a) Segment policies: Revenues and identifiable operating expenses in relation to the segments are categorized based on items that are individually identifiable to that segment. In cases where the management believes it is not practical to provide disclosure relating to some expenses, then these expenses are separately disclosed as' unallocated' and adjusted against the total income of the Company.

(b) Business segments: For Management reporting purposes, the Company is organized in to two major operating segments:

(i) Products

(ii) Services

The above segments have been identified taking in to account the organization structure as well as the differing risks and returns of these segments.

(c) The accounting policies adopted for segment reporting are in line with the accounting policies adopted by the Company for the purpose of these financial statements.

1.8 Realizations

In the opinion of the Board and to the best of its knowledge and belief, the value on realization of current assets, loans and advances, will in the ordinary course of business be not less than the amounts at which they are stated in the Balance sheet.

1.9Contractual liabilities

All other contractual liabilities connected with business operations of the Company have been appropriately provided for.

1.10Amounts in the financial statements Amounts in the financial statements are rounded off to rupees in lakhs.


Mar 31, 2011

1. Quantitative information as required under paragraphs 3 and 4 of Part II of Schedule VI of the Companies Act, 1956.

The installed capacity is the annual capacity and is computed based on the maximum utilisation of plant and machinery. Installed capacity is as certified by the management and relied upon by the Auditors.

2. Details of goods traded:

The Company deals with innumerable items of welding consumables, equipment spares and refurbishment products of various sizes and grades which are sold under various measures. Hence, it is impractical to submit relevant quantitative particulars of each such items traded by the Company.

3. Segment reporting under Accounting Standard 17:

a. Primary business segments - Revenue from products (manufacturing and trading activities)

- Revenue from job works and other income

4. Related party disclosure under Accounting Standard 18:

a. Holding Companies : Nil

b. Subsidiary Companies : Nil

c. Associate Companies : J B Advani and Company Private Limited (JBA)

Ador Welding Limited (AWL)

Ador Powertron Limited (APL)

d. Key management personnel : Mr. H P Ledwani

e. Relatives of key management personnel : Mrs. Sunila H Ledwani (where transactions have taken place)

5. Disclosure for leases under Accounting Standard 19:

a. Financial Lease:

The net carrying amount of assets acquired under financial lease: Nil

b. Operating Lease:

The Company has entered in to cancellable operating lease with an option to renew in respect of certain godowns, offices and residential premises. The expenditure incurred thereon amounting to Rs. 72,96,014/- (Previous year Rs. 52,48,900/-) has been charged to the Profit and loss account.

6. Employee benefits:

The Company has determined liability for Employee benefits as at March 31, 2011 in accordance with the Accounting Standard 15

b. Defined benefit obligation of compensated absence (unfunded) amounts to Rs. 4,05,71,391/- (Rupees four crore five lakh seventy one thousand three hundred and ninety one only) as at March 31, 2011.

7. Amount transferred to the Investor education and protection fund during the year was Rs. 2,62,452/- (Rupees two lakh sixty two thousand four hundred and fifty two only).

8. a. Working capital facilities from banks are secured by a charge on fixed assets, book debts and hypothecation of the Companys stock, both present and future.

b. The charge on movable and immovable properties (both present and future) in favour of the Companys bankers also covers guarantees and letters of credit, if any, issued by them in the normal course of business.

9. Micro, Small and Medium Enterprises Development Act, 2006:

The Company has not received any intimation from its vendors regarding their status under Micro, Small and Medium Enterprises Development Act, 2006. Nonetheless, there are no amounts outstanding for a period beyond the stipulated period as specified under Micro, Small and Medium Enterprises Development Act, 2006.

10. Figures in brackets indicate negative values.

11. Figures of the previous year have been regrouped/recast wherever necessary, to conform to the current periods classification.


Mar 31, 2010

1. Quantitative information as required under paragraphs 3 and 4 of Part II of Schedule VI of the Companies Act, 1956.

2. Disclosure for leases under Accounting Standard 19: Operating Lease

The Company has entered in to cancellable operating lease with an option to renew in respect of certain godowns, offices and residential premises. The expenditure incurred thereon amounting to Rs. 52,48,900 (Previous year Rs. 57,22,864) has been charged to the Profit and Loss Account.

3. Amount transferred to the Investor education and protection fund during the year was Rs. 1,86,381/- (Rupees one lakh eighty six thousand three hundred and eighty one).

4. a. Working capital facilities from banks are secured by a charge on fixed assets, book debts and hypothecation of the Company’s stock, both present and future.

b. The charge on movable and immovable properties (both present and future) in favour of the Company’s bankers also covers guarantees and letters of credit, if any, issued by them in the normal course of business.

5. Employee benefits

The Company has determined the liability for employee benefits as at March 31, 2010 in accordance with the Accounting Standard 15.

b. Defined benefit obligation of compensated absence amounts to Rs. 3,06,18,834/- (Rupees three crore six lakh eighteen thousand eight hundred and thirty four) as on March 31, 2010.

As at As at 6. Contingent liabilities: 31.03.10 31.03.09 Rs. Rs. a. Outstanding guarantees Guarantees (Bank and Corporate) 2,75,46,144 1,70,12,032 b. Claims against the Company not acknowledged as debt Demand raised under excise duty 70,73,413 70,73,413

No provision has been made in the Company’s accounts in respect of the above demand raised by the Central Excise Department as regards levy of excise duty on traded goods. The Company has obtained legal opinion that the demand is not sustainable and has filed an appeal dated 19.11.08. An amount of Rs. 10,00,000 (Rupees ten lakhs only) has since been paid under protest on specific demand by the authorities and the same is in waiver of all other pre-deposit requirements. A stay order has been granted recognising cenvat credit and pending disposal of the appeal.

7. Micro, Small and Medium Enterprises Development Act, 2006

The Company has not received any intimation from its vendors regarding their status under Micro, Small and Medium Enterprises Development Act, 2006. Nonetheless, there are no amounts outstanding for a period beyond the stipulated period as specified under Micro, Small and Medium Enterprises Development Act, 2006.

8. Figures in brackets indicate negative values.

9. Figures of the previous year have been regrouped/recast wherever necessary, to conform to the current period’s classification.

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