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Notes to Accounts of Everest Industries Ltd.

Mar 31, 2015

1 Corporate information

Everest Industries Limited ('the Company') is engaged in manufacturing and trading of building products like roofing products, boards and panels, other building products and accessories and manufacturing and erection of pre-engineered steel buildings and related accessories.

2 Contingent Liabilities and Commitments

(i) Contingent liabilities

Claims against the Company not acknowledged as liabilities in respect of::

(Rs. in lacs) i. sales tax matters 2,130.36 2,192.81

ii. customs, excise and service tax matters 3,111.59 2,882.05

iii. Income Tax matters 7,585.44 7,919.37

Total 12,827.39 12,994.23

iv. Advance paid / adjusted by Income tax authorities against above 5,850.69 4,579.53

(ii) Commitments

a) Estimated amount of contracts to be executed on capital account - Rs. 325.98 lakhs (net of advances - Rs. 434.18 lakhs), [previous year -Rs. 1,994.88 lakhs (net of advances Rs. 645.57 lakhs)].

b) Export Obligation: The Company has purchased fixed assets under the 'Export Promotion Capital Goods Schemes'. As per the terms of the license granted under the scheme, the Company has undertaken to achieve an export commitment of Rs. 7,894.34 lakhs (previous year Rs. 7,678.39 lakhs) over a period of 6-8 years.

The Company would be liable to pay customs duty of Rs. 1,021.31 lakhs (previous year Rs. 985.32 lakhs) and interest on the same in the event of non-fulfillment of the balance export obligation. The Company is in the process of filing of satisfaction of its export obligations of Rs. 1,458.86 lakhs. However the Company does not expect any liability to arise based on its export performance.

3 Disclosure of Retirement Benefits under Accounting Standard 'AS15-Employee Benefits'

a. Defined contribution plan

The Company makes provident fund and superannuation fund contributions to defined contribution retirement benefit plans for covered employees. The Company's contributions towards provident fund and superannuation fund are deposited in respective trusts. the company is generally liable for contributions paid/ payable under provident Fund scheme and any deficiency in interest cost compared to interest computed based on the rate of interest declared by the central Government under the Employees' provident Fund scheme, 1952 and recognises, if any, as an expense in the year it is determined.

As of 31 March, 2015, the fair value of the assets of the fund and the accumulated members' corpus is Rs. 5,780.25 lakhs and Rs. 5,599.39 lakhs respectively. In accordance with an actuarial valuation, there is no deficiency in the interest cost as the present value of the expected future earnings on the fund is greater than the expected amount to be credited to the individual members based on the expected guaranteed rate of interest of 8.75%. the actuarial assumptions include discount rate of 7.80% and an average expected future period of 10 years.

the company recognised 361.08 lakhs (previous year Rs. 332.39 lakhs) for provident fund contributions and Rs. 89.69 lakhs (previous year Rs. 90.37 lakhs) for superannuation fund contributions in the statement of profit and Loss. the contribution payable to the plan by the company is at the rate specified in rules to the scheme.

b. Defined benefit plan

the company's contribution towards its gratuity liability is a defined benefit retirement plan. the company makes contributions to the trust from time to time which in turn makes contributions to the Employee's group gratuity-cum-Life assurance scheme of the Life Insurance corporation of India. the scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to fifteen days salary payable for each completed year of service or part thereof in excess of six months. vesting occurs upon completion of five years of service.

the present value of the defined benefit obligation and the related current service cost were measured using the projected unit credit method with actuarial valuations being carried out at each balance sheet date.

4 Managerial Remuneration

Managerial remuneration forming part of employee benefits expenses for the year ended 31 March, 2014 had exceeded the limits specified in the companies Act, 1956. The company had filed applications with the central Government for requisite approvals.

The company has reversed/ adjusted managerial remuneration amounting to Rs. 128.46 lakhs during the current year to the extent approvals had not been received from the central Government..

5 Related Party Disclosures

a. List of related parties

i. Enterprise exercising significant influence

* M/s Falak Investment Private Limited

ii. subsidiary companies

* M/s Everest Building Products, Mauritius(with effect from 9 September, 2013)

* M/s Everestind FZE, United Arab Emirates(UAE)* (with effect from 18 December, 2013) -subsidiary of Everest Building products

* M/s Everest Building Products LLC , United Arab Emirates (UAE)* (with effect from 7 December, 2014) -subsidiary of Everest Building products

ii. Associate company

* M/s Everest Building Solutions Limited(upto 23 March, 2014)

iii. Key management personnel

* Mr. Aditya Vikram Somani, Chairman

* Mr. Manish Sanghi, Managing Director

* Mr. Y. Srinivasa Rao, Executive Director

* Has not commenced operations

6 Segment Information

a. Business segments:

Based on the guiding principles given in Accounting Standard AS-17 "Segment Reporting", the Company's business segments include 'Building products' and 'Steel buildings'.

Building products includes manufacturing and trading of roofing products, boards and panels, other building products and accessories.

Steel buildings consist of manufacture and erection of pre - engineered and smart steel buildings and its accessories.

b. Geographical segments:

Since the Company's activities/ operations are primarily within the country and as such there is only one geographical segment.

c. Segment accounting policies:

In addition to the significant accounting policies applicable to the business segments as set out in note a above, the accounting policies in relation to segment accounting are as under:

i. Segment revenue and expenses:

Segment revenue and expenses include the respective amounts identifiable to each of the segments. Unallocable items in segment results include income from bank deposits and corporate expenses.

ii. Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consist principally of operating cash, trade receivables, inventories and fixed assets, net of allowances and provisions, which are reported as direct offsets in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities. Segment assets and liabilities do not include fixed deposits, advance income tax, borrowings and deferred income tax etc.

7 Lease Commitments

Operating lease

The Company has taken properties on cancellable operating leases and has recognised rent of Rs. 649.06 lakhs (previous year Rs. 587.92 lakhs). there are no non-cancellable lease arrangements as at the end of the year.

8 Rights, preferences and restrictions attached to equity shares

The Company has one class of equity shares having a par 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, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.

The Company has accounted the above options using the intrinsic value method at the exercise price from time to time and there is no stock compensation expense under the intrinsic value method for the options granted.

the Guidance Note issued by the Institute of chartered Accountants of India requires the disclosure of pro forma net results and Eps both basic and diluted, had the company adopted the fair value method. Had the company accounted the option under fair value method, amortising the stock compensation expense thereon over the vesting period, the reported profit for the year ended 31 March, 2015 would have been lower by Rs. 40.55 lakhs (previous year Rs. 124.76 lakhs) and the basic and diluted Eps would have been revised to Rs. 22.18 (previous year Rs. 5.20) and Rs. 22.18 (previous year Rs.5.20) respectively. The fair value of stock based awards to employees is calculated through the use of option pricing models, requiring subjective assumptions which greatly affect the calculated values. the said fair value of the options have been calculated using Black-scholes option pricing model, considering the expected term of the options to be 5 years, an expected dividend yield of 0.75% (previous year Nil) on the underlying equity shares,volatility in the share price of 41.72% (previous year nil) and a risk free rateof interest of 7.72% (previous year nil). the company's calculations are based on a single option valuation approach, and forfeitures are recognised as they occur.the expected volatility is based on historical volatility of the share price during the year after eliminating the abnormal price fluctuations.

9 As per information available with the company, none of its creditors comprises micro, small and medium enterprises as defined under the MsMED act, 2006 which comprise amounts outstanding for more than 45 days as at the Balance sheet date. Based on the information available with the company, the balance due to micro and small enterprises as defined under the MsMED act, 2006 in the current year is Rs. nil (previous year nil) and no interest during the year has been paid or is payable under the terms of the MsMED act, 2006.

10 consequent to the enactment of the companies act, 2013 and its applicability for accounting periods commencing on or after 1 april, 2014 the company has computed depreciation with reference to the useful life of assets recommended in schedule II to the act. the depreciation for the year is lower by Rs. 542.51 lakhs consequent to the change in the useful life of the assets. Further, depreciation related to the assets having written down value of Rs. 215.25 lakhs as on 1 april, 2014, whose useful life had expired, has been adjusted from the general reserves amounting to Rs. 142.09 lakhs (net of deferred tax credit of Rs. 73.16 lacs).

11 previous year figures have been recast/ regrouped wherever necessary to conform to the current years' presentation.


Mar 31, 2013

NOTE 1.1

Corporate information

Everest Industries Limited (‘the Company'') is engaged in manufacturing and trading of products like roofing products, ceilings, walls, flooring, cladding, doors, pre- engineered steel buildings and other building products and accessories thereof.

2.1 Contingent Liabilities

a) Claims against the Company not acknowledged as liabilities in respect of:

(Rs. in lacs)

As at As at

Particulars 31.03.2013 31.03.2012

i. Sales tax matters 4,475.92 4,238.61

ii. Customs, excise and service tax matters 2,816.27 206.20

iii. Income Tax matters 6,523.48 6,972.74

Total 13,815.67 11,417.55

iv. Advance paid / adjusted by Income Tax authorities against above 3,375.15 3,547.02

b) Guarantees aggregating to Rs. 2,540.76 lacs (previous year Rs. 1,751.62 lacs) issued by banks have been secured by a first pari-passu charge on the entire current assets, present and future, including receivables of the Company and second pari-passu charge on all fixed assets, land and buildings present and future, except land and building situated at Kolkata.

c) Estimated amount of contracts to be executed on capital account – Rs. 1,598.18 lacs (net of advances – Rs. 773.18 lacs), [previous year – Rs. 1,142.54 lacs (net of advances Rs. 969.55 lacs)].

d) Export Obligation: The Company has purchased fixed assets under the ‘Export Promotion Capital Goods Scheme''. As per the terms of the license granted under the scheme, the Company had undertaken to achieve an export commitment of Rs. 7,518.69 lacs (Previous year Rs. 9,950.22 lacs) over a period of 8 years.

The Company has filed for satisfaction of its export obligations of Rs. Nil lacs (Previous year Rs. 3,122.99 lacs) during the year ended 31 March, 2013, the balance export obligation as at the year end being Rs. 7,518.69 lacs (Previous year Rs. 6,827.23 lacs). The Company would be liable to pay customs duty of Rs. 939.84 lacs (Previous year Rs. 853.40 lacs) and interest on the same in the event of non-fulfillment of the balance export obligation. However the Company does not expect any liability to arise based on its export performance.

2.2 Disclosure of Retirement Benefits under Accounting Standard ‘AS15-Employee Benefits''

a. Defined contribution plan

The Company''s contributions of Rs. 294.74 lacs (previous year Rs. 285.62 lacs) towards provident fund and Rs. 97.48 lacs (previous year Rs. 100.29 lacs) towards superannuation fund are charged to Statement of Profit and Loss. The contributions payable to the plan by the Company are at rates specified in rules to the schemes.

b. Defined benefit plan

The Company''s contribution towards its gratuity liability is a defined benefit retirement plan. The Company makes contributions to the trust from time to time which in turn makes contributions to the Employee''s Group Gratuity-cum-Life Assurance scheme of the Life Insurance Corporation of India. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to fifteen days salary payable for each completed year of service or part thereof in excess of six months. Vesting occurs upon completion of five years of service.

The present value of the defined benefit obligation and the related current service cost were measured using the Projected Unit Credit Method with actuarial valuations being carried out at each balance sheet date.

c. The following tables set out the funded status of the gratuity plan and amounts recognised in the Company''s financial statements as at 31 March, 2013:

2.3 Current tax is net of excess provision of earlier years written back Rs. Nil (previous year Rs. 20.97 lacs).

2.4 Related Party Disclosures a. List of related parties

i. Enterprise exercising significant influence

- M/s Falak Investment Private Limited (with effect from 10 May, 2011)

- M/s Everest Finvest (India) Private Limited (till 9 May, 2011)

ii. Associate company*

- M/s Everest Building Solutions Limited

iii. Key management personnel

- Mr. Aditya Vikram Somani, Chairman

- Mr. Manish Sanghi, Managing Director

- Mr. Y Srinivasa Rao, Executive Director (Operations)

*Has not commenced operations

2.5 Segment Information

a. Business segments:

Based on the guiding principles given in Accounting Standard AS-17 "Segment Reporting" notified under Companies (Accounting Standard) Rules, 2006, the Company''s business segments include ‘Building products'' and ‘Steel buildings''.

Building products include roofing, ceiling, wall, floor solutions and its accessories.

Steel buildings consists of manufacture and supply of pre – engineered and smart steel buildings and its accessories.

b. Geographical segments:

Since the Company''s activities/operations are primarily within the country and considering the nature of products / services it deals in, the risks and returns are the same and as such there is only one geographical segment.

c. Segment accounting policies:

In addition to the significant accounting policies applicable to the business segments as set out in note a above, the accounting policies in relation to segment accounting are as under:

i. Segment revenue and expenses:

Segment revenue and expenses include the respective amounts identifiable to each of the segments. Unallocable items in segment results include income from bank deposits and corporate level expenses.

ii. Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consist principally of operating cash, debtors, inventories and fixed assets, net of allowances and provisions, which are reported as direct offsets in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities. Segments assets and liabilities do not include deferred income taxes.

2.6 Lease Commitments

Operating lease

The Company has taken property on cancellable and non-cancellable operating leases and has recognised rent of Rs. 576.16 lacs (previous year Rs. 562.23 lacs). The total of future minimum lease payments under non-cancellable operating lease are set out as below:

2.7 Changes in Foreign Exchange Rates

During the previous years, the Company had changed its policy on accounting for fluctuation on foreign exchange based on notification F.No.17/33/2008/CL-V dated 31 March, 2009 and subsequent amendments thereto, issued by the Ministry of Corporate Affairs, which was effective 7 December 2006, allowing capitalisation of exchange differences arising on revaluation of long term foreign currency monetary items (like ECB) pertaining to depreciable capital assets to the cost of fixed assets and deferment of similar exchange fluctuation in "Foreign Currency Monetary Item Translation Difference Account" (FCMITDA) where it does not relate to acquisition of fixed assets. In accordance with the said notification, the Company has during the current year capitalised Rs. 122.52 lacs (previous year Rs. 394.16 lacs) to the cost of fixed assets. The aforesaid amounts so capitalised are being depreciated over the remaining useful life of the fixed assets.

2.8 Employee Stock Option Scheme

The Company has granted 160,945 options (previous year 150,720 options) during the year ended 31 March, 2013. The exercise price per option shall be the average of the two weeks high and low price of the share preceding the date of grant of options on BSE/NSE or closing price of the Company''s share on that stock exchange on the date prior to the date of grant of options, whichever is less. Options granted shall vest with the grantee after a period of one year from the date of grant. The exercise period of the options is a period of four years after the vesting of the options.

The Company has accounted the above options using the intrinsic value method. As noted by the Remuneration Committee, the exercise price has been determined at Rs. 268 and thus there is no stock compensation expense under the intrinsic value method for the options granted.

The Guidance Note issued by the Institute of Chartered Accountants of India requires the disclosure of pro forma net results and EPS both basic and diluted, had the Company adopted the fair value method. Had the Company accounted the option under fair value method, amortising the stock compensation expense thereon over the vesting period, the reported profit for the year ended 31 March, 2013 would have been lower by Rs. 88.83 lacs (previous year Rs. 88.89 lacs) and the basic and diluted EPS would have been revised to Rs. 34.11 (previous year Rs. 34.37) and Rs. 34.11 (previous year Rs. 34.37) respectively. The fair value of stock based awards to employees is calculated through the use of option pricing models, requiring subjective assumptions which greatly affect the calculated values. The said fair value of the options have been calculated using Black-Scholes option pricing model, considering the expected term of the options to be 5 years, an expected dividend yield of 2.60% (previous year 3.42%) on the underlying equity shares, volatility in the share price of 35.32% (previous year 40.22%) and a risk free rate of interest of 7.91% (previous year 8.13%). The Company''s calculations are based on a single option valuation approach, and forfeitures are recognised as they occur. The expected volatility is based on historical volatility of the share price during the year after eliminating the abnormal price fluctuations.

2.9 As per information available with the Company, none of its creditors comprises micro, small and medium enterprises as defined under the MSMED Act, 2006 which comprise amounts outstanding for more than 45 days as at the Balance Sheet date. Based on the information available with the Company, the balance due to micro and small enterprises as defined under the MSMED Act, 2006 in the current year is Rs. Nil (Previous year Nil) and no interest during the year has been paid or is payable under the terms of the MSMED Act, 2006.

2.10 Previous year figures have been recast / regrouped wherever necessary to conform to the current years'' presentation.


Mar 31, 2012

1.1 Contingent Liabilities

a) Claims against the Company not acknowledged as liabilities in respect of:

Particulars As at As at

31.03.2012 31.03.2011 (Rs. /Lakhs) (Rs. /Lakhs)

i. Sales tax matters 4,238.61 4,244.18

ii. Customs, excise and service tax matters 206.20 173.99

iii. Income Tax matters 6,972.74 2,236.61

Total 11,417.55 6,654.78

iv. Advance paid against above 3,547.02 2,129.71

b) Guarantees aggregating to Rs. 1,751.62 lakhs (previous year Rs. 1,814.91 lakhs) issued by banks have been secured by a first pari-passu charge on the entire current assets, present and future, including receivables of the Company and second pari-passu charge on all fixed assets, land and buildings present and future, except land and building situated at Kolkata.

c) Estimated amount of contracts to be executed on capital account - Rs. 1,142.54 lakhs (net of advances - Rs. 969.55 lakhs), [previous year - Rs. 424.26 lakhs (net of advances Rs. 342.40 lakhs)].

d) Export Obligation: The Company has purchased fixed assets under the 'Export Promotion Capital Goods Scheme'. As per the terms of the license granted under the scheme, the Company had undertaken to achieve an export commitment of Rs. 9,950.22 lakhs (Previous year Rs. 9,550.81 lakhs) over a period of 8 years.

The Company has filed for satisfaction of its export obligations of Rs. 3,122.99 lakhs (Previous year Rs. Nil) till 31 March, 2012, the balance export obligation being Rs. 6,827.23 lakhs (Previous year Rs. 9,550.81 lakhs). The Company would be liable to pay customs duty of Rs. 853.40 lakhs (Previous year Rs. 1,193.85 lakhs) and interest on the same in the event of non-fulfillment of the balance export obligation. However the Company does not expect any liability to arise based on its export performance.

1.2 Disclosure of Retirement Benefits under Accounting Standard 'AS15-Employee Benefits'

a. Defined contribution plan

The Company's contributions of Rs. 285.62 lakhs (previous year Rs. 266.94 lakhs) towards provident fund and Rs. 100.29 lakhs (previous year Rs. 102.05 lakhs) towards superannuation fund are charged to Statement of Profit and Loss. The contributions payable to the plan by the Company are at rates specified in rules to the schemes.

b. Defined benefit plan

The Company's contribution towards its gratuity liability is a defined benefit retirement plan. The Company makes contributions to the trust from time to time which in turn makes contributions to the Employee's Group Gratuity-cum-Life Assurance scheme of the Life Insurance Corporation of India. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to fifteen days salary payable for each completed year of service or part thereof in excess of six months. Vesting occurs upon completion of five years of service.

The present value of the defined benefit obligation and the related current service cost were measured using the Projected Unit Credit Method with actuarial valuations being carried out at each balance sheet date.

The planned assets of the Company are managed by the Life Insurance Corporation of India in terms of an insurance policy taken to fund obligations of the Company with respect to its gratuity plan. Information on categories of plan assets as at 31 March, 2012 has not been provided by the Life Insurance Corporation of India.

1.3 Current tax is net of excess provision of earlier years written back Rs. 20.97 lakhs (previous year Rs. 86.20 lakhs).

1.4 Proposed dividend includes Nil (previous year Rs. 7.85 lakhs) pertaining to the previous year. Tax on distributed profits includes Nil (previous year Rs. 1.30 lakhs) pertaining to the previous year and is net of Nil (previous year Rs. 2.56 lakhs) reversed during the year.

1.5 Related Party Disclosures

a. List of related parties

i. Enterprise exercising significant influence

- M/s Falak Investment Private Limited (with effect from 10 May, 2011)

- M/s Everest Finvest (India) Private Limited (with effect from 26 March, 2010 till 9 May, 2011)

ii. Subsidiary company

- M/s Everest Building Solutions Limited (till 13 April, 2010)

iii. Associate company *

- M/s Everest Building Solutions Limited (with effect from 14 April, 2010)

iv. Key management personnel

- Mr. Aditya Vikram Somani, Chairman with effect from 21 June, 2010

- Mr. Manish Sanghi (COO and Director till 30 September, 2010), Managing Director with effect from 1 October, 2010

- Mr. M.L. Gupta (Managing Director till 30 September, 2010)

- Mr. Y. Srinivasa Rao, Executive Director (Operations)

1.6 Segment Information

a. Business segments:

Based on the guiding principles given in Accounting Standard AS-17 "Segment Reporting" notified under Companies (Accounting Standard) Rules, 2006. The Company's business segments include 'Building products' and 'Steel buildings'.

Building products include roofing, ceiling, wall, floor solutions and its accessories.

Steel buildings consists of manufacture and supply of pre - engineered and smart steel buildings and its accessories.

b. Geographical segments:

Since the Company's activities/operations are primarily within the country and considering the nature of products/services it deals in, the risks and returns are the same and as such there is only one geographical segment.

c. Segment accounting policies:

In addition to the significant accounting policies applicable to the business segments as set out in note a above, the accounting policies in relation to segment accounting are as under:

i. Segment revenue and expenses:

Segment revenue and expenses include the respective amounts identifiable to each of the segments. Unallowable items in segment results include income from bank deposits and corporate level expenses.

ii. Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consist principally of operating cash, debtors, inventories and fixed assets, net of allowances and provisions, which are reported as direct offsets in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities. Segments assets and liabilities do not include deferred income taxes.

1.7 Changes in Foreign Exchange Rates During the previous years, the Company had changed its policy on accounting for fluctuation on foreign exchange based on notification F.No.17/33/2008/CL-V dated 31 March, 2009 and subsequent amendments thereto, issued by the Ministry of Corporate Affairs, which was effective 7 December 2006, allowing capitalization of exchange differences arising on revaluation of long term foreign currency monetary items (like ECB) pertaining to depreciable capital assets to the cost of fixed assets and deferment of similar exchange fluctuation in 'Foreign Currency Monetary Item Translation Difference Account' (FCMITDA) where it does not relate to acquisition of fixed assets. In accordance with the said notification, the Company has during the current year capitalized Rs. 394.16 lakhs (previous year decapitalised Rs. 10.29 lakhs) to the cost of fixed assets. The aforesaid amounts so capitalized are being depreciated over the remaining useful life of the fixed assets.

1.8 Share Application Money Pending Allotment

As at 31 March, 2011, the Company had received an amount of Rs. 3.90 lakhs. The share application money had been received pursuant to an invitation to offer shares under various Employee Stock Option Schemes of the Company. The Company had sufficient authorized capital to cover the allotment and 5,196 equity shares at a premium aggregating to Rs. 3.38 lakhs were issued during the current year. The share application money pending allotment as at 31 March, 2012 was Rs. Nil.

1.9 Employee Stock Option Scheme

The Company has granted 150,720 options (previous year 147,705 options) during the year ended 31 March, 2012. The exercise price per option shall be the average of the two weeks high and low price of the share preceding the date of grant of options on BSE/NSE or closing price of the Company's share on that stock exchange on the date prior to the date of grant of options, whichever is less. Options granted shall vest with the grantee after a period of one year from the date of grant. The exercise period of the options is a period of four years after the vesting of the options.

Previous year figures are in italics.

The Company has accounted the above options using the intrinsic value method. As noted by the Remuneration Committee, the exercise price has been determined at Rs. 126 and thus there is no stock compensation expense under the intrinsic value method for the options granted. The Guidance Note issued by the Institute of Chartered Accountants of India requires the disclosure of pro forma net results and EPS both basic and diluted, had the Company adopted the fair value method. Had the Company accounted the option under fair value method, a mortising the stock compensation expense thereon over the vesting period, the reported profit for the year ended March 31, 2012 would have been lower by Rs. 88.89 lakhs (previous year Rs. 81.99 lakhs) and the basic and diluted EPS would have been revised to Rs. 34.37 (previous year Rs. 26.55) and Rs. 34.37 (previous year Rs. 26.55) respectively. The fair value of stock based awards to employees is calculated through the use of option pricing models, requiring subjective assumptions which greatly affect the calculated values. The said fair value of the options have been calculated using Black-Scholes option pricing model, considering the expected term of the options to be 5 years, an expected dividend yield of 3.42% (previous year 2.60%) on the underlying equity shares, volatility in the share price of 40.22% (previous year 44.50%) and a risk free rate of interest of 8.13% (previous year 8.06%). The Company's calculations are based on a single option valuation approach, and forfeitures are recognized as they occur. The expected volatility is based on historical volatility of the share price during the year after eliminating the abnormal price fluctuations.

1.10 As per information available with the Company, none of its creditors comprises micro, small and medium enterprises as defined under the MSMED Act, 2006 which comprise amounts outstanding for more than 45 days as at the Balance Sheet date. Based on the information available with the Company, the balance due to micro and small enterprises as defined under the MSMED Act, 2006 in the current year is Rs. Nil (Previous year Rs. 2.25 lakhs) and no interest during the year has been paid or is payable under the terms of the MSMED Act, 2006.

1.11 Previous year figures have been recast/ regrouped wherever necessary to conform to the current years' presentation.


Mar 31, 2010

1. Contingent Liabilities

a) Claims against the Company not acknowledged as liabilities in respect of:

As at As at

Particulars 31.03.2010 31.03.2009 (Rs./Lakhs) (Rs./Lakhs)

i. Sales tax matters 4,176.11 3,758.67

ii. Customs and excise matters 2,598.36 2,468.34

iii. Income Tax matters 2,149.02 1,026.63

b) Guarantees issued by bank have been secured by a first pari-passu charge on the entire current assets, present and future, including receivables of the Company and second pari-passu charge on all fixed assets, land and buildings present and future, except land and building situated at Podanur (on which State Bank of India has exclusive charge) and at Kolkata, to the extent of Rs. 2,606.56 lakhs (previous year Rs. 1,558.98 lakhs).

c) Estimated amount of contracts to be executed on capital account - Rs. 326.35 lakhs (net of advances - Rs. 136.58 lakhs), [previous year - Rs. 119.08 lakhs (net of advances Rs. 31.90 lakhs)].

2. Disclosure of Retirement Benefits under Accounting standard AS15-Employee Benefits

a. Defined contribution plan

The Companys contributions towards provident fund for qualifying employees and towards superannuation fund for specific employees are defined contribution retirement plans. The Companys contributions towards provident fund are deposited in trusts formed by the Company under the Employees Provident Fund and Miscellaneous Provisions Act, 1952. Contributions to superannuation fund are deposited in a separate trust. These trusts are recognised by the Income Ta x authorities. The contributions to the trusts are managed by the trustees of the respective trusts.

The Companys contributions of Rs. 266.98 lakhs (previous year Rs. 205.95 lakhs) towards provident fund and Rs. 98.64 lakhs (previous year Rs. 106.68 lakhs) towards superannuation fund are charged to the Profit and Loss account. The contributions payable to the plan by the Company are at a rate specified in rules to the schemes.

b. Defined Benefit plan

The Companys contribution towards its gratuity liability is a defined benefit retirement plan. The Company makes contributions to the trust from time to time which in turn makes contributions to the Employees Group Gratuity-cum-Life Assurance scheme of the Life Insurance Corporation of India. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of 6 months. Vesting occurs upon completion of 5 years of service.

The present value of the defined benefit obligation and the related current service cost were measured using the Projected Unit Credit Method with actuarial valuations being carried out at each balance sheet date.

3. Related Party Disclosures

a. List of related parties

i. Holding company

M/s Everest Finvest (India) Private Limited (till 25 March, 2010)

ii. Subsidiary company

M/s Everest Building Solutions Limited

iii. Key management personnel

Mr. M. L. Gupta, Managing Director

Mr. Manish Sanghi, COO and Director Mr. Y. Srinivasa Rao, Executive Director

4. Segment Information

Consequent to commencement of Steel buildings business during the previous year Accounting Standard AS17 - Segment Reporting has become applicable.

a. Business segments:

The Companys business segments include Building products and Steel buildings.

Building products include roofing, ceiling, wall, floor solutions etc.

Steel buildings consists of manufacture and supply of pre engineered and smart steel buildings.

b. Geographical segments:

Since the Companys activities/operations are primarily within the country and considering the nature of products/services it deals in, the risks and returns are same and as such there is only one geographical segment.

c. Segment accounting policies:

In addition to the significant accounting policies applicable to the business segments as set out in note 1 above, the accounting policies in relation to segment accounting are as under:

i. Segment revenue and expenses:

Segment revenue and expenses include the respective amounts identifiable to each of the segments. Unallocable items in segment results include income from bank deposits and corporate level expenses.

ii. Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consist principally of operating cash, debtors, inventories and fixed assets, net of allowances and provisions, which are reported as direct offsets in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities. Segments assets and liabilities do not include deferred income taxes.

5. Changes in Foreign Exchange Rates

During the previous year, the Company had changed its policy on accounting for fluctuation on foreign exchange based on notification F.No.17/33/ 2008/CL-V dated March 31, 2009, issued by the Ministry of Corporate Affairs, which was effective 7 December 2006, allowing capitalisation of exchange differences arising on revaluation of long term foreign currency monetary items (like ECB) pertaining to depreciable capital assets to the cost of fixed assets and deferment of similar exchange fluctuation in "Foreign Currency Monetary Item Translation Difference Account" (FCMITDA) where it does not relate to acquisition of fixed assets. Further the balance transferred to the FCMITDA will need to be amortised over the period that is shorter of the maturity period of the monetary items or 31 March, 2011. Unamortised amount in FCMITDA is carried forward as deferred cost in the financial statements.

In accordance with the said notification, the Company during the current year has de-capitalized Rs. 614.15 lakhs (previous year capitalised an amount of Rs. 1,262.30 lakhs) from the cost of fixed assets and transferred Rs. Nil (previous year Rs. 105.58 lakhs) to FCMITDA. The amount so capitalised is being depreciated over the remaining useful life of the fixed assets and the balance in the FCMITDA account is being amortised over the period 1 April 2008 to 31 March 2011 which is shorter of the maturity period of the monetary items or 31 March, 2011. The unamortized amount of Rs. 34.13 lakhs (previous year Rs. 68.27 lakhs) has been carried forward in the financial statements as a deferred cost as at 31 March, 2010. Further, the Company during the previous year ended 31 March, 2009 had also recognized a reversal of the exchange gain on such foreign currency monetary items aggregating to Rs. 13.19 lakhs which was credited to the Profit and loss account during the previous year ended 31 March, 2008 by debiting the opening balance of the General Reserve by Rs. 13.19 lakhs and crediting the FCMITDA by Rs 3.17 lakhs and crediting the cost of the opening balance of the fixed assets by Rs. 10.02 lakhs.

6. Previous year figures have been recast/ regrouped wherever necessary to conform to the current years presentation.

 
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