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Notes to Accounts of ISGEC Heavy Engineering Ltd.

Mar 31, 2017

1 : Leases

2. Company as a lessee

The Company has taken various residential /commercial premises and plant and machinery under cancellable operating leases. In accordance with Indian Accounting Standard (Ind AS-17) on ''Leases'' the lease rent charged to statement of Profit & Loss for the year are:

3. Company as a Lessor

The Company has given on lease factory, land and plant and machinery under operating lease. In accordance with Indian Accounting Standard (Ind AS-17) on ''Leases'' disclosure of the future minimum lease income under non cancellable operating leases in the aggregate and for each of the following periods:

4 : Segment Information

The Company operates in only one segment of engineering business which comprises of production and sales of Engineering Equipment''s, identified in accordance with principle enunciated in Indian Accounting Standard (Ind AS-108), Segment Reporting. Hence, separate business segment information is not applicable.

The Managing Director of the company has been identified as The Chief Operating Decision Maker (CODM). The Chief Operating Decision Maker also monitors the operating results as one single segment for the purpose of making decisions about resource allocation and performance assessment and hence, there are no additional disclosures to be provided other than those already provided below or in the financial statements.

5. The company is domiciled in India. The amount of its revenue is broken on the basis of location of customer.

* FVTPL - Fair Value Through Profit and Loss

# FVTOCI - Fair Value Through Other Comprehensive Income

6. Fair Value Hierarchy

This section explains the judgments and estimates made in determining the fair values of the financial instruments that are (a) recognized and measured at fair value and (b) measured at amortized cost and for which fair values are disclosed in financial statements. To provide an indication about the reliability of inputs used in determining fair values, the group has classified its financial instruments into three levels prescribed under the accounting standards.

The fair value of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

The following table provides the fair value measurement hierarchy of Company''s asset and liabilities, grouped into Level 1 to Level 3 as described below :-

Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

7. Valuation techniques used to determine Fair value

The Company maintains policies and procedures to value financial assets or financial liabilities using the best and most relevant data available. The fair values of the financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Specific valuation technique used to value financial instrument includes:

- the use of quoted market prices or dealer quotes for similar financial instruments.

- the fair value of financial assets and liabilities at amortized cost is determined using discounted cash flow analysis.

The following method and assumptions are used to estimate fair values:

The Carrying amounts of trade receivables, trade payables, capital creditors, cash and cash equivalents, short term deposits etc. are considered to be their fair value , due to their short term nature.

Long-term fixed-rate and variable-rate receivables / borrowings are evaluated by the Company based on parameters such as interest rates, specific country risk factors, credit risk and other risk characteristics. For borrowing fair value is determined by using the discounted cash flow (DCF) method using discount rate that reflects the issuer''s borrowings rate. Risk of non-performance for the company is considered to be insignificant in valuation.

Financial assets and liabilities measured at fair value and the carrying amount is the fair value.

8.: FINANCIAL RISK MANAGEMENT

The Company''s principal financial liabilities, other than derivatives, comprise borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to manage finances for the Company''s operations. The Company''s principal financial assets include investments in marketable securities, loans , trade and other receivables, cash and short-term deposits that arise directly from its operations.

The Company''s activities are expose to Market risk, Credit risk and Liquidity risk.

9. Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise three types of risk: currency rate risk, interest rate risk and other price risks, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings, deposits, investments, and derivative financial instruments. The sensitivity analysis in the following sections relate to the position as at March 31, 2017 and March 31, 2016.

10. Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. In order to optimize the Company''s position with regard to interest income and interest expenses and to manage the interest rate risk, treasury performs a comprehensive corporate interest rate risk management by balancing the proportion of the fixed rate and floating rate financial instruments in its total portfolio.

11. Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company operates internationally and the Company has obtained foreign currency loans and has foreign currency trade payables and receivables and is therefore, exposed to foreign exchange risk.

The Company hedges its exposure to fluctuations by using foreign currency forwards contracts on the basis of risk management policy approved by the Board.

The carrying amounts of the Company''s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period as follows:

12. Price Risk

The company''s exposure to price risk arises from the investment held by the company . To manage its price risk arising from investments in marketable securities, the company diversifies its portfolio and is done in accordance with the company policy. The company''s major investments are actively traded in markets and are held for short period of time. Therefore no senility is provided for the same.

13.. Credit risk

Credit risk arises from the possibility that the counterparty will default on its contractual obligations resulting in financial loss to the company. To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial conditions, current economic trends, and analysis of historical bad debts and ageing of accounts receivable.

The Company considers the probability of default upon initial recognition of assets and whether there has been a significant increase in credit risk on an ongoing basis through each reporting period. To assess whether there is significant increase in credit risk, it considers reasonable and supportive forward looking information such as:

14. Actual or expected significant adverse changes in business.

15. Actual or expected significant changes in the operating results of the counterparty.

16. Financial or economic conditions that are expected to cause a significant change to the counterparty''s ability to meet its obligation.

17. Significant increase in credit risk and other financial instruments of the same counterparty.

18. Significant changes in the value of collateral supporting the obligation or in the quality of third party guarantees or credit enhancements.

The company''s major exposure is from trade receivables, which are unsecured and derived from external customers. Credit risk on cash and cash equivalents is limited as we generally invest in deposits with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies. Investments primarily include investment in liquid mutual fund units, quoted securities and certificates of deposit which are funds deposited at a bank for a specified time period. Other loans are majorly provided to the subsidiaries and employee which have very minimal risk of loss.

The Company uses a provision matrix to determine impairment loss on portfolio of its trade receivable. The provision matrix is based on its historically observed default data over the expected life of the trade receivable and is adjusted for forward- looking estimates. At every reporting date, the historical observed default rates are updated and changes in forward-looking estimates are analyzed.

18. Liquidity Risk

Liquidity risk is defined as the risk that company will not be able to settle or meet its obligation on time or at a reasonable price. The Company''s objective is to at all times maintain optimum levels of liquidity to meet its cash and collateral requirements. The Company''s treasury department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risk are overseen by senior management. Management monitors the company''s net liquidity position through rolling, forecast on the basis of expected cash flows.

The table below provides details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments:

19. Debt is defined as long-term and short-term borrowings including current maturities (excluding derivatives) as described in notes 20, 26 and 28.

20. Total equity (as shown in balance sheet) includes issued capital and all other equity.

21. Loan Covenants

In order to achieve this overall objective, the company''s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to call loans and borrowings or charge some penal interest. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current year and the previous years.

No changes were made in the objectives, policies or processes for managing capital during the current years and previous years.

22.Transition to Ind AS

These financial statements, for the year ended March 31,2017,are the first, the company has prepared in accordance with Ind AS. For the periods up to and including the year ended March 31 2016,the Company prepared its financial statements in accordance with the accounting standards notified under section 133 of the Companies Act 2013, read together with Paragraph 7 of the Companies(Accounts) Rules,2014(Indian GAAP).

Accordingly, the company has prepared its financial statement to comply with the Ind AS for the year ending March 31, 2017, together with the comparative data as at and for the year ended March 31, 2016, as described in the summary of significant accounting policies. In preparing these financial statements, Company''s opening balance sheet was prepared as at April 1, 2015, the date of transition to Ind AS. This note explains the principal adjustments made by the company in restating its Indian GAAP financial statements, including the balance sheet as at April 1, 2015 and the financial statements as at and for the year ended March 31, 2016.

23.: Exemptions and exceptions opted by the company on the date of transition :-

Ind AS 101 allows first-time adopters certain exemptions and exceptions from the retrospective application of certain requirements under Ind AS. The company has applied the following exemptions and exceptions:

24. Exemptions from retrospective application

Deemed Cost

Ind AS 101 permits first time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognized in financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition .This exemption can also be used for intangible assets covered by Ind AS 38 intangible Assets. Accordingly, the group has elected to measure all of its property, plant and equipment, intangible assets at their previous GAAP carrying value.

Leases

Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. Ind AS 101 provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind AS, except where the effect is expected to be not material.

The company has elected to apply this exemption for such contracts/arrangements.

Investments in Subsidiaries, joint ventures and associates.

The company has elected to apply previous GAAP carrying amount of its equity investment in subsidiaries, associates and joint ventures at deemed cost as on the date of transition to Ind AS.

25. Exceptions from retrospective application

26. Classification and measurement of financial assets :-

The Company has classified the financial assets in accordance with Ind AS 109 on the basis of facts and circumstances that exists at the date of transition to Ind AS.

27. Estimates

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

Ind AS estimates at April 1, 2015 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:

28. Impairment of financial assets based on expected credit loss model;

29. Investment in equity instruments carried at FVTPL;

30. Investment in debt instruments carried at FVTPL.

Notes to the first time of adoption to Ind AS

31. Fair Value of Investments

Under Indian GAAP current investments are measured at the lower of cost or market price and non-current investments are measured at cost less any permanent diminution in value of investment.

Under Ind AS investments are designated as Fair Value through Other Comprehensive Income (FVOCI), Fair Value through Profit and Loss (FVTPL) and carried at amortized cost. For investment designated as FVOCI, difference between the fair value and carrying value is recognized in Other Comprehensive Income (OCI). For investment designated as FVTPL, difference between the fair value and carrying value is recognized in profit and loss. For investment designated at amortized cost, accrual of interest is recognized in profit and loss with which value of investment will be equal to maturity date contractual cash flows which includes solely payments of interest and principal.

Accordingly, net profit of Rs. 2198.64 lakhs for fair valuation of investment designated as FVTPL booked in Ind AS.

32. Defined benefit liabilities

Under Indian GAAP, actuarial gains and losses were recognized in the statement of profit and loss. Under Ind AS, the actuarial gains and losses form part of re-measurement of the net defined benefit liability/ asset which is recognized in other comprehensive income. Consequently, the tax effect of the same has also been recognized in other comprehensive income under Ind AS instead of the statement of profit and loss.

33. Deferred tax

Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP.

In addition, the various transitional adjustments lead to temporary differences. According to the accounting policies, the company has to account for such differences. Deferred tax adjustments are recognized in correlation to the underlying transaction either in retained earnings or a separate component of equity.

34. Sale of goods

Under Indian GAAP, sale of goods was presented as net of excise duty. However, under Ind AS, sale of goods includes excise duty. Excise duty on sale of goods is presented as a part of other expenses in statement of profit and loss. Thus sale of goods under Ind AS has increased with a corresponding increase in other expense.

35) Trade receivables

Under Indian GAAP, the company has created provision for impairment of receivables consists only in respect of specific amount for incurred losses. Under Ind AS, impairment allowance has been determined based on Expected Credit Loss model (ECL). Due to ECL model, the company impaired its trade receivable which has been eliminated against retained earnings. The impact of amount for the year ended on March 31, 2016 has been recognized in the statement of profit and loss.

36. Dividend

Under Indian GAAP, proposed dividends including DDT are recognized as a liability in the period to which they relate, irrespective of when they are declared. Under Ind AS, a proposed dividend is recognized as a liability in the period in which it is declared by the company (usually when approved by shareholders in a general meeting) or paid.

In the case of the Company, the declaration of dividend occurs after period end. Therefore, the liability for the year ended on March 31, 2015 recorded for dividend has been derecognized against retained earnings on April 1, 2015. The proposed dividend for the year ended on March 31, 2016 recognized under Indian GAAP was reduced with a corresponding impact in the retained earnings.

37. Borrowings

Under Indian GAAP, transaction costs incurred in connection with borrowings are amortized upfront and charged to statement of profit or loss for the period. Under Ind AS, transaction costs are included in the initial recognition amount of financial liability and charged to statement of profit or loss using the effective interest method.

38. Provisions

Under Indian GAAP, the company has accounted for provisions, including long-term provision, at the undiscounted amount. In contrast, Ind AS 37 requires that where the effect of time value of money is material, the amount of provision should be the present value of the expenditures expected to be required to settle the obligation. The discount rate(s) should not reflect risks for which future cash flow estimates have been adjusted. Ind AS 37 also provides that where discounting is used, the carrying amount of a provision increases in each period to reflect the passage of time. This increase is recognized as interest expense in P&L A/c. This led to a decrease in provision on the date of transition and which was adjusted against retained earnings.

39. Derivative instruments

The fair value of forward foreign exchange contracts is recognized under Ind AS, and was not recognized under Indian GAAP. The contracts, which were designated as hedging instruments under Indian GAAP, have been designated as at the date of transition to Ind AS as hedging instrument in fair value hedges of either expected future sales for which the group has firm commitments or expected purchases from suppliers that are highly probable. The corresponding adjustment has been recognized as a separate component in the hedge reserve. On the date of transition, cash flow hedge reserve was debited on April 1, 2015 and net movement (net of tax) during the year ended March 31, 2016 was recognized in OCI and subsequently taken to cash flow reserve.

40. Security Deposits

Under previous GAAP, interest free lease security deposits (that are refundable in cash on completion of lease term) are recorded at their transaction value. Under Ind AS all financial Assets are required to be recognized at fair value. Accordingly, the company has fair valued these security deposits under Ind AS. Difference between fair value and transaction value of the security deposit has been recognized as prepaid rent. Consequent to this change, the amount of security deposits decreased as at the date of transition to Ind AS with corresponding increase in prepaid rent.

41. Lease Equalization Expense

Under Ind AS expense incurred in relation to operating lease has to be charged to P&L A/c on a straight line basis over the period of lease. Accordingly, all payments to be made in future in respect of operating lease for all the lease agreements have been calculated and charged to P&L A/c on a straight line basis.

ISGEC HEAVY ENGINEERING LIMITED 137

42: Details of Specified Bank Notes ("SBNs") held and transacted during the period from 08th November

43: Standards issued but not yet effective

The standard issued, but not yet effective up to the date of issuance of the Company financial statements is disclosed below. The Company intends to adopt these standards when it becomes effective.

Ind AS 115 Revenue from Contracts with Customers

Ind AS 115 was issued in February 2015 and establishes a five step model to account for revenue arising from contracts with customers. Under Ind AS 115 revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The new revenue standard will supersede all current revenue recognition requirements under Ind AS. This standard will come into force from accounting period commencing on or after April 1, 2018. The Company will adopt the new standard on the required effective date. During the current year, the Company performed a preliminary assessment of Ind AS 115, which is subject to changes arising from a more detailed ongoing analysis.

Amendment to Ind AS 7:

In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards)(Amendments) Rules, 2017, notifying amendment to Ind AS 7, ''Statement of Cash Flows''. This amendment is in accordance with the recent amendment made by International Accounting Standards Board (IASB) to IAS 7. The amendment is applicable to the company from April 1, 2017.

The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash flow items, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement.

The company is evaluating the requirements of the amendment and the effect on the financial statements is being evaluated.

44: Previous year figures have been regrouped,/ rearranged, wherever considered necessary to conform to current year''s classification.


Mar 31, 2016

Note 1. Secured by hypothecation of inventories and by a charge on book debts and other assets of the Company, in favour of working capital consortium bankers on pari passu basis.

Note 2. : Repayable on demand. Rates of interest vary from 10.60% to 12.90% p.a.

Note 3. : Average rate of interest on Packing Credit Loans from Banks is 0.97 % p.a in Foreign Currency (all loans are in USD) (previous year 1.13 % p.a) and 9.08 % p.a. in Indian Rupees (previous year not applicable )

Note 4. Details of Employee Benefits Expense

The disclosure of employee benefits as required in Accounting Standard -15 is given below:-

a) Defined Contribution Plan:

The Company has recognised, in the statement of profit and loss, expenses for the following Defined Contribution Plans:

Note 5. : Earning Per Share

In accordance with Accounting Standard (AS-20) on ''Earnings Per Share'' the following table reconciles the numerator and denominator used to calculate Basic and Diluted Earnings Per Share:

Note 6: Segment Reporting

(a) Primary Segment

The Company operates in only one segment of Engineering business which comprises of production and sales of Engineering Equipments, identified in accordance with principles enunciated in Accounting Standard AS- 17 . Hence, separate segment information is not applicable.

(b) Secondary Segment

In respect of secondary segment information, the Company has identified Geographical segments as (i) domestic and (ii) Overseas.

(i) Domestic Revenue includes sales to customers located within India and earnings in India.

(ii) Overseas Revenue includes sales to customers located outside India and earnings outside India.

The required disclosure is as follows:-

Note 7: There is no other information required to be disclosed apart from the information already disclosed, pursuant to the requirements of Schedule III to the Companies Act,2013

Note 8: Previous year figures have been regrouped/ recast wherever considered necessary to conform to current year classification.

Note 9: Company Overview:

Isgec Heavy Engineering Limited (the "Company") is a Heavy Engineering Company and is engaged in the manufacture of Process Plant equipments, Mechanical and Hydraulic Presses, Alloy Steel and Ferrous Castings, Containers, Contract Manufacturing and Execution of Projects for setting up Boilers, Sugar Plants, Power Plants and Air Pollution Control Equipments for customers in India and abroad. The Company is a Public Limited Company and its shares are listed on Bombay Stock Exchange (BSE).


Sep 30, 2013

Note 1. Overview

Isgec Heavy Engineering Limited (the ACI-Company ACI-) is a diversified heavy engineering Company and is engaged in manufacture of Process Plant equipments, Mechanical and Hydraulic Presses and Castings, Contract Manufacturing and execution of projects for setting up Boilers, Sugar Plants and EPC Power Plants for customers in India and abroad.

The Company is a Public Limited Company and its shares are listed on Bombay Stock Exchange (BSE) and Delhi Stock Exchange (DSE).

a) Provisions

Provisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if

i) the Company has a present obligation as a result of a past event,

ii) a probable outflow of resources is expected to settle the obligation and

iii) the amount of the obligation can be reliably estimated.

b) Contingent Liabilities

Contingent Liability is disclosed in the case of

i) a present obligation arising from a past event, when it is not probable that an outflow of resources will be required to settle the obligation

ii) a possible obligation, unless the probability of outflow of resources is remote.

c) Contingent Assets : Contingent Assets are neither recognised, nor disclosed.

d) Provisions, Contingent Liabilities and Contingent Assets are reviewed at each Balance Sheet date.

a)The rights, preferences and restrictions attaching to each class of shares including restrictions on the distribution of dividends and the repayment of capital are as under:

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each share holder is entitled to one vote per share. The dividend proposed by the board of directors is subject to the approval of the share holders in the ensuing Annual General Meeting. In the event of the liquidation of the company, the holders of the equity shares will be entitled to receive the remaining assets of the company, after distribution of all the preferential amounts. The distribution will be in proportion to number of equity shares held by each of the equity share holders.

Note 1.1 Secured by hypothecation of inventories and by a charge on book debts and other assets of the company, on pari passu basis to working capital consortium bankers.

Note 1.2 Repayable on demand

Note 1.3 Average rate of interest on Packing Credit Loans from Banks is 7.78 ACU-.

Note 1.4 : Classified as joint venture in accordance with Accounting Standard (AS) 27-Financial Reporting of Interest in Joint Ventures as per joint venture agreement between Isgec Heavy Engineering Limited and Hitachi Zosen Corporation, Japan. It may be noted that the Company holds 51 ACU- equity shares in the said company.

Note 2 : CONTINGENT LIABILITIES ACY- COMMITMENTS

(Rs. in lacs)

Particulars As at As at 30.09.2013 30.09.2012

I Contingent Liabilities:

a) Claims against the Company not acknowledged as debts 1,172.92 650.59 (including sales tax under dispute)

b) Guarantees furnished by the bankers on behalf of the Company and 114,796.21 104,932.34 counter indemnity furnished by the Company to bankers for the same amount. ACo-

ACo- Includes Performance Bank Guarantees given on behalf of subsidiary - 21.50 company Isgec Covema Limited

c) Bonds executed in favour of President of India against Export Promotion 5,711.24 6,632.60 Capital Goods license

d) Bonds executed in favour of President of India against Advance 26,128.20 - Authorizations ACo-

ACo- Includes Bonds given on behalf of joint venture company Isgec Hitachi 8,438.00 - Zosen Limited

e) Bills discounted with Banks / Financial Institutions outstanding at 2,718.90 - the year end

f) Corporate Guarantees furnished by the Company to Customers 1,245.12 1,505.01

II Letters of Credit outstanding 4,808.29 4,080.37

III Estimated amount of contracts remaining to be executed on Capital Account 1,774.84 1,171.83 and not provided for (net of advances)

Note 3 : SEGMENT REPORTING

(a) Primary Segment

The company operates in only one segment of Engineering business which comprises of production and sales of Engineering Equipments, identified in accordance with principle enunciated in Accounting Standard (AS-17) Hence, separate segment information is not applicable.

(b) Secondary Segment

The Segment Revenue in the geographical segments considered for disclosure is as follows:

(i) Revenue within India includes sales to customers located within India and earnings in India.

Note 4 : There is no other information required to be disclosed apart from the information already disclosed, pursuant to the requirements of Schedule VI to the Companies act,1956

Note 5 : Previous year figures have been regrouped/ recast wherever considered necessary to confirm to current year classification.


Sep 30, 2012

Note 1. Overview

Isgec Heavy Engineering Limited (the "Company") is a diversified heavy engineering company and is engaged in manufacture of Process Plant equipments, Mechanical and Hydraulic Presses and Castings, Contract Manufacturing and execution of projects for setting up Boilers, Sugar Plants and EPC Power Plants for customers in India and abroad.

The company is a Public limited company and its shares are listed on Bombay Stock Exchange (BSE) and Delhi Stock Exchange (DSE).

(a) The rights, preferences and restrictions attaching to each class of shares including restrictions on the distribution of dividends and the repayment of capital are as under:

The Company has only one class of equity shares having a par value of Rs. 10/- per share. Each share holder is entitled to one vote per share. The dividend proposed by the board of directors is subject to the approval of the share holders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of the liquidation of the company, the holders of the equity shares will be entitled to receive the remaining assets of the company, after distribution of all the preferential amounts. The distribution will be in proportion to number of equity shares held by each of the equity share holders.

Note 2.1 Secured by hypothecation of inventories and by a charge on book debts and other assets of the company, on pari passu basis to working capital consortium bankers

Note 2.2 Repayable on demand

Note 3.1 : Classified as joint venture in accordance with Accounting Standard (AS) 27-Financial Reporting of Interest in Joint Ventures as per joint venture agreement between Isgec Heavy Engineering Limited and Hitachi Zosen Corporation, Japan. It may be noted that the Company holds 51% equity shares in the said company.

Note 4 : CONTINGENT LIABILITIES & COMMITMENTS

(Rs. in lacs)

Particulars As at As at 30.09.2012 30.09.2011

I Contingent Liabilities:

a) Claims against the Company not acknowledged as debts 650.59 928.33 (including sales tax under dispute)

b) Guarantees furnished by the bankers on behalf of the Company and counter 104,932.34 125,598.79 indemnity furnished by the Company to bankers for the same amount.*

*Includes Performance Bank Guarantees given on behalf of subsidiary 21.50 132.25 company Isgec Covema Limited

c) Bonds executed in favour of President of India against Export Promotion 6,632.60 1,968.50 Capital Goods licence

II Letters of Credit outstanding 4,080.37 10,332.95

III Estimated amount of contracts remaining to be executed on Capital Account 1,171.83 2,142.93 and not provided for (net of advances)

Note 5.1 : SEGMENT REPORTING

(a) Primary Segment

The company operates in only one segment of Engineering business which comprises of production and sales of Engineering Equipments, identified in accordance with principle enunciated in Accounting Standard AS-17 . Hence, separate segment information is not applicable.

(b) Secondary Segment

The Segment Revenue in the geographical segments considered for disclosure is as follows:

(i) Revenue within India includes sales to customers located within India and earnings in India.

(ii) Revenue outside India includes sales to customers located outside India and earnings outside India.

Note 5.2 : LEASE RENT INCOME

(a) The Company has given on lease factory, land and plant and machinery under operating lease. In accordance with Accounting Standard (AS-19) on ''Leases'' disclosure of the future minimum lease income under non cancellable operating leases in the aggregate and for each of the following periods:

Note 6 : FOREIGN CURRENCY EXPOSURES

The Company had entered into swaps/forward contracts which are not intended for trading or speculative purposes but for hedge purposes, to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

Note 7 : There is no other information required to be disclosed apart from the information already disclosed, pursuant to the requirements of Schedule VI to the Companies act,1956

Note 8 : Previous year figures have been regrouped/ recast wherever considered necessary to conform to current year classification.


Sep 30, 2011

1. As At As At 30.09.2011 30.09.2010 (Rs. in Lacs) (Rs. in Lacs)

1 Contingent Liabilities:

a) Claims against the Company not acknowledged as debts (including sales tax under dispute) 928.33 843.36

b) Guarantees furnished by the bankers on behalf of the Company and counter indemnity furnished by the Company to bankers for the same amount. 125,598.79* 87,596.26*

*Includes Performance Bank Guarantees given on behalf of subsidiary company ISGEC Covema Limited 132.25 276.25

c) Bonds executed in favour of President of India against EPCG licence 1,968.50 1,740.35

2 Letters of Credit outstanding at year end 10,332.95 9,702.80

3 Estimated amount of contracts remaining to be executed on Capital Account and not provided for (net of advances) 2,142.93 3,137.89

4 NAME OF THE COMPANY: The Registrar of Companies, after completion of the requisite formalities, approved the change in the name of the Company to ISGEC HEAVY ENGINEERING LIMITED. A fresh Certificate of Incorporation was issued by the Registrar of Companies on 26th August, 2011. The change is not due to any new line of business.

5 Deferred Tax

The Company estimates the Deferred tax (charge)/ credit for the year using the applicable tax rate based on the impact of timing differences between items in the financial statements and the estimated taxable income for the current year. The movement in provision for Deferred tax is given below:

The information has been given in respect of such vendors to the extent they could be identified as "Micro, Small and Medium enterprises as defined under the Micro, Small and Medium Enterprises (Development) Act, 2006” on the basis of information available with the Company.

6 Employee Benefits:

The disclosure of employee benefits as defined in Accounting Standard - 15 is given below:-

Note :- Disclosure in respect of previous four annual periods as required by Accounting Standard - 15 is not presented as the company adopted the Accounting Standard in 2007-08.

7 Segment Reporting

(a) Primary Segment

The company operates in only one segment of Engineering business which comprises of production and sales of Engineering Equipments, identified in accordance with principle enunciated in Accounting Standard AS-17 . Hence, separate segment information is not applicable.

(b) Secondary Segment

The Segment Revenue in the geographical segments considered for disclosure is as follows:

(i) Revenue within India includes sales to customers located within India and earnings in India.

(ii) Revenue outside India includes sales to customers located outside India and earnings outside India.

8. Related Party Transactions

In accordance with the Accounting Standard on "Related Party Disclosures” (AS-18), the disclosures in respect of Related Parties and Transactions with them, as identified and certified by the Management, are as follows:

I Description and Name of Related Parties

Description of Relationship Name

Holding Company None

Subsidiaries Saraswati Sugar Mills Limited

ISGEC Covema Limited

ISGEC Exports Limited

ISGEC Engineering & Projects Ltd.

Joint Venture ISGEC Haco Metal Forming Machinery Pvt. Ltd. (Refer Note No. 25)

Entities over which Directors and their relatives can exercise significant influence Yamuna Syndicate Limited

Kamla Puri Charitable Trust

Kamla Puri Charitable Foundation

Blue Water Enterprises

Key Management Personnel Mr. Aditya Puri (Managing Director)

Mrs. Nina Puri (Wholetime Director) Relatives of Key Management Personnel Mr. Ranjit Puri (Chairman), (Husband of Mrs. Nina Puri Wholetime Director & Father of Mr. Aditya Puri Managing Director)

Mrs. Tanupriya Puri (wife of Mr. Aditya Puri Managing Director)

Note : The Company depreciates fixed assets based on estimated useful lives implicit in Schedule XIV to the

Companies Act, 1956.

(I) Figures in parenthesis pertain to previous year.

(ii) Sales/Purchase include inter-unit transfers to the extent elimination is not practicable.

(iii) The licenced and installed capacities cannot be given in view of the multifarious activities that can be performed in the machinery installed. Further licensing has been abolished vide notification no. 477(E) of July 25th 1991. The quantum of production during the year depends on product mix.

(iv) It is not possible to furnish quantitative information in respect of trading operations of the company due to the innumerable number of components involved.

(v) Including 208.53 MT for own use ( previous year 386.26 MT )

9 Interests in Joint Ventures:

After the close of the Financial Year 2009-10, ISGEC Haco Metal Forming Machinery Pvt. Ltd. ceased to be a joint venture.

10 Foreign Currency Exposures :

The Company had entered into swaps/forward contracts which are not intended for trading or speculative purposes but for hedge purposes, to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

11 Previous year figures have been regrouped/ recast wherever considered necessary to conform to current year classification.


Sep 30, 2010

As at As at 30.09.2010 30.09.2009 (Rs in lacs) (Rs in lacs)

1 contingent Liabilities:

a) Claims against the Company not acknowledged as debts (including sales tax under dispute) 843.36 861.46

b) Guarantees furnished by the bankers on behalf of the Company and counter indemnity furnished by the Company to bankers for the same amount. 87,596.26* 49,309.47* Includes Performance Bank Guarantees given on behalf of subsidiary company ISGEC Covema Limited 276.25 122.17

c) Bills discounted with Banks / Fina ncial Institutions outstanding at the year end - 341.57

d) Bonds executed in favour of Presi dent of India against EPCG licence 1,740.35 1,917.45

2 Letters of credit outstanding at year end 9,702.80 3,668.47

3 Estimated amount of contracts remai ning to be executed on Capital Account and not provided for (net of advances) 3,137.89 340.10

4 Employee Benefits:

As per Accounting Standard -15 "Employee Benefits", the disclosure of employee benefts as defned in Accounting Standard is given below:-

a) Defned Contribution Plan:

b) Defned Benefts Plan :

5 Segment Reporting

The Company has only one segment of Engineering Business identified in accordance with guiding principles enunciated in Accounting Standard AS–17 Segment Reporting, hence the segment information is not applicable

6 Related party Transactions

In accordance with the Accounting Standard on "Related Party Disclosures" (AS-18), the disclosures in respect of Related Parties and transactions with them, as identified and certified by the management, are as follows:

I names of Related parties and description of relationship

Holding Company None

Subsidiaries Saraswati Sugar Mills Limited

ISGEC Covema Limited

ISGEC Exports Limited

ISGEC Engineering & Projects Ltd.

Joint Venture ISGEC Haco Metal Forming Machinery Pvt. Ltd. (Refer Note No. 25)

Entities over which Direct ors and their Yamuna Syndicate Limited relatives can exercise sig nificant influence Kamla Puri Charitable Trust

Kamla Puri Charitable Foundation

Blue Water Enterprises

Key Management Personnel Mr. Aditya Puri (Managing Director)

Mrs. Nina Puri (Wholetime Director)

Relatives of Key Management Personnel Mr. Ranjit Puri (Chairman), (Husband of Mrs. Nina

Puri Wholetime Director & Father of Mr. Aditya Puri Managing Director)

Mrs. Tanupriya Puri (wife of Mr. Aditya Puri Managing Director)

(i) Figures in parenthesis pertain to previous year.

(ii) Sales/ Purchase include inter-unit transfers to the extent elimination is not practicable.

(iii) The licenced and installed capacities cannot be given in view of the multifarious activities that can be performed in the machinery installed. Further licencing has been abolished vide notification no. 477(E) of July 25th 1991. The quantum of production during the year depends on product mix.

(iv) It is not possible to furnish quantitative information in respect of trading operations of the company due to the innumerable number of components involved.

(v) Including 386.26 MT for own use ( previous year 128.66 MT )

7 Interests in Joint Ventures:

After the close of the year, ISGEC Haco Metal Forming Machinery Pvt. Ltd. ceased to be a joint venture, as the company has excercised the option to exit the joint venture in terms of the Memorandum of Understanding entered into with Haco N.V. Belgium

8 foreign currency exposures :

The Company had entered into swaps/forward contracts which are not intended for trading or speculative purposes but for hedge purposes, to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

9 The dividend of Rs 1419.98 lacs has been received during the year from the subsidiary company Saraswati Sugar Mills Ltd. In terms of specific provisions contained in Income Tax Act, 1961, Dividend distribution tax of Rs 241.33 lacs paid by subsidiary company on the aforesaid dividend has been set off by the company against such tax payable on final dividend for the financial year 2008-09 and interim dividend paid for financial year 2009-10.

10 Previous year figures have been regrouped/ recast wherever considered necessary to conform to current year classification.

Notes :

1 The above Cash flow statement has been prepared under the indirect method setout in Accounting Standard - 3 .

2 Figures in brackets indicate cash outgo.

3 Previous period figures have been regrouped and recast wherever necessary to conform to the current period classification.

4 Following non cash transactions have not been considered in the cash flow statement. - Tax deducted at source (on income)


Sep 30, 2009

1. Contingent Liabilities:

a) Claims against the Company not acknowledged as debts (including sales tax under dispute) Rs. 861.46 Lacs (Previous year Rs. 788.41 lacs).

b) Guarantees furnished by the bankers on behalf of the Company for Rs. 49309.47 lacs.* (Previous year Rs. 43,253.70 lacs) and counter indemnity furnished by the Company to bankers for the same amount.

"Includes Performance Bank Guarantees given on behalf of subsidiary company Isgec Covema Limited Rs 122.17 lacs (Previous year Rs. 183.04 lacs).

c) C Forms due against Sales Tax for the assessment years 2004-05 to 2008-2009 of Rs.739.02 lacs (Previous year Rs. 600.92 lacs.)

d) Bills discounted with Banks / Financial Institutions outstanding at the year end Rs.341.57 lacs (Previous year Rs. 267.99 lacs)

e) Bonds executed in favour of President of India against EPCG licence Rs. 1917.45 lacs (Previous year Rs. 996.08 lacs)

2. Letters of credit outstanding at year end Rs. 3668.47 lacs (Previous Year Rs. 9,143.58 lacs).

3. a) Estimated amount of contracts remaining to be executed on Capital Account and not provided for (net of advances) Rs. 340.10 lacs (Previous year Rs. 1831.84 lacs).

b) Liability on account of partly paid units of Kotak India Growth Fund - II Rs. 169.75 (Previous year 169.75).

4. Micro, Small & Medium Enterprises Development Act, 2006

The Company is in the process of compiling information from its suppliers regarding their status under the above Act and hence disclosure, if any, of the amounts unpaid as at the year end together with the interest paid/ payable as required has been given to the extent of information available.

5. Segment Reporting

The Company has only one segment of Engineering Business identified in accordance with guiding principles enunciated in Accounting Standard AS-17 Segment Reporting issued by the Institute of Chartered Accountants of India, hence the segment information is not applicable.

6. Related Party transactions

In accordance with the Accounting Standard on "Related Party Disclosures" (AS-18), the disclosures in respect of Related Parties and transactions with them, as identified and certified by the management, are as follows:

(a) Nature of Related Parties and description of relationship

Holding Company None

Subsidiaries Saraswati Sugar Mills Limited

ISGEC Covema Limited

ISGEC Exports Limited

ISGEC Engineering & Projects Ltd.

Joint Venture ISGEC Haco Metal Forming Machinery Pvt. Ltd.

Entities over which Directors Yamuna Syndicate Limited and their relatives can Kamla Puri Charitable Trust exercise significant influence Kamla Puri Charitable Foundation

Blue Water Enterprises Key Management Personnel Mr. Aditya Puri (Managing Director)

Mrs. Nina Puri (Wholetime Director) Relatives of Key Management Mr. Ranjit Puri (Chairman), (Husband of Mrs. Nina Puri Wholetime Director & Father of Mr. Aditya Puri Managing Director)

Mrs. Tanupriya Puri (wife of Mr. Aditya Puri Managing Director)

7. In accordance with Accounting Standard (AS-19) on Leases, the Company has taken various residential/ commercial premises and plant and machinery under cancellable operating leases. Lease rent charged to Profit & Loss account for the year Rs 168.52 Lacs (Previous year Rs 105.79 lacs)

8. As per Accounting Standard, AS - 26, Software Licences and Technical Know How amounting to Rs. 103.72 lacs (Previous Year 98.13 lacs) and Rs. NIL lacs (Previous Year Rs. 111.98 Lacs) respectively acquired during the year have been capitalised and amortised over estimated useful life of five years.

9. Disclosure in terms of Accounting Standard AS - 29 on Provisions, Contingent Liabilities and Contingent Assets:-

a) Movement for provision for Liabilities: (Rs. in Lacs)

2008-09 2007-08

Opening Balance 5,502.17 4,386.80

Provided for during the year 2,587.80 2,435.22

Used during the year 571.34 1,192.43

Reversed during the year 641.22 127.42

Closing Balance 6,877.41 5,502.17

Timing of outflow/uncertainties Outflow on expenses incurred/ crystallisation of dues depends upon claims to be made by Customers & others.

b) Provisions made during the year have been accounted for under the head cost of goods purchased for resale for Rs.2307.71 lacs (Previous year Rs. 2259.52 Lacs) and manufacturing expenses for Rs.280.09 lacs (Previous year Rs. 175.70 Lacs).

10. The Company has not made any provision for Corporate Dividend Tax as the dividend receivable by the Company from its subsidiary during the financial year ending 31.03.2010 when the right to receive payment is established, is likely to be more than the dividend to be distributed.

11. Dividend paid during the year includes Nil (Previous Year Nil) dividend in foreign currency on 508900 (Previous Year 512050) Equity Shares held by six (previous year six) Non - Resident shareholders. The dividend to these shareholders has been paid in Indian Currency.

12. Foreign Currency Exposures:

The Company had entered into swaps/forward contracts which are not intended for trading or speculative purposes but for hedge purposes, to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

13. Previous year figures have been regrouped/ recast wherever considered necessary to conform to current year classification.

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