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Notes to Accounts of IFB Industries Ltd.

Mar 31, 2016

1. Estate, Taluka Salcete, District South Goa and registration sub district ILHAS in the state of Goa containing by admeasuring 48,695 square meters or thereabout.

(&) For sanction of capex letter of credit amounting to Rs 1,000 lacs by Standard Chartered Bank, following charge have been created:

First charge on existing movable fixed assets of Goa (Verna) plant (except exclusive charge to term lenders) of the company including without limitations its movable plant and machinery, furniture and fittings, equipment, computer hardware, computer software, machinery spares, tools and accessories and other movables, etc. stored or to be stored at the company''s godown or premises situated at Plot no L-1, Verna Electronic City, Verna Industrial Estate, Goa - 403 722 or wherever else the same may be.

(A) For sanction of working capital facility amounting to Rs. 9,000 lacs by Standard Chartered Bank, following charge have been created:

(i) First charge on all current assets, both present and future.

(ii) First charge on existing movable fixed assets of Goa (Verna) plant (except exclusive charge to term lenders).

(iii) Second charge on the leasehold land and building of Goa (Verna) unit on all that piece and parcel of non-agricultural land bearing at No. L1 situated within the village panchayat of Nagoa, Verna Plateau, Verna Industrial Estate, Taluka Salcete, District South Goa and registration sub district lLHAS in the state of Goa containing by admeasuring 48,695 square meters or thereabout.

(*) For sanction of credit facilities amounting to Rs. 3,500 lacs by DBS Bank Ltd., following charge have been created :

(i) Hypothecation by way of first pari passu and floating charge over goods being finished goods, semi-finished goods, stocks of raw-materials, work-in-process located at various factories / warehouses / godowns of the company and whether in transit or lying at any other place and hypothecation by way of first pari passu and floating charge over the company''s present and future book debts, outstanding monies receivables, claims, bills, contracts, engagements, securities, investments, rights and assets.

(ii) Hypothecation by way of exclusive charge over all present and future movable fixed assets of the engineering division of the Company including without limitation its movable plant and machinery, furniture and fittings, equipment, computer hardware, computer software, machinery spares, tools and accessories and other movables etc. stored or to be stored at Company''s godowns or premises situated at 14, Taratolla Road, Kolkata and 16/17, Visveswaraiah Industrial Estate, Whitefield Road, Bangalore - 560048 (Engineering Division) or wherever else the same may be.

2. Leases

The Company is obligated under cancellable leases for residential, office premises, warehouses, etc. Total rental expense under cancellable operating lease amounted to Rs. 1,305 Lacs (31 March 2015 : Rs. 898 Lacs).

3. Changes in Accounting Policy and Accounting Estimates

Pursuant to the notification of Schedule II to the Companies Act, 2013, with effect from 1 April 2014, the Company had changed the policy of providing depreciation of buildings from written down value (WDV) method to straight line method (SLM) thereby resulting in a surplus of Rs. 844 Lacs for the year ended 31 March 2015.

Pursuant to the transition provisions prescribed in Schedule II to the Companies Act, 2013 and its subsequent amendment by Ministry of Corporate Affairs, the Company charged off the carrying value of assets net of residual value, where the remaining useful life of the asset was determined to be nil as on 1 April 2014 to the Statement of Profit and Loss. Thereby for such assets, the Company has charged an amount of Rs. 1,196 Lacs as depreciation in the Statement of Profit and Loss for the year ended 31 March 2015.

As a result of change in estimated useful life as prescribed in Schedule II of the Companies Act, 2013, the depreciation charge for the year ended 31 March 2015 is higher by Rs. 1,496 Lacs.

4. Dues to Micro and Small Enterprises

The Ministry of Micro, Small and Medium Enterprises has issued an office memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum in accordance with the ''Micro, Small and Medium Enterprises Development Act, 2006'' (''the Act''). Accordingly, the disclosure in respect of the amounts payable to such enterprises as at 31 March 2016 has been made in the financial statements based on information received and available with the Company. A sum of Rs. 283 lacs is payable to Micro and Small Enterprises as at 31 March 2016 (31 March 2015 : Rs. 398 lacs). Further in view of the Management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act is not expected to be material. The Company has not received any claim for interest from any supplier as at the balance sheet date.

5. Employee benefits

(a) Gratuity and leave encashment

The employees'' gratuity fund scheme, determined as post-employment benefit, is managed through Insurance Companies under a defined benefit plan. The present value of obligation is determined based on an actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for unfunded leave encashment determined as other long-term benefit plan is recognized in the same manner as gratuity.

(b) Provident Fund, Superannuation Fund and other defined contribution schemes:

The company contributed Rs. 944 Lacs (31 March 2015 : Rs. 785 Lacs) to defined contribution scheme (Provident Fund, superannuation fund and others) during the year ended 31 March 2016.

6. Disclosure requirement for Derivatives Instruments

The Company uses foreign currency hedges to manage its risks associated with foreign currency fluctuations relating to certain existing foreign currency payables. The Company does not use derivative contracts for trading or speculative purposes.

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


Mar 31, 2015



1. Rights, preferences and restrictions attached to equity shares

The Company has a single class of equity shares. Accordingly, all equity shares rank equally with regard to dividends and share in the Company's residual assets. The equity shares are entitled to receive dividend as declared from time to time. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to its share of the paid-up equity capital of the Company.

Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable have not been paid.

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

(i) Exclusive charge on moveable fixed assets financed by the bank.

(ii) First charge on existing movable fixed assets of Goa (Verna) plant (except exclusive charge to term lenders).

(iii) First and exclusive charge on the leasehold land and building of Goa (Verna) unit on all that piece and parcel of non- agricultural land bearing at No. LI situated within the village Panchayat of Nagoa, Verna Plateau, Verna Industrial Estate,

Taluka Salcete, District South Goa and registration sub district ILHAS in the state of Goa containing by admeasuring 48695 square meters or thereabout and bounded as follows: On or towards the north: proposed 30 meters wide road, on or towards the south : open space reserved for gardening, on or towards the east: proposed road of 25 meters wide, on or towards the west: proposed road of 20 meters wide together with all buildings and structures standing thereon or to be erected hereafter and the plant and machinery attached to the earth or permanently fastened to anything attached to the earth, both present and future.

(*) For sanction of working capital facility amounting to Rs. 9,000 lacs by Standard Chartered Bank, following securities have been created:

(i) First charge on all current assets, both present and future.

(ii) First charge on existing movable fixed assets of Goa (Verna) plant (except exclusive charge to term lenders).

(iii) Second charge on the leasehold land and building of Goa (Verna) unit on all that piece and parcel of non-agricultural land bearing at No. LI situated within the village Panchayat of Nagoa, Verna Plateau, Verna Industrial Estate, Taluka Salcete, District South Goa and registration sub district lLHAS in the state of Goa containing by admeasuring 48695 square meters or thereabout and bounded as follows: On or towards the north: proposed 30 meters wide road, on or towards the south: open space reserved for gardening, on or towards the east: proposed road of 25 meters wide, on or towards the west: proposed road of 20 meters wide together with all buildings and structures standing thereon or to be erected hereafter and the plant and machinery attached to the earth or permanently fastened to anything attached to the earth, both present and future.

(*) For sanction of working capital facility amounting to Rs. 3,500 lacs by DBS Bank Ltd., following securities have been created:

(i) Hypothecation by way of first pari passu and floating charge over goods being finished goods, semi-finished goods, stocks of raw-materials, work-in-process located at various factories / warehouses godowns of the company and whether in transit or lying at any other place and hypothecation by way of first pari passu and floating charge over the company's present and future book debts, outstanding monies receivables, claims, bills, contracts, engagements, securities, investments, rights and assets.

(ii) Hypothecation by way of exclusive charge over all present and future movable fixed assets of the engineering division of the Company including without limitation its movable plant and machinery, furniture and fittings, equipment, computer hardware, computer software, machinery spares, tools and accessories and other movables etc. stored or to be stored at Company's godowns or premises situated at 14, Taratolla Road, Kolkata and 16/17, Visveswaraiah Industrial Estate, Whitefield Road, Bangalore - 560048 (Engineering Division) or wherever else the same may be.

2. Leases

The Company is obligated under cancellable leases for residential, office premises, warehouses, etc. Total rental expense under cancellable operating lease amounted to Rs. 898 Lacs (31 March 2014 : Rs. 772 Lacs).

3. Changes in Accounting Policy and accounting estimates

Pursuant to the notification of Schedule II to the Companies Act, 2013, with effect from 1 April 2014, the Company has changed the policy of providing depreciation of buildings from written down value (WDV) melhod to straight line method (SLM) thereby resulting in a surplus of Rs. 844 Lacs for the year ended 31 March 2015.

Pursuant to the transition provisions prescribed in Schedule II to the Companies Act, 2013 and its subsequent amendment by Ministry of Corporate Affairs, the Company has an option to charge off the carrying value of assets net of residual value, where the remaining useful life of the asset was determined to be nil as on 1 April 2014 either to the opening balance of retained earnings or to the Statement of Profit and Loss. Thereby for such assets, the Company has charged an amount of Rs. 1,196 Lacs as depreciation in the Statement of Profit and Loss. If the same is adjusted against the opening balance of retained earnings then the profit before tax for the year would be Rs. 7,123 Lacs and profit after tax would be Rs. 5,763 Lacs.

As a result of all the above stated changes the depreciation charge for the year ended 31 March 2015 is higher by Rs. 1,496 Lacs.

4. Dues to Micro and Small Enterprises

The Ministry of Micro, Small and Medium Enterprises has issued an office memorandum dated August 26, 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum in accordance with the 'Micro, Small and Medium Enterprises Development Act, 2006' ('the Act'). Accordingly, the disclosure in respect of the amounts payable to such enterprises as at 31 March 2015 has been made in the financial statements based on information received and available with the Company. Further in view of the Management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act is not expected to be material. The Company has not received any claim for interest from any supplier as at the balance sheet date.

5. Employee benefits

(a) Gratuity and leave encashment

The employee's gratuity fund scheme, determined as post-employment benefit, is managed through Insurance Companies under a defined benefit plan. The present value of obligation is determined based on an actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for unfunded leave encashment determined as other long-term benefit plan is recognized in the same manner as gratuity.

I. Percentage of each category of plan assets to the fair value of plan assets as at 31 March 2015

The plan assets of the fund has been invested 100% (previous year 100%) with the schemes of insurance companies.

II. Provident Fund, Superannuation Fund and other defined contribution schemes:

The company contributed Rs. 785 Lacs (31 March 2014 : Rs. 642 Lacs) to defined contribution scheme (Provident Fund, superannuation fund and others) during the year ended 31 March 2015.

6 Contingent Liabilities : Rs. Lacs

31 March 2015 31 March 2014

i) Disputed sales tax matters, excise matters, income tax matters and 1,653 1,564 other matters contested in appeals. (These disputes mostly relate to arbitrary disallowances of claims of the Company under various state laws, which are under appeal. The management is of the view that these demands are not sustainable in law and is hopeful of succeeding in appeals.)

ii) Other claims against the Company not acknowledged as debts (#) 16 39

iii) Custom duty and interest obligation for advance licenses (*) 681 -

(#) The Company obtained a bank guarantee of Rs. 16 lacs in connection with the execution of a civil contract awarded by the State Health Department, Government (Govt.) of West Bengal. Following a dispute, the State Health Department, Govt. of West Bengal invoked the said Bank Guarantees whereupon the Company challenged such invocation by way of a writ petition before the Hon'ble Calcutta High Court. The Hon'ble High Court allowed an interim order of injunction dated 22 May 2003 restraining the State Health Department not to give any effect to the invocation of the guarantee till further order with the condition that the guarantee shall be renewed from time to time. The bank guarantee expired and has not been renewed since the case has been dismissed by the Hon'ble Calcutta High Court. The amount has been included in Claims against the Company not acknowledged as debts as at 31 March 2015 and 31 March 2014.

(*) Pursuant to direction from Directorate General of Foreign Trade (DGFT) dated 24 February 2010, the period for fulfilment of export obligations against 11 advance licenses was extended by 5 years with effect from 29 September 2009 which is remaining outstanding as at 31 March 2015. The Company has filed an application on 9 September 2014 before the 'Policy Interpretation Committee', DGFT to clarify the ambiguity regarding the date of fulfilment of export obligation. Simultaneously the Company has also applied before the 'Policy Relaxation Committee', DGFT, on 31 July 2014 for clubbing of the referred advance licenses. The Company expects a favourable order from DGFT.

7. Related party transactions

The Company has the following related parties in accordance with Accounting Standard 18 "Related Party Disclosures".

Investor Company : IFB Automotive Private Limited.

Key Management Personnel (KMP) : Mr. Bijon Nag, Executive Chairman

Mr. Bikram Nag, joint Executive Chairman and Managing Director

Mr. Sudam Maitra, Deputy Managing Director

Mr. Prabir Chatterjee, Director and CFO

Mr. Gautam Dasgupta, Mentor

Mr. A K Nag, President

Mr. Rajshankar Ray, CEO, Home Appliances Division

Mr. A.S. Negl, National Service Head, Home Appliances Division

Mr. Jayanta Chanda, Service Accounts Head, Home Appliance Division

Mr. Govindaraj Collegal, Head, Goafactory

Mr. Partha Sen, CEO, Kolkata Engineering Factory

Mr. K.R.Krishna Prasad, CEO, Bangalore Engineering Factory

Mr. B.M. Shetye, Vice President, R&D, Home Appliances Division

Mr. G. Ray Chowdhury, Company Secretary

Mr. Susanta Das, Head of Personnel and Administration

Mr. Uma Shankar Ghosh Dastidar, Head - Taxation

Mr. Arup Das, Head Marketing, Engineering Division

Mr. Diptanil Saha, GM, Corporate Affairs

Mr. Sukhdev Nag, Regional Manager, Home Appliances Division, South

Mr.T.R. Ramesh, Regional Manager, Home Appliances Division, East

Mr. Ranjan Mohan Mathur, Regional Manager, North

Mr. Soumitra Goswami, DGM, Accounts and Finance

Mr. Ashok Hazra, AGM - Accounts, Bangalore Engineering Factory

Mr. R. Anand, Head, Motor Division

Companies that have a member(s) IFB Agro Industries Limited, of KMP in common : Travel Systems Limited, Thai Automotive and Appliances Limited, Global Automotive and Appliances Limited, IFB Global Limited.

Company over which a KMP is able IFB Appliances Limited. to exercise significant Influence :

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


Mar 31, 2013

1. Leases

The Company is obligated under cancellable leases for residential, ofce premises, warehouses, etc. Total rental expense under cancellable operating lease amounted to Rs. 740 Lacs (31 March 2012: Rs. 635 Lacs).

2. Dues to Micro, Small and Medium Enterprises

The Ministry of Micro, Small and Medium Enterprises has issued an ofce memorandum dated August 26, 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated afer fling of the Memorandum in accordance with the ''Micro, Small and Medium Enterprises Development Act, 2006'' (''the Act''). Accordingly, the disclosure in respect of the amounts payable to such enterprises as at 31 March 2013 has been made in the fnancial statements based on information received and available with the Company. Further in view of the Management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act is not expected to be material. The Company has not received any claim for interest from any supplier as at the balance sheet date.

3. Employee benefts

(a) Gratuity and leave encashment

The employee''s gratuity fund scheme, determined as post-employment beneft, is managed through Insurance Companies under a defned beneft plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee beneft entitlement and measures each unit separately to build up the fnal obligation. The obligation for unfunded leave encashment determined as other long term beneft plan is recognized in the same manner as gratuity.

The following tables sets out the status of the gratuity plans and leave encashment under AS 15 - Employee benefts

4. Commitments and contingent liabilities:

Rs. Lacs 31 March 2013 31 March 2012

i) Outstanding capital commitments for tangible assets 3,037 2,258

ii) Outstanding capital commitments for intangible assets 893 17

iii) Disputed sales tax maters, excise maters, income tax maters and other 1,445 689 maters contested in appeals

(These disputes mostly relate to arbitrary disallowances of claims of the Company under various state laws, which are under appeal. The management is of the view that these demands are not sustainable in law and is hopeful of succeeding in appeals.)

iv) Other claims against the Company not acknowledged as debts (#) 116 76

v) Corporate guarantee to bank on behalf of associate company - 100

(#) The Company obtained a bank guarantee of Rs. 16 lacs in connection with execution of a civil contract awarded by State Health Department, Government (Govt.) of West Bengal. Following a dispute, the State Health Department, Govt. of West Bengal invoked the said Bank Guarantees whereupon the Company challenged such invocation by way of a writ petition before the Hon''ble Calcuta High Court. The Hon''ble High Court allowed an interim order of injunction dated 22 May 2003 restraining the respondent not to give any efect to the invocation of the guarantee till further order with the condition that the guarantee shall be renewed from time to time. The bank guarantee expired and has not been renewed since the case has been dismissed by the Hon''ble Calcuta High Court. The amount has been included in Claims against the Company not acknowledged as debts as at 31 March 2013 and 31 March 2012.

5. Related party transactions

The Company has the following related parties in accordance with Accounting Standard 18 "Related Party Disclosures" notifed under Section 211 (3C) of the Companies Act, 1956. Investor Company: IFB Automotive Private Limited

Associate Company: IFB Agro Industries Limited, Travel Systems Limited, Thai Automotive and

Appliances Limited, Global Automotive and Appliances Limited, IFB Appliances Limited

Key Management Personnel: Mr. Bion Nag, Executive Chairman

Mr. Bikram Nag, Joint Executive Chairman and Managing Director

Mr. Prabir Chaterjee, Additional Director and CFO

Mr. Dipak Mitra, President - Legal

Mr. A. K. Nag, Sr. Vice President, Corporate Afairs

Mr. Gautam Dasgupta, Mentor

Mr. Rajshankar Ray, CEO, Home Appliances

Mr. A.S. Negi, National Service Head, Home Appliances

Mr. Partha Sen, CEO, Kolkata Engineering Factory

Mr. K.R.Krishna Prasad, CEO, Bangalore Engineering Factory

Mr. B.M. Shetye, Vice President, R & D, Home Appliances

Mr. Dipak Sen, Vice President, Corporate Afairs & Strategies

Mr. G. Ray Chowdhury Company Secretary

Mr. Susanta Das, Head of Personnel and Administration

Mr. Uma Shankar Ghosh Dastidar, Head - Taxation

Mr. Sukhdev Nag, Product Head, Microwave Ovens, Dishwasher

Mr. Arup Das, Head Marketing , Engineering

Mr. Diptanil Saha, DGM, Corporate Afairs

Mr. T.R. Ramesh, Regional Manager, East

Mr. Ranjan Mohan Mathur, Regional Manager, North

Mr. Jayanta Chanda, Finance Head, Goa Factory

Mr. Soumitra Goswami, DGM, Accounts and Finance

Mr. Ashok Hazra, AGM - Accounts, Bangalore Engineering

Mr. Ritesh Agarwal, Deputy Company Secretary & Head Banking

6. Disclosure requirement for Derivatives Instruments

The Company uses foreign currency hedges to manage its risks associated with foreign currency fuctuations relating to certain existing foreign currency payables. The Company does not use derivative contracts for trading or speculative purposes.

7. The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under Section 92-92F and Specifed Domestic Transactions'' (SDT) under Section 92BA of the Income Tax Act 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company is in the process of updating the documentation for the international transactions and specifed domestic transaction entered into with the associated enterprises during the fnancial year. The management is of the opinion that its international transactions with associated enterprises are at arm''s length so that the aforesaid legislation will not have any impact on the fnancial statements, particularly on the amount of tax expense and that of provision for taxation to be recognised.

8. Previous year''s fgures have been regrouped/ reclassifed wherever necessary to correspond with the current year''s classifcation.


Mar 31, 2012

A. Rights, preferences and restrictions attached to equity shares

The company has only class of equity shares having par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share other than the partly paid shares which have been forfeited.

In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company.

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

b. Shares issued under Employees Stock Purchase Scheme

During the year the Company has issued 61,900 (31 March 2011: 701,850) fully paid equity shares of Rs. 10 each to its employees under IFB Industries Limited - Employees Stock Purchase Scheme 2008 at premium of Rs. 5 per share.

Provision for warranty

The Company warrants that their products will perform in all material respects in accordance with the Company's standard specifications in effect at the time of delivery of the products to the customers for the warranty period. Accordingly based on specific warranties, claims and claim history the Company provides for warranty claims. The movements in the provision for warranty cost is as follows :

Note : (a) R and D denotes Research and Development

(b) For sanction of import letter of credit amounting to Rs 3,000 lacs for import of capital goods by Standard Chartered Bank, following securities have been created :

(i) First charge on all present and future movable fixed assets of the Company situated at Goa Plant (except exclusive charge to term lenders).

(ii) Exclusive charge on plant & machinery financed by the Bank including movable plant & machinery, furniture & fittings, equipments, computer hardware & software, machinery spares tools, accessories and other movables.

(iii) First and exclusive charge over company's immovable property i.e.., non-agricultural land bearing at No. LI SIT within the village panchayat of Nago, Verna Plateau, Verna Industrial Estate, Taluka Salcete, District South Goa (Goa) admeasuring 48695 square meters together with all buildings and structures thereon or to be thereon and all plant and machinery installed thereon or to be thereon.

(c) For sanction of import letter of credit amounting to Rs 3,000 lacs for raw materials and other trade related goods by Standard Chartered Bank, following securities have been created:

(i) First charge on all current assets, both present and future.

(ii) Second charge on existing movable fixed assets of Goa unit (except exclusive charge to term lenders) and company's immovable properties i.e., non-agricultural land bearing at No. LI SIT within the village panchayat of Nago, Verna Plateau, Verna Industrial Estate, Taluka Salcete, District South Goa (Goa) admeasuring 48695 square meters together with all buildings and structures thereon or to be thereon and all plant and machinery installed thereon or to be thereon.

(*) Includes semi finished process components and semi finished tools amounting to Rs. 533 lacs (31 March, 2011 : Rs. 672 Lacs) and semi finished motors amounting to Rs. 69 lacs (31 March, 2011: Rs. 119 Lacs).

The company has entered into a mutual compromise settlement in respect of one of the past claims on the company, pertaining to a business discontinued since year 1999-2000. As per the terms of settlement, the company has paid a sum of Rs. 150 lacs (31 March 2011: Nil).

This amount has been recognized as an exceptional item for the year.

1. Impairment

The Company has reviewed potential generation of economic benefits from its cash generating units and concluded that there are no further impairments during the year.

2. Dues to Micro, Small and Medium Enterprises

Information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

3. Employee Benefits

(a) Gratuity and Leave Encashment

The employee's gratuity fund scheme, determined as post employment benefit, is managed through Insurance Companies under a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for unfunded leave encashment determined as other long term benefit plan is recognized in the same manner as gratuity.

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

VI. Percentage of each category of plan assets to the fair value of plan assets as at March 31,2012

The plan assets of the trust has been invested 100% (previous year 100%) with the schemes of insurance companies

(b) Provident Fund and Superannuation Fund:

In addition to the above benefits, employee of the company receives benefits from provident fund and superannuation fund, a defined contribution plan. The employee and employer each make monthly contribution to Government's Provident Fund equal to 12% of the covered employee's eligible salary. The company contributed Rs. 467 lacs (Previous year Rs. 352 lacs) to defined contribution scheme during the year ended March 31, 2012.

4. Commitments and contingencies : Rs.' lacs

March 31,2012 March 31, 2011

i) Outstanding capital commitments for tangible assets 2,258 1,276

ii) Outstanding capital commitments for intangible assets 17 18

iii) Disputed sales tax matters, excise duties, income tax contested in 689 484 appeals (These disputes mostly relate to arbitrary disallowances of

claims of the Company under various state laws, which are under appeal. The management is of the view that these demands are not sustainable in law and is hopeful of succeeding in appeals.)

iv) Indemnity bonds executed in favour of excise and customs 150 100

v) Guarantees given by the bankers on behalf of the Company 118 61

vi) Letter of credits 226 538

vii) Corporate Guarantee for Advance licenses 603 1,498

viii) Claims against the Company not acknowledged as debts (#)(@) 76 470

ix) Corporate Guarantee to bank on behalf of Associate Company 100 100

(#) The Company obtained a bank guarantee of Rs. 16 lacs in connection with execution of a civil contract awarded by State Health Department, Government (Govt.) of West Bengal. Following a dispute the Health Department, Govt. of West Bengal invoked the said Bank Guarantees whereupon the Company challenged such invocation by way of a writ petition before the Hon'ble Calcutta High Court. The Hon'ble High Court was pleased to allow interim order of injunction dated May 22, 2003 restraining the respondent not to give any effect to the invocation of guarantees till further order with the condition that the guarantee shall be renewed from time to time. The bank guarantee expired and has not been renewed since the case has been dismissed by the Hon'ble Calcutta High Court. The amount has been included in Claims against the Company not acknowledged as debts as at 31st March 2012 and 31st March 2011.

(@) As at 31st March 2011, claims against the company not acknowledged as debts included a claim relating to material rejection amounting to Rs. 454 lacs. During the year the company has entered into a mutual compromise settlement wherein the Company has settled and paid an amount of Rs. 150 lacs as settlement amount. The same has been recognized as an exceptional item for the year ended 31st March 2012.

(figures for the previous year, March 31, 2011, have been shown below each item)

Segment revenue, segment result, segment asset and segment liabilities include the respective amount identifiable to each of the segments as also amounts allocated on reasonable basis. The expenses, which are not directly relatable to the business segment, are shown as unallowable corporate cost and grouped as "Unallocated". Assets and liabilities that cannot be allocated between the segments are shown as unallowable corporate assets and liabilities and are grouped as "Unallocated".

5. Disclosure requirement for Derivatives Instruments

The Company uses foreign currency hedges to manage its risks associated with foreign currency fluctuations relating to certain existing foreign currency payables. The Company does not use derivative contracts for trading or speculative purposes.

6. The Revised Schedule-VI has become effective from 1 April, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped/reclassified wherever necessary to correspond with the current year's classification.


Mar 31, 2011

1. Share Capital

During the year the Company has issued 701,850 (previous year 891,599) fully paid equity shares of Rs. 10 each to its employees under IFB Industries Limited - Employees Stock Purchase Scheme 2008 of which 701,850 (previous year 812,199) shares were issued at premium of Rs 5 per share.

2. Impairment

The Company has reviewed potential generation of economic benefits from its cash generating units and concluded that there is no further impairments during the year.

3. Dues to Micro, Small and Medium Enterprises

There are no Micro, Small and Medium Enterprises, to whom the Companies owes dues, which are outstanding for more than 45 days as at March 31, 2011 except for the details mentioned below. Information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

4. Employee Benefits

(a) Gratuity and Leave Encashment

The employee's gratuity fund scheme, determined as post employment benefit, is managed through Insurance Companies under a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for unfunded leave encashment determined as other long term benefit plan is recognized in the same manner as gratuity.

VI. Percentage of each category of plan assets to their fair value of plan assets as at March 31,2011

The plan assets of the trust has been invested 100% (previous year 100%) with the schemes of insurance companies.

(b) Provident Fund and Superannuation Fund :

In addition to the above benefits, employee of the company receives benefits from provident fund and superannuation fund, a defined contribution plan. The employee and employer each make monthly contribution to Government's Provident Fund equal to 12% of the covered employee's eligible salary. The company contributed Rs. 35,220 thousand (Previous year Rs. 32,134 thousand) to defined contribution scheme during the year ended March 31, 2011.

5. Commitments and contingencies:

March 31,2011 March 31, 2010 (Rs.'000) (Rs.'000)

i) Outstanding capital commitments 129,366 302,479

ii) Disputed sales tax matters, excise duties contested in appeals 48,421 46,608

(These disputes mostly relate to arbitrary disallowances of claims of the Company under various state laws, which are under appeal. The management is of the view that these demands are not sustainable in law and is hopeful of succeeding in appeals.)

iii) Indemnity bonds executed in favour of excise and customs 10,000

iv) Guarantees given by the bankers on behalf of the CompanyO(#) 6,780 21,019

v) Letter of credits 53,772

vi) Corporate Guarantee for Advance licenses 149,844 149,844

vii) Claims against the Company not acknowledged as debts (#)(@) 47,004 45,958

viii) Corporate Guarantee to bank on behalf of Associate Company 10,000

6 At 31st March 2010, bank guarantees includes four bank guarantees of Rs 13,734 thousand in favour of DGFT in respect of EPCG licenses. Such Bank guarantees were invoked by the beneficiaries and the company has disputed the claim by way of writ petition filed before the Calcutta High Court. The Hon'ble High Court had earlier granted an order of status quo on September 18, 2003 and since extended from time to time. In the meantime, the said guarantees expired on September 30, 2003.Thereafter the Hon'ble High Court by an Order dated May 11, 2010 directed the company to renew the said guarantees The said order dated May 11, 2010 was modified by a further order dated May 19, 2010 directing the company to deposit the aggregate amount of guarantees in the form of fixed deposits in favour of The Registrar/Calcutta High Court, original Side to secure possible claim of DGFT in place of old bank guarantees. The company has made the fixed deposit pursuant to the said order amounting to Rs 13,800 thousands which have been lodged by the Company's banker Standard Chartered Bank with the DGFT.

At 31st March 2010, the Company had an outstanding provision of Rs 81,880 thousands for customs duty payable to DGFT due to non- fulfillment of export obligations under Advance License and EPCG Schemes. Pursuant to direction from the DGFT dated 24th February 2010 the period for fulfillment of export obligations against 11 Advance Licenses was extended by 5 years with effect from 29th September 2009. Moreover vide direction from DGFT dated 23rd February 2011, the Company got an extension for fulfillment of export obligations under 5 EPCG Licenses for a period of 12 years from 30th January 2009 to 29th January 2021. Consequent to such directions from DGFT, the Company has written back the provision of Rs 81,880 thousand and recognized the same as Other Income for the year ended 31st March 2011.

(#) At 31st March 2010, Guarantees given by the bankers on behalf of the Company included a bank guarantee of Rs 1,563 thousand obtained in connection with execution of a civil contract awarded by State Health Department, Govt, of West Bengal. Following a dispute the Health Department, Govt, of West Bengal invoked the said Bank Guarantees whereupon, the Company challenged such invocation by way of a writ petition before the Hon'ble Calcutta High Court. The Hon'ble High Court was pleased to allow interim order of injunction dated May 22, 2003 restraining the respondent not to give any effect to the invocation of guarantees till further order with the condition that the guarantee shall be renewed from time to time. The bank guarantee expired and has not been renewed since the case has been dismissed by the Hon'ble Calcutta High Court. The amount has been included in Claims against the Company not acknowledged as debts as at 31st March 2011.

(@) Includes claim relating to material rejection amounting to Rs. 45,441 thousands (Previous year Rs. 45,958 thousand). The management is of the opinion that the claim is not tenable.

7. Previous year's figures have been regrouped and rearranged wherever necessary.


Mar 31, 2010

1. Share Capital

During the year the Company has issued 5,000,000 fully paid equity shares of Rs. 10 each at par on preferential basis to the promoters of the Company as per the order dated September 11, 2009 of the Board for Financial Reconstruction (BIFR) under Sick Industrial Companies (Special Provision) Act 1985, as amended (SICA). The Company has also issued 891,599 fully paid equity shares of Rs.10 each to its employees under IFB Industries Limited - Employees Stock Purchase Scheme 2008 of which 812,199 shares were issued at premium of Rs. 5 per share.

The Company has redeemed 16,000,000 5% cumulative redeemable preference shares of Rs. 10 each out of profits of the Company and consequently a sum of Rs. 160,000 thousand equal to the nominal amount of shares redeemed, has been transferred to Capital Redemption Reserve Account.

2. Impairment

The Company has reviewed potential generation of economic benefits from its cash generating units and concluded that there is no further impairments during the year.

3. Dues to Micro, Small and Medium Enterprises

There are no Micro, Small and Medium Enterprises, to whom the Companies owes dues, which are outstanding for more than 45 days as at March 31, 2010 except for the details mentioned below. Information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

4. Employee Benefits

(a) Gratuity and Leave Encashment

The employees gratuity fund scheme, determined as post employment benefit, is managed through Insurance Companies under a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for unfunded leave encashment determined as other long term benefit plan is recognized in the same manner as gratuity.

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

VI. Percentage of each category of plan assets to their fair value of plan assets as at March 31, 2010

The gratuity fund administered and managed by Aviva Life Insurance has invested 35% (previous year 64%) in Government of India Securities, 32% (previous year 22%) in Equities, 20% (previous year 9%) in Corporate Bonds and balance 13% (previous year 5%) in Money market investment.

The Company has not received any break-up of the compositions of investment by category with respect to Gratuity fund administered and managed by Life Insurance Corporation of India and hence disclosure required for compositions of investment for plan assets under Accounting Standard 15 on Employee Benefits have not been given to that extent.

(b) Provident Fund and Superannuation Fund :

In addition to the above benefits, employee of the company receives benefits from provident fund and superannuation fund, a defined contribution plan. The employee and employer each make monthly contribution to Governments Provident Fund equal to 12% of the covered employees eligible salary. The company contributed Rs. 32,134 thousand (Previous year Rs. 27,705 thousand) to defined contribution scheme during the year ended March 31, 2010.

5. Related party transactions

The Company has the following related parties in accordance with Accounting Standard 18 issued by the Institute of Chartered Accountants of India :

Associate Companies:

IFB Agro Industries Limited, Travel Systems Private Limited CPL Projects Limited

Investor Company: IFB Automotive Private Limited

Key Management Personnel:

Mr. Bijon Nag, Executive Chairman

Mr. Bikram Nag, Joint Executive Chairman and Managing Director

Mr. Gautam Dasgupta, President & CEO

Mr. Dipak Mitra, President- Legal

Mr. A K Nag, Sr. Vice President, Corporate Affairs

Mr. S Bhattacharya, Chief Financial Officer

Mr. Indroneel Goho, Vice President - Finance

Mr. B.M. Shetye, Vice President

Mr. P Chatterjee, Vice President - Finance

Mr. Siddhartha Chatterjee, Unit Head Engineering

Mr. G. Ray Chowdhury, Company Secretary

Mr. Rajshankar Ray, Vice president- Sales

Mr. A.S. Negi, Vice President

Mr. B.D. Jung, President R&D

Mr. T.R. Ramesh, Regional Manager West

Mr. Sukhdev Nag, Regional Accountant South

Mr. Jayanta Chanda, Finance Head, Goa Factory

Mr. Ranjan Mohan Mathur, Regional Manager North

Mr. Arup Das, Senior Manager

6. Previous years figures have been regrouped and rearranged wherever necessary.

 
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