Notes to Accounts of Foseco India Ltd.

Dec 31, 2022

Provision for Compensated Absences and Gratuity a Long term employee benefit obligations

Compensated absences

The Compensated absences covers the liability for privilege leave. The classification of compensated absences into current and noncurrent is based on the report of independent actuary prepared for the year ended December 31, 2022.

b Post employment obligations

(i) Defined Contribution Plan

The Company also has certain defined contribution plans. Contributions are made to provident fund for employees at the rate of 12% and towards superannuation fund at the rate of 15% of basic salary as per regulations. The contributions are made to registered provident fund administered by the central government, superannuation trust administered through Life Insurance Corporation of India. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation.

(ii) Gratuity

In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan (Gratuity Scheme) covering certain categories of employees. The Gratuity Scheme provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employee''s last drawn salary and the years of employment with the Company. The Company provides the gratuity benefit through annual contributions to the fund managed by the Life Insurance Corporation of India (LIC), under this plan the settlement obligation remains with the Company. The Company does fully fund the liability based on estimations of expected gratuity valuation provided by the Actuary.

The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method) has been applied as when calculating the defined benefit liability recognized in the balance sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

VII Risk Exposure

Through its defined benefit plan, the Company is exposed to a number of risks, the most significant of which are detailed below:

Asset volatility

The plan liabilities are calculated using a discount rate set with reference to bond yields. If plan assets underperform this yield, this will create a deficit. All plan assets are maintained in a trust fund managed by a public sector insurer i.e., LIC of India. LIC has a sovereign guarantee and has been providing consistent and competitive returns over the years. The Company has opted for a traditional fund wherein all assets are invested primarily in risk averse markets. The Company has no control over the management of funds but this option provides a high level of safety for the total corpus. A single account is maintained for both the investment and claim settlement and hence, 100% liquidity is ensured. Also, interest rate and inflation risk are taken care of.

Changes in bond yields

A decrease in bond yields will increase plan liabilities, although this will be partially offset by an increase in yield in the value of the plans'' bond holdings.

Future salary escalation and inflation risk

Since price inflation and salary growth are linked economically, they are combined for disclosure purposes. Rising salaries will often result in higher future defined benefit payments resulting in higher present value of liabilities. Further, unexpected salary increases provided at the discretion of the management may lead to uncertainties in estimating this increasing risk.

Asset-Liability mismatch risk

Risk which arises if there is a mismatch in the duration of the assets relative to the liabilities. By matching duration with the defined benefit liabilities, the Company is successfully able to neutralize valuation swings caused by interest rate movements as it has adopted asset-liability management approach.

28 Share Based Payments - Medium Term Plan (a) Employee option plan

Vesuvius Pic. (Ultimate Holding Company) may grant restricted stock awards to certain employees of the Company under its stock incentive plan

Restricted Stock Units - Restricted stock unit (RSU) awards entitle the holder to receive equity instruments of the Ultimate Holding Company which is equal to the annual incentive plan (AIP) amount which the employee is entitled to receive. RSUs become fully vested over a vesting period of two years from the date of grant. Options are granted under the plan for no consideration and do not carry dividend and voting rights till the RSUs become fully vested.

Fair value of options granted:

The fair value at grant date of options granted during the year ended December 31, 2022 was GBP 4.02 per RSU (December 31, 2021 was GBP 4.45 per RSU). The equivalent fair value in ? for the year ended December 31, 2022 was ? 401.85 per RSU (December 31, 2021 was ? 446.82 per RSU) The fair value at grant date is determined using the average middle market price of an ordinary share of GPB 10p in the capital of Vesuvius Pic for the 5 trading days immediately prior to the date of grant.

30 Segment Reporting

(a) Description of segments and principal activities

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief operating decision maker. The Managing Director has been identified as the Chief operating decision maker (CODM).

The Company operates in only one business segment i.e. manufacturing and trading of metallurgical products and services. This is the principal activity for the Company. The segment revenue is measured in the same way in Statement of Profit and Loss.

31 Contingencies and Commitments	As at December 31, 2022	As at December 31, 2021
a) Contingent Liabilities Contingent Liabilities
b) Commitments: Estimated Amount of Contracts remaining to be executed on Capital Account and not provided for (net of advance payments)	5.29	12.39
c) Bank Guarantees Counter Guarantees given to Banks in respect of Guarantee given by them towards third parties for supply of goods, clearance of goods from customs etc.	23.08	28.54

Fair value hierarchy

This section explains the judgements & estimates made in determining the fair value of the financial instruments. The fair value of financial instruments as referred to in note above have been classified into three categories depending on the inputs used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active market for identical assets or liabilities (level 1 measurements) and lowest priority to unobservable inputs (level 3 measurements).

(a) recognised and measured at fair value and

(b) measured at amortised cost and for which fair values are disclosed in the financial statements

For all financial instruments referred above that have been measured at amortised cost, their carrying values are

reasonable approximations of their fair values. These are classified as level 3 financial instruments.

There were no transfers between Level 1, Level 2 and Level 3 during the year.

The categories used are as follows:

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices.

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

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

33 Financial Risk Management 1 Financial risk management

The Company''s activities exposes it to market risk, liquidity risk and credit risk. This note explains the sources of

risk which the entity is exposed to and how the entity manages the risk.

(A) Credit risk

The Company is exposed to credit risk from its operating activities (primarily trade receivables) and deposits with banks and other financial instruments. For banks and other financial institutions, only high rated banks/ financial institutions are accepted. The balances with banks, loans given to employees, security deposits are subject to low credit risk and the risk of default is negligible or nil. Hence, no provision has been created for expected credit loss for credit risk arising from these financial assets. The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in the credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forward-looking information, for e.g., external credit rating (to the extent available), actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant change to borrower''s ability to meet its obligations.

I. Trade receivables

Credit risk arises from the possibility that customer will not be able to settle their obligations as and when agreed. To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends, analysis of historical bad debts, ageing of accounts receivable and forward looking information. Individual credit limits are set accordingly.

The Company uses the Expected Credit Loss (ECL) model to assess the impairment gain or loss. As per ECL simplified approach, the Company uses a provision matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account a continuing credit evaluation of Company''s customers'' financial condition; aging of trade accounts receivable; the value and adequacy of collateral received from the customers in certain circumstances (if any); the Company''s historical loss experience; and adjustment based on forward looking information. The Company defines default as an event when there is no reasonable expectation of recovery.

(B) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. To assure the solvency and financial flexibility, the Company retains a liquidity reserve through cash and cash equivalents and lines of credit.

(C) Market risk

Market risk comprises of foreign currency risk and interest rate risk.

I) Foreign currency risk

The company is engaged in international trade and thereby exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD, EUR, AUD, GBP and JPY. Foreign exchange risk arises from recognised assets and liabilities denominated in a currency other than company''s functional currency (INR). The Company''s exposure to foreign currency arises from short term receivables and payables where fluctuations in the foreign exchange rates are generally not significant and consequently limiting the company''s exposure.

34 Capital Management a) Risk management

The Company''s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and maintain an optimal capital structure to reduce the cost of capital. For the purpose of the Company''s capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders of the parent. The primary objective of the Company''s capital management is to maximise the shareholders value. The Company manages its capital structure and makes adjustments in light of changes in economic conditions.

ii Details of benami property held

No proceedings have been initiated on or are pending against the Company under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.

iii Borrowing secured against current assets

The Company has no borrowing from bank or any financial institutions.

iv Wilful defaulter

The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.

v Compliance with number of layers of companies

The Company has complied with the number of layers prescribed under the Companies Act, 2013.

vi Compliance with approved scheme(s) of arrangements

The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.

vii Utilisation of borrowed funds and share premium

The Company has not advanced or loaned or invested funds to any other person or entity, including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or

b. provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.

The Company has not received any fund from any person or entity, including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

b. provide any guarantee, security or the like on behalf of the ultimate beneficiaries

viii Undisclosed income

There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.

ix Details of crypto currency or virtual currency

The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

x Registration of charges or satisfaction with Registrar of Companies

The Company does not have any charges to be created or satisfied which requires to be registered with Registrar of Companies (ROC).

38 In terms of provisions of Regulation 30 read with Schedule III of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company had, on February 06, 2023, informed the BSE Limited and the National Stock Exchange of India Limited that there has been an incident involving unauthorised access to its IT systems that happened through an offshore affiliate. Immediately upon becoming aware of such unauthorised activity on the networks, the Company had initiated necessary steps to investigate and respond to the incident, including shutting down the affected systems. Based on management''s preliminary assessment with the support of leading cyber security experts, related to investigations and identification of the extent of the issue, including the impact, if any, on production and contract fulfilment, there was no assessed impact on the financial statements of the Company for the year ended December 31, 2022. While the restoration process of the IT systems has started in the phased manner and the detailed investigation as regards the incident is yet to be concluded, the management does not expect any further financial, legal or regulatory impact of the incident reported herein on the aforesaid financial statements of the Company.

39 Previous year''s figure have been regrouped, wherever required.

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Dec 31, 2018

Notes:

1 Refer to note 29(c) for disclosure of contractual commitments for the acquisition of property, plant and equipment.

2 Capital work-in-progress comprises of mainly Plant and Machinery.

3 Leasehold land of the Company is located at Pondicherry.

4 The Company has elected to continue with carrying value of property, plant and equipment as recognized in financial statements as per Indian GAAP and regard those values as deemed cost on the date of transition.

The disclosure relating to Specified Bank Notes* (SBNs) is not applicable to the Company for year ended December 31, 2018 and December 31, 2017.

* Specified Bank Notes (SBNs) mean the bank notes of denominations of the then existing series of the value of five hundred rupees and one thousand rupees as defined under the notification number S.O. 3407(E), dated the 8th November, 2016 issued by the Department of Economic Affairs under the Ministry of Finance, Government of India.

Amounts recognized in the statement of profit and loss

Provision for excess and obsolete inventory amounted to Rs. 28.64 lakhs (December 31, 2017 : Rs. 4.01 lakhs, January 1, 2017 : Rs. 22.36 lakhs). These were recognized as an expense during the year and included in ''Cost of materials consumed'' in the statement of profit and loss. the Company is in the process of updating its documentation in respect to international transactions with Related Parties (Associated Enterprises) as required under section 92E of the Income Tax Act, 1961. The Company''s Management believes that the transfer pricing legislation will not have any impact on the financial statements, particularly on the amount of tax expense and the provision for tax made as at and for the year ended 31 December 2018 and 31 December 2017.

(ii) Terms/ rights attached to equity shares

The Company has only 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 dividends. 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.

Note :

a Long term employee benefit obligations Compensated absences

The Compensated absences of employees covers the liability for privilege leave. The classification of compensated absences into current and non-current is based on the report of independent actuary prepared for the year ended December 31, 2018.

b Post employment obligations (i) Defined Contribution Plan

The Company has certain defined contribution plans. Contributions are made to registered provident fund account of the employees at the rate of 12% of basic salary as per regulations as well as to superannuation fund. The contributions are made to registered provident fund administered by the government , superannuation trust administered through Life Insurance Corporation of India. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expense recognized during the period towards defined contribution plan is Rs. 275.60 lakhs (31 December 2017 : Rs. 272.80 lakhs).

(ii) Gratuity

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The gratuity plan is a funded plan and the Company makes contributions to the recognized funds in India. The Company does fully fund the liability based on estimations of expected gratuity valuation provided by the Actuary.

The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method) has been applied as when calculating the defined benefit liability recognized in the balance sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

VI Risk Exposure

Through its defined benefit plan, the Company is exposed to a number of risks, the most significant of which are detailed below:

Asset volatility

The plan liabilities are calculated using a discount rate set with reference to bond yield. If plan assets underperform this yield, this will create a deficit. All plan assets are maintained in a trust fund managed by a public sector insurer i.e., LIC of India. LIC has a sovereign guarantee and has been providing consistent and competitive returns over the years. The Company has opted for a traditional fund wherein all assets are invested primarily in risk averse markets. The Company has no control over the management of funds but this option provides a high level of safety for the total corpus. A single account is maintained for both the investment and claim settlement and hence, 100% liquidity is ensured. Also, interest rate and inflation risk are taken care of.

Changes in bond yields

A decrease in bond yield will increase plan liabilities, although this will be partially offset by an increase in yield in the value of the plans'' bond holdings.

Future salary escalation and inflation risk

Since price inflation and salary growth are linked economically, they are combined for disclosure purposes. Rising salaries will often result in higher future defined benefit payments resulting in higher present value of liabilities. Further, unexpected salary increases provided at the discretion of the management may lead to uncertainties in estimating this increasing risk.

Asset-Liability mismatch risk

Risk which arises if there is a mismatch in the duration of the assets relative to the liabilities. By matching duration with the defined benefit liabilities, the Company is successfully able to neutralize valuation swings caused by interest rate movements as it has adopted asset-liability management approach.

i) Legal matters under dispute

The Company is contesting the demands and the management believes that its position is likely to be upheld in the appellate proceedings. It is not practicable to estimate the timing of cash outflows, if any in respect of legal matters, pending resolution of the proceedings with the appellate authorities.

b) The bank has given guarantees for Rs. 23.08 Lakhs (December 31, 2017 Rs. 15.71 Lakhs and January 01, 2017 Rs. 11.76 Lakhs) to third parties for supply of goods, clearance of goods from customs etc.

c) Capital commitments

Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for is Rs.397.72 lakhs (December 31, 2017 : Rs. 11.68 lakhs, January 1, 2017 : Rs. 18.68 lakhs)

30 Related party transactions

Name of the related parties and nature of relationship

(i) Name of Related Party Where Control Exists :

1 Vesuvius Plc. United Kingdom Ultimate Holding Company

2 Foseco (U.K.) Limited., United Kingdom Parent of Immediate Holding Company

3 Foseco Overseas Limited, United Kingdom Immediate Holding Company

Notes to the Financial Statements (continued)

(All amounts in INR lakhs, unless otherwise stated)

(ii) Other Related Parties with whom transactions have taken place during the year:

(I) Fellow Subsidiaries:

1 Foseco (Thailand) Limited

2 Foseco Foundry (China) Company Limited

3 Foseco Golden Gate Company Limited, Taiwan

4 Foseco Industrial e-Commercial Ltda., Brazil

5 Foseco International Limited, United Kingdom

6 Foseco Japan Limited

7 Foseco Korea Limited

8 Foseco Nederland BV.

9 Foseco Philippines Inc.

10 PT Foseco Trading Indonesia

11 PT Foseco Indonesia

12 Vesuvius Australia Pty Ltd.

13 Vesuvius Emirates (FZE), Dubai

14 Vesuvius Foundry Technologies (Jiangsu) Company Limited, China

15 Vesuvius GmbH, Germany

16 Vesuvius Group SA, Belgium

17 Vesuvius India Limited

18 Vesuvius Italia S.P.A.

19 Vesuvius Malaysia Sdn. Bhd.

20 Vesuvius New Zealand Limited

21 Vesuvius Poland Sp. Z.o.o.

22 Vesuvius Ras Al Khaimah FZ-LLC, Dubai

23 Vesuvius UK Limited, United Kingdom

24 Vesuvius Inc., USA

25 Vesuvius Holdings Limited, United Kingdom

26 Foseco Espanola, S.A.

27 Foseco SMC Nederlands

28 Vesuvius LLC

29 Vesuvius Scandinavia AB

(II) Key Management Personnel (KMP) as per Indian Accounting Standard (Ind AS) 24 Related Party Disclosures

1 Mr. Pradeep Mallick - Director and Chairperson till April 24, 2018

2 Mr. Ajit Shah - Director

3 Mr. Indira Parikh - Director

4 Mr. Glenn Cowie - Director

IV Terms and conditions for outstanding balances

Transactions with related parties were made on normal commercial terms and conditions.

All outstanding balances are unsecured and payable in cash.

31 Segment reporting

(a) Description of segments and principal activities

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Managing Director has been identified as the chief operating decision maker (CODM).

The Company operates in only one business segment i.e. manufacturing of metallurgical products and services. This is the principal activity for the Company. The segment revenue is measured in the same way in Statement of Profit and Loss.

The Company''s revenue from geographical locations other than India are insignificant to the total revenue of the Company.

The Company does not have any customer contributing to 10% or more to the total revenue.

(b) Non-current assets

All the non-current assets are located within India.

The Company has not disclosed the fair values for above financial instruments because their carrying amounts are a reasonable approximation of fair values mainly because of their short-term nature.

Fair value hierarchy

This section explains the judgments & estimates made in determining the fair value of the financial instruments.

The fair value of financial instruments as referred to in note above have been classified into three categories depending on the inputs used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active market for identical assets or liabilities (level 1 measurements) and lowest priority to unobservable inputs (level 3 measurements).

(a) Only derivative contracts are measured at fair value. These derivative contracts are categorized as Level 2 financial instruments.

(b) Assets and liabilities which are measured at amortized cost for which fair values are disclosed.

For all financial instruments referred above that have been measured at amortized cost, their carrying values are reasonable approximations of their fair values. These are classified as level 3 financial instruments. There were no transfers between Level 1, Level 2 and Level 3 during the year.

The categories used are as follows:

Level 1 : Level 1 hierarchy includes financial instruments measured using quoted prices.

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

Level 3 : If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

33 Financial risk management 1 Financial risk management

The Company''s activities exposes it to market risk, liquidity risk and credit risk. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk.

(A) Credit risk

The Company is exposed to credit risk from its operating activities (primarily trade receivables) and deposits with banks and other financial instruments. For banks and other financial institutions, only high rated banks/ financial institutions are accepted. The balances with banks, loans given to employees, security deposits are subject to low credit risk and the risk of default is negligible or nil. Hence, no provision has been created for expected credit loss for credit risk arising from these financial assets. The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in the credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive

forward-looking information, for e.g., external credit rating (to the extent available), actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant change to borrower''s ability to meet its obligations.

I Trade receivables

Credit risk arises from the possibility that customer will not be able to settle their obligations as and when agreed. To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends, analysis of historical bad debts, ageing of accounts receivable and forward looking information. Individual credit limits are set accordingly.

On account of adoption of Ind AS 109, the Company uses the Expected Credit Loss (ECL) model to assess the impairment gain or loss. As per ECL simplified approach, the Company uses a provision matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account a continuing credit evaluation of Company''s customers'' financial condition; aging of trade accounts receivable; the value and adequacy of collateral received from the customers in certain circumstances (if any); the Company''s historical loss experience; and adjustment based on forward looking information. The Company defines default as an event when there is no reasonable expectation of recovery.

(B) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. To assure the solvency and financial flexibility, the Company retains a liquidity reserve through cash and cash equivalents and lines of credit.

(i) Maturities of financial liabilities

The tables below analyses the Company''s financial liabilities into relevant maturity group based on their contractual maturities for :

(C) Market risk Market risk comprises of foreign currency risk and interest rate risk I) Foreign currency risk

The company is engaged in international trade and thereby exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD, EUR, GBP and JPY Foreign exchange risk arises from recognized assets and liabilities denominated in a currency other than company''s functional currency (INR). The Company''s exposure to foreign currency arises from short term receivables and payables where fluctuations in the foreign exchange rates are generally not significant and consequently limiting the company''s exposure.

II) Interest rate risk

The Company''s main interest rate risk arises from deposits placed over a period of time on frequent basis thereby exposing the company to interest rate risk. The Company''s policy is to have fixed interest rate at the time of deal execution.

34 Capital Management a) Risk management

The Company''s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and maintain an optimal capital structure to reduce the cost of capital. For the purpose of the Company''s capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders of the parent. The primary objective of the Company''s capital management is to maximize the shareholders’ value. The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants.

No changes were made in the objectives, policies or processes for managing capital during the years ended December 31, 2017 and December 31, 2018.

35 First-time adoption Transition to Ind AS

These are the Company''s first financial statements prepared in accordance with Ind AS.

The accounting policies set out in Note 1 have been applied in preparing the financial statements for the year ended December 31, 2018, the comparative information presented in these financial statements for the year ended December 31, 2017 and in the preparation of an opening Ind AS Balance Sheet as at January 1, 2017 (the Company''s date of transition). In preparing its opening Ind AS Balance Sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows is set out in the following tables and notes.

I Exemptions availed a) Government Loans

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for government loans as recognized in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and not to recognize the benefit of the loan so availed at a below market rate of interest as a government grant. Accordingly, the Company has elected to measure all of its government loans at their previous GAAP carrying value and has not recognized a government grant for the corresponding benefit.

a) Deemed cost - Property, plant and equipment (PPE), intangible assets

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment and intangible assets as recognized in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value.

II Exceptions applied

a) Estimates

An entity''s estimates in accordance with Ind ASs at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error. Ind AS estimates as at January 1, 2017 are consistent with the estimates as at the same date made in conformity with previous GAAP.

Note:

There is no change in cash and cash equivalents on account of adoption of Ind AS. Also, there is no impact of Ind AS on the Statement of Cash Flows.

Notes to first-time adoption a) Excise duty

Under the previous GAAP, revenue from sale of products was presented exclusive of excise duty. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. The excise duty paid is presented on the face of the statement of profit and loss as a part of expenses. This change has resulted in an increase in total revenue and total expenses for the year ended 31 December 2017 by Rs. 2,109.32 lakhs. There is no impact on the total equity and profit.

b) Remeasurements of defined employee benefit plan

Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognized in other comprehensive income instead of profit or loss. Under the previous GAAP, these remeasurements were forming part of the profit or loss for the year. As a result of this change, the profit for the year ended December 31, 2017 decreased by Rs. 12.90 lakhs. There is no impact on the total equity as at December 31, 2017.

c) Proposed dividend

Under the previous GAAP up to December 31, 2016, final dividend proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed final dividend was recognized as a liability. Under Ind AS, such dividends are recognized after it is approved by shareholders in the general meeting. Accordingly, the liability for proposed dividend (including tax thereon) of Rs. Nil as at December 31, 2017 (January 1, 2017 : Rs. 538.06 lakhs) included under short term provisions has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity increased by an equivalent amount.

d) Other comprehensive income

Under Ind AS, all items of income and expenses recognized in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expenses that are not recognized in profit or loss but are shown in statement of profit or loss as ''Other Comprehensive Income'' includes measurements of defined benefit plans. The concept of other comprehensive income did not exist under previous GAAP.

e) Deferred tax

Deferred tax have been recognized on the adjustments made on transition to Ind AS.

3 Expenditure on research and development during the year

Revenue expenditure incurred on in-house Research and Development activities Rs. 90.61 lakhs (December 31, 2017: Rs. 69.15 lakhs).

Capital expenditure in relation to acquisition of property plant and equipment incurred on in-house research and development activities is Rs. 46.05 lakhs (December 31, 2017: Nil)

4 Previous GAAP figures have been reclassified / regrouped to conform to the presentation requirements under Ind AS and the requirements laid down in Division II to the Schedule III of the Companies Act, 2013.

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Dec 31, 2016

Note 1 : Disclosure Notes

1 Disclosure of Related Parties I Related Party Transactions

a. Name of Related Party Where Control Exists

i Vesuvius Pic., United Kingdom -Ultimate Parent Company

ii Vesuvius Holdings Limited, United Kingdom -Subsidary of Ultimate Parent Company

iii Foseco Holding Limited, United Kingdom - Subsidary of Ultimate Parent Company

iv Foseco (U.K.) Limited., United Kingdom -Subsidary of Ultimate Parent Company

v Foseco Overseas Limited, United Kingdom - Immediate Holding Company

b. Names of Related Parties with whom transactions were carried out for the Financial Year ended 31 December2016.

i Fellow Subsidiaries

1) Foseco (Thailand) Limited

2) Foseco Foundry (China) Company Limited

3) Foseco Industrial e-Commercial Ltda., Brazil

4) Foseco International Limited, United Kingdom

5) Foseco Japan Limited

6) Foseco Korea Limited

7) Foseco Nederland BV.

8) Foseco Philippines Inc.

9) Foseco Pty Limited, Australia

10) FosecoTrading Indonesia

11) Foseco Indonesia

12) PT Foseco Indonesia

13) Vesuvius Emirates (FZE), Dubai

14) Vesuvius Foundry Technologies (Jiangsu) Company Limited, China

15) Vesuvius Foundry Products (Suzhou) Company Limited, China

16) Vesuvius GmbH, Germany

17) Vesuvius Group SA, Belgium

18) Vesuvius Inc., USA

19) Vesuvius UK Limited, United Kingdom

20) Vesuvius Ras Al Khaimah FZ-LLC, Dubai

21) Vesuvius Malaysia Sdn. Bhd.

22) Vesuvius Poland Sp. Z.o.o.

23) Vesuvius India Limited

ii. Key Management Personnel

Name Designation

1) Mr. Sanjay Mathur Managing Director

2) Mr. RUmesh Chief Financial Officer

3) Mr. Mahendra Kumar Dutia Controller of Accounts and Company Secretary

52 Employee Benefit Plans

Gratuity: In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan (Gratuity Scheme) covering certain categories of employees. The Gratuity Scheme provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employee''s last drawn salary and the years of employment with the Company. The Company provides the gratuity benefit through annual contributions to the fund managed by the Life Insurance Corporation of India (LIC), under this plan the settlement obligation remains with the Company although the Life Insurance Corporation of India, administers the plan and determines the contribution of premium required to be paid by the Company.

The Company has invested the plan assets with the Life Insurance Corporation of India. Expected rate of return on the plan asset has been determined scientifically considering the current and expected plan asset allocation, historical rate of return earned by the company, current market trend and the expected return on the plan assets.

The Company assesses these assumptions with its projected long-term plans of growth and prevalent industry standards. The estimates of future salary increase, considered in actuarial valuation, takes account of inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market.

ii) Defined Contribution Plan:-

The Company has recognized the following amounts which are defined contribution plans in the Statement of Profit and Loss.

3 Segmental Re porting

The Company operates in a single business segment, metallurgical products and services, as defined by Accounting Standard 17. Secondary segmental reporting is identified on the basis of the geographical location of the customers. The Company has identified India and rest of the world for secondary segmental reporting.

Geographical sales are segregated based on the location of the customer who is invoiced or in relation to which the sale is otherwise recognized. Assets other than receivables used in the Company''s business or liabilities contracted have not been identified to any of the reportable segments, as these are used interchangeably between segments. All assets other than receivables are located in India. Similarly, capital expenditure is incurred towards fixed assets located in India.

4 Corporate Social Responsibility Activities

As per the Section 135 of the Companies Act, 2013, (Act) a Corporate Social Responsibility (CSR) committee has been duly constituted by the Company. The funds allocated for CSR activities was Rs. 75.98 Lakhs of which utilized by the Company as specified under Schedule VII of the Act is provided herein below

5 Provision for Tax

The Company''s Management is of the opinion that its international transactions with associated enterprises are at ''arm''s length'' and that the Company is in compliance with the transfer pricing legislation. Further, the Company is in the process of updating its documentation in respect of international transactions with Associated Enterprises as required under section 92E of the Income Tax Act, 1961. The Company''s Management believes that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and the provision for tax as at and for the year ended 31 December 2016.

6 Prior Period Comparative

Certain comparative figures have been regrouped / re-classified wherever necessary to confirm the current year position.

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Dec 31, 2014

A Terms / Rights attached to Equity Shares

The company has only one class of equity shares having a par value of Rs. 10/- per share. Each holder of equity share is entitled for one vote per share. Accordingly, all equity shares rank equally with regards to dividends and shares in the Company''s residual assets. The equity shares are entitled to receive dividend as declared from time to time.

On winding up of the Company, the holder''s of equity shares will be entitled to receive the residual assets of the company after distribution of all preferential amounts in proportion to the number of equity shares held.

The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

Note 1 : Company Background

Nature of Operations

The Company is engaged in the manufacture of products used in the metallurgical industry. The products are in the nature of additives and consumables that improve the physical properties and performance of castings. The manufacturing activities are at Sanaswadi and Puducherry.

Note 2 : Disclosure Notes

1. Disclosure of Related Parties / Related Party Transactions

a. Name of Related Party Where Control Exists

i Vesuvius plc., United Kingdom - Ultimate Parent Company

ii Vesuvius Holdings Limited, United Kingdom - Subsidary of Ultimate Parent Company

iii Foseco Holdings Limited, United Kingdom - Subsidary of Ultimate Parent Company

iv Foseco (U.K.) Limited., United Kingdom - Subsidary of Ultimate Parent Company

v Foseco Overseas Limited, United Kingdom - Immediate Holding Company

b. Names of Related Parties with whom transactions were carried out for the Financial Year ended 31 December 2014. i. Fellow Subsidiaries

1) Foseco (FS) Limited, United Kingdom

2) Foseco (Thailand) Limited

3) Foseco Foundry (China) Company Limited

4) Foseco Golden Gate Company Limited, Taiwan

5) Foseco Industrial e-Commercial Ltda., Brazil

6) Foseco International Limited, United Kingdom

7) Foseco Japan Limited

8) Foseco Korea Limited

9) Foseco Nederland B V.

10) Foseco Philippines Inc.

11) Foseco Pty Limited, Australia

12) PT Foseco Indonesia

13) Vesuvius Emirates (FZE), Dubai

14) Vesuvius Foundry Products (Suzhou) Company Limited, China

15) Vesuvius GmbH, Germany

16) Vesuvius Group SA, Belgium

17) Vesuvius Belgium N.V

18) Vesuvius Inc., USA

19) Vesuvius UK Limited

20) Vesuvius Foundry Technologies (Jiangsu) Company Limited, China

21) Vesuvius Istanbul Refrakter SA, Turkey

22) Vesuvius Italia S.p.A.

23) Vesuvius Malaysia Sdn. Bhd.

24) Vesuvius Poland Sp. Z.o.o.

25) Vesuvius France SA

26) Vesuvius India Limited

ii. Key Management Personnel Sanjay Mathur, Managing Director

c. Names of Related Parties with whom the Company neither had any Transactions nor had any outstanding Balances for the Financial Year ended 31 December 2014

1) Cookson Overseas Limited, United Kingdom

2) Cookson Financial Limited, United Kingdom

3) Vesuvius Group Limited, United Kingdom

3.1 Employee Benefit Plans

Gratuity: In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan (Gratuity Scheme) covering certain categories of employees. The Gratuity Scheme provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employee''s last drawn salary and the years of employment with the Company. The Company provides the gratuity benefit through annual contributions to the fund managed by the Life Insurance Corporation of India (LIC), under this plan the settlement obligation remains with the Company although the Life Insurance Corporation of India, administers the plan and determines the contribution of premium required to be paid by the Company.

4 Segmental Reporting

The Company operates in a single business segment, metallurgical products and services, as defined by Accounting Standard 17. Secondary segmental reporting is identified on the basis of the geographical location of the customers. The Company has identified India and rest of the world for secondary segmental reporting.

Geographical sales are segregated based on the location of the customer who is invoiced or in relation to which the sale is otherwise recognised. Assets other than receivables used in the Company''s business or liabilities contracted have not been identified to any of the reportable segments, as these are used interchangeably between segments. All assets other than receivables are located in India. Similarly, capital expenditure is incurred towards fixed assets located in India.

5 Provision for Tax

The Company''s Management is of the opinion that its international transactions with associated enterprises are at ''arm''s length'' and that the Company is in compliance with the transfer pricing legislation. Further, the Company is in the process of updating its documentation in respect of international transactions with Associated Enterprises as required under section 92E of the Income Tax Act, 1961. The Company''s Management believes that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and the provision for tax as at and for the year ended 31 December 2014

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Dec 31, 2013

Note 1 : Company Background

Nature of Operations

The Company is engaged in the manufacture of products used in the metallurgical industry. The products are in the nature of additives and consumables that improve the physical properties and performance of castings. The manufacturing activities are at Sanaswadi and Puducherry.

Note 2 : Disclosure

Notes 1. Disclosure of Related Parties / Related Party Transactions

a. Name of Related Party Where Control Exists

i Vesuvius plc., United Kingdom - Ultimate Parent Company

ii Vesuvius Holdings Limited #, United Kingdom - Subsidary of Ultimate Parent Company

iii Foseco Holdings Limited, United Kingdom - Subsidary of Ultimate Parent Company

iv Foseco (U.K.) Limited., United Kingdom - Subsidary of Ultimate Parent Company

v Foseco Overseas Limited, United Kingdom - Immediate Holding Company

# Formerly known as Cookson Group plc

b. Names of Related Parties with whom transactions were carried out for the Financial Year ended 31 December 2013.

i. Fellow Subsidiaries of Holding Company

1) Foseco (FS) Limited, United Kingdom

2) Foseco (Thailand) Limited

3) Foseco Foundry (China) Company Limited

4) Foseco Golden Gate Company Limited, Taiwan

5) Foseco Industrial e-Commercial, Ltda., Brazil

6) Foseco International Limited, United Kingdom

7) Foseco Japan Limited

8) Foseco Korea Limited

9) Foseco Nederland BV.

10) Foseco Philippines Inc.

11) Foseco Pty Limited, Australia

12) Foseco S.A.S. Technical Sales Office, France

13) PT Foseco Indonesia

14) Vesuvius Emirates (FZE), Dubai

15) Vesuvius Foundry Products (Suzhou) Company Limited, China

16) Vesuvius GmbH

17) Vesuvius Group SA, Belgium

18) Vesuvius Inc., USA

19) Vesuvius UK Limited

20) Vesuvius Istanbul Refrakter SA, Turkey

21) Vesuvius Italia S.p.A.

22) Vesuvius Malaysia Sdn. Bhd.

23) Vesuvius Poland Sp. Z.o.o.

24) Vesuvius India Limited

ii. Key Management Personnel Sanjay Mathur, Managing Director

c. Names of Related Parties with whom the Company neither had any Transactions nor had any outstanding Balances for the Financial Year ended 31 December 2013

1) Cookson Overseas Limited, United Kingdom

2) Cookson Financial Limited, United Kingdom

3) Vesuvius Group Limited, United Kingdom

3. Employee Benefit Plans

Gratuity: In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan (Gratuity Scheme) covering certain categories of employees. The Gratuity Scheme provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employee''s last drawn salary and the years of employment with the Company. The Company provides the gratuity benefit through annual contributions to the fund managed by the Life Insurance Corporation of India (LIC), under this plan the settlement obligation remains with the Company although the Life Insurance Corporation of India, administers the plan and determines the contribution of premium required to be paid by the Company.

4. Segmental Reporting

The Company operates in a single business segment, metallurgical products and services, as defined by Accounting Standard 17. Secondary segmental reporting is identified on the basis of the geographical location of the customers. The Company has identified India and rest of the world for secondary segmental reporting.

Geographical sales are segregated based on the location of the customer who is invoiced or in relation to which the sale is otherwise recognised. Assets other than receivables used in the Company''s business or liabilities contracted have not been identified to any of the reportable segments, as these are used interchangeably between segments. All assets other than receivables are located in India. Similarly, capital expenditure is incurred towards fixed assets located in India.

5. Provision for Tax

The Company''s Management is of the opinion that its international transactions with associated enterprises are at ''arm''s length'' and that the Company is in compliance with the transfer pricing legislation. Further, the Company is in the process of updating its documentation in respect of international transactions with Associated Enterprises as required under section 92E of the Income Tax Act, 1961. The Company''s Management believes that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and the provision for tax as at and for the year ended 31 December 2013.

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Dec 31, 2012

A Terms / Rights attached to Equity Shares

The company has only one class of equity shares having a par value of Rs. 10/- per share. Each holder of equity share is entitled for one vote per share. Accordingly, all equity shares rank equally with regards to dividends and shares in the Company''s residual assets. The equity shares are entitled to receive dividend as declared from time to time.

On winding up of the Company, the holder''s of equity shares will be entitled to receive the residual assets of the company after distribution of all preferential amounts in proportion to the number of equity shares held.

The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

Note 1 : Company Background

Nature of Operation

The Company is engaged in the manufacture of products used in the metallurgical industry. The products are in the nature of additives and consumables that improve the physical properties and performance of castings. The manufacturing activities are at Sanaswadi and Puducherry.

Note 2 : Disclosure Notes

1. Disclosure of Related Parties / Related Party Transactions

a. Name of Related Party Where Control Exists

i Cookson Group pic, United Kingdom - Ultimate Parent Company

ii Foseco Holdings Limited, United Kingdom - Subsidary of Ultimate Parent Company

iii Foseco (U.K.) Limited., United Kingdom - Subsidary of Ultimate Parent Company

iv Foseco Overseas Limited, United Kingdom - Immediate Holding Company

b. Names of Related Parties with whom transactions were carried out for the Financial Year ended 31 December 2012.

i. Fellow Subsidiaries of Holding Company

1) Foseco International Limited, United Kingdom

2) Foseco (Thailand) Limited

3) Foseco Foundry (China) Company Limited

4) Foseco Korea Limited

5) Foseco Golden Gate Company Limited, Taiwan

6) Foseco Industrial e-Commercial Ltda., Brazil

7) Foseco Japan Limited

8) Foseco (FS) Limited, United Kingdom

9) Foseco Nederland BV.

10) Foseco Pty Limited, Australia

11) PT Foseco Indonesia

12) Vesuvius Poland Sp.z.o.o

13) Vesuvius UK Limited , United Kingdom

14) Vesuvius USA

15) Vesuvius GmbH, Germany

16) Vesuvius Malaysia Sdn. Bhd.

17) Vesuvius Group SA, Belgium

18) Vesuvius Emirates (FZE), Dubai

19) Vesuvius India Limited

20) Cookson India Private Limited

21) Cookson Group pic, United Kingdom

ii. Key Management Personnel

Sanjay Mathur, Managing Director

c. Names of Related Parties with whom the Company neither had any Transactions nor had any outstanding Balances for the Financial Year ended 31 December 2012

1) Cookson Overseas Limited, United Kingdom

2) Cookson Financial Limited, United Kingdom

3) Vesuvius Group Limited, United Kingdom

3.1 Employee Benefit Plans

Gratuity: In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan (Gratuity Scheme) covering certain categories of employees. The Gratuity Scheme provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employee''s last drawn salary and the years of employment with the Company. The Company provides the gratuity benefit through annual contributions to the fund managed by the Life Insurance Corporation of India (LIC), under this plan the settlement obligation remains with the Company although the Life Insurance Corporation of India, administers the plan and determines the contribution of premium required to be paid by the Company.

The Company assesses these assumptions with its projected long-term plans of growth and prevalent industry standards. The estimates of future salary increase, considered in actuarial valuation, takes account of inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market.

4 Segmental Reporting

The Company operates in a single business segment, metallurgical products and services, as defined by Accounting Standard 17. Secondary segmental reporting is identified on the basis of the geographical location of the customers. The Company has identified India and rest of the world for secondary segmental reporting.

Geographical sales are segregated based on the location of the customer who is invoiced or in relation to which the sale is otherwise recognised. Assets other than receivables used in the Company''s business or liabilities contracted have not been identified to any of the reportable segments, as these are used interchangeably between segments. All assets other than receivables are located in India. Similarly, capital expenditure is incurred towards fixed assets located in India.

5 Provision for Tax

The Company''s Management is of the opinion that its international transactions with associated enterprises are at ''arm''s length'' and that the Company is in compliance with the transfer pricing legislation. Further, the Company is in the process of updating its documentation in respect of international transactions with Associated Enterprises as required under section 92E of the Income Tax Act, 1961. The Company''s Management believes that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and the provision for tax as at and for the year ended 31 December 2012.

6 Prior Period Comparative

Certain comparative figures have been regrouped / re-classified to conform to the requirements of the Revised Schedule VI of the Companies Act, 1956.

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Dec 31, 2011

1 micro and Small enterprises

The Company has circulated letters to all its suppliers requesting them to confirm whether they are covered under the Micro, Small and Medium Enterprises Development Act, 2006 ('MSMED'). Certain suppliers have provided the necessary confirmation along with the evidence of being Micro or Small enterprises. As on 31st December 2011, the dues payable to Micro and Small Enterprises is Rs. 7.54 (Previous Year Rs. 16.24) and interest accrued and unpaid thereon Rs. 0.19 (Previous Year Rs. 0.28).

2 contingent liabilities

(Amount in Rs. Lacs)

Particulars 2011 2010

i. Counter guarantees given to banks in respect of 40.88 49.68 guarantee given by them

ii. Income tax demands in respect of which the 897.92 558.38 Company is in appeal

iii. Central Excise Demands in respect of which the 7.69 - Company is in Appeal

3 excise Duty included in closing Stock

In accordance with ASI 14 (Revised) on 'Disclosure of Revenue from Sales Transactions' issued by Institute of Chartered Accountants of India, excise duty on sales amounting to Rs. 2,254.05 Lacs ( Previous Year Rs. 1,633.28 Lacs) has been reduced from sales in profit & loss account and excise duty on increase in stock amounting to Rs. 9.29 Lacs (Previous year decrease Rs. 15.77 Lacs for decrease in stock) has been adjusted in Schedule 13 of the financial statements.

4 Deferred tax asset / (liability)

Deferred Tax Asset / (Liability) due to timing differences are in respect of:

5 leasehold Rights

The leasehold land at the closed Chinchwad site is proposed for disposal by its owners Greaves Limited. The Company has agreed to surrender its 99 year lease (ending in 2060) in exchange for a 50% share of the sale proceeds. A tripartite memorandum of understanding has been entered into between Greaves Ltd., the Company and the proposed buyer. Pending execution of the agreement, Rs. 16.75 Lacs has been received by the Company as earnest money deposit.

As the future liability for gratuity and leave encashment is provided on an actuarial basis for the Company as a whole, the amount pertaining to the Director's is not ascertainable and, therefore, not included above.

6. employee benefit plans

Gratuity: In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan (Gratuity Scheme) covering certain categories of employees. The Gratuity Scheme provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employee's last drawn salary and the years of employment with the Company. The Company provides the gratuity benefit through annual contributions to the fund managed by the Life Insurance Corporation of India (LIC), under this plan the settlement obligation remains with the Company although the Life Insurance Corporation of India, administers the plan and determines the contribution of premium required to be paid by the Company.

The Company has invested the plan assets with the Life Insurance Corporation of India. Expected rate of return on the plan asset has been determined scientifically considering the current and expected plan asset allocation, historical rate of return earned by the Company, current market trend and the expected return on the plan assets.

ii) Defined contribution plan:-

The Company has recognised the following amounts which are defined contribution plans in the Profit and Loss Account.

7 Segmental Reporting

The Company operates in a single business segment, metallurgical products and services, as defined by Accounting Standard 17. Secondary segmental reporting is identified on the basis of the geographical location of the customers. The Company has identified India and rest of the world for secondary segmental reporting.

Geographical sales are segregated based on the location of the customer who is invoiced or in relation to which the sale is otherwise recognised. Assets other than receivables used in the Company's business or liabilities contracted have not been identified to any of the reportable segments, as these are used interchangeably between segments. All assets other than receivables are located in India. Similarly, capital expenditure is incurred towards fixed assets located in India.

8 provision for tax

Fiscal year for the Company being year ending 31 March 2012, the ultimate tax liability will be determined on the basis of the results for the period from 01 April 2011 to 31 March 2012.

The Company's Management is of the opinion that its international transactions with associated enterprises are at 'arm's length' and that the Company is in compliance with the transfer pricing legislation. Further, the Company is in the process of updating its documentation in respect of international transactions with associated enterprises as required under section 92E of the Income Tax Act, 1961. The Company's Management believes that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and the provision for tax as at and for the year ended 31 December 2011.

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Dec 31, 2009

1. Micro and Small Enterprises

The Company has circulated letters to all its suppliers requesting them to confirm whether they are covered under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED). Certain suppliers have provided the necessary confirmation along with the evidence of being Micro or Small Enterprises. As on 31st December 2009, the dues payable to Micro and Small Enterprises is Rs. 12.67 Lacs (Previous Year Rs. 2.08 Lacs) and interest accured and unpaid thereon Rs. 0.15 Lacs (Previous Year Rs. 0.01 Lacs).

However, in view of the Management, the impact of interest, if any, that may be payable in accordance with theprovisions of this Act is not expected to be significant.

(Amount in Rs. Lacs)

2. Contingent Liabilities

Particulars 2009 2008

i. Counter guarantees given to banks in respect of guarantee given by them 2.78 10.55

ii.Income tax demand in respect of which the Company is in appeal 454.36 391.25

3. Excise Duty included in Closing Stock

In accordance with AS114 (Revised) on Disclosure of Revenue from Sales Transactions issued by Institute of Chartered Accountants of India, excise duty on sales amounting to Rs. 847.68 Lacs ( Previous Year Rs.1,950.34 Lacs) has been reduced from sales in profit & loss account and excise duty on decrease in stock amounting to Rs. 6.13 Lacs (Previous year Rs. 33.61 Lacs for decrease in stock) has been adjusted in Schedule 13 of the financial statements.

4. Leasehold Rights

The leasehold land at the closed Chinchwad site is proposed for disposal by its owners Greaves Limited. The Company has agreed to surrender its 99 year lease (ending in 2060) in exchange for a 50% share of the sale proceeds. A tripartite memorandum of understanding has been entered into between Greaves Ltd., the Company and the proposed buyer. Pending execution of the agreement, Rs. 16.75 Lacs has been received by the Company as earnest money deposit.

5 Employee Benefit Plans

Gratuity: In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan (Gratuity Scheme) covering certain categories of employees. The Gratuity Scheme provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employees last drawn salary and the years of employment with the Company. The Company provides the gratuity benefit through annual contributions to the fund managed by the Life Insurance Corporation of India (LIC), under this plan the settlement obligation remains with the Company although the Life Insurance Corporation of India, administers the plan and determines the contribution of premium required to be paid by the Company.

6 Segmental Reporting

The Company operates in a single business segment, metallurgical products and services, as defined by Accounting Standard 17. Secondary segmental reporting is identified on the basis of the geographical location of the customers. The Company has identified India and rest of the world for secondary segmental reporting.

Geographical sales are segregated based on the location of the customer who is invoiced or in relation to which the sale is otherwise recognised. Assets other than receivables used in the Companys business or liabilities contracted have not been identified to any of the reportable segments, as these are used interchangeably between segments. All assets other than receivables are located in India. Similarly, capital expenditure is incurred towards fixed assets located in India.

7. Company Secretary

The Company is in the process of appointing a full time Company Secretary as required by the provisions of Section 383A of the Companies Act, 1956. In the absence of a Whole-time Company Secretary, these financial statements have not been authenticated by a Whole-time Company Secretary as required under Section 215 of the Companies Act, 1956.

8. Provision for Tax

Fiscal year for the Company being year ending 31 March 2010, the ultimate tax liability will be determined on the basis of the results for the period from 01 April 2009 to 31 March 2010.

The Companys Management is of the opinion that its international transactions with associated enterprises are at arms length and that the Company is in compliance with the transfer pricing legislation. Further, the Company is in the process of updating its documentation in respect of international transactions with associated enterprises as required under section 92E of the Income Tax Act, 1961. The Companys Management believes that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and the provision for tax as at and for the year ended 31 December 2009.

9. Previous Year Comparatives

Previous years figures have been regrouped where necessary to conform to current years classification.