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Notes to Accounts of Ador Welding Ltd.

Mar 31, 2015

Note 1- Background of the Company

Incorporated in 1951, Ador Welding Ltd. (AWL) is one of India's leading player in the field of Welding Products, Technologies and Services. The Company is also engaged in providing customized solutions for multi-disciplinary projects and contracts related to Refineries, Oil & Gas, Petrochemicals, Fertilizers, Steel Plants, Pharma, Water, other chemical process industries, etc.

Note 2 - Contingent Liabilities not provided for

(Rs. in lacs) Particulars Year ended Year ended 31st March, 2015 31st March, 2014

a) Disputed Sales Tax as the matters are in appeal (advance paid Rs.31 lacs Previous Year Rs.27 lacs) 287 279

b) Disputed Excise duties as the matters are in appeal (advance paid Rs.2 lacs; Previous Year Rs.2 lacs) 115 123

c) On account of bills discounted by the Company 27 222

d) Bonds / Undertakings given by the Company under Concessional duty / exemption scheme / Waiver of penalty to Customs Authorities. 96 90

e) Standby Letter of Credit issued to Bank Hapoalim Ltd. / HDFC Bank Ltd.- Hongkong for loans drawn / to be drawn by a subsidiary - 73

f) Other matters 152 110

Note 3 - Revenue expenditure incurred during the year on Research and Development, through the natural heads of account, amounts to Rs. 307 lacs (Previous year Rs. 296 lacs) (including Depreciation Rs. 20 lacs; Previous year Rs. 29 lacs) and Capital expenditure thereof amounts to Rs. 46 lacs (Previous year Rs. 63 lacs).

C) Other Disclosures

1. Segments have been identified in line with the Accounting Standard on Segment Reporting (AS - 17) taking into account the organisation structure as well as differential risks and returns of these segments.

2. The Company has disclosed Business Segment as the primary segment.

3. Types of Products and Services in each Business Segment:

Business Segment Types of Products and Services

a) Consumables - Electrodes, Wires, Agency Items related to consumables.

b) Equipment & - Equipment, Spares, cutting products and Agency Items Project Engineering related to Equipment and Cutting Products & Design, Engineering, Procurement and commissioning of Flares Incinerators, Furnaces, etc.

4. Segment Revenues, Results, Assets and Liabilities include the respective amounts identifiable to each of the segment and amounts allocated on a reasonable basis.

Note 4 - Related Parties Disclosure A. Relationships

Relationship Name of the Person / Company

i. Where control exists

a) Holding Company : J. B. Advani & Co. Private Limited

b) Subsidiary Company Ador Welding Academy Private Limited & Fellow subsidiaries Plasma Laser Technologies Ltd. (Under Liquidation)

Plasma Laser Technologies, North America Inc. (Under Liquidation)

Aluminium Hybrid Systems Ltd. (Under Liquidation)

ii. Other related parties with whom transactions have taken place during the year

a) Companies in which Holding Company has significant influence and its associates :

Ador Powertron Limited Ador Fontech Limited Ador Multiproducts Limited Mack Valves India Private Limited Ador Digatron Private Limited Ador Green Energy Private Limited

b) Key Management Personnel Ms. A. B. Advani

Mr. S. M. Bhat

c) Relative of Director Mr. Ajit T. Mirchandani

Notes:

1. Related Party relationship is as identified by the Company and relied upon by the Auditors.

2. The Company has issued Standby Letter of Credit to Bank Hapoalim Limited and HDFC Bank Limited - Hongkong for Rs. Nil (Previous year Rs. 1,127 lacs) towards security for loan taken by M/s. Plasma Laser Technologies Limited.

3. The Company has shared facility limits offered by HDFC Bank Limited to the extent of Rs. 100 lacs by ear marking working capital funds in favour of Ador Welding Academy Private Limited.

4. Considering the downturn of the operation, the Employees of Plasma Laser Technologies Ltd. (PLT), had approached Israel Court in FY 2014-15 for the purpose of liquidation and considering the same, Israel Court has appointed the Official Liquidator to evaluate various options, including revival or liquidation. Hence, the management believes that the Company has lost its control on the affairs and assets of such subsidiary, as the same is now vested with such Official Liquidator appointed by Israel Court. Further, the Management believes that there are no claims expected on the Company on account of PLT.

Note 5 - Employee Benefits

The disclosures required as per Accounting Standard 15 - Employee Benefits (Revised 2005), are as under: Brief description of the Plans:

The Company has various schemes for employee benefits such as provident fund, superannuation and gratuity. In case of funded schemes, the funds are administered through trustees / appropriate authorities. The Company's defined contribution plans are superannuation and provident fund and the Company has no further obligation beyond making the contributions. The Company's defined benefit plans consist of provident fund and gratuity. The employees of the Company are entitled to compensated absences as per the Company's policy.

I. Defined Contribution Plans:

(i) Provident Fund

(ii) Superannuation Fund

(iii) Employees State Insurance Fund

During the year, the Company has recognized the following amounts in the Statement of Profit and Loss*:

*included in Note 27- 'Employee Benefits Expense'

II. Defined Benefit Plans (Disclosure based on actuarial reports):

(a) Contribution to Gratuity Fund (Funded Scheme)

(x) The Liability for compensated absence as at 31st March 2015 aggregates to Rs. 183 lacs as against Rs. 150 lacs in the previous year.

Note 44 - Lease arrangements - Operating Lease

The Company's significant leasing arrangements are in respect of residential flats and office premises taken on cancellable lease. The aggregate amount of operating lease rent debited to Statement of Profit and Loss during the year is Rs. 85 lacs (Previous year Rs. 79 lacs).

Note 6 - Lease Obligation - Finance Lease

Net carrying amount of carrying assets as at Balance Sheet date - Rs. 42 lacs (Previous year Rs. 140 lacs). The minimum future lease rentals and present value of minimum lease rentals payable are as follows:

Note 7 - Amounts below Rs 0.49 lac have been rounded off as per rounding off norms of the Company.

Note 8 - The Figures for the previous year are regrouped / re-arranged, wherever necessary.


Mar 31, 2014

Note 1 - Background of the Company

Incorporated in 1951, Ador Welding Ltd. (AWL) is one of India''s leading players in the field of Welding Products, Technologies & Services. The Company is also engaged in providing customized solutions for multi-disciplinary projects and contracts related to Refineries, Oil & Gas, Petrochemicals, Fertilizers, Steel Plants, Pharma, Water & other chemical process industries.

Note 2 - Contingent Liabilities not provided for

(Rupees in lacs)

Particulars As at As at 31st March,2014 31st March,2013

a) Disputed Sales Tax as the matters are in appeal (advance paid Rs. 27 lacs; Previous Year Rs. 9 Lacs) 279 68

b) Disputed Excise duties as the matters are in appeal (advance paid Rs. 2 lacs; Previous Year Rs. 2 lacs) 123 115

c) On account of bills discounted by the Company 222 130

d) Bonds / Undertakings given by the Company under Concessional duty / exemption scheme / Waiver of penalty to Customs Authorities 90 110

e) Standby Letter of Credit issued to Bank Hapoalim Ltd. / HDFC Bank Ltd. - Hongkong for loans drawn / to be drawn by a subsidiary 73 187

f) Other matters 110 83

Note 3 - Revenue expenditure incurred during the year on Research & Development, through the natural heads of account, amounts to Rs. 296 Lacs (Previous Year Rs. 449 Lacs) (including Depreciation Rs. 29 Lacs; Previous Year Rs. 31 Lacs) and Capital expenditure thereof amounts to Rs. 63 Lacs (Previous Year Rs. 11 Lacs).

Note 4 - Exceptional Items

a) Investment in Plasma Laser Technologies Ltd (PLT) (Subsidiary).

The Company has an investment of Rs. 927 Lacs (PY Rs. 543 Lacs) in PLT and has also issued Standby Letter of Credits (SBLC) to Banks aggregating to Rs. 1,127 Lacs (PY Rs. 187 Lacs) for loans drawn / to be drawn by PLT.

PLT has incurred losses since the date of acquisition. The accumulated losses of PLT as at 31st March 2014 exceeded its net worth. The Company has evaluated its investment for the purpose of determination of potential diminution in value and based on such evaluation and considering the underlying factors including downturn in business and decrease in related activities, has recognized a provision for diminution in the value of investment in PLT as at 31st March 2014 amounting to Rs. 927 Lacs and has also provided for the SBLC amounting to Rs. 1,054 Lacs (being the amount drawn by PLT) both of which have been shown as exceptional items in the Statement of Profit and Loss Account.

b) Surplus on sale of property of Rs 503 Lacs (Refer Note 39B(a))

Note 5 - Employee Benefits

a) An amount of Rs.113 Lacs (Previous year Rs. 130 Lacs) towards defined contribution plans is recognised as expense in the Statement of Profit and Loss.

b) The following table sets out the status of the gratuity plan as required under AS 15 (Revised 2005) and the reconciliation of opening and closing balances of the present value of the defined benefit obligation:

Note 6 - Lease arrangements - Operating Lease

The Company''s significant leasing arrangements are in respect of residential flats and office premises taken on cancellable lease. The aggregate amount of operating lease rent debited to Statement of Profit and Loss during the year is Rs 79 Lacs (Previous year Rs. 89 Lacs)

Note 7 - Lease Obligation - Finance Lease

Net carrying amount of carrying assets as at Balance Sheet date - Rs.141 Lacs (Previous year Rs 170 Lacs)

Note 8 - Amounts below Rs 0.50 lac have been rounded off as per rounding off norms of the Company.

Note 9 - The Figures for the previous year are regrouped/ re-arranged, wherever necessary.


Mar 31, 2013

Note 1 A - Rights, preferences and restrictions attached to shares

The Company has only one class of shares referred fo as equity shares having a par (face) value of Rs. 10/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend.

In the event of liquidation of the Company, the equity shareholders will be entitled to receive the remaining assets of the Company, after distribution of all the preferential amounts, in proportion to their shareholding.

Note 2 - In the opinion of the Management, no item of current assets, including inventories has a value on realisation in the ordinary course of business, which is less than the amount at which it is stated in the Balance Sheet.

Note 3 - Revenue expenditure incurred during the year on Research and Development, through the natural heads of account, amounts to Rs. 448.76 lacs (Previous year Rs. 253.62 lacs) (including Depreciation Rs. 30.80 lacs; Previous year Rs. 36.66 lacs) and Capital expenditure thereof amounts to Rs. 11.45 lacs (Previous year Rs. 64.27 lacs).

Note 4 - Employee Benefits

a) An amount of Rs,118.23 Lacs (Previous year Rs.106.86 lacs) towards Defined Contribution Plans is recognised as expense in the Profit and Loss Account.

b) The following table sets out the status of the gratuity plan as required under AS 15 (Revised 2005) and the reconciliation of opening and closing balances of the present value of the Defined Benefit Obligation.


Mar 31, 2012

Note 1 - Rights, preferences and restrictions attached to shares

The Company has only one class of shares referred to as equity shares having a par (face) value of Rs. 10/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend.

In the event of liquidation of the Company, the equity shareholders will be entitled to receive the remaining assets of the Company, after distribution of all the preferential amounts, in proportion to their shareholding.

(i) Working Capital facilities from Banks are secured by hypothecation of stocks and other tangible movable assets of the Company, both present & future and book debts in favour of Bank of Baroda and HDFC Bank Limited. The said facilities are also secured by way of pari-passu charge on the entire plant and machinery and other moveable fixed assets of the Company and on the land & building at the Company's Silvassa Unit.

(ii) Guarantees given by banks to third parties amounting to Rs.848.05 lacs; (Previous year Rs. 400.48 lacs) on behalf of the Company are secured against securities mentioned in (i) above.

Note 2 - Contingent Liabilities not provided for

(Rupees in lacs)

Particulars 31.03.2012 31.03.2011

a) Disputed Sales Tax as the matters are in appeal (advance paid Rs.9.21 lacs; Previous year Rs.9.21 lacs) 67.52 67.52

b) Disputed Excise duties as the matters are in appeal (advance paid Rs.3.15 lacs; Previous year Rs.3.15 lacs) 113.78 103.39

c) On account of bills discounted by the Company 999.98 Nil

d) Bonds / Undertakings given by the Company under Concessional duty / exemption scheme to Customs Authorities. 78.79 147.28

e) Other matters 72.09 74.86

Note 3 - Estimated amount of Contracts remaining to be executed on Capital Account and not provided for (Net of advances) 312.90 215.65

Note 4 - In the opinion of the Management, no item of current assets, including inventories has a value on realisation in the ordinary course of business, which is less than the amount at which it is stated in the Balance Sheet.

Note 5 - Revenue expenditure incurred during the year on Research and Development, through the natural heads of account, amounts to Rs.253.62 lacs (Previous year Rs. 170.00 lacs) (including Depreciation Rs. 36.66 lacs; Previous year Rs.30.97 lacs) and Capital expenditure thereof amounts to Rs.64.27 lacs (Previous year Rs.69.82 lacs).

C. Other Disclosures:

1. Segments have been identified in line with the Accounting Standard on Segment Reporting (AS - 17) taking into account the organisation structure as well as differential risks and returns of these segments.

2. The Company has disclosed Business Segment as the primary segment.

4. The Segment Revenues, Results, Assets and Liabilities include the respective amounts identifiable to each of the segment and amounts allocated on a reasonable basis.

Note 6 - Employee Benefits

a) An amount of Rs. 106.86 lacs (Previous year Rs.98.77 lacs) towards defined contribution plans is recognised as expense in the Profit and Loss Account.

c) Provident Fund Liability

In case of certain employees, the Provident Fund contribution is made to a trust administered by the Company. In terms of the guidance note issued by the Institute of Actuaries of India, the actuary has provided a valuation of Provident Fund liability based on the assumptions listed below. The assumptions used in determining the present value obligation of the interest rate guarantee under deterministic approach are:- Remaining terms of maturity - 7 years Expected guaranteed interest rate - 8.25% Discount rate for the remaining term to maturity of interest portfolio - 8.60%* takes into account the inflation, promotions and other relevant factors.

Note 7 - The financial statements for the year ended 31st March,2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act 1956. Consequent to the notification under the Companies Act,1956,the financial statements for the year ended 31st March,2012 are prepared under revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year's classification.

Note 8 - Significant accounting policies and practices adopted by the Company are as disclosed in the Statement annexed to these Financial Statements as Annexure I.

 
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