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Notes to Accounts of EPC Industrie Ltd.

Mar 31, 2016

Rights, preferences and restrictions attached to the 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. In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive remaining assets of the Company. The distribution will be in proportion to the number of equity shares held by the shareholders.

Shares held by the holding company 1,51,44,433 shares (As at March 31, 2015: 1,51,44,433 shares) are held by the Holding Company viz., Mahindra and Mahindra Limited.

1. Disclosure under Regulation 34(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

The Company has not given any loans and advances in the nature of loans to subsidiaries, associates and firms/ companies in which directors are interested. Further, The Company has not made any loans and advances where there is no repayment schedule or repayment beyond seven years or no interest or interest lower than the prevailing yield of one year, three year, five year or ten year Government Security closest to the tenure of the loan as per Section 186 of the Companies Act, 2013.

2. There are no amounts due to Investor Education and Protection Fund.

3. Disclosure required in terms of Regulation 32 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

In June, 2012, the Company had allotted 1,03,58,199 equity shares at a price of Rs. 40 per share (including a premium of Rs. 30/- per share) resulting in total issue size of Rs. 41,43,27,960 under the Rights Issue.

NOTE NO. 4. - DISCLOSURES ON EMPLOYEE SHARE BASED PAYMENTS Employee Stock Option Scheme

(a) Pursuant to the “Employees Stock Option Scheme - 2014” (ESOS) approved by the Shareholders in the Annual General Meeting held on July 31, 2014, the Company had granted 80,424 and 3228 Stock Options to the eligible employees on October 28, 2014 and October 31, 2015 respectively as per the recommendation of the Nomination and Remuneration Committee, at an exercise price of Rs. 10 /- each.

In respect of the options granted in 2014, the equity settled options vest in 5 tranches of 20% each upon the expiry of 12 months, 24 months, 36 months, 48 months and 60 months, respectively from the date of the grant. Each tranche is exercisable within one year from the respective date of vesting. The number of options exercisable in each tranche is minimum 20% of the options vested, except in case of the last date of the exercise, where the employee can exercise all the options vested but not exercised till that date.

In respect of options granted in 2015, the equity settled options vest in 4 tranches of 25% each upon the expiry of 12 months, 24 months, 36 months and 48 months, respectively from the date of the grant. Each tranche is exercisable within one year from the respective date of vesting. The number of options exercisable in each tranche is minimum 25% of the options vested, except in case of the last date of the exercise, where the employee can exercise all the options vested but not exercised till that date.

The difference between the fair price of the share underlying the options granted on the date of grant of option and the exercise price of the option (being the intrinsic value of the option) representing Stock compensation expense is expensed over the vesting period.

NOTE NO. 5. - EMPLOYEE BENEFIT PLANS

(a) Defined contribution plans

The Company makes Provident Fund and Superannuation Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized Rs. 71,69,514 [Year ended March 31, 2015 Rs. 70,79,141] for Provident Fund contributions and Rs. 18,66,675 [Year ended March 31, 2015 Rs. 18,71,565] for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

NOTE NO. 6. - RELATED PARTY DISCLOSURES

(a) Parties where control exists

Name Relationship

Mahindra and Mahindra Limited Holding Company

(b) Other related parties with whom transactions have been undertaken Name Relationship

Mahindra Logistics Limited Fellow subsidiary

Mahindra ZHPC Pvt Ltd Fellow subsidiary

Mahindra Lifespace Developers Ltd Fellow subsidiary

Mr. Ashok Sharma Key Management Personnel (Managing Director)

Mr. Sanjeev Mohoni Key Management Personnel (Chief Executive Officer)

Mr. Mayur Bumb Key Management Personnel (Chief Financial Officer)

NOTE NO. 7. - SEGMENT REPORTING

The Company is engaged in the business of ‘Micro Irrigation System’ (MIS). All other activities of the Company revolve around the main business and accordingly there are no separate reportable segments, as per the Accounting Standard on ‘Segment Reporting’ (AS 17).

NOTE NO. 8. - DETAILS OF LEASING ARRANGEMENTS As Lessee

The Company has entered into operating lease arrangements for certain facilities and office premises. The leases are generally cancellable and are for a period of 11 months to 10 years under leave & license agreements and may be renewed by mutual consent on mutually agreeable terms.

NOTE NO. 9. - PROVISION FOR FRAUD

During the year other expenses included a provision of Rs. 29,25,000 in respect of expected loss due to alleged misappropriation of funds by an ex-employee. The Company has already taken remedial action in the matter which is now under investigation with the appropriate authorities.

NOTE NO. 10. - PREVIOUS YEAR’S FIGURES

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


Mar 31, 2015

Rights, preferences and restrictions attached to the 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. In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive remaining assets of the Company. The distribution will be in proportion to the number of equity shares held by the shareholders.

Shares held by the holding company

1,51,44,433 shares (As at March 31, 2014: 1,51,44,433 shares) are held by the Holding Company viz., Mahindra and Mahindra Limited.

Details of shareholders holding more than 5% shares in the Company

Shares reserved for issue under options

Shares reserved for issue under options 5,52,765 shares (As at March 31, 2014 - 4,74,125 shares) of Rs. 10 each towards outstanding employee stock options granted [Refer Note No. 29]

The Company has recognised deferred tax asset on unabsorbed depreciation to the extent of the corresponding deferred tax liability on the difference between the book balance and the written down value of fixed assets under Income Tax net off of other balances constituting deferred tax asset.

* Includes margin monies amounting to Rs. 5,11,98,083/- [As at March 31,2014 Rs. 4,24,05,382/-] with maturity greater than 12 months from the Balance Sheet date.

** Includes Rs. 1,10,078/- [As at March 31, 2014 Rs. 3,03,305/-] towards interest payable on Public Deposits Rs. 3,95,000/- [As at March 31,2014 Rs. Nil] toward unclaimed Public Deposits, Rs. 4,77,66,293/- [As at March 31,2014 Rs. 5,01,84,186/-] being unutilised proceeds out of the Rights Issue and Rs. Nil [As at March 31, 2014 Rs. 1,000,000/-] towards liquid assets maintained in respect of public deposits.

Particulars As at As at March 31, 2015 March 31, 2014 Rupees Rupees

2.1 Contingent liabilities (to the extent not provided for)

(a) Claims against the Company not acknowledged as debts 2,649,921 1,533,641

(b) Custom Duty/Interest on account of commitment to Export, under Export

Promotion Capital Goods Scheme 21,886,226 19,992,408

(c) Demands against the Company, relating to issues of deductibility and taxability in respect of which the company is in appeal/Department is in appeal

Income Tax: 4,933,598 4,933,598

Sales Tax: 743,552 743,552

Excise Duty: 7,944,000 7,944,000

(d) Long Term Loans & Advances include refund claim made for excise duty paid under protest consequent upon the judicial pronouncement made by CESTAT in favour of the Company, which was disputed by the department before higher authorities. 16,679,302 16,679,302

The Commissioner (Appeals), Central Excise and Customs, Nashik has sanctioned the claim on merit but taking recourse to the principle of "Unjust Enrichment" has ordered the claim to be transferred to the credit of the "Consumer Welfare Fund". The Company had filed an appeal against the order. On hearing the appeal the Hon' CESTAT, Mumbai remanded back the case to the adjudicating authorities to examine the issue afresh. The Adjudicating Authority issued a Show Cause Notice and after personal hearing passed an ]order rejecting the claim without following the guidelines given by the Hon' CESTAT.

The Company had filed an appeal against the order with the Commissioner (Appeals),

Central Excise & Customs, Nashik. The order Passed by the Commissioner (Appeals),

Central Excise & Customs, Nashik is similar to order as given in order in appeal. The Company has filed an appeal to CESTAT Mumbai and no hearing has happened thereafter.

The Claim is still tenable, no provision has been considered.

Note: In respect of items mentioned above, till the matters are finally decided, the timing of outflows of economic benefits cannot be ascertained.

2.2 Disclosure as per Clause 32 of the Listing Agreements with the Stock Exchange

The Company has not given any loans and advances in the nature of loans to subsidiaries, associates and firms/ companies in which directors are interested. Further, the Company has not made any loans and advances where there is no repayment schedule or repayment beyond seven years or no interest or interest lower than the prevailing yield of one year, three year, five year or ten year Government Security closest to the tenure of the loan as per section 186 of the Companies Act, 2013.

2.3 There are no amounts due to Investor Education and Protection Fund.

2.4 Disclosure required in terms of Chapter VII of SEBI (Issue of Capital & Disclosure requirements') Regulations 2009

In June, 2012, the Company had allotted 1,03,58,199 equity shares at a price of Rs. 40 per share (including a premium of Rs. 30/- per share) resulting in total issue size of Rs. 41,43,27,960 under the Rights Issue.

The uses and application of funds raised under the Rights Issue are given as under:

NOTE NO. 3 - DISCLOSURES ON EMPLOYEE SHARE BASED PAYMENTS Employee Stock Option Scheme

(a) Pursuant to the "Employees Stock Option Scheme - 2010" (ESOS) approved by the Shareholders in the Annual General Meeting held on July 21, 2010, the Company had granted 60,500 Stock Options to the three non-executive Directors and some permanent employees on November 19, 2010, as per the recommendation of the Compensation Committee, at exercise price of Rs. 35/- each.

Pursuant to the "Employees Stock Option Scheme - 2014" (ESOS) approved by the Shareholders in the Annual General Meeting held on July 31, 2014, the Company had granted 80,424 Stock Options to the eligible employees on October 28, 2014 as per the recommendation of the Nomination and Remuneration Committee, at exercise price of Rs. 10/- each. In respect of the ESOP-2010 options granted, the equity settled options vest in 4 tranches of 25% each upon the expiry of 12 months, 24 months, 36 months and 48 months respectively from the date of the grant. Each tranche is exercisable within two years from the respective date of vesting. The number of options exercisable in each tranche is minimum 25% of the options vested, except in case of the last date of the exercise, where the employee can exercise all the options vested but not exercised till that date.

In respect of the ESOP-2014 options granted, the equity settled options vest in 5 tranches of 20% each upon the expiry of 12 months, 24 months, 36 months, 48 months and 60 months, respectively from the date of the grant. Each tranche is exercisable after one year from the respective date of vesting. The number of options exercisable in each tranche is minimum 20% of the options granted.

The compensation costs of the stock options granted are accounted by the Company on the basis of intrinsic value of share on the date of grant of options.

The difference between the fair price of the share underlying the options granted on the date of grant of option and the exercise price of the option (being the intrinsic value of the option) representing Stock compensation expense is expensed over the vesting period.

(a) Defined contribution plans

The Company makes Provident Fund and Superannuation Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs. 70,79,141 [Year ended March 31, 2014 Rs. 75,88,127] for Provident Fund contributions and Rs. 18,71,565 [Year ended March 31, 2014 Rs. 16,95,221] for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

(b) Defined benefit plans

The Company offers the following employee benefit schemes to its employees:

i. Gratuity

ii. Compensated absences

The following table sets out the funded status of the defined benefit schemes and the amount recognised in the financial statements:

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 inflation, seniority, promotion, increments and other relevant factors.

NOTE NO. 4 - RELATED PARTY DISCLOSURES

(a) Parties where control exists

Name Relationship

Mahindra and Mahindra Limited Holding Company

(b) Other related parties with whom transactions have been undertaken

Name Relationship

Mahindra EPC Services Pvt Ltd Fellow subsidiary

Mahindra Logistics Limited Fellow subsidiary

Mahindra Holidays and Resorts India Ltd Fellow subsidiary

Mr. Ashok Sharma Key Management Personnel (Executive Director & CEO)

Mr. Mayur Bumb Key Management Personnel (Chief Financial Officer)

The Company is engaged in the business of 'Micro Irrigation System' (MIS). All other activities of the Company revolve around the main business and accordingly there are no separate reportable segments, as per the Accounting Standard on 'Segment Reporting' (AS 17).

NOTE NO. 5 - DETAILS OF LEASING ARRANGEMENTS As Lessee

The Company has entered into operating lease arrangements for certain facilities and office premises. The leases are generally cancellable and are for a period of 11 months to 10 years under leave & license agreements and may be renewed by mutual consent on mutually agreeable terms.

NOTE NO. 6 - PROVISION FOR WARRANTY

(a) Provision for warranty is made in respect of sale of certain products, the estimated cost of which is accrued at the time of sale. The products are generally covered under a free warranty period ranging from 6 months to 5 years.

(b) The movement in provision for warranty is as follows:

NOTE NO. 7 - PREVIOUS YEAR'S FIGURES

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


Mar 31, 2014

1. Disclosure as per Clause 32 of the Listing Agreements with the Stock Exchange

The Company has not given any loans and advances in the nature of loans to subsidiaries, associates and firms/companies in which directors are interested. Further, The Company has not made any loans and advances where there is no repayment schedule or repayment beyond seven years or no interest or interest below section 372A of The Companies Act, 1956.

2. There are no amounts due to Investor Education and Protection Fund.

NOTE NO. 3 - DISCLOSURES ON EMPLOYEE SHARE BASED PAYMENTS Employee Stock Option Scheme

(a) Pursuant to the "Employees Stock Option Scheme - 2010" (ESOS) approved by the Shareholders in the Annual General Meeting held on July 21, 2010, the Company had granted 60,500 Stock Options to the three non-executive Directors and some permanent employees on November 19, 2010, as per the recommendation of the Compensation Committee, at exercise price of Rs. 35/- each.

In respect of the options granted, the equity settled options vest in 4 tranches of 25% each upon the expiry of 12 months, 24 months, 36 months and 48 months respectively from the date of the grant. Each tranche is exercisable within two years from the respective date of vesting. The number of options exercisable in each tranche is minimum 25% of the options vested, except in case of the last date of the exercise, where the employee can exercise all the options vested but not exercised till that date. In case the option is not exercised by the Employee within the time limits as prescribed in the Scheme, the Options would lapse and no right shall be deemed to accrue or arise after that date.

The compensation costs of the stock options granted are accounted by the Company on the basis of intrinsic value of share on the date of grant of options.

The difference between the fair price of the share underlying the options granted on the date of grant of option and the exercise price of the option (being the intrinsic value of the option) representing Stock compensation expense is expensed over the vesting period.

NOTE NO. 4 - EMPLOYEE BENEFIT PLANS

(a) Defined contribution plans

The Company makes Provident Fund and Superannuation Fund contributions to Defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs. 75,88,127 [Year ended March 31, 2013 Rs. 63,88,137] for Provident Fund contributions and Rs. 16,95,221 [Year ended March 31, 2013 Rs. 15,17,716] for Superannuation Fund contributions in the Statement of profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

NOTE NO. 5 - PUBLIC DEPOSITS CLASSIFICATION

The provisions of the Companies Act, 2013 (''the Act'') requires that all outstanding deposits be repaid within one year from the date of commencement of the Act or from the date on which such payments are due, whichever is earlier. Accordingly, fixed deposits with original maturity more than one year have been classifed under "Current maturities of long term debt" in Note no. 8 to the financial statements.

NOTE NO. 6 - SEGMENT REPORTING

The Company is engaged in the business of ''Micro Irrigation System'' (MIS). All other activities of the Company revolve around the main business and accordingly there are no separate reportable segments, as per the Accounting Standard on ''Segment Reporting'' (AS 17) notifed under the Companies (Accounting Standards) Rules, 2006.

NOTE NO. 7 - DETAILS OF LEASING ARRANGEMENTS As Lessee

The Company has entered into operating lease arrangements for certain facilities and office premises. The leases are generally cancellable and are for a period of 11 months to 10 years under leave & license agreements and may be renewed by mutual consent on mutually agreeable terms.

NOTE NO. 8 - PREVIOUS YEAR''S FIGURES

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


Mar 31, 2013

1.1 Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006

The Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures relating to amounts unpaid as at the period end, together with interest paid / payable under this Act, have not been given.

1.2 Disclosure as per Clause 32 of the Listing Agreements with the Stock Exchange

The Company has not given any loans and advances in the nature of loans to subsidiaries, associates and firms / companies in which directors are interested.

NOTE NO. 2 - DISCLOSURES ON EMPLOYEE SHARE BASED PAYMENTS

Employee Stock Option Scheme

(a) Pursuant to the "Employees Stock Option Scheme - 2010" (ESOS) approved by the Shareholders in the Annual General Meeting held on July 21, 2010, the Company had granted 60,500 Stock Options to the three non-executive Directors and some permanent employees on November 19, 2010, as per the recommendation of the Compensation Committee, at exercise price of Rs. 35 /- each.

In respect of the options granted, the equity settled options vest in 4 tranches of 25% each upon the expiry of 12 months, 24 months, 36 months and 48 months respectively from the date of the grant. Each tranche is exercisable within two years from the respective date of vesting. The number of options exercisable in each tranche is minimum 25% of the options vested, except in case of the last date of the exercise, where the employee can exercise all the options vested but not exercised till that date.

In case the option is not exercised by the Employee within the time limits as prescribed in the Scheme, the Options would lapse and no right shall be deemed to accrue or arise after that date.

The compensation costs of the stock options granted are accounted by the Company on the basis of intrinsic value of share on the date of grant of options.

The difference between the fair price of the share underlying the options granted on the date of grant of option and the exercise price of the option (being the intrinsic value of the option) representing Stock compensation expense is expensed over the vesting period.

NOTE NO. 3- EMPLOYEE BENEFIT PLANS

(a) Defined contribution plans

The Company makes Provident Fund and Superannuation Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs. 63,88,137 [Year ended March 31, 2012 Rs. 51,88,935] for Provident Fund contributions and Rs. 15,17,716 [Year ended March 31, 2012 Rs. 13,80,182] for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

(b) Defined benefit plans

The Company offers the following employee benefit schemes to its employees:

i. Gratuity

ii. Compensated absences

The following table sets out the funded status of the defined benefit schemes and the amount recognised in the financial statements:

NOTE NO. 4- RELATED PARTY DISCLOSURES Details of Related Party

a) Parties where control exists

Name Relationship

Mahindra and Mahindra Limited Holding Company

b) Other related parties with whom transactions have been undertaken Name Relationship

Mahindra Logistics Limited Fellow subsidiary

Credit Renaissance Fund Limited Associate upto January 8, 2013

Credit Renaissance Development Fund LP Associate upto January 8, 2013

Mr. K. L. Khanna Key Management Personnel (KMP) upto September 30, 2011

Kimplas Piping Systems Limited Entities in which KMP / relatives of KMP have significant influence upto September 30, 2011

Patkaai Plastics Private Limited Entities in which KMP / relatives of KMP have significant influence upto September 30, 2011

NOTE NO. 5 - SEGMENT REPORTING

The Company is mainly engaged in the business of ''Micro Irrigation System'' (MIS). All other activities of the Company revolve around the main business and accordingly there are no separate reportable segments, as per the Accounting Standard on ''Segment Reporting'' (AS 17) notified under the Companies (Accounting Standards) Rules, 2006.

NOTE NO. 6 - DETAILS OF LEASING ARRANGEMENTS

As Lessee

The Company has entered into operating lease arrangements for certain facilities and office premises. The leases are generally cancellable and are for a period of 11 months to 10 years under leave & license agreements and may be renewed by mutual consent on mutually agreeable terms.

Pursuant to the Rights Issue, Earnings Per Share (EPS) has been restated as per the Accounting Standard on Earnings Per Share (AS 20), notified under the Companies (Accounting Standards) Rules, 2006 for the previous periods / year.

Note No. 7 - Previous year''s figures

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


Mar 31, 2012

Rights, preferences and restrictions attached to the 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. In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive remaining assets of the Company. The distribution will be in proportion to the number of equity shares held by the shareholders.

Shares held by the holding company

Mahindra and Mahindra Limited, the holding company (by virtue of control over the composition of the Board of Directors) holds 6,577,865 shares of the Company as at the Balance Sheet date.

Details of shareholders holding more than 5% shares in the Company

Shares reserved for issue under options 490,500 shares (As at March 31, 2011 - 500,000 shares) of Rs. 10 each towards outstanding employee stock options granted [Refer Note No. 28]

* The Company had issued Optionally Cumulative Convertible Debentures (OCCDs) carrying, interest @12% p.a. (Net of Withholding Tax). The Debenture holders had an option to convert these Debentures (equivalent to the face value) into 12% Preference Shares of Rs. 100/- each from September 30, 2010 to March 31, 2012.

In accordance with the Shareholders' Agreement and Amendment to the Debenture Subscription Agreement both dated February 9, 2011 entered into with Mahindra and Mahindra Limited, the terms of the Debentures had been changed so as to make them compulsorily redeemable by February 28, 2012 in a phased manner, which has been further extended to July 1,2012 by mutual consent.

During the year, the Company has recognised deferred tax asset on unabsorbed depreciation to the extent of the corresponding deferred tax liability on the difference between the book balance and the written down value of fixed assets under Income Tax net off of other balances constituting deferred tax asset.

* Balances with banks include deposits amounting to Rs. 30,240 [As at March 31,2011 Rs. 30,240} and margin monies amounting to Rs. 65,367,270 [As at March 31, 2011 Rs. 25,604,997] which have an original maturity of more than 12 months.

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

1.1 Contingent liabilities (to the extent not provided for)

(i)Contingent liabilities

(a)Claims against the Company not acknowledged as debt 1,301,081 1,185,665

(b) Guarantees issued by Banks secured by Fixed Deposits 72,745,705 30,178,300

(c) Custom Duty / Interest on account of commitment to Export, under Export 26,313,276 17,950,748 Promotion Capital Goods Scheme

(d)Show Cause cum Demand Notices are received from / issued by the Excise authorities. The major 7,944,000 7,944,000 issues raised therein have been decided in favour of the Company at the Tribunal level. The said Notices are pending adjudication and the Company is confident of favourable decisions.

(e)Disputed income tax liability (Net of Provision) and interest demanded by 2,366,859 2,366,859 department for the assessment year 1993-94 .

Based on the decisions of the Appellate Orders and interpretations of relevant provisions, the Company has been advised that the demand is expected to be either deleted or substantially reduced.

(f)Long Term Loans & Advances include refund claim made for excise duty paid 16,679,302 16,679,302 under protest consequent upon the judicial pronouncement made by CESTAT in favour of the Company, which was disputed by the department before higher authorities.

The Commissioner (Appeals), Central Excise and Customs, Nashik has sanctioned the claim on merit but taking recourse to the principle of "Unjust Enrichment" has ordered the claim to be transferred to the credit of the "Consumer Welfare Fund".

The Company had filed an appeal against the order. On hearing the appeal the Hon' CESTAT, Mumbai remanded back the case to the adjudicating authorities to examine the issue afresh. The Adjudicating Authority issued a Show Cause Notice and after personal hearing passed an order rejecting the claim without following the guidelines given by the Hon' CESTAT.

The Company has filed an appeal against the order with the Commissioner (Appeals), Central Excise & Customs, Nashik. As the Company has been advised that the claim is tenable, no provision has been considered. Note: In respect of items mentioned above, till the matters are finally decided, the timing of outflows of economic benefits cannot be ascertained.

1.2 Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006

The Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures relating to amounts unpaid as at the period end, together with interest paid / payable under this Act, have not been given. 27.4 Disclosure as per Clause 32 of the Listing Agreements with the Stock Exchange

The Company has not given any loans and advances in the nature of loans to subsidiaries, associates and firms / companies in which directors are interested.

Employee Stock Option Scheme

(a) Pursuant to the "Employees Stock Option Scheme - 2010" (ESOS) approved by the Shareholders in the Annual General Meeting held on July 21, 2010, the Company had granted 60,500 Stock Options to the three non-executive Directors and some permanent employees on November 19, 2010, as per the recommendation of the Remuneration / Compensation Committee, at exercise price of Rs. 35 /- each.

In respect of the options granted, the equity settled options vest in 4 tranches of 25% each upon the expiry of 12 months, 24 months, 36 months and 48 months respectively from the date of the grant. Each tranche is exercisable within two years from the respective date of vesting. The number of options exercisable in each tranche is minimum 25% of the options vested, except in case of the last date of the exercise, where the employee can exercise all the options vested but not exercised till that date.

In case the option is not exercised by the Employee within the time limits as prescribed in the Scheme, the Options would lapse and no right shall be deemed to accrue or arise after that date.

The compensation costs of the stock options granted are accounted by the Company on the basis of intrinsic value of share on the date of grant of options.

The difference between the fair price of the share underlying the options granted on the date of grant of option and the exercise price of the option (being the intrinsic value of the option) representing Stock compensation expense is expensed over the vesting period.

(a) Defined contribution plans

The Company makes Provident Fund and Superannuation Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs. 5,188,935 [Year ended March 31, 2011 Rs. 4,352,472] for Provident Fund contributions and Rs. 1,380,182 [Year ended March 31, 2011 Rs. 1,249,197] for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

(b) Defined benefit plans

The Company offers the following employee benefit schemes to its employees:

i. Gratuity

ii. Compensated absences

NOTE NO. 2 - SEGMENT REPORTING

The Company is mainly engaged in the business of 'Micro Irrigation System' (MIS). All other activities of the Company revolve around the main business and accordingly there are no separate reportable segments, as per the Accounting Standard on 'Segment Reporting' (AS 17) notified under the Companies (Accounting Standards) Rules, 2006.

As Lessee

The Company has entered into operating lease arrangements for certain facilities and office premises. The leases are generally cancellable and are for a period of 11 months to 3 years under leave & license agreements and may be renewed by mutual consent on mutually agreeable terms.

Note no. 3 - Previous year's figures

The Revised Schedule VI has become effective from April 1,2011 for the preparation^ 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.


Mar 31, 2011

Previous Year

Rupees Rupees

1 Contingent Liabilities not provided for :

a. Guarantees issued by Banks secured by Fixed Deposits 30,178,300 24,463,758

b. Custom Duty / Interest under Export Promotion Capital Goods Scheme 17,950,748 17,175,896

The Director General of Foreign Trade, New Delhi, vide it's letter dated 12th January, 2011, has extended the Export Obligation period granted to the Company till 31st March, 2015.

2 During the year pursuant to the "Employees Stock Option Scheme - 2010" (ESOS) approved by the Shareholders in the Annual General Meeting held on 21st July 2010. The Company has granted 60,500 Stock Options to the three non-executive Directors and some permanent employees on 19th November, 2010, as per the recommendation of the Compensation Committee, at exercise price of Rs. 35 /- each.

In respect of the Options granted, the equity settled options vest in 4 tranches of 25% each upon the expiry of 12 months, 24 months, 36 months and 48 months respectively from the date of the grant. Each tranche is exercisable within two years from the respective date of Vesting. The number of options exercisable in each tranche is minimum 25% of the Options Vested, except in case of the last date of the exercise, where the employee can exercise all the Options Vested but not exercised till that date.

In case the Option is not exercised by the Employee within the time limits as prescribed in the Scheme, the Options would lapse and no right shall be deemed to accrue or arise after that date.

The compensation costs of the Stock Options granted are accounted by the Company on the basis of market price of share on the date of grant of Options minus the exercise price of the Option.

The range exercise price is Rs. 35 in respect of 60,500 Stock Options, whose weighted average remaining lite is 4.13 years.

In respect of the Options granted under the Employees Stock Options Scheme, in accordance with guidelines issued by SEBI, the accounting value of the Options is accounted as deferred employee compensation, which is amortised on a straight line basis over the period between the date of grant of Options and eligible dates of conversion into Equity Shares. Consequently, salaries, wages, bonus etc. includes amortisation of deferred employee compensation of Rs. 332,974.

Had the Company adopted fair value method been used, in respect stock options granted under the ESOP Scheme, 2010, the employee compensation would have been higher by Rs. 1.47 lacs, Profit after Tax lower by Rs. 1.47 lacs and the basic and diluted earnings per share would have lower by Rs. 0.01 and Rs. 0.01 respectively.

3 Pursuant to the resolution passed in the Extra Ordinary General Meeting of the Shareholders, the Company has received funds aggregating to Rs. 433,488,096/- on 17th March, 2011 from Mahindra & Mahindra Limited against the Preferential Allotment of 65,58,065 Equity shares of Rs. 10/- each for cash at a premium of Rs. 56.10/- per share.

4 Disputed Income Tax Liability (Net of Provision) and interest demanded by department for the assessment year 1993-94 .

Based on the decisions of the Appellate Orders and interpretations of relevant provisions, the Company has been advised that the demand is expected to be either deleted or substantially reduced.

In view of carry forward losses/depreciation available to Company and absence of the book profit under section 115JB of the Income Tax Act, 1961, no provision of current Income Tax has been made.

5 Liabilities in respect of pending Sales Tax Assessments have been provided on the basis of Returns filed and/or Assessment Orders received.

6 Loans & Advances includes refund claim made for excise duty paid under protest consequent upon the judicial pronouncement made by CESTAT in favour of the Company, which was disputed by the department before higher authorities.

The Commissioner (Appeals) of Central Excise and Customs, Nashik has sanctioned the claim on merit but taking recourse to the principle of "Unjust Enrichment" has ordered the claim to be transferred to the credit of the "Consumer Welfare Fund".

The appeal is filed by the Company against the Order. The Company has been legally advised that the claim is tenable, hence no provision has been considered.

7 The Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosure relating to amounts unpaid as at the year end, together with interest paid/payable under this Act, have not been given.

The Company operates Defined Contribution Scheme like Provident Fund and Superannuation Schemes. Contributions to Provident Fund are made by the Company, based on current salaries, to the funds maintained by the Government . In case of Provident Fund Schemes, contributions are also made by the employees. Contribution to Superannuation Schemes, as applicable for certain categories of employees and the contribution by the Company is invested with a Life Insurance Corporation of India.

Defined Benefit Plan

The Employees' Gratuity Fund Scheme, managed by LIC is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as given rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in the same manner as gratuity.

The estimate of rate of escalation in salary, considered in actuarial valuation, takes into account inflation, seniority, promotion and other relevant factors, including supply and demand in the employment market. The above information is certified by the Actuary.

The expected rate of return on plan assets is determined considering several applicable factors, mainly the composition of plan assets held, assessed risks, historical results of return on plan assets and the Company's policy for plan assets management.

Hitherto provision for Gratuity payable to Chairman & Managing Director has been made on estimated basis. During the year provision has been made on actuarial basis, as a result charge to Profit & Loss Account is higher by Rs. 228,585/-.

The Payment of Gratuity (Amendment) Bill 2010 amending the maximum gratuity payable under The Payment of Gratuity Act, 1972 from Rs. 3.50 lakhs to Rs. 10.00 lakhs has been passed by both the houses of Parliament in May 2010. The Company has given effect to the same in valuing it's actuarial liability for gratuity as at 31st March, 2011. The impact of the same is not material.

8 SEGMENT INFORMATION

The Company has disclosed Business Segment as the primary segment. Segments have been identified by the Management taking into account the nature of products, customer profiles and other relevant factors.

The Company's operations have been mainly classified between two primary segments, 'Micro Irrigation System' (MIS) and 'Industrial and Infrastructure Piping' (IIP).

Composition of business segments is as follows :

1 Micro Irrigation Systems (MIS)

2 Industrial and Infrastructure ( Gas and Water ) Pipes (IIP)

Segmentwise Revenue, Results, Assets and Liabilities include the respective amounts identifiable to either of the segments as also amounts allocated on a reasonable basis. The expenses, which are not directly attributable to the business segment, are shown as unallocated cost. Assets and Liabilities that cannot be allocated between the segments are shown as a part of unallocated assets and liabilities respectively

3 Inter Segment Transfer Pricing.

There are no Inter segment transfer of material.

9 Related Party Disclosures

(a) List of Related Parties with whom transactions have taken place during the year

Schroder Credit Renaissance Fund Ltd (Significant Influence)

Credit Renaissance Development Fund L P. (Significant Influence)

Kimplas Piping Systems Limited (Significant Influence of relative of Key Management Personnel)

Trans Continental Capital Advisors Private Limited

(Significant Influence of Key Management Personnel)

Garuda Plant Products Limited(Significant Influence of Key Management Personnel)

Patkaai Plastics Private Limited (Significant Influence of relative of Key Management Personnel)

Mr. K. L. Khanna ( Key Management Personnel)

10 There are no amounts due to Investor Education and Protection Fund.

11 Figures relating to previous year have been regrouped and rearranged, wherever necessary.


Mar 31, 2010

Previous Year Rupees Rupees 1 Contingent Liabilities not provided for: 1 Guarantees issued by Banks secured by Fixed Deposits. 2,44,63,758 2,62,04,016

2 Custom Duty/Interest under Export Promotion Capital Goods Scheme. 1,71,75,896 1,60,78,188 2 Estimated amount of Contracts remained to be executed on Capital Account and not provided for (Net of Advance). 57,72,160 8,91,510

3 Claims against the Company not acknowledged as debt. 48,09,509 15,65,919

4 Depreciation charged to Profit & Loss Account is after deducting additional depreciation arising on revaluation uplifitment and withdrawn from Capital (Revaluation) Reserve. 32,37,630 32,24,278

5 The balances shown under Debtors, Advances, Deposits and Creditors are subject to confirmations and reconciliations, if any.

6 Professional fees include Remuneration to Auditors - Audit fees (Including Service Tax) 3,30,900 3,30,900 Taxation Matters 1,21,330 1,11,049 Certification 30,333 1,51,480 Management Services 1,84,201 49,632 Out of Pocket Expenses 3,51,847 2,08,147

7 Miscellaneous Expenses include Board/Committee Meeting Fees paid to Directors 2,20,000 2,40,000

8 With effect from 1 st April, 2009, the Company has implemented Microsoft Business Solutions - Navision as ERP platform and the valuation of inventories of Raw Material, Components and Finished Goods is done on the basis of Weighted Average Method instead of FIFO/YTD Average basis as applied in earlier years. The impact of this change on profit is not material.

9 Disputed income tax liability (Net of Provision) and interest demanded by department for the assessment year 1993-94.

Based on the decisions of the Appellate Orders and interpretations of relevant provisions, the Company has been advised that the demand is expected to be either deleted or substantially reduced.

In view of carry forward losses/depreciation available to the Company and in absence of the book profit under Section 115JB of the Income Tax Act, 1961, no provision of current Income Tax has been made. 23,66,859 23,66,859

10 Liabilities in respect of pending sales tax assessments have been provided on the basis of Returns filed and/or Assessment Orders received.

11 Loans & Advances includes refund claim made for excise duty paid under protest consequent upon the judicial pronouncement made by CESTAT in favour of the Company, which was disputed by the Department before hisher authorities.

The Commisssioner (Appeals) of Central Excise and Customs, Nashik has sanctioned the claim on merit but taking recourse to the principle of "Unjust Enrichment" has ordered the claim to be transferred to the credit of the "Consumer Welfare Fund".

The appeal is filed by the Company against the order. The Company has been legally advised that the claim is tenable. Hence no provision has been considered. 1,66,79,302 1,66,79,302

12 Show Cause cum Demand Notices are received from/issued by the Excise authorities. The major issues raised therein have been decided in favour of the Company at the Tribunal level. The said Notices are pending adjudication and the Company is confident of favourable decisions. Hence no provision has been made. 79,44,000 79,44,000

13 The Company has not received information From vendors regarding their status under the Micro,Small and Medium Enterprises Development Act, 2006 and hence disclosure relating to amounts unpaid as at the year end together with interest paid/payable under this Act have not been given.

14 As per Accountins Standard 15 " Employee Benefits", the disclosures of Employee benefits as defined in the Accountins Standard are given below:

Defined Contribution Plan

Contribution to Defined Contribution Plan, recognized as expenses for the year are as under: Employers Contribution to Provident Fund Employers Contribution to Superannuation Fund The Company operates Defined Contribution Scheme like Provident Fund and Superannuation schemes. Contributions to Provident Fund are made by the Company,based on current salaries, to the funds maintained by the Government. In case of Provident Fund Schemes, contributions are also made by the employees. Contribution to Superannuation Scheme is applicable for certain categories of employees and the contribution by the Company is invested with a Insurance Company.

Defined Benefit Plan

The Employees Gratuity Fund Scheme, managed by LIC is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as given rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in the same manner as gratuity. 39,97,315 31,96,245 11,33,595 10,77,911

The estimate or rate of escalation in salary, considered in actuarial valuation, takes into account inflation, seniority, promotion and other relevant factors, including supply and demand in the employment market. The above information is certified by the Actuary.

The expected rate of return on plan assets is determined considering several applicable factors, mainly the composition of plan assets held, assessed risks, historical results of return on plan assets and the Companys policy for plan assets management.

15 SEGMENT INFORMATION

The Company has disclosed Business Segment as the primary segment. Segments have been identified by the management taking into account the nature of products, customer profiles and other relevant factors.

The Companys operations have been mainly classified between two primary segments, Micro Irrigation System(MIS) and Industrial and Infrastructure Piping.(IIP).

Composition of business segments are as follows :

1 Micro Irrigation Systems (MIS)

2 Industrial and Infrastructure ( Gas and Water) Pipes (IIP)

Segmentwise Revenue, Results, Assets and Liabilities include the respective amounts identifiable to either of the segments as also amounts allocated on a reasonable basis. The expenses, which are not directly attributable to the business segment, are shown as unallocated cost. Assets and Liabilities that can not be allocated between the segments are shown as a part of unallocated assets and liabilities respectively.

3 Inter Segment Transfer Pricing.

There are no Inter segment transfers of material. 4 Segment Revenues, Results and other Information 20 Related Party Disclosures

(a) List of Related Parties with whom transactions have taken place during the year

Schroder Credit Renaissance Fund Ltd (Significant Influence) Credit Renaissance Development Fund LP. (Earlier known as Schroder Credit Renaissance Fund L.P.) (Significant Influence) Kimplas Piping Systems Limited (Significant Influence of relative of Key Management Personnel) Kimplas Limited, UK (Significant Influence of relative of Key Management Personnel) Mr. K. L. Khanna (Key Management Personnel)

16 Figures relating to previous year have been regrouped and rearranged, wherever necessary.