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Notes to Accounts of Greenlam Industries Ltd.

Mar 31, 2015

1 Terms/Rights attached to the Equity Shares

The Company has only one class of equity Shares having a par value of Rs.5 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year, the amount of per share dividend recognized as distribution to equity shareholders was Rs.0.50 (Previous year Rs.Nil).

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. This distribution will be in proportion to the number of equity shares held by the shareholders.

2 The Company has not reserved any shares for issue under option and contract/commitments for the sale fo share/ disinvestment.

3 The Company for the period of five years immediately preceding the date of Balance Sheet (i.e. since incorporation) has:

i. Allotted 2,41,36,374 equity shares as fully paid and cancelled 1,00,000 equity shares pursuant to Scheme of Arrangement without payment being received in cash.

ii. Not allotted fully paid up shares by way of bonus shares

4 Subject to Note no. 32.2.7, Term Loans of Rs.13365.49 lacs are secured by first pari-passu charge on all movable fixed assets of the Company, present and future, first pari-passu charge on immovable fixed assets of the Company''s units at (a) Behror (Rajasthan) and (b) Nalagarh (Himachal Pradesh), second pari-passu charge on all current assets of the Company, present and future.

5 Subject to Note No. 32.2.7, Working Capital Loans of Rs.3341.13 lacs are secured by first pari-passu charge on all current assets of the company, present and future, second pari-passu charge on all movable fixed assets of the company, present and future, second pari-passu charge on immovable fixed assets of the company''s units at (a) Behror (Rajasthan) and (b) Nalagarh (Himachal Pradesh).

6 Addition to Plant & Equipments includes loss of Rs.152.10 lacs (Previous year Rs. Nil) on account of fluctuation in Foreign Exchange Rates. (Refer Note No. 33)

7 Borrowing Cost capitalised during the year Rs.346.73 lacs (Previous year Rs. Nil), included in tangible assets Rs.335 lacs and Capital Work in Progress Rs.11.73 lacs.

8 CONTINGENT LIABILITIES AND COMMITMENTS

Contingent liabilities

Pending litigation

Excise Duty, Sales Taxes and other Indirect Taxes claims disputed by the Company relating to issues of applicability and determination aggregating Rs.2798.67 lacs (Previous year Rs. Nil).

Notes:

i) Based on the discussion with the solicitors/favourable decisions in similar cases/legal opinion taken by the Company, the management believes that the Company has a good chance of success in above mentioned cases and hence, no provision there against is considered necessary.

ii) The company does not expect any reimbursements in respect of the above contingent liabilities.

iii) Future cash outflows in respect of the above are determinable only on receipt of judgements/decisions pending with various forums/authorities.

9 Other

a. Letter of credit established but material not received amounting to Rs.3024.18 lacs (Previous year Rs.Nil).

b. Counter-Guarantees given to banks for Stand-by Letter of Credit (SBLC) facility Rs.2549.15 lacs (Previous Year Rs. Nil). Outstanding amount of Overdraft limit availed by Greenlam America Inc., Greenlam Asia Pacific Pte. Ltd. and Greenlam Europe (UK) Ltd., against SBLC facility is USD 19,40,000, USD 10,00,000 and EURO 9,90,972.32 respectively equivalent to Rs.2505.57 lacs (Previous year Rs. Nil) translated at year-end exchange rate.

10 Commitments

a. Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of advances) Rs.2555.02 lacs (Previous year Rs. Nil)

b. Uncalled liability on shares and other investments which are partly paid Rs. NIL (Previous year Rs. NIL)

c. Other commitments Rs. NIL (Previous year Rs. NIL)

11 DISCLOSURES REGARDING EMPLOYEE BENEFITS

i) Defined Contribution Plan: Employee benefits in the form of Provident Fund is considered as defined contribution plan and the contributions to Employees'' Provident Fund Organisation established under The Employees'' Provident Fund and Miscellaneous Provisions Act 1952 is charged to the Statement of Profit and Loss of the year when the contributions to the respective funds are due.

ii) Defined Benefit Plan: Retirement benefits in the form of Gratuity are considered as defined benefit obligations and is provided for on the basis of third party actuarial valuation, using the projected unit credit method, as at the date of the Balance Sheet. Every Employee who has completed five years or more of service is entitled to Gratuity on terms not less favourable than the provisions of The Payment of Gratuity Act, 1972. As the Company has not funded its liability, it has nothing to disclose regarding plan assets and its reconciliation.

12 Balances under Trade receivables, Trade Payables, Loans and Advances payable or receivable are subject to confirmation to be received from some of the parties.

a) Business Segments :

A description of the types of products and services provided by each reportable segment is as follows:

Laminate & Allied Products: The Segment is engaged in the business of manufacturing of Laminates, compact laminates and other allied products through its wholesale and retail network.

Veneered & Allied Products: The Segment is engaged in the business of manufacturing of Decorative veneers, Engineered Wood Flooring and other allied products through its wholesale and retail network.

b) Segment Assets and Liabilities :

All Segment Assets and liabilities are directly attributable to the segment. Segment assets include all operating assets used by the segment and consist principally of fixed assets, inventories, sundry debtors, advances and operating cash and bank balances. Segment assets and liabilities do not include share capital, reserves and surplus, borrowings, proposed dividend and income tax (both current and deferred).

c) Segment Revenue and Expenses :

Segment revenue and expenses are directly attributable to the segment. It does not include dividend income, profit on sale of investments, interest income, interest expense, other expenses which cannot be allocated on a reasonable basis and provision for income tax (both current and deferred).

13 RELATED PARTY DISCLOSURES AS PER ACCOUNTING STANDARD AS - 18

31.1 List of related parties and relationship:

a) Related parties where control exists Subsidiary Companies

i) Greenlam Asia Pacific Pte. Ltd. (became subsidiary w.e.f. 01.04.2014 pursuant to Scheme of Arrangement)

ii) Greenlam America, Inc. (became subsidiary w.e.f. 01.04.2014 pursuant to Scheme of Arrangement)

iii) Greenlam VT Industries Pvt. Ltd. (became subsidiary w.e.f. 01.04.2014 pursuant to Scheme of Arrangement)

iv) Greenlam Europe (UK) Ltd. (became subsidiary w.e.f. 01.04.2014 pursuant to Scheme of Arrangement)

v) Greenlam Asia Pacific (Thailand) Co. Ltd. (became subsidiary w.e.f. 01.04.2014 pursuant to Scheme of Arrangement)

vi) Greenlam Holding Co. Ltd. (became subsidiary w.e.f. 01.04.2014 pursuant to Scheme of Arrangement)

vii) Pt. Greenlam Asia Pacific (became subsidiary w.e.f. 01.04.2014 pursuant to Scheme of Arrangement)

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

Key Management Personnel

i) Mr. Saurabh Mittal, Managing Director & CEO w.e.f. 11.11.2014 (Director upto 10.11.2014)

ii) Mrs. Parul Mittal, Whole-Time Director (w.e.f. 11.11.2014)

iii) Mr. Vijay Kumar Chopra, Independent Director (w.e.f. 30.10.2014)

iv) Mrs. Urvashi Saxena, Independent Director (w.e.f. 30.10.2014)

v) Ms. Sonali Bhagwati Dalal, Independent Director (w.e.f. 30.10.2014)

vi) Mr. Ashok Kumar Sharma, Chief Financial Officer (w.e.f. 17.11.2014)

vii) Mr. Prakash Kumar Biswal, Company Secretary (w.e.f. 17.11.2014)

Enterprises Owned/Influenced by Key Management Personnel or their relatives

i) Himalaya Granites Ltd.

ii) Prime Properties Pvt Ltd.

iii) Greenply Industries Ltd.

Relatives of Key Management Personnel

i) Mrs. Parul Mittal (Wife of Mr. Saurabh Mittal)

14 RELATED PARTY DISCLOSURES AS PER ACCOUNTING STANDARD AS - 18 (Contd.)

Investments by the loanee in the shares of the parent Company and its subsidiary companies, when the Company has made a loan or advance in the nature of loan Rs. Nil (Previous year Rs. Nil)

Notes : Related Party Relationship is as identified by the Company and relied upon by the Auditors.

15 SCHEME OF ARRANGEMENT

Pursuant to the Scheme of Arrangement ("the scheme") between Greenply Industries Ltd. (Greenply), the Company and their respective shareholders and creditors as approved by the High Court of Gauhati vide its order dated October 31, 2014, which became effective on November 17, 2014 on filing with the Registrar of Companies, all the assets and liabilities of the Decorative Division (i.e. business and interests in manufacture of laminates and decorative veneers) of Greenply have been transferred to and vested in the Company at their respective book values on a going concern basis with effect from the appointed date (i.e. April 1, 2013). Accordingly, the Scheme of Arrangement has been given effect to in these accounts.

16 The company has issued and alloted 2,41,36,374 equity shares of Rs.5 (Indian Rupees five only) to the shareholders of Greenply whose names appear in the register of members of Greenply as on the record date, 1 (one) equity share of Rs.5 (Indian Rupees five only) each, credited as fully paid up for every 1 (one) equity share of Rs.5 (Indian Rupees five only) each held by them in Greenply. Consequent to the allotment of new shares as per the scheme, 1,00,000 of Rs.5 each alloted to Greenply has been cancelled and the Company has ceased to be subsidiary of Greenply.

17 The net profit for the period from the appointed date i.e. April 1, 2013 to March 31, 2014, Rs.3718.59 lacs is adjusted in Surplus, i.e. balance in the Statement of Profit and Loss.

18 The transactions between the appointed date upto to the effective date as appearing in the books of accounts of Greenply have been deemed to have been made by the Company.

19 All costs, charges and expenses including stamp duties arising out of or incurred so far in carrying out and implementing this Scheme and matters incidental thereto, have been borne by Greenply and the company in the ratio of 2:1.

20 The immovable assets of the Company stands freed from all charges, mortgages and encumbrances relating to liabilities relating to Greenply. But, Greenply had created charges over its immovable assets (including those which now belong to the Company) under section 125 of the Companies Act, 1956 in respect of certain credit facilities taken from various banks for itself and for various undertakings of the Company. As the legal ownership of the immovable assets have not yet been transferred to the Company, Greenply continues to enjoy credit facilities by the subsisting charges, mortgages and encumbrances over such assets. Vice Versa, the Company enjoys credit facilities by the subsisting charges, mortgages and encumbrances over immovable assets belonging to Greenply. Till creation/ modification/satisfaction of Charges, as the case may be, in favour of the various banks/secured creditors of the respective Companies in terms of the applicable provisions of the Companies Act, 2013, the banks/secured creditors of the Company shall continue to hold their respective charge over the immovable assets of Greenply.

21 Although, pursuant to the scheme of arrangement, the immovable properties belonging to the demerged undertakings of Greenply vest in and/or deemed to be transferred to and vested in the Company, the mutation of title/assignment of leases thereof in the name of the Company are yet to be made and recorded by the appropriate authorities. Notwithstanding the same, the Company exercises all rights and privileges and pays ground rent, municipal taxes and fulfils all obligations, in relation to or applicable to such immovable properties.

22 FLUCTUATION IN LONG TERM FOREIGN CURRENCY MONETARY ITEMS

The Company has exercised the option available to it under Rule 46A of the Companies (Accounting Standards) (Second Amendment) Rules, 2011 in respect of accounting for fluctuations in foreign exchange relating to "Long Term Foreign Currency Monetary Items". Accordingly, it has adjusted a loss of Rs.152.10 lacs (Previous year Rs. Nil) during the period to the cost of its fixed assets on account of such difference arising during the current period and has provided for depreciation thereon over the balance useful life of the respective assets. Consequently, the charge to the Statement of Profit and Loss is effected to that extent.

23 TAXATION

The Company''s management is of the opinion that its international and domestic transactions are at arm''s length as per the independent accountants report for the year ended 31 March 2014. Management continues to believe that its international transactions post March 2014 and that the transfer pricing legislation will not have any impact on these financial statements, particularly on amount of tax expense and that of provision of taxation.

24 DEPRECIATION

In accordance with the provisions of the Companies Act 2013, effective from 1st April, 2014, the Company has reassessed the remaining useful lives of its fixed assets prescribed by Schedule II to the Act or actual useful life of assets, whichever is lower. In case of any asset whose life has completed as above, the carrying value, net of residual value of Rs.68.51 lacs, as at April 1, 2014 has been adjusted to the General Reserve and in other cases the carrying value has been depreciated over the remaining of the revised life of the assets and recognized in the Statement of Profit and Loss.

25 The figures stated in the current year are not comparable with those of previous period for the reasons that (a) the figures for the previous period were since incorporation of the Company on August 12, 2013 to March 31, 2014; and (b) in the current year, effect has been given to Scheme of Arrangement as approved by the Gauhati High Court. The figures for the previous period are re-classified/ re-arranged / re -grouped, wherever necessary so as to be in conformity with the figures of the current period''s classification/disclosure.

26 INFORMATION REGARDING MICRO, SMALL AND MEDIUM ENTERPRISES

As at 31st March, 2015, no supplier has intimated the Company about its status as Micro or Small enterprises or its registration with the appropriate authority under Micro, Small and Medium Enterprises Act, 2006. So, no disclosure is made. The Company has compiled this information based on the current information in its possession.

 
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