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Notes to Accounts of Integra Engineering India Ltd.

Dec 31, 2012


INTEGRA Engineering India Limited is a public company domiciled in India and incorporated under the provision of the Companies Act, 1956. Its shares are listed on BSE stock exchange in India. The operations of the company are limited to one segment, namely Manufacturing of Machineries and Components.

a. Reduction in Face Value of Equity Shares

The Hon''ble High Court of Gujarat approved reduction in authorised, issued, subscribed and paid-up share capital from Rs. 10/- per share to Rs. 1/- per share vide order received on 14th May, 2012 w.e.f 1st January, 2011.

b. Right, Preferences and restrictions attached to Shares Equity shares

The Company has only one class of equity shares having a par value ofRs. 1/- (P.Y. Rs. 10/-) per share. Each holder of equity shares is entitled to one vote per share. Any dividend declared by the company shall be paid to each holder of Equity shares in proportion to the number of shares held to total equity shares outstandingas on that date.. In the event of liquidation of the Company, the holders of the 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. Preference shares

The company has only one class of Preference shares having a par value of Rs. 10/- per share. These shares are redeemable at anytime before 28th October,2024. The Cumulative Redeemable Preference Shareholder ("CRPS") has no right to vote or to receive Notices or to attend at the General Meetings of the Company. If, however, any resolution affecting the rights attached to the CRPS holder is placed before the meeting of Shareholders, such resolution will first be placed before a meeting of Registered CRPS holders for their consideration. The CRPS holder have right to receive dividend @ 4% p.a. in respect of the amount paid -up on the CRPS for a period of 20 years from the date of allotment of CRPS, only out of profits, if any, of the Company. The dividend as and when declared by the Company shall be paid to the shareholder on the record date, which the Board may fix from time to time. If any year, the Company has not declared any dividend on the CRPS, the right to the dividends shall accumulate and the accumulated dividends will be paid out of the profits, if any, of the subsequent financial year (s) including carryforward profits, if any, of the previous years, before any dividend is paid to the Equity Shareholders. Such right to receive the accumulated dividend, if any, will cease on the expiry of 20 years from the date of allotment.

The CRPS holders comprising the present issue shall rank pari -passu interse with any preference or priority of one over the other or others of them.

In the event of liquidation of the Company, the preference shareholders will be entitled to receive their capital contribution in the Company after the distribution / repayment of all creditors but before distribution to equity shareholders. The distribution to the preference shareholders will be in proportion of the number of shares held by each shareholder.

2 Amalgamation

i. The Composite Scheme of Amalgamation of Integra India Group Company Limited with Integra Engineering India Limited and reorganization of share capital of Integra Engineering India Limited was sanctioned by the Hon''ble High Court of Gujarat, Ahmedabad and the certified true copy of the order was received on 14th May, 2012. Certified True Copies of the said Orders were filed with Registrar of Companies, Ahmedabad on 11th June, 2012 (''Effective Date).

ii. In terms of the scheme, the amalgamation took place effective on January 01, 2011 (''The Appointed Date''). The Scheme has accordingly been given effect to in these financial statements which includes assets, liabilities and reserves of Integra India Group Company Limited (Transferor Company) with effect from the appointed date and also Income and Expenditure for the period from January 01,2012 to December 31,2012.

iii. Pursuant to Scheme of Arrangement in the nature of Amalgamation of Integra India Group Company Limited (Transferor Company) with Integra Engineering India Limited (Transferee Company) and Reorganisation of Share Capital of Integra Engineering India Limited, the Transferee Company in its Committee of Director''s Meeting held on 26th July, 2012, issued and allotted 1,93,95,196 Equity Shares of Rs. l/-(Rupee one only) each, fully paid up by reducing the paid up and face value of Rs. 10/- (Rupees ten only )per share to Rs. 1/- per share fully paid up share to eligible shareholders of Integra Engineering India Limited whose names are registered in the Register of Members of the Transferee Company on the Record Date (16th July, 2012).

iv. The Amalgamation has been accounted for under the "pooling of interest" method as prescribed by Accounting Standard 14 (AS 14) "Accounting of Amalgamation".

a) The assets, liabilities and reserve of transferor Company have been taken over at their book values after adjusting financial effect of retrospective change in method of depreciation from written down value method to straight line method.

b) All inter Company balances between the Transferor Company and the Company have been cancelled and there shall be no further obligation /outstanding in this behalf.

c) In accordance with the swap ratio, shares ofRs. 148,500 thousands (148,500,000 shares of Rs. 1 each fully paid) have been allotted to the Shareholders of Transferor Company without any further application made by the shareholders of Transferor Company whose names are registered in the Register of Members of the Transferor Company on the Record Date (16th July, 2012), in the ratio of 27 (Twenty Seven) Equity Shares of the face value of Rs. 1/- (Rupee one only) each of the Transferee Company with rights attached thereto as mentioned in this Scheme for every 2 (two) Equity shares of the face value ofRs. 10/- (Rupees ten only) in the Transferor Company.

d) Pursuant to issue and allotment of Equity Shares issued by the Company to the Shareholders of Transferor Company, the fraction entitlement of shares (equivalent to 166 Shares) issued and allotted to the Corporate Trustees ("the Trustees") appointed by the Company in its Committee of Director''s Meeting held on 26th July, 2012. The Trustees will sell such fractional entitlements in the market at such price or prices and at such time ortimes as the Trustee may in its sole discretion decide and on such sale pay to theTransferee Company the net sale proceeds thereof whereupon the Transferee Company shall, distribute such sale proceeds to the concerned shareholders of the Transferor Company in proportion to their respective fractional entitlements.

3 Estimated amount of contracts remaining to be executed and not provided for (Net of Advances) is Rs. Nil/- (Previous Year Rs. 10,129 thousands).

4 LEASE Income

The Company has let out its certain factory premises under operating lease during the year. These lease are cancellable by either party by giving a notice of one month. Rent Income is recognized in the statement of Profit and Loss as "Rent Income" underthe Note No.20.


The company has obtained office premises under operating lease. These are generally not non-cancelable lease. These leases are under operating lease and are renewable by mutual consent on mutually agreeable terms.

Lease payments are recognized in the statement if Profit and Loss account as "Rent Expenses" under Note No.25.

b) Nature of Provisions: Warranties:

Warranty costs are estimated by the management on the basis of technical evaluation and past experience. Provision is made for estimated liability in respect of warranty costs in the year of recognition of revenue.


The Company has classified the various benefit provided to employees as under

(i) Defined Contribution Plan

The Company makes contribution towards Employee Provident Fund and Super Annuation Fund. The Company is required to contribute specified percentage of payroll cost.

(ii) Defined Benefits Plan

The Company recognises the liability towards the gratuity at each balance sheet date.

The most recent actuarial valuation of the defined benefit obligation for gratuity was carried out at December 31, 2012 by an actuary. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of benefit entitlement and measures each unit separately to build up the final obligation.

The following tables sets out the status of the gratuity plan and the amounts recognised in the Company''s financial statements as at December 31,2012.

6 As the Company''s business activity falls within a single primary business segment i.e. "manufacturing of Machineries and Components" the disclosure requirements of Accounting Standard 17- Segment Reporting is not applicable.

7 The value of realization of assets other than fixed assets and non current investment in the ordinary course of business will not be less than the value at which they are stated in the Balance Sheet.

8 The Company is in the process of identifying the suppliers, if any, covered under the Micro, Small and Medium Enterprise Development Act, 2006. Due to non availability of data, the details required have not been furnished.

9 The Company has to recover an amount of Rs. 314.75 lacs for the supply of goods to Gorba Integra Systems Private Limited "GISPL" (a joint venture promoted by the Company and another joint venture partner). Due to the failure of the obligations of the other JV Partner, GISPL was unable to fulfill the requirements of its customers, thereby suffering losses and resulting ultimately in its inability to pay the dues owed to the Company.

The Company has therefore initiated appropriate legal and other actions, against the other JV Partner, pursuant to which the Company estimates a recovery by GISPL,of Rs. 280 lacs from the JV Partner, which shall be utilized to repay the Company''s dues. The balance of Rs. 34.75 lacs receivable by the Company from GISPL has been written off during the year under review.

10 As per the opinion of the management, Deferred tax assets ofRs. 131.71 lacs on Carried Forward Business Loss/Unabsorbed depreciation is recognised and carried forward only to the extent that there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

11 The balances of trade receivables and trade payables are subject to adjustment if any on reconciliation/settlement.

12 The financial statements for the year ended 31st December, 2011 had been prepared as per the then applicable, pre- revised Schedule VI to the Companies Act, 1956. Consequent to the notification under the Companies Act,1956, the financial statements for the year ended 31st December, 2012 are prepared under revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year''s classification.

13 Figures for the year ended December 31,2011 are not comparable as such figures are standalone figures of the transferee company before merger was effective.

Dec 31, 2009

1. Contingent Liabilities in respect of:

Particulars As at As at 31.12.2009 31.12.2008 Rupees Rupees (in 000) (in 000)

A Demand raised by Sales Tax Authorities & disputed by the Company 13,51 13.51

B Demand raised by Income Tax Authorities & disputed by the company 26.20 NIL

C Claims against the Company not acknowledged as debts 9,50 9.40

D Dividend on 4% Cumulative Redeemable Preference Shares 256.70 207.10

The above Contingent liabilities do not include the following, as the same are not ascertainable.

i) Continuity Bonds given to Customs Authorities from time to time and

ii) Pending labour cases.

2. The Accounts have been prepared on a going concern basis.

3. During the year, no Research & Development expenditure have been incurred.

4. The tax year of the Company being March 31,2010, the provision for taxation for the year is the aggregate of the provision made for the three months ended March 31,2009 and the provision based on the figures for the remaining nine months up to December 31,2009 the ultimate tax liability of which will be determined on the basis of the figures for the period April 1,2009 to March 31,2010.

5. Provision has not been made for Obsolete/slow moving / non moving inventory aggregating Rs.4691 (in 000)

6. As per the information available with the Company and as certified by the management, there are no dues outstanding including interest as on 31st December, 2009 to Small and Micro enterprises as defined under Micro, Small and Medium Enterprises Development (MSMED) Act, 2006.

7. During the year the Company has given Voluntary Retirement Scheme to its employees. Expenditure in respect of Voluntary Retirement Scheme is being amortised over a period of five years. Accordingly, an amount of Rs.3074 (in 000) has been expensed during the year and a balance of Rs. 12294 (in 000) has been carried forward and disclosed under Miscellaneous Expenditure as at December 31,2009.

(b) Computation of net loss in accordance with Section 309(5) of the Companies Act, 1956 has not been made in view of the brought forward losses.

(c) Perquisites have been valued as per Income tax rules 1962, where applicable.

8. The Company has provided an amount of Rs.321 (in 000) for excise duty payable on finished manufactured goods but not cleared from the factory in accordance with the Guidance Note on Accounting Treatment for Excise Duty and other professional pronouncements issued by the Institute of Chartered Accountants of India. However, the same has no effect on the profit for the year.


Provision of gratuity liability on actuarial valuation under Projected Unit Credit (PUC) Method has been done on going concern basis, in accordance with revised AS 15.

Since 2006, Gratuity liability has been fully funded with Life Insurance Corporation of India.

10. Segment reporting:

In the opinion of the Company, the Company has only one segment viz., Textile machines, hence no separate disclosure of segment wise information has been made. The surplus capacity is being deployed for the Job work which are not considered permanent identifiable product of the company.

11. Operating Lease:

The Company has given certain factory premises on non-cancellable operating lease. The tenure of these lease agreements ranges from 36 months to 60 months.

12. Taxes on income:

The Company has net deferred tax assets as at 1 st April, 2008 as well as at 31 st March, 2009. Deferred tax assets arising mainly on account of unabsorbed depreciation and carried forward losses under the tax laws have not been considered for recognition as there is no virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Therefore, such deferred tax assets has not been recognized in the accounts of the Company.

13. The previous years figures have been regrouped wherever necessary.

14. Refer Annexure 1 for additional information pursuant to Part IV of Schedule VI to the Companies Act, 1956 of India