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Notes to Accounts of CMI FPE Ltd.

Mar 31, 2015

Corporate Information:

The principal activities of the Company comprise manufacturing and installation of cold rolling mills, galvanizing lines, colour coating lines, tension levelling lines, skin pass mills, acid regeneration plants, wet flux line and pickling lines for ferrous and non-ferrous industries world wide.

1. Terms/rights attached to equity shares:

The Company is having only one class of equity shares having par value of Rs. 10/- each. Each holder of equity share is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees. The dividend, if proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive remaining assets of the Company, after the distribution of all preferential amounts. The distribution will be in proportion of the paid up share capital held by the shareholders.

2. Since the Company is a project management company and engaged in the business of putting up projects for its clients on turnkey basis, the Company is following percentage of completion method as prescribed under Accounting Standard-7 Construction contracts under which project stock, manufactured items and other direct cost are considered as project cost incurred till date. Inventory procured for a specific project is immediately booked to the project as consumed and is not considered as inventory. In view of the above, itemwise break-up for cost of materials consumed is not available in the system.

(Rs. in lacs) Note Particulars As at As at March 31,2015 March 31,2014

3. Contingent liabilities and commitments (to the extent not provided for)

(i) Contingent liabilities

(a) Claims against the Company not acknowledged as debt

Service tax* 733.83 413.08

Sales tax** 16.33 16.33

Excise duty*** 180.93 88.33

Labour matter - 5.00

Taxation matters:

against the Company not acknowledged as debt and not provided for, relating to issues of deductibility and taxability in respect of which the Company is in appeal and exclusive of effect of similar matters in respect of assessments remaining to be completed:

- Income Tax 448.37 437.19

2) Items in respect of which the company has succeeded in appeal, but the Income-tax Department is pursuing appeal and exclusive of effect of similar matters in respect of assessments remaining to be completed:

- Income Tax 30.67 30.67

(b) Other matters for which the Company is contingently liable

Advance licence - custom duty elements 38.31 1,087.12

(ii) Commitments

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for

Tangible assets 110.66 113.58

4. Additional information to the financial statements (contd.)

* Matters relating to:

(i) During the period October 2007 to February 2008, the Company had paid service tax on the Commission charged by their non-resident commission agents for the services rendered in connection with sales of the Company's finished goods in overseas market and availed Cenvat Credit. The Central Excise department had issue a show cause Notice No. F.No.V(CH84)3-06/Dem./2009-10, dated 29.10.2009 for denial of wrongly availed Cenvat Credit of Rs. 140.41 lacs of service tax paid as input service during the period October 2007 to February 2008. The Commissioner of Central Excise, Customs and Service tax vide their order No.14/ Dem./Vapi/2010, dated 12.04.2010 upheld the service tax liability of Rs. 300.51 lacs (As at March 31,2014: Rs. 272.67 lacs) including interest of Rs. 160.08 lacs (As at March 31,2014: Rs. 132.24 lacs) with additional penalty of Rs. 140.43 lacs (As at March 31, 2014: Rs. 140.43 lacs). An appeal has been filed by the Company before CESTAT, Ahmedabad vide appeal No.STS/326/2010. The Honorable CESTAT, Ahmedabad, has passed a stay order in favour of the Company and dispensed with the condition of pre-deposit of the duty and penalty amount to the tune of Rs. 440.92 lacs (As at March 31, 2014: Rs. 413.08 lacs) vide order No. 5/570/WZB/ AHD/2011, dated 05.04.2011;

(ii) During the period April 2009 to July 2014, tthe Company had paid service tax on the Commission charged by their non-resident commission agents for the services rendered in connection with sales of the Company's finished goods in overseas market and availed Cenvat Credit. The Central Excise department had issue a show cause Notice No. SCN NO.05/COMMR/GLT-1/CMI/CEN-D/NON-CERA/2014-15 Dated 26.09.2014 for denial of wrongly availed Cenvat credit of Rs. 184.64 lacs of service tax paid as input service. The Commissioner of Central Excise and Service tax LTU upheld the service tax liability of Rs. 292.91 lacs (As at March 31,2014: Rs. Nil) including interest of Rs. 108.27 lacs (As at March 31,2014: Rs. Nil). The Company has replied to show cause notice.

** Matters relating to (i) detention of goods despatched by vendor of the Company at site of customer without valid TIN/CST mentioned on the invoice on 19.02.2013; (ii) omission of trading purchases and adoption of wrong output tax on lubricants noticed during VAT Audit for the year 2012-13 against which the Company has filed the petition before Joint Commissioner (Vellore) and appeal before Appellate Deputy Commissioner III Chennai respectively.

*** Matter relating to non-reversal of proportionate Cenvat Credit on inventory shortages identified during the course of EA2000 audit conducted for the period from April 2009 to March 2011 against which the Company has filed the appeal. The Commissioner of Central Excise LTU, upheld the excise duty liability of Rs. 180.93 lacs (As at March 31,2014: Rs. 88.33 lacs) including interest of Rs. 92.60 lacs (As at March 31,2014: Rs. Nil).

5. Additional information to the financial statements (contd.)

Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management. This has been relied upon by the auditors.

6. Disclosures under Accounting Standards (Contd.)

Segment information

Geographical Segments:

The Company has considered geographical segments as the primary segment for disclosure. For the purpose of Segment reporting, the Company has identified two geographical segments which comprises of Overseas and India. The segments have been identified taking into account the differing risks and returns relating to these geographical areas.

7. Related party transactions

a Details of related parties:

Description of relationship Names of related parties

Holding Company Cockerill Maintenance & Ingenierie SA

Fellow Subsidiaries (with whomCMI Industry Automation Private Company has Limited made transactions during the year) CMI UVK GmbH CMI M W Engineering GmbH CMI Tech5i Pastor SAS

Key Management Personnel (KMP) Mr. Raman Madhok - Managing Director (w.e.f. October 9, 2013) Mr. Sanjoy Kumar Das - Managing Director (from April 15, 2013 upto October 8, 2013) Mr. Jean Gourp - Managing Director (upto April 15, 2013 and thereafter Executive Director till April 30, 2013)

Note: Related parties have been identified by the Management.

8. Operating Lease:

The Company has entered into operating lease or leave and licence arrangements for residential premises/ godowns (including furniture and fittings therein as applicable). These leasing arrangements which are not non-cancellable range between 11 months to 36 months.

9. The Company has also entered into an agreement with CMI SA for providing knowhow, access to various industrial processes, development and implementation of strategy, access to best practices for business operations, exploitation of knowledge for new business initiatives, access to new global business opportunities, etc.

10. Due to stress in the steel industry, one of the major customers to whom the net exposure of the Company is Rs. 1,943.76 lacs has been experiencing cash flow problems during the year. However, the management is confident of receiving the amount and believes that no provision is necessary.

11. Previous year's figures have been regrouped/reclassified wherever necessary to correspond with the current year's classification /disclosure.


Mar 31, 2014

(Rs in lacs) Note Particulars As at As at March March 31-2014 31-2013 1.1 Contingent liabilities and commitments (to the extent not provided for)

(i) Contingent liabilities

(a) Claims against the Company not acknowledged as debt Service tax* 413.08 387.81

Sales tax** 16.33 -

Excise duty*** 88.33 -

Labour matter 5.00 5.00

Taxation matters:

1) Demands against the Company not acknowledged as debt and not provided for, relating to issues of deductibil- liy and taxability in respect of which the Company is in appeal and exclusive of the effect of similar matters in respect of assessments remaining to be completed:

- Income Tax 437.19 57.95

2) Items in respect of which the company has succeeded in appeal, but the Income-tax Department is pursuing appeal and exclusive of effect of similar matters in respect of assessments remaining to be completed:

- Income Tax 30.67 30.67

(b) Other matters for which the Company is conting- ently liable Advance licence - custom duty elements 1,087.12 1,346.13

(ii) Commitments

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for

Tangible assets 113.58 229.40

Notes forming part of the financial statements

Note 2 Additional information to the financial statements (contd.)

* During the period October 2007 to February 2008, the Company had paid service tax on the Commission charged by their non-resident commission agents for the services rendered in connection with sales of the Company''s fnished goods in overseas market and availed Cenvat Credit. The Central Excise department had issued a show cause Notice No. F.No.V(CH84)3-06/Dem./2009-10, dated 29.10.2009 for denial of wrongly availed Cenvat Credit of Rs. 140.41 lacs of service tax paid as input service during the period October 2007 to February 2008. The Commissioner of Central Excise, Customs and Service tax vide their order No.14/Dem./Vapi/2010, dated 12.04.2010 upheld the service tax liability of Rs. 272.67 lacs (As at March 31, 2013: Rs. 247.40 lacs) including interest of Rs. 132.24 lacs (As at March 31, 2013: Rs. 106.97 lacs) with additional penalty of Rs. 140.43 lacs (As at March 31, 2013: Rs. 140.43 lacs). An appeal has been fled by the Company before CESTAT, Ahmedabad vide appeal No.STS/326/2010. The Honorable CESTAT, Ahmedabad, has passed a stay order in favour of the Company and dispensed with the condition of pre-deposit of the duty and penalty amount to the tune of Rs. 413.08 lacs (As at March 31, 2013: Rs. 387.81 lacs) vide order No. 5/570/WZB/AHD/2011, dated 05.04.2011.

** Matters relating to (i) detention of goods despatched by vendor of the Company at site of customer without valid TIN/CST mentioned on the invoice on 19.02.2013; (ii) omission of trading purchases and adoption of wrong output tax on lubricants noticed during VAT Audit for the year 2012-13 against which the Company has fled the appeal/is in process of fling of appeal respectively.

*** Matter relating to non-reversal of proportionate Cenvat Credit on inventory shortages identified during the course of EA2000 audit conducted for the period from April 2009 to March 2011 against which the Company has fled the appeal.

Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management. This has been relied upon by the auditors.

Notes forming part of the financial statements

Note 3 Additional information to the financial statements (contd.)

3.1 Details on derivatives instruments and unhedged foreign currency exposures

The Company uses Forward Exchange Contracts to hedge its exposure in foreign currency related to firm commitments and highly probable forecast transactions. The information on Derivative Instruments is as follows:

Details of Forward contracts outstanding in respect of recognised assets, firm commitments and highly probable forecast transactions are as below:

Note: The Company''s records do not distinguish between raw materials, components and stores and spares. Therefore, separate figures for each category of imported items have not been given. The above amounts have been computed based on the purchase bills to the extent identified by the Company, for imported items. The total import purchases of Rs. 6,666.86 lacs (Year ended March 31, 2013: Rs. 8,228.55 lacs) comprise of purchases of goods amounting to Rs. 1,926.42 lacs (Year ended March 31, 2013: Rs. 1,540.73 lacs) on CFR/CPT/ EXW/FCA/FOB/FOT basis.

Note: The total export sales (made under long-term contracts) of Rs. 20,135.92 lacs (Year ended March 31, 2013: Rs. 20,067.83 lacs) comprise of sale of goods amounting to Rs. 9,900.26 lacs (Year ended March 31, 2013: Rs. 7,052.19 lacs) on FOB basis, to the extent identified from the records maintained in the ordinary course of business as above and balance sales on CFR/CIF/DAP/DDP basis.

The discount rate is based on the prevailing market yields of Government of India securities as at the Balance Sheet date for the estimated term of the obligations.

The estimate of future salary increases considered, takes into account the infation, seniority, promotion, increments and other relevant factors.

*Due to absence of data provided by Life Insurance Corporation of India, break-up of plan assets (asset allocation) in insurer managed funds have not been furnished.

The above information has been certifed by the actuary and relied upon by the auditors.

3.4 Segment information

Geographical Segments:

The Company has considered geographical segments as the primary segment for disclosure. For the purpose of Segment reporting, the Company has identified two geographical segments which comprises of Overseas and India. The segments have been identified taking into account the differing risks and returns relating to these geographical areas.

Secondary Segments:

As the Company''s business activity falls within a single business segment i.e. Original Equipments Manufacturer and Project Management, the disclosure requirement of Accounting Standard (AS-17) for secondary segment reporting is not applicable.

3.5 a Details of related parties:

Description of relationship Names of related parties

Holding Company : Cockerill Maintenance & Ingenierie SA Fellow Subsidiaries (with whom Company has : CMI Industry Automation Private Limited made transactions during CMI UVK GmbH the year) CMI M W Engineering GmbH

Key Management Personnel : Mr. Raman Madhok - Managing Director (KMP) (w.e.f. October 9, 2013) Mr. Sanjoy Kumar Das - Managing Director (from April 15, 2013 upto October 8, 2013) Mr. Jean Gourp - Managing Director (upto April 15, 2013 and thereafter Executive Director till April 30, 2013)

Note: Related parties have been identified by the Management.

3.6 Operating Lease:

The Company has entered into operating lease or leave and licence arrangements for residential premises/ godowns (including furniture and fttings therein as applicable). These leasing arrangements which are not non-cancellable range between 11 months to 36 months.

With regard to other non-cancellable operating lease for residential premises/godown, the future minimum rentals are as follows: (Rs. in lacs)

3.7 Details of provisions

The Company has made provision for various contractual obligations based on its assessment of the amount it estimates to incur to meet such obligations, details of which are given below:

3.8 The Company has also entered into an agreement with CMI SA for providing knowhow, access to various industrial processes, development and implementation of strategy, access to best practices for business operations, exploitation of knowledge for new business initiatives, access to new global business opportunities, etc. The agreement is effective from January 1, 2010.

The Company has entered into an agreement with CMI SA for rights to use the CMI Brand name. The Company pays 0.6% of net sales. The agreement is effective from January 1, 2010 and the tenure of the agreement is 5 years.

Notes forming part of the financial statements

Note 4 Disclosures under Accounting Standards (Contd.)

4.1 The expenses disclosed under the Statement of profit and Loss are net of the following amounts as stated below which have been capitalised under fixed assets:

4.2 In view of the uncertainty resulting from the protracted negotiation that are ongoing, the Company has made an additional provision of Rs. 1,950.94 lacs during the year in respect of the receivable from a foreign customer that has remained outstanding for over three years. With this, the receivable is fully provided for.

4.3 Previous year''s figures have been regrouped/reclassified wherever necessary to correspond with the current year''s classifcation/disclosure.


Mar 31, 2013

1 Corporate Information:

The principal activities of the Company comprise manufacturing and installation of cold rolling mills, galvanizing lines, colour coating lines, tension levelling lines, skin pass mills, acid regeneration plants, wet flux line and pickling lines for ferrous and non-ferrous industries world wide.

2.1 Details on derivatives instruments and unhedged foreign currency exposures

The Company uses Forward Exchange Contracts to hedge its exposure in foreign currency related to firm commitments and highly probable forecasted transactions. The information on Derivative Instruments is as follows:

Details of Forward contracts outstanding in respect of recognised assets, firm commitments and highly probable forecasted transactions are as below:

(i) Outstanding forward exchange contracts entered into by the Company as on March 31, 2013:

2.2 Segment information

Geographical Segments:

The Company has considered geographical segments as the primary segment for disclosure. For the purpose of Segment reporting, the Company has identified two geographical segments which comprises of Overseas and India. The segments have been identified taking into account the differing risks and returns relating to these geographical areas.

Secondary Segments:

As the Company''s business activity falls within a single business segment i.e. Original Equipments Manufacturer and project management, the disclosure requirement of Accounting Standard (AS-17) for secondary segment reporting is not applicable.

2.3 Operating Lease:

The Company has entered into operating lease or leave and licence arrangements for residential premises/ godowns (including furniture and fittings therein as applicable). These leasing arrangements which are not non-cancellable range between 11 months to 36 months.

2.4 The Company has also entered into an agreement with CMI SA for providing knowhow, access to various industrial processes, development and implementation of strategy, access to best practices for business operations, exploitation of knowledge for new business initiatives, access to new global business opportunities, etc. The agreement is effective from January 1, 2010.

The Company has entered into an agreement with CMI SA for rights to use the CMI Brand name. The Company pays 0.6% of net sales. The agreement is effective from January 1, 2010 and the tenure of the agreement is 5 years.

2.5 The expenses disclosed under the Statement of Profit and Loss are net of the following amounts as stated below which have been capitalised under fixed assets:

2.6 The Company has been taking active steps and is hopeful of recovery of an amount of Rs. 2,788.61 lacs (As at March 31, 2012: Rs. 2,447.01 lacs) receivable from a foreign customer which has remained outstanding for over three years for several reasons. By way of abundant caution, it has also made adequate provision therefor in the books of account.

2.7 Previous year''s figures have been regrouped/reclassified wherever necessary to correspond with the current year''s classification/disclosure.


Mar 31, 2012

1 Corporate Information:

The principal activities of the Company comprise manufacturing and installation of cold rolling mills, galvanizing lines, colour coating lines, tension levelling lines, skin pass mills, acid regeneration plants, wet flux line and pickling lines for ferrous and non-ferrous industries world wide.

(i) Terms/rights attached to equity shares:

The Company is having only one class of equity shares having par value of Rs 10/- each. Each holder of equity share is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended March 31, 2012, the amount of per share dividend recognised as distribution to equity shareholders was Rs 5/- (March 31, 2011: Rs 20/-)

In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive remaining assets of the Company, after the distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

(ii) Long term borrowings from banks towards cash credit are secured by hypothecation of stocks and book debts and by first pari passu charge on the fixed assets of the Company and equitable mortgage of land at Taloja, Silvassa and Andheri. The Company continues to avail non-fund based limits and the charge continues.

Note:

Since the Company is a project management company and engaged in the business of putting up projects for its clients on turnkey basis, the Company is following percentage of completion method as prescribed under Accounting Standard-7 Construction contracts under which project stock, manufactured items and other direct cost are considered as project cost incurred till date. Purchases figure is derived figure. Inventory procured for a specific project is immediately booked to the project as consumed and is not considered as inventory. In view of the above, itemwise break-up for cost of materials consumed is not available in the system.

Note 1 Additional information to the financial statements

(Rs in lacs)

Note Particulars As at As at March 31, 2012 March 31, 2011

1.1 Contingent liabilities and commitments (to the extent not provided for)

(i) Contingent liabilities

(a) Claims against the Company not acknowledged as debt Service tax* 362.53 337.19

Labour matter 5.00 5.00

Income tax 88.62 -

(b) Other money for which the Company is contingently liable

Advance licence - custom duty elements 432.95 246.67

(ii) Commitments

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for Tangible assets 349.18 76.40

*During the period October 2007 to February 2008, the Company has paid service tax on the Commission charged by their non-resident commission agents for the services rendered in connection with sales of the assessee's finished goods in overseas market and availed Cenvat Credit. The Central Excise department has issued a show cause Notice No. F.No.V(CH84)3-06/Dem./2009-10, dated 29.10.2009 for denial of wrongly availed Cenvat Credit of Rs 140.41 lacs of service tax paid as input service during the period October 2007 to February 2008. The Commissioner of Central Excise, Customs and Service tax vide their order No.14/ Dem./Vapi/2010, dated 12.04.2010 upheld the service tax liability of Rs 222.12 lacs (As at March 31, 2011: Rs 196.78 lacs) including interest of Rs 81.69 lacs (As at March 31, 2011: Rs 56.35 lacs) with additional penalty of Rs 140.43 lacs (As at March 31, 2011: Rs 140.43 lacs). An appeal has been filed by the Company before CESTAT, Ahmedabad vide appeal No.STS/326/2010. The Honorable CESTAT, Ahmedabad, has passed a stay order in favour of the Company and dispensed with the condition of pre-deposit of the duty and penalty amount to the tune of Rs 362.53 lacs (As at March 31, 2011: Rs 337.19 lacs) vide order No. 5/570/ WZB/AHD/2011, dated 05-04-2011.

1.2 Details on derivatives instruments and unhedged foreign currency exposures

The Company uses Forward Exchange Contracts to hedge its exposure in foreign currency related to firm commitments and highly probable forecasted transactions. The information on Derivative Instruments is as follows:

Details of Forward contracts outstanding in respect of recognised assets, firm commitments and highly probable forecasted transactions are as below:

Note: The Company's records do not distinguish between raw materials, components and stores and spares. Therefore, separate figures for each category of imported items have not been given. The above amounts have been computed based on the purchase bills to the extent identified by the Company, for imported items.

Note: The total export sales (made under long-term contracts) of Rs 9,490.38 lacs (Year ended March 31, 2011: Rs 11,779.94 lacs) comprises of sale of goods amounting to Rs 7,524.45 lacs (Year ended March 31, 2011: Rs 3,920.10 lacs) on FOB basis, to the extent identified from the records maintained in the ordinary course of business as above and balance sales on CFR/CIF basis.

2.1 Segment information

Geographical Segments:

The Company has considered geographical segments as the primary segment for disclosure. For the purpose of Segment reporting, the Company has identified two geographical segments which comprises of Overseas and India. The segments have been identified taking into account the differing risks and returns relating to these geographical areas.

Secondary Segments:

As the Company's business activity falls within a single business segment i.e. Original Equipments Manufacturer and project management company, the disclosure requirement of Accounting Standard (AS-17) for secondary segment reporting is not applicable.

2.2 Operating Lease:

The Company has entered into operating lease or leave and licence arrangements for residential premises/godowns (including furniture and fittings therein as applicable). The leases are generally non-cancellable and are for a period of 11 months to 2 years under leave and licence.

2.3 The Company has also entered into an agreement with CMI S.A. for providing knowhow, access to various industrial processes, development and implementation of strategy, access to best practices for business operations, exploitation of knowledge for new business initiatives, access to new global business opportunities, etc. The agreement is effective from January 1, 2010.

The Company has entered into an agreement with CMI S.A. for rights to use the CMI Brand name. The Company pays 0.6% of net sales. The agreement is effective from January 1, 2010 and the tenure of the agreement is 5 years.

2.4 The Revised Schedule VI has become effective from April 1, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped/reclassified wherever necessary to correspond with the current year's classification/disclosure.

 
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