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Notes to Accounts of GMM Pfaudler Ltd.

Mar 31, 2015

1. CORPORATE INFORMATION

GMM Pfaudler Limited, formerly Gujarat Machinery Manufacturers Limited, ("the Company") was incorporated in India on November 17, 1962. The Company's manufacturing unit is located at Karamsad, Gujarat. The Company's principal activity is the manufacture of corrosion resistant glass-lined equipment used primarily in the chemical, pharmaceutical and allied industries. The Company also manufactures flouro-polymer products and other chemical process equipment such as agitated nutsche filters, filter driers, wiped film evaporators and mixing systems.

Pfaudler, Inc., USA owns 50.44% of the total issued share capital of the Company. On December 30, 2014 National Oilwell Varco, USA sold Pfaudler Process Solution Group to a German Private Equity firm and under the new structure Pfaudler, Inc. is a wholly owned subsidiary of Pfaudler S.a r.l. Luxembourg.

2. BASIS OF PREPARATION

The financial statement have been prepared in accordance with the generally accepted accounting principles in India. The Company has prepared these financial statement under the historical cost convention on an accrual basis to comply in all material respect with the Accounting Standards specified under section 132 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 and other accounting principles generally accepted in India and the relevant provisions of the Companies Act 2013. The accounting policies have been consistently applied by the Company.

All the assets and liabilities have been classified as current and non current as per the company's normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013. Based on the nature of product and the time between acquisition of assets for processing and their realization in cash and cash equivalents, the company has ascertained it's operating cycle as twelve months for the purpose of current / non current classification of assets and liabilities.

3. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value Rs. 2 per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

4. Buyback of Shares, Bonus Shares and Shares issued for Consideration other than cash.

The company has not boughtback any shares, neither has it issued bonus shares nor has it issued shares for consideration other than cash in the past five years.

5. Terms of any Securities convertible into equity/preference shares - Not Applicable

6. Calls Unpaid - Nil

Security Deposits include Rs. 30.70 million (previous year Rs. 30.70 million) of security deposits paid to Ready Mix Concrete Limited (a entity in which Key Managerial Person have significant influence) for use of three additional factory sheds taken under lease by the Company from November 01, 2012.

As at As at 31.03.15 31.03.14

Rs. in Millions Rs. in Millions

1) Contingent Liabilities

a) Claim against the Company not acknowledged as debts

i) Dispute relating to Excise, Service tax and Sales tax 12.99 8.70

ii) Matter decided in favour of the company where the income tax department has preferred appeals. 5.84 0.00

iii)Disputed demands relating to tax against which the Company has preferred appeals. 65.72 24.07

b) Guarantee issued by bank 206.14 241.98

2) Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for 8.28 7.99

7. RELATED PARTY DISCLOSURES

(I) List of Related parties

(a) Parties where control exists:

(i) Ultimate Holding Company: : National Oilwell Varco Inc. (Up to December 30, 2014) Pfaudler S.a r.l. Luxembourg (From December 31, 2014)

(ii) Holding Company: : Pfaudler Inc.

(b) Subsidiary Companies : Karamsad Holdings Ltd.

Karamsad Investments Ltd.

GMM Mavag AG Mavag AG

(c) Fellow Subsidiaries : Pfaudler Werke GMBH

Pfaudler Balfour Ltd.

Edlon PSI Inc.

Suzhou Pfaudler Glass Lined Equipment Co. Ltd.

Glass Steel Parts and Services Tycon Technoglass Pfaudler Rochester,USA

National Oilwell Varco LLP (Formerly Chemineer Inc) Robbins & Myers DE Mexico, SA.DECV Robbins & Myers Inc. (From 21st February 2013)

(d) Key management personnel : Mr. Ashok J. Patel - Managing Director

Mr. Tarak A. Patel - Executive Director Mr. Ashok C. Pillai - Chief Operating Officer Mr. Amar Nath Mohanty - Chief Financial Officer Ms. Mittal Mehta - Company Secretary

(e) Relative of Key : Mrs. Urmi A. Patel management personnel (wife of Mr. Ashok J. Patel) Mrs. Uttara G. Gelhaus (Daughter of Mr. Ashok J. Patel)

(f) Enterprises over which key managerial personnel have significant influence : Skyline Millars Ltd. Ready Mix Concrete Ltd. Ashok J Patel - HUF J V Patel & Co.

8. Pursuant to notification of Schedule II to The Companies Act, 2013, the Company has assessed the useful life of fixed assets and the depreciation for the year has been provided on the basis of the useful lives w.e.f. April 01,2014.This change has resulted in a higher depreciation of Rs. 27.90 Millions for the year and an amount of Rs. 4.68 million (net of deferred tax) has been recognized in the opening balance of retained earnings.

9. Previous years figures have been regrouped/reclassified wherever necessary.


Mar 31, 2013

Note 1. BACKGROUND

GMM Pfaudler Limited, formerly Gujarat Machinery Manufacturers Limited, ("the Company") was incorporated in India on November 17, 1962. The Company''s manufacturing unit is located at Karamsad, Gujarat. The Company''s principal activity is the manufacture of corrosion resistant glass-lined equipment used primarily in the chemical, pharmaceutical and allied industries. The Company also manufactures fouro-polymer products and other chemical process equipment such as agitated nutsche flters, flter driers, wiped flm evaporators and mixing systems.

The Company has entered into an investment and technical know-how agreement with Pfaudler Inc. USA (''Pfaudler'') a Company incorporated in the United States of America, which owns 50.99 percent of the total issued share capital of the Company. The Company''s ultimate holding Company Robbins & Myers Inc, USA, merged with National Oilwell Varco Inc. (NOV), USA on February 20, 2013. By virtue of this merger NOV has become the ultimate holding Company from February 21, 2013.

2. CURRENT LIABILITIES

Disclosure of trade payable under current liabilities is based on the information available with the Company regarding the status of the suppliers as defned under the "Micro, Small and Medium Enterprises Development Act, 2006". Amount overdue as on March 31, 2013 to Micro, Small and Medium Enterprises on account of principal amount together with interest, aggregate to Rs. 5.50 Millions (previous - Rs. 0.55 Millions)

The information regarding micro, small and medium enterprises have been determined to the extent such parties have been identifed on the basis of information available with the Company, which has been relied upon by the auditors.

3. CONTINGENT LIABILITIES AND COMMITMENTS

As at As at 31.03.13 31.03.12 Rs. in Millions Rs. in Millions

1) Contingent Liabilities

a) Claim against the Company not acknowledged as debts

i) Dispute relating to Cenvat and Sales tax 8.32 5.28

ii) Dispute relating to tax demand 15.49 0.49

b) Guarantee issued by bank 239.14 212.79

c) Other Contingent Liability

2) Commitments

a) "Estimated amount of contracts remaining to be executed on capital account and not provided for" 7.09 9.89

4. RELATED PARTY DISCLOSURES

(I) List of Related parties

(a) Parties where control exists:

(i) Ultimate Holding Company: : Robbins & Myers Inc. USA (Upto 20th February 2013)

National Oilwell Varco Inc. USA (from 21st February 2013)

(ii) Holding Company: : Pfaudler Inc. USA

(iii) Subsidiary Companies: : Karamsad Holdings Ltd.

Karamsad Investments Ltd.

GMM Mavag AG

Mavag AG

(b) Related parties with whom transactions have taken place during the year:

(i) Fellow Subsidiaries: : Pfaudler Werke GMBH

Pfaudler Balfour Ltd. Edlon PSI Inc.

Suzhou Pfaudler Glass Lined Equipment Co. Ltd. Glass Steel Parts and Services Tycon Technoglass

Robbins & Myers DE Mexico, SA.DECV Robbins & Myers Inc.(Upto 20th February 2013)

(ii) Key management personnel : Mr. Ashok J. Patel – Managing Director

Mr. Tarak A. Patel – Executive Director Mr. Ashok C. Pillai – Chief Operating Offcer

(iii) Relative of Key management personnel : Mrs. Urmi A. Patel (wife of Mr. Ashok J. Patel)

Mrs. Uttara G. Gelhaus (Daughter of Mr. Ashok J. Patel)

(iv) Enterprises over which persons in (b)(ii) or (b)(iii) are able to exercise signifcant infuence.

: Skyline Millars Ltd.

Ready Mix Concrete Ltd.

5. The shareholders at the Extra Ordinary General Meeting held on March 11, 2008 appointed Mr. Ashok Patel as the Managing Director of the Company for a period of fve years from January 1, 2007 to December 31, 2012. On the recommendation of the Remuneration Committee, the Board of Directors in their meeting held on November 5, 2012, appointed Mr. Ashok Patel as the Managing Director of the Company for a further period of three years effective from January 1, 2013. This appointment is subject to the shareholders'' approval in the forthcoming Annual General Meeting.


Mar 31, 2012

Note 1. BACKGROUND

GMM Pfaudler Limited, formerly Gujarat Machinery Manufacturers Limited, ("the Company") was incorporated in India on November 17, 1962. The Company's manufacturing unit is located at Karamsad, Gujarat. The Company's principal activity is the manufacture of corrosion resistant glass-lined equipment used primarily in the chemical, pharmaceutical and allied industries. The Company also manufactures flouro-polymer products and other chemical process equipment such as agitated nutsche filters, filter driers .wiped film evaporators and mixing systems.

The Company has entered into an investment and technical know-how agreement with Pfaudler Inc. USA ('Pfaudler') a Company incorporated in the United States of America, which owns 51 percent of the total issued share capital of the Company. The Company's ultimate holding Company is Robbins & Myers Inc, USA.

a) Terms/rights attached to equity shares

The company has only one class of equity shares having a par value Rs. 2 per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

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

Disclosure of trade payable under current liabilities is based on the information available with the Company regarding the status of the suppliers as defined under the "Micro, Small and Medium Enterprises Development Act, 2006". Amount overdue as on March 31, 2012 to Micro, Small and Medium Enterprises on account of principal amount together with interest, aggregate to 135 (previous - Rs. Nil)

The information regarding micro, small and medium enterprises have been determined to the extent such parties have been identified on the basis of information available with the Company, which has been relied upon by the auditors.

2. CONTINGENT LIABILITIES AND COMMMITMENTS

(Rs. in Millions)

As at As at 31.03.12 31.03.11

1) Contingent Liabilities

a) Claim against the Company not acknowledged as debts

i) Dispute relating to Cenvat 5.28 4.17 ii) Dispute relating to tax demand 0.49 0.49

b) Guarantee issued by bank 212.79 188.87

c) Other Contingent Liability - -

2) Commitments

a) Estimated amount of contracts remaining to be executed on 9.89 31.39

3. Prior Year's Figures have been regrouped where necessary.


Mar 31, 2010

1. Background

GMM Pfaudler Limited, formerly Gujarat Machinery Manufacturers Limited, ("the Company") was incorporated in India on November 17, 1962. The Companys manufacturing unit is located at Karamsad, Gujarat. The Companys principal activity is the manufacture of corrosion resistant glass-lined equipment used primarily in the chemical, pharmaceutical and allied industries. The Company also manufactures flouro-polymer products and other chemical process equipment such as agitated nutsche filters, filter driers and wiped evaporators and Mixing systems.

The Company has entered into an investment and technical know-how agreement with Pfaudler Inc. USA (Pfaudler) a Company incorporated in the United States of America, which owns 51 percent of the total issued share capital of the Company. The Companys ultimate holding Company is Robbins & Myers Inc, USA.

2. CHANGE IN ACCOUNTING POLICY

The Company has changed its accounting policy for revenue recognition for large contracts, from recognition on completion basis to recognition on percentage of completion basis, with effect from April 1, 2009.

Large contracts for said purpose are contracts exceeding Rupee equivalent of USD 1 million at the time of order receipt and the contract term is at least six months from contract signing through product delivery.

This change has neither resulted in any change in revenue nor on profi ts for the year ended March 31, 2010.

b. Deposits include earnest deposit of Rs. 961 thousand (Previous year Rs. 961 thousand) paid to Skyline Millars Limited (formerly Millars India Limited) and Rs. 10,703 thousand (Previous year Rs. 9,411 thousand) to Ready Mix Concrete Limited, being companies in which two directors of the Company are interested. Deposits given are for use of factory sheds under the lease agreements.

3. CURRENT LIABILITIES

Disclosure of sundry creditors under current liabilities is based on the information available with the company regarding the status of the suppliers as defi ned under the "Micro, Small and Medium Enterprises Development Act, 2006". Amount overdue as on March 31, 2010 to Micro, Small and Medium Enterprises on account of principal amount together with interest, aggregate to Rs. Nil (Previous year - Rs. Nil)

The information regarding micro, small and medium enterprises have been determined to the extent such parties have been identifi ed on the basis of information available with the Company, which has been relied upon by the auditors.

4. OPERATING LEASE

The companys signifi cant leasing arrangements are in respect of operating leases for factory shed/premises and guesthouse. These lease agreements, which are not non-cancellable, range up to 120 months and are usually renewable by mutual consent on mutually agreeable terms.

5. CONTINGENT LIABILITIES

As at As at 31.03.10 31.03.09 Rs. 000 Rs. 000

a) Claims against the Company not acknowledged as debts:

i) Dispute relating to Cenvat Credit 3,913 4,100

ii) Disputed Income Tax demands 19,666 15,151

b) Guarantees issued by bank 135,942 176,450

13. Turnover includes sales commission Rs. Nil (previous year Rs. Nil thousand)

Notes:

(i) Licensed capacity is not applicable in terms of Government of Indias Notifi cation No. S.O.477 (E) dated 25th July,1991.

(ii) Installed capacities have been certifi ed by the management of the Company and not verifi ed by the auditors.

(iii) Installed capacities in respect of products not currently manufactured have not been given.

(iv) Production quantities in items 2 and 4 include job orders subcontracted to third parties and broad-banding of installed capacities.

(v) The installed capacity of Mild Steel equipments and Stainless steel equipment is not determined and therefore not included in the above table.

The Company has made an application to the central government for increasing the remuneration of the Managing Director. The remuneration for the current year includes a provision of Rs. 204 thousand payable to the Managing Director only after receipt of approval from the central government.

During the current year, the Company has paid Rs. 1,963 thousand as arrears of remuneration relating to the earlier fi nancial years to the Managing Director and the same has not been included above. The above arrears are within the limit specifi ed by Section 349 of the Companies Act, 1956.

h Other Details

Gratuity is payable at the rate of 15 days salary for each year of service subject to a maximum of Rs. 350 thousand Salary escalation is considered as advised by the company which is in line with the industry practice considering promotion and demand and supply of the employees.

6. RELATED PARTY DISCLOSURES

(I) List of Related parties

a) Parties where control exists:

(i) Ultimate Holding Company : Robbins & Myers Inc.

(ii) Holding Company: : Pfaudler Inc.

(iii) Subsidiary Companies: : Karamsad Holdings Limited

Karamsad Investments Limited GMM Mavag AG Mavag AG

(b) Related parties with whom transactions have taken place during the year:

(i) Fellow Subsidiaries: : Pfaudler Werke GMBH

Pfaudler Balfour Ltd. Edlon PSI Inc. Chemineer Inc.

Suzhou Pfaudler Glass Lined Equipment Company Limited Robbins & Myers Singapore Private Limited Glass Steel Parts and Services

(ii) Key management personnel: : Mr. Ashok J. Patel - Managing Director

Mr. Tarak A. Patel - Executive Director Mr. Ashok C. Pillai - Chief Operating Offi cer

(iii) Relative of Key management personnel: : Mrs. Urmi A. Patel (wife of Mr. Ashok J. Patel)

Mrs. Uttara G. Gelhaus (Daughter of Mr. Ashok J. Patel)

(iv) Enterprises over which persons in (b)(ii) or (b)(iii) : Skyline Millars Limited are able to exercise signifi cant infl uence. Glass Lined Equipment Company Limited

Ready Mix Concrete Limited

Dietrich Engineering Consultants India Private Limited J. V. Patel & Co. Unifrax India Limited SKF India Limited Siemens Limited Bayer Material Science Private Limited

Notes:

1) The Business segments have been identifi ed in line with the Accounting Standard 17 on "Segment Reporting", taking into account the nature of product, the nature of manufacturing process, the class of customers, the organization structure and the internal fi nancial reporting system.

2) Segment revenue, results, assets and liabilities include amounts that are directly attributable to the respective segments. Amounts not directly attributable have been allocated to the segments on the best judgment of the management in the absence of detailed internal fi nancial reporting system. Expenses not directly allocable to the segments are treated as "Unallocated Expenses".

7. Prior years figures have been regrouped where necessary.

 
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