Notes to Accounts of Kilburn Engineering Ltd.

Mar 31, 2018

Notes:1

1. In accordance with the Ind AS 36 on ''Impairment of Assets'', the Company has reassessed the carrying amount of its Intangible assets and is of the view that no further impairment / reversal is considered to be necessary in view of its expected realisable value.

2. For Intangible Assets existing as on 1 April 2016 i.e., the date of transition to Ind AS, the Company has used Indian GAAP carrying value as deemed cost.

Investments at fair value through OCI (fully paid) reflect investment in quoted equity securities. These equity shares are designated as FVTOCI as they are not held for trading purpose. Thus disclosing their fair value fluctuation in profit and loss will not reflect the purpose of holding.

** The Company has availed working capital loan from bank aggregating to Rs. 10,300 lacs as at 31 March 2018 (31 March 2017: Rs. 11,000 lacs, 1 April 2016: INR NIL). However, pending utilisation of the monies for the aforesaid, the Company has placed Rs. 9,930 lacs (31 March 2017: Rs.10,480lacs, 1 April 2016: Rs. NIL) with group companies as Inter-Corporate Deposit (included in Inter-corporate deposits given to Others shown above).

***Bank deposits with maturity more than 12 months includes balances with banks held as margin money of Rs. 30.68 lacs (31 March 2017: Rs.24.90 lacs, 1 April 2016 :Rs. 11.70 lacs) having residual maturity of more than 12 months.

Derivative instruments at fair value through profit or loss includes foreign exchange forward contracts entered into by the Company with the intention of reducing the foreign exchange risk of trade receivables. These contracts are not designated in hedge relationships and are measured at fair value through profit or loss.

1. No trade receivables are due from directors or other persons in whom directors are interested.

2. Trade receivables are non-interest bearing and are generally on terms of 30 to 90 days.

Terms/ rights attached to equity shares

The Company has only one class of equity shares having par value of INR 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

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

There are no shares issued as bonus, shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date.

Other equity

Capital Redemption Reserve - The Company had made an offer of buyback of its own fully paid up equity shares through the methodology of "Open Market Purchase through Stock Exchange" pursuant to the approval of Board of Directors at their meeting held on 29 January 2009. The Company bought back 2,40,032 equity shares for an aggregate amount of Rs.63.54 lacs by utilising Securties Premium Account to the extent of Rs.39.53 lacs. Capital Redemption Reserve of Rs. 24.01 lacs has been created being the nominal value of the shares bought back.

Securities Premium Reserve - Where the Company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount of the premium received on those shares shall be transferred to "Securities Premium Reserve". The Company may issue fully paid-up bonus shares to its members out of the securities premium reserve and the Company can use this reserve for buy-back of shares.

Capital Reserve - Capital Reserve contains profit on re-issue of forfeited shares.

General Reserve - General Reserve is created out of the profits earned by the Company by way of transfer from surplus in the statement of profit and loss. The Company can use this reserve for payment of dividend and issue of fully paid-up bonus shares.

FVOCI - Net gain/(loss) on hedging instruments in a cash flow hedge - The Company has taken foreign exchange forward contracts and cross currency interest rate swaps to hedge foreign currency term loans taken from banks to meet the working capital requirements. The forward contracts and cross currency interest rate swaps have been taken to offset the effect of changes in interest rates and foreign exchange rates. The net gain / (loss) on these foreign exchange forward contracts and cross currency interest rate swaps have been recognised in other comprehensive income in accordance with the requirements of Ind AS.

FVOCI - Net gain/(loss) on FVOCI equity investments - As per Ind AS 109, investment in equity shares are to be initially measured at fair value and subsequently at fair value through profit and loss or other comprehensive income. At initial recognition, an entity may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument within the scope of this Standard that is neither held for trading nor contingent consideration recognised by an acquirer in a business combination to which Ind AS 103 applies.

The Company represents that its investments are long term strategic investments and the Company intends to hold the same for an indefinite period. Thus, the Company has decided to subsequently measure investments at fair value through other comprehensive income.

Proposed dividends on equity shares are subject to approval at the annual general meeting and are not recognised as a liability (including dividend distribution tax thereon) as at 31 March.

Notes:2

a. Secured by hypothecation of cars. Two loans - One loan having effective interest rate of 8.25% and payable on EMI basis up to 05 March 2021 and other loan having effective interest rate of 9.70% and payable on EMI basis up to 07 July 2020.

b. Details of security :

1. Equitable Mortgage created by way of Deposit of Title Deed on the Company''s immovable property situated at Plot No.6, KalyanBhiwandi Industrial Area, Thane.

2. Hypothecation of present and future stocks of raw materials, semi-finished goods, finished goods and book debts by way of first charge and also by hypothecation of movable plant and machinery by way of first charge.

Outstanding loans carry an average interest rate of 11.60% to 14.50% p.a.(31 March 2017 : 13.00% to 14.50% p.a., 1 April 2016 : 13.50% to 15.80% p.a.)

c. Secured by Letter of Comfort from Steel Authority of India Ltd. This loan carries an interest rate of 10.25% p.a. (31 March 2017 : 10.25%, 1 April 2016 : 10.25% p.a.)

d. i) Payable on demand on 6 October 2018 – Rs. 4000 lacs, Rate of interest - 1 year LIBOR plus 321 basis points. The effective rate of interest on this loan is 15.40%. However, since there has been a breach in the condition of the covenant as per the loan agreement, the term loan has become repayable on demand. The breach has not been remediated upto the date of issue of financial statements.

Details of security :

1. Subservient charge on the current assets and movable fixed assets of the Company.

2. Board resolution backed Letter of Comfort from McleodRussel India Limited

3. Unconditional and irrevocable corporate guarantee of Williamson Financial Services Ltd to remain valid during the currency of loan.

4. Unconditional and irrevocable personal guarantee of Mr.AdityaKhaitan to remain valid during the currency of the loan.

ii) Payable on demand on 22 September 2018 – Rs. 4000 lacs, Rate of interest - 1 year LIBOR plus 350 basis points. The effective rate of interest on this loan is 15.93%. However, since there has been a breach in the condition of the covenant as per the loan agreement, the term loan has become repayable on demand. The breach has not been remediated upto the date of issue of financial statements.

Details of security :

1. Subservient charge on the current assets and movable fixed assets of the Company.

2. Board resolution backed Letter of Comfort from McleodRussel India Limited

3. Unconditional and irrevocable corporate guarantee of Williamson Financial Services Ltd to remain valid during the currency of loan.

4. Unconditional and irrevocable personal guarantee of Mr.AdityaKhaitan (Chairman) to remain valid during the currency of the loan.

iii) Payable on demand on 30 September 2017 - Rs. 4000 lacs, Rate of interest - 6 months LIBOR 300 basis points. The effective rate of interest on this loan is 15.40%. However, since there has been a breach in the condition of the covenant as per the loan agreement, the term loan has become repayable on demand. The breach has not been remediated upto the date of issue of financial statements.

Details of security :

1. Subservient charge on the current assets and movable fixed assets of the Company.

2. Board resolution backed Letter of Comfort from McleodRussel India Limited

3. Unconditional and irrevocable corporate guarantee of Williamson Financial Services Ltd to remain valid during the currency of loan.

iv) Payable on demand on 6 August 2017 - Rs.INR 4000 lacs, Rate of interest - 10.50%. The effective rate of interest on this loan is 15.75%. However, since there has been a breach in the condition of the covenant as per the loan agreement, the term loan has become repayable on demand. The breach has not been remediated upto the date of issue of financial statements.

Details of security :

1. Subservient charge on the current assets and movable fixed assets of the Company.

2. Board resolution backed Letter of Comfort from McleodRussel India Limited.

3. Unconditional and irrevocable corporate guarantee of Williamson Financial Services Ltd to remain valid during the currency of loan.

4. Unconditional and irrevocable corporate guarantee of Bishnauth Investments Limited (of Rs. 2000 lacs).

5. Unconditional and irrevocable personal guarantee of Mr.AdityaKhaitan (Chairman).

1. Trade payables are non-interest bearing and are normally settled on 60-90 day terms.

2. For explanations on the Company''s credit risk management processes, refer to Note 40.

** Disclosure as required under Section 22 of Micro, Small & Medium Enterprises Development Act, 2006 ("the Act"):

The information has been given in respect of such vendors to the extent they could be identified as ''Micro & Small Enterprises'' on the basis of information available with the Company.

** Includes term loan repayable to RBL Bank by way of three annual installments starting from 30 September 2017: Rs. 700 lacs, 30 September 2018: Rs. 800 lacs& 30 September 2019: Rs. 1500 lacs as per the loan agreement carrying an interest rate of 6 months LIBOR plus 300 basis points. The effective interest rate on this loan is 15.40%. However, since there has been a breach in the condition of the covenant as per the loan agreement, the term loan has become repayable on demand. The breach has not been remediated upto the date of issue of financial statements.

Details of security :

1. Subservient charge on the current assets and movable fixed assets of the Company.

2. Board resolution backed Letter of Comfort from group company McleodRussel India Limited.

3. Unconditional and irrevocable corporate guarantee of Williamson Financial Services Ltd to remain valid during the currency of loan.

Financial Liabilities at fair value through other comprehensive income

Financial Liabilities at fair value through other comprehensive income reflect the change in fair value of foreign exchange forward contracts and cross currency interest rate swaps designated as cash flow hedges to hedge foreign currency term loans taken from banks to meet the working capital requirements. The Company is exposed to changes in the rates of interest and foreign exchange rates on its foreign currency loans. The forward contracts and cross currency interest rate swaps have been taken to offset the effect of changes in interest rates and foreign exchange rates. The Company has a policy to hedge all its foreign currency loans.

Provision for liquidated damages

The Company creates provision for liquidated damages on those construction contracts for which delivery has been delayed and no formal communication regarding extension of time has been received from the customers. The provision has been created on the basis of purchase order raised by the customers.

**The Government of India introduced the Goods and Service Tax (GST) with effect from 1 July 2017, GST is collected on behalf of the Government and no economic benefit flows to the Company and hence gross revenue under GST regime is presented excluding GST as per Ind AS. However, gross revenue under pre-GST regime included Excise Duty which is now subsumed in GST. Consequently, the figures for the year ended 31 March 2018 are not comparable with the year ended 31 March 2017.

Fair value gain on financial instruments at fair value through profit or loss relates to foreign exchange forward contracts that did not qualify for hedge accounting and embedded derivatives, which have been separated. No ineffectiveness has been recognised on foreign exchange and interest rate hedges.

Note 3: Employee benefit disclosure

A. Defined contribution plans:

Amount of Rs. 118.97 lacs (31 March 2017: Rs.116.08 lacs) is recognised as expenses and included in Note No. 28 "Employee benefit expense" in the Statement of Profit and Loss.

B. Defined benefit plans:

The Company has following post employment benefits which are in the nature of defined benefit plans:

(a) Gratuity

The Company has a defined benefit gratuity plan in India (funded). The Company''s defined benefit gratuity plan is a final salary plan for employees, which requires contributions to be made to a separately administered fund. The fund is managed by a trust which is governed by the Board of Trustees. The Board of Trustees are responsible for the administration of the plan assets and for the definition of the investment strategy.

Gratuity is a defined benefit plan and company is exposed to the following risks:

Interest rate risk : A fall in the discount rate which is linked to the Government Securities Rate will increase the present value of the liability requiring higher provision. A fall in the discount rate generally increases the mark to market value of the assets depending on the duration of asset.

Salary Risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of members. As such, an increase in the salary of the members more than assumed level will increase the plan''s liability.

Investment Risk: The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. If the return on plan asset is below this rate, it will create a plan deficit. Currently, for the plan in India, it has a relatively balanced mix of investments in government securities, and other debt instruments.

Asset Liability Matching Risk: The plan faces the ALM risk as to the matching cash flow. Since the plan is invested in lines of Rule 101 of Income Tax Rules, 1962, this generally reduces ALM risk.

Mortality risk: Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not have any longevity risk.

Concentration Risk: Plan is having a concentration risk as all the assets are invested with the insurance company and a default will wipe out all the assets. Although probability of this is very less as insurance companies have to follow regulatory guidelines.

During the year, there were no plan amendments, curtailments and settlements.

A separate trust fund is created to manage the Gratuity plan and the contributions towards the trust fund is done as guided by rule 103 of Income Tax Rules, 1962.

Terms and conditions of transactions with related parties

1. The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm ''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables.

2. ICD''s given to related party carries interest rate of NIL (31 March 2017: 14.00% & 1 April 2016 : 14.00%)

Commitments with related parties

The company has not provided any commitments to the related party as at 31 March 2018 (31 March 2017 : Nil & 1 April 2016: Nil)

NOTE 4: Segment information:

A. Primary operating segment

In line with the provision of Ind AS-108 - Operating Segments, Chief Operating Decision Maker (CODM) reviews the operations of the Company as manufacturer of Engineering Products, which is considered to be the only reportable segment by the management. Accordingly, no separate disclosure of primary operating segment information has been made.

The management assessed that cash and cash equivalents, trade receivables, current loans given, other current financial assets, trade payables, short term borrowings and other current financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

Note 5: Financial risk management objectives and policies

The Company''s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade payables and other financial liabilities. The main purpose of these financial liabilities is to finance the Company''s operations and to provide guarantees to support its operations. The Company''s principal financial assets include loans, trade receivables, cash and cash equivalents, bank balances other than that included in cash and cash equivalents and other financial assets that arise directly from its operations. The Company also holds FVTOCI investments and enters into derivative transactions.

The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks. The Board of Directors have adopted risk management policy to identify the risks involved in all activities of the Company. Further, the Company has a policy to hedge all foreign currency loans carrying a floating rate of interest with the help of foreign exchange forward contracts and cross currency interest rate swaps to cover foreign exchange rate and interest rate risk. It is the Company''s policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.

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 currency rate risk and interest rate risk. Financial instruments affected by market risk include loans and borrowings, FVTOCI financial investments, trade receivables, trade payables and derivative financial instruments.

The Company''s activities expose it to a variety of financial risks, including the effects of changes in foreign currency exchange rates and interest rate movement. The Company uses derivative financial instruments such as foreign exchange forward contracts and cross currency interest rate swaps to manage its exposures to foreign exchange fluctuations.

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. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s debt obligations.

The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings. The Company also enters into cross currency interest rate swaps, in which it agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon principal amount.

Interest rate sensitivity

With all other variables held constant, the following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected, after the impact of hedge accounting on profit before tax and equity as follows:

The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment.

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''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s operating activities (when revenue or expense is denominated in a foreign currency).

The Company manages its foreign currency risk by taking foreign exchange forward contracts and cross currency interest rate swaps.

When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure.

The Company hedges its exposure to fluctuations on the translation into INR of its foreign operations by holding net borrowings in foreign currencies and by using cross currency interest rate swaps and forwards.

Foreign currency sensitivity

The following table demonstrates the sensitivity in the USD and Euro to the functional currency of the Company, with all other variables held constant. The impact on the Company''s profit before tax is due to changes in the fair value of monetary assets and liabilities including foreign currency derivatives.

Equity price risk

The Company''s investment consists of investments in publicly traded companies held for the purpose other than trading. Such investments represents a low exposure risk for the Company and are not hedged. As at 31 March 2018, the exposure to listed equity securities at fair value was Rs. 1,608.52 lacs (31 March 2017: Rs. 1,264.46 lacs, 1 April 2016 :Rs. 1,400.87 lacs). A decrease / increase of 10% on the BSE market index could have an impact of approximatelyRs.160.85 lacs (31 March 2017: Rs.126.45 lacs, 1 April 2016:Rs.140.09 lacs) respectively on the OCI and equity. These changes would not have an affect on profit or loss.

Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.

Trade receivables

Customer credit risk is managed as per the Company''s established policy, procedures and controls relating to customer credit risk management. Trade receivables are non-interest bearing and are generally on credit term in line with respective industry norms. Outstanding customer receivables are regularly monitored. The Company has no concentration of credit risk as the customer base is widely distributed both economically and geographically.

The requirement for impairment is analysed at each reporting date. Refer Note 6 for details on the impairment of trade receivables.

Financial instruments and cash deposits

Credit risk from balances with banks is managed by the Company''s treasury department in accordance with the Company''s policy. Investments of surplus funds are made only on the basis of decision taken by the Company''s senior management.

The Company''s maximum exposure to credit risk for the components of the balance sheet at 31 March 2018 and 31 March 2017 is the carrying amounts as illustrated in Note 16, 17 & 18 except for derivative financial instruments. The Company''s maximum exposure relating to financial derivative instruments is noted in note 18 and the liquidity table below.

Liquidity risk

Liquidity risk is the risk that the Company may not be able to make its present and future collateral obligations without incurring unacceptable losses. The Company''s objective is to, at all times maintain optimum levels of liquidity to meet its cash and collateral requirements. The Company closely monitors its liquidity position and maintains adequate sources for financing including debts, cash credits and overdrafts at an optimised cost.

Note 41: Capital management

For the purpose of the Company''s capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company''s capital management is to maximise the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions or its business requirements. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings less cash and cash equivalents.

No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March 2018, 31 March 2017 and 1 April 2016.

Note 6: First-time adoption of Ind AS

These financial statements, for the year ended 31 March 2018, are the first Ind AS financial statements the Company has prepared in accordance with Ind AS. For periods up to and including the year ended 31 March 2017, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (previous Indian GAAP).

Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on 31 March 2018, together with the comparative period data as at and for the year ended 31 March 2017, as described in the summary of significant accounting policies. In preparing these financial statements, the Company''s opening balance sheet was prepared as at 1 April 2016, the Company''s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian previous GAAP financial statements, including the balance sheet as at 1 April 2016 and the financial statements as at and for the year ended 31 March 2017.

Exemptions applied

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

Deemed cost

Ind AS 101 permits a first time adopter to elect to measure an item of property, plant and equipment including capital work in progress at the transition to Ind AS at its carrying value and use that carrying value as its deemed cost at that date. This exemption can also be used for intangible assets covered by Ind AS 38. Accordingly, the Company has elected to measure all of its property, plant and equipment & intangible assets including capital work in progress at previous indian GAAP carrying value on the date of transition to Ind AS and used those carrying value as deemed cost of Property, plant and equipment & Intangible assets.

Designation of previously recognised financial instruments

Ind AS 101 allows an entity to designate investments in equity instruments at FVOCI on the basis of facts and circumstances at the date of transition to IndAS . The Company has elected to apply this exemption.

Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification and measurement of financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

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 previous indian GAAP, unless there is objective evidence that those estimates were in error. Ind AS estimates as at 1 April 2016 and 31 March 2017 are consistent with the estimates as at the same date made in the conformity with previous indianGAAP . The Company made estimates for the following in accordance with Ind AS at the date of transition as these were not required under previous indian GAAP:

1. Investment in equity instruments carried at FVOCI

2. Impairment of financial assets based on Expected Credit Loss model

The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at 1 April 2016, the date of transition to Ind AS and as of 31 March 2017.

Footnotes to the reconciliation of equity as at 1 April 2016 and 31 March 2017 and profit or loss for the year ended 31 March 2017:

1. FVTOCI financial assets

Under previous Indian GAAP, the Company accounted for long term investments in quoted equity shares as investment measured at cost less provision for other than temporary diminution in the value of investments. Under Ind AS, the Company has designated such investments as FVTOCI investments. Ind AS requires FVTOCI investments to be measured at fair value. At the date of transition to Ind AS, difference between the instruments fair value and previous Indian GAAP carrying amount of Rs. 108.76 lacs has been recognised in retained earnings. Further the difference between the change in instruments fair value during the year ended 31 March 2017 and provision for other than temporary dimunition in the value of investment as per previous indian GAAP of Rs. 63.59 lacs has been recognised in the statement of profit and loss.

2. Expected credit loss

Under previous Indian GAAP, the Company has created provision for impairment of trade receivables and unbilled revenue on project accounts on specific identification basis. Under Ind AS, impairment allowance has been determined based on Expected Credit Loss model (ECL) as per Ind AS 109. Due to ECL model, the Company impaired its trade receivables and unbilled revenue on project accounts byRs.210.98 lacs andRs.252.95 lacs respectively on 1 April 2016 which has been eliminated against retained earnings. The impact of reversal of provision of Rs. 0.35 lacs for trade receivables and provision of Rs.16.92 lacs for unbilled revenue on project accounts for year ended 31 March 2017 has been recognized in the statement of profit and loss.

3. Derivative instruments

The Company uses derivative financial instruments, such as foreign exchange forward contracts and cross currency interest rate swaps, to hedge its foreign currency risks and interest rate risks. Under previous Indian GAAP, there is no mandatory standard that deals comprehensively with hedge accounting, which has resulted in the adoption of varying practices. The Company has designated various cash flow hedges and applied the cash flow hedge accounting principles to avoid profit or loss mismatch. All the hedges designated under previous Indian GAAP are of types which qualify for hedge accounting in accordance with Ind AS 109 also. Accordingly the Company has recognised cash flow hedge reserve of Rs.185.23 lacs in the statement of profit and loss which is equivalent to the impact of exchange difference recognised on restatement of foreign currency borrowings at closing rate and Rs. 180.89 lacs has been recognised in other comprehensive income for the year ended 31 March 2017.

4. Proposed Dividend

Under previous Indian GAAP, proposed dividend including dividend distribution tax, are recognised as liability in the period to which they relate, irrespective of when they are recommended by the Board of Directors and approved by the shareholders in a general meeting. Under Ind AS, proposed dividend is recognised 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. Therefore, the proposed dividend including dividend distribution tax amounting to Rs.319.09 lacs has been derecognised and adjusted against the retained earnings as on the date of transition.

5. Deferred Tax

The various transitional adjustments lead to temporary differences, which the Company has to account for. Deferred tax adjustments are recognised in correlation to the underlying transaction either in retained earnings or a separate component of equity. On the date of transition, the net impact on deferred tax assets aggregating Rs.160.56 lacs has been adjusted to retained earnings as on 1 April 2016. Further, Rs.68.34 lacs has been recognised in the statement of profit and loss for the year ended 31 March 2017.

6. Revenue from Operations

Under the previous Indian GAAP, sale of goods was presented net of excise duty. However, under Ind AS, sale of goods includes excise duty. Excise Duty on sale of goods is presented separately on the face of statement of profit and loss. Thus, revenue from operations under Ind AS has increased by Rs.1,239.78 lacs with excise duty on sales shown separately.

7. Defined benefit obligation

Under previous Indian GAAP, the entire cost, including actuarial gains and losses on post-employment defined benefit plan is charged to the statement of profit or loss. Under Ind-AS, remeasurements comprising of actuarial gains and losses are recognised through Other Comprehensive Income. Thus, employee benefits expense is reduced by Rs.17.30 lacs (tax impact of Rs.5.99 lacs has been reclassified from statement of profit and loss to other comprehensive income) and is recognised in Other Comprehensive Income during the year ended 31 March 2017.

8. Utilization of MAT Credit Entitlement

The Company has recorded entry for utilization of MAT Credit Entitlement of Rs.164.04 lacs. Under previous indian GAAP, the Company had provision for tax liability of Rs.108.87 lacs which was shown under short term provisions. Due to utilization of MAT Credit Entitlement of Rs.164.04 lacs, the Company will now be entitled to a refund of Rs.55.17 lacs which has been shown under income tax assets (net).

9. Reclassification of assets and liabilities in accordance with Ind AS

The Company has reclassified its assets and liabilities shown as per previous indian GAAP to confirm with the disclosure requirement of Ind AS and schedule III of the Companies Act 2013.

Note 7: Leases

Operating Leases :

The Company has entered into leasing arrangements for lease of premises with lease terms ranging between 2 to 3 years. The Company has the option to renew the leases upon expiry based on mutually agreed terms to be decided upon at the time of renewal of leases. Lease payments recognized in the Statement of Profit and Loss : 31 March 2018 : Rs.27.46 lacs (31 March 2017 : Rs.28.78 lacs)

Note 8: Research and development costs

The Company has an inhouse research and development department which concentrates on product development and developing new products. Research and development costs that are not eligible for capitalisation have been expensed out in the respective years. The total amount of research and development cost expensed out in the year ended 31 March 2018 was Rs.70.23 lacs (31 March 2017: Rs.63.95 lacs).

Note 9: Disclosure in terms of Indian Accounting Standard 11 on the Accounting of Construction Contracts is as under:

The Company has recognized unbilled revenue during the year in respect of high value, long delivery orders which are delivered in parts over the execution period. The Unbilled revenue is calculated based on percentage of completion of individual contracts.

Note 10: New standards / amendments to existing standards issued but not yet adopted:

Following are the new standards / amendments to existing standards which have been issued by The Ministry of Corporate Affairs (''MCA'') that are not effective for the reporting period and have not been early adopted by the Company:

a. Issue of Ind AS 115 - Revenue from Contracts with Customers:

On March 28, 2018, the Ministry of Corporate Affairs (MCA) notified the new revenue recognition standard, viz., Ind AS 115 Revenue from Contracts with Customers. Ind AS 115 is applicable to the Company for the financial years beginning on or after April 1, 2018 for all the companies who have migrated to Ind AS. The new standard establishes a five step model related to revenue recognition from contracts with customers. It permits either ''full retrospective'' adoption in which the standard is applied to all of the periods presented or a ''modified retrospective'' adoption.

The Company is evaluating its various contractual arrangement and the available transition methods. The Company has established a team for evaluation of the contracts with customers to implement Ind-AS 115. Reliable estimates of the quantitative impact of Ind-AS 115 on the financial statements will be possible after a detailed evaluation.

b. Amendment to existing standards:

The MCA has also carried out amendments of the following accounting standards, applicable to the Company:

i. Ind AS 21 - The Effects of Changes in Foreign Exchange Rates;

ii. Ind AS 12 - Income Taxes

Application of above amendments are not expected to have any significant impact on the Company''s financial statements.

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Mar 31, 2016

Details of security for (a)(i)

1. Equitable Mortgage created by way of Deposit of Title Deed on the Company''s immovable property situated at Plot No.6, Kalyan Bhiwandi Industrial Area, Thane.

2. Hypothecation of present and future stocks of raw materials, semi-finished goods, finished goods and book debts by way of first charge and also by hypothecation of movable plant and machinery by way of first charge.

Details of Security for (a)(ii)

3. Secured by Letter of Comfort from Steel Authority of India Ltd.

Notes:

Balances with banks held as margin money include Rs. 11.70 lacs (previous year Rs. 24.80 lacs) having residual maturity of more than 12 months.

4. The Company holds investment in equity shares of Mcnally Bharat Engineering Company Limited (Book Value Rs. 1,993.45 lacs) as strategic investment on a long term basis. The Company is of the view that the diminution in value of Rs. 1344.17 lacs (Previous Year Rs. 1280.10 lacs) in these investments is temporary. Notwithstanding this, out of abundant caution, a total provision of Rs. 800 lacs (Previous Year Rs. 600 lacs) including Rs. 200 lacs (Previous Year Rs. 200 lacs) during the year is made in the books.

5. The Board of Directors of the Company at its meeting held on March 22, 2016, gave their approval in respect of the scheme of amalgamation of McNally Bharat Engineering Company Limited, McNally Sayaji Limited and EMC Limited with the Company under Section 391 and Section 394 and other applicable provisions of the Companies Act, 1956, with effect from January 1, 2015. The Company is in the process of obtaining all requisite statutory and regulatory approvals.

6. Disclosures under Accounting Standards Note 27.1

In accordance with requirements of Accounting Standard 7, Company has recognized unbilled revenue during the year in respect of high value, long delivery orders which are delivered in parts over the execution period. The Unbilled revenue is calculated based on percentage of completion of individual contracts.

7.Employee benefit plans

Defined contribution plans

The Company makes Provident Fund and Superannuation Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized Rs. 82.61 lacs (Year ended 31 March, 2015 Rs. 79.29 Lacs) for Provident Fund contributions and Rs. 34.52 lacs (Year ended 31 March, 2015 Rs. 33.43 lacs) for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

The following table sets out the funded status of the Gratuity benefit and the amount recognized in the financial statements:

8. Based on the guiding principles given in the Accounting Standard on ''Segment Reporting'' (AS-17) issued by the Institute of Chartered Accountants of India, the primary segment of the Company is business segment which comprises of Engineering Segment. As the Company operates in a single primary business segment, no segment information thereof is given.

Segment information for secondary segment reporting (by geographical segments).

The company has a customer base within and outside India.

9. Disclosure of provisions as required by Accounting Standard 29

*(i) Consequent to closure of Baroda factory in 2003, provision was made for additional retrenchment compensation in respect of 97 employees amounting to Rs. 45.80 lacs. Consequent to a settlement with the workers before the labour court an amount of Rs. 30 lacs was paid as full and final settlement during previous two years. The balance amount has been written back.

*(ii) The Company was party to a litigation by certain ex-employees of the Company who were members of the WM Super Annuation Fund (SAF) who had filed a petition in the High Court of Mumbai to direct the Company to buy annuities enabling them to receive their pension. The Company had provided Rs. 220 lacs in total in the accounts towards this liability in addition to the amount already contributed by the erstwhile group company fund to a Super Annuation fund held with Life Insurance Corporation of India. During the year the Company has arrived at a settlement with petitioners. It is agreed in the memorandum of understanding that total amount available in Super Annuation fund held with Life Insurance Corporation of India will be equitably distributed among ex-employees and the writ petition will be withdrawn. Consequent to an understanding arrived at with the ex-employees and the withdrawal of the petition by them, the trust has settled their claim at the negotiated amount out of the accumulated corpus. Such settlement has been completed and the trust is likely to be wound up shortly. Balance provision no longer required has been written back.

10. a) Operating Leases :

Lease payments recognized in the Statement of Profit and Loss : Rs. 29.94 lacs (Previous Year Rs. 25.94 lacs).

b) Finance Lease

The Company has entered into finance lease arrangements for vehicle, which provide the Company an option to purchase the assets at the end of the lease period.

Note 11.

The total amount incurred on Research and Development activities during the year amount to Rs. 65.44 lacs (Previous Year Rs. 59.57 lacs).

Note 12.

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

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Mar 31, 2015

1. Corporate Information

Kilburn Engineering Limited is in the business of process design, engineering, manufacturing, project management, installation and commissioning of equipment and systems for various process plants across the world.

2. Additional information to the financial statements

Rs. In Lacs

Particulars As at As at 31st March, 31st March, 2015 2014

Contingent liabilities and commitments (to the extent not provided for)

Contingent liabilities

(a) Letters of Credit and Bank Guarantees outstanding 3,712.57 2,441.17 as at the year end. FDR of Rs. 629.08 lacs (previous year Rs. 439.43 lacs) pledged with banks against the LC's and Bank Guarantees.

(b) Demand Notice from DGFT for non-fulfilling of eport 137.00 137.00 obligations. The Company expects no liability on this account.

(c) The Company is a party to litigation - - by certain ex-employees in respect of claim for Superannuation fund dues/ retrenchment compensation arising around the year 2000-01. The Company has provided for the probable obligation. This is expected to materialize on resolution of the dispute.

(d) The Company had received an order 30.75 30.75 from Deputy Commissioner of Sales Tax, Mumbai for the year 2008-09. The Company has filed an appeal with the Joint Commissioner of Sales Tax after payment of Rs. 1.50 lacs.

(e) The Company had received a Demand Notice 111.98 111.98 from the Maharashtra State VAT Authority for the assessment year 2005-06. The Company has filed an appeal against the said order.

(f) The Company had received a Demand Notice 639.73 730.73 from the Central Sales Tax Authorities for the assessment year 2005-06. The Company has filed an appeal against the said order & has paid an amount of Rs. 242.30 lacs during current year & made a provision of Rs. 91 lacs in books. In respect of (e) & (f) above, the total demand of Rs. 842 lacs is on account of non-production of "C" Forms which were lost and certain errors in assessment.

(g) Last year the Company had received Demand 35.39 35.39 Notice from the Income Tax Authorities disallowing certain expenses and selling commission expense for the assessment year 2011-12.

(h) Other claims not acknowledged as debts. 0.80 0.80

3. Disclosures under Accounting Standards Note 26.1

In accordance with requirements of Accounting Standard 7, Company has recognized unbilled revenue during the year in respect of high value, long delivery orders which are delivered in parts over the execution period. The Unbilled revenue is calculated based on percentage of completion of individual contracts.

4. Employee benefit plans

Defined contribution plans

The Company makes Provident Fund and Superannuation Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs. 79.29 lacs (Year ended 31 March, 2014 Rs. 70.49 Lacs) for Provident Fund contributions and Rs. 33.43 lacs (Year ended 31 March, 2014 Rs. 34.51 lacs) for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

5. Based on the guiding principles given in the Accounting Standard on 'Segment Reporting' (AS-17) issued by the Institute of Chartered Accountants of India, the primary segment of the Company is business segment which comprises of Engineering Segment. As the Company operates in a single primary business segment, no segment information thereof is given.

6. Operating Leases :

Lease payments recognized in the Statement of Profit and Loss : Rs. 25.94 lacs (Previous Year Rs. 28.10 lacs).

7. The total amount incurred on Research and Development activities during the year amount to Rs. 59.57 lacs (Previous Year Rs. 65.99 lacs)

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

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Mar 31, 2014

Rs'' In Lacs

Note Particulars As at As at 31st March 31st March 2014 2013

1.1 Contingent liabilities and commitments (to the extent not provided for)

Contingent liabilities

(a) Letters of Credit outstanding as at 2,441.17 377.55 the year end FDR of Rs.439.43 lacs (previous year Rs.356.88 lacs) pledged with banks against the LCs and Bank Guarantees.

(b) Demand Notice from DGFT for non-fulfilling of 137.00 137.00 export obligations. The Company expects no liability on this account

(c) The Company is a party to litigation by certain - - ex employees in respect of claim for Superannuation fund dues/ retrenchment compensation arising around the year 2000-01. The Company has provided for the probable obligation. This is expected to materialize on resolution of the dispute.

(d) During the year, the Company has received an 30.75 30.75 order from Deputy Commissioner of Sales Tax, Mumbai for the year 2008-09. The Company has filed an appeal with the Joint Commissioner of Sales Tax after payment of Rs.1.5 lacs.

(e) During the year, the Company has received a 111.98 - Demand Notice from the Maharashtra State VAT Authority for the Assessment Year 2005-06. The Company has filed an appeal against the said order.

(f) During the year, the Company has received 730.73 - a Demand Notice from the Central Sales Tax Authorities for the Assessment Year 2005-06. The Company has filed an appeal against the said order.

In respect of (e) & (f) above, the total demand of Rs. 842 lacs is on account of non-production of "C" Forms which were lost and certain errors in assessment.

(g) During the year, the Company has received Demand 35.39 - Notice from the Income Tax Authorities disallowing certain expenses and Selling Commission expense for the Assessment Year 2011-12. The Company has preferred an appeal against the said order.

(h) Other claims not acknowledged as debts 0.80 0.80

Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management. This has been relied upon by the auditors.

2.1 The Company holds investment in equity shares of Mcnally Bharat Engineering Company Limited (Book Value Rs.1,993.45 lacs) as strategic investment on a long term basis. The Company is of the view that the diminution in value of Rs.1,409.95 lacs (Previous Year Rs.1,409.11 lacs) in these investments is temporary. Notwithstanding this, out of abundant caution, a provision of Rs.400 lacs (Previous Year Rs.200 lacs) including Rs.200 lacs (Previous Year Rs.200 lacs) during the year is made in the books.

Note 3 Disclosures under Accounting Standards

Note 3.1

In accordance with requirements of Accounting Standard 7 notified by the Companies Accounting Standard Rules, 2006, the Company has recognized unbilled revenue during the year in respect of high value, long delivery orders which are delivered in parts over the execution period. The Unbilled revenue is calculated based on percentage of completion of individual contracts.

Note 3.2

Employee benefit plans

Defined contribution plans

The Company makes Provident Fund and Superannuation Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs. 70.49 lacs (Year ended 31st March, 2013 Rs.8.37 Lacs) for Provident Fund contributions and Rs.34.51 lacs (Year ended 31st March, 2013 Rs.34.88 lacs) for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

The following table sets out the funded status of the Gratuity benefit and the amount recognized in the financial statements:

The discount rate is based on the prevailing market yields of Government of India securities as at the Balance Sheet date for the estimated term of the obligations.

The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments and other relevant factors.

100% of Plan Assets are invested in Group Gratuity Scheme offered by LIC of India, an insurance Company.

3.3 Based on the guiding principles given in the Accounting Standard on ''Segment Reporting'' (AS-17) issued by the Institute of Chartered Accountants of India, the primary segment of the Company is business segment which comprises of Engineering Segment. As the Company operates in a single primary business segment, no segment information thereof is given.

Segment information for secondary segment reporting (by geographical segments).

The Company has a customer base within and outside India.

The Company has recognised deferred tax asset on unabsorbed depreciation to the extent of the corresponding deferred tax liability on the difference between the book balance and the written down value of fixed assets under Income Tax.

Consequent to closure of Baroda Factory in year 2003, provision was made for additional retrenchment compensation in respect of 97employees amounting to Rs.45.80 lacs. Out of 97 employees, 50 had preferred an appeal before the labour court in Baroda. A settlement was arrived with the above workers before the labour court during the year and an amount of Rs.18.50 lacs was paid.

3.4 Operating Leases :

Lease payments recognized in the Statement of Profit and Loss : Rs 28.10 lacs (Previous Year Rs.33.31 lacs)

Note 4

The total amount incurred on Research and Development activities during the year amount to Rs.65.99 lacs (Previous Year Rs.72,79 lacs).

Note 5

There has been a undue delay in getting allotment of the land in Asansol. In the interim period the Company has developed several reliable subcontractors in Eastern India to handle the Company''s manufacturing and site works. In view of this the Company is not at present pursuing the allotment of land by Asansol Durgapur Development Authority.

Note 6

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

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Mar 31, 2013

1 Corporate Information

Kilburn Engineering Limited is in the business of process design, engineering, manufacturing, project management, installation and commissioning of equipment and systems for various process plants across the world.

As at As at 31st March, 31st March, 2013 2012

2.1 Contingent liabilities and commitments (to the extent not provided for)

Contingent liabilities

(a) Letters of Credit outstanding as at the year end 377.55 380.07 FDR of Rs. 356.88 lacs (previous year Rs. 448.12 lacs) pledged with banks against the LCs and Bank Guarantees.

(b) Demand Notice from DGFT for non-fulflling of export obligations. The Company 137.00 137.00 expects no liability on this account

(c) The Company is a party to litigation by - - certain ex- employees in respect of claim for Superannuation fund dues/ retrenchment compensation arising around the year 2000-01. The Company has provided for the probable obligation. This is expected to materialize on resolution of the dispute.

(d) During the year, the Company has received an order from Deputy Commissioner 30.75 - of Sales Tax, Mumbai for the year 2008-09 raising demand for Rs. 30.75 lacs. The Company is in the process of fling appeal against the said order.

(e) The Company had received demand notice u/s - 148.65 143(3) for the Assessment year 2009-10 from Income Tax Authorities. The Company has filed appeal before CIT (A) after depositing Rs. 30 lacs under protest and expects the outcome of the appeal to be in its favour. CIT appeals order was received subsequently

(f) Other claims not acknowledged as debts 0.80 0.80

2.2 The Company holds investment in equity shares of Mcnally Bharat Engineering Company Limited (Book Value Rs. 1,993.45 lacs) as strategic investment on a long term basis. The Company is of the view that the diminution in value of Rs. 1,409.11 lacs (Previous Year Rs. 1,248.91 lacs) in these investments is temporary. Notwithstanding this, out of abundant caution, a provision of Rs. 200 lacs is made in the books during the year.

2.3 Exceptional Item:

Exceptional Items represent relocation related expenses, including rent, incurred by the Company in view of its shifting of manufacturing operations to Saravali which has been completed in the previous year.

Note 3 Disclosures under Accounting Standards

Note 3.1

In accordance with requirements of Accounting Standard 7 notifed by the Companies Accounting Standard Rules, 2006, the Company has recognized unbilled revenue during the year in respect of high value, long delivery orders which are delivered in parts over the execution period. The Unbilled revenue is calculated based on percentage of completion of individual contracts.

Note 3.2

Employee beneft plans

Defned contribution plans

The Company makes Provident Fund and Superannuation Fund contributions to defned contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specifed percentage of the payroll costs to fund the benefts. The Company recognised Rs. 68.37 lacs (Year ended 31st March, 2012 Rs. 62.88 Lacs) for Provident Fund contributions and Rs. 34.88 lacs (Year ended 31st March, 2012 Rs. 36.54 lacs) for Superannuation Fund contributions in the Statement of Proft and Loss. The contributions payable to these plans by the Company are at rates specifed in the rules of the schemes.

3.3 Based on the guiding principles given in the Accounting Standard on ''Segment Reporting'' (AS-17) issued by the Institute of Chartered Accountants of India, the primary segment of the Company is business segment which comprises of Engineering Segment. As the Company operates in a single primary business segment, no segment information thereof is given.

3.4 Operating Leases :

Lease payments recognized in the Statement of Proft and Loss : Rs. 33.31 lacs (Previous Year Rs. 68.74 lacs)

Note 4

The total amount incurred on Research and Development activities during the year amount to Rs. 72.79 lacs (Previous Year Rs. 46.60 lacs).

Note 5

Pursuant to an application dated 18th February 2008, the Company had received an allotment letter dated 21st May 2008 for 20 acres of land from Asansol Durgapur Development Authority (ADDA). The Company was informed that ADDA is in the process of acquiring the land.

Note 6

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

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Mar 31, 2012

1. Corporate Information

Kilburn Engineering Limited is in the business of process design, engineering, manufacturing, project management and installation of equipment and systems for various process plants across the world.

Note 2 Reserves and Surplus

Details of terms of repayment and security provided :

Secured during the year by pledge of 850,000 shares of Mcnally Bharat Engineering Company Limited and further secured by cross default arrangement on securities offered by Group Companies; in the previous year, the loan was unsecured.

Terms of Repayment: Payable in eight equal installments of Rs. 125 Lacs on quarterly basis, commencing from June, 2012 to March, 2014.

Rate of Interest : 475 basis points below the Long Term Borrowing Monthly Rate (LTBMR)of IL&FS . During the year, the rate varied from 14% p.a. to 15.25% p.a. (Previous year 14% p.a.)

Note 3 Short-term borrowings

Notes:

Details of security:

1. Equitable Mortgage created by way of Deposit of Title Deed on the Company's immovable property situated at Plot No.6, MIDC Industrial Area, Kalyan Bhiwandi Road, Saravali, Thane 421 311.

2. Hypothecation of present and future stocks of raw materials, semi-fi nished goods, finished goods and book debts by way of first charge and also by hypothecation of movable plant and machinery by way of first charge.

Note 4 Other non-Current Assets

Notes:

Balances with banks held as margin money include Rs. 20.25 lacs (previous year Rs. 154.87 lacs) having original maturity of more than 12 months and Rs. 20.25 lacs (previous year Rs. 154.87 lacs) having residual maturity of more than 12 months.

Note 5 Additional information to the financial statements

(Rs. In Lacs)

Note Particulars As at As at 31st March, 31st March, 2012 2011

5.1 Contingent liabilities and commitments (to the extent not provided for)

(i) Contingent liabilities

(a) Guarantees and Letters of Credit issued by Banks against which 2,121.94 2,986.05 FDR of Rs. 448.12 lacs (previous year Rs. 428.71 lacs) pledged with banks

(b) Demand Notice from DGFT for non- 137.00 137.00 fulfilling of export obligations. The Company expects no liability on this account

(c) The Company is a party to litigation by certain ex-employees in respect of claim for Superannuation fund dues/ retrenchment compensation arising around the year 2000- 01. The Company has provided for the probable obligation. This is expected to materialize on resolution of the dispute.

(d) Other claims not acknowledged as debts 0.80 0.80

(e) During the year the Company has received 148.65 - demand notice u/s 143(3) for the Assessment year 2009-10 from Income Tax Authorities.The Company has filed appeal before CIT (A) after depositing Rs. 30 lacs under protest and expects the outcome of the appeal to be in its favour. (ii) Commitments Estimated amount of contracts remaining to be executed on capital - 951.17 account and not provided for Tangible Assets.

5.2 No provision for diminution of Rs. 1248.91 lacs has been made for Investment in equity shares of Mcnally Bharat Engineering Company Limited (Book value Rs. 1,993.45 lacs), as the company is holding this as a strategic Investment on a long term basis and is of the view that the diminution is temporary.

Note 6 Disclosures under Accounting Standards

Note 6.1

Employee benefit plans

Defined contribution plans

The Company makes Provident Fund and Superannuation Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs. 62.88 lacs (Year ended 31st March, 2011 Rs. 42.83 Lacs) for Provident Fund contributions and Rs. 36.54 lacs (Year ended 31st March, 2011 Rs. 55.44 lacs) for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

6.2 Based on the guiding principles given in the Accounting Standard on 'Segment Reporting' (AS-17) issued by the Institute of Chartered Accountants of India, the primary segment of the Company is business segment which comprises of Engineering Segment. As the Company operates in a single primary business segment, no segment information thereof is given.

Segment information for secondary segment reporting (by geographical segments).

6.3 Operating Leases :

(i) Significant Leasing Agreements :

a) The Company had taken a factory shed and appurtenant land on Leave and License basis for the purpose of manufacturing, fabrication, storage of plants and machinery and other allied and permissible commercial activities.

b) The tenure of the agreement was for a period of 3 years commencing from 7th May, 2008

c) The agreement was non-cancellable for a period of 2 years.

(ii) Lease payments recognized in the Statement of Profit and Loss : Rs. 68.74 lacs (Previous Year Rs. 206.06 lacs)

(iii) Total of future minimum lease payments under the non-cancellable period of the lease : Not later than 1 year : Nil (Previous Year Rs. 11 lacs)

Note 7

The total amount incurred on Research and Development activities during the year amount to Rs. 46.60 lacs (Previous Year 39.43 lacs).

Note 8

Pursuant to an application dated 18th February 2008, the company had received an allotment letter dated 21st May 2008 for 20 acres of land from Asansol Durgapur Development Authority (ADDA). The company was informed that ADDA is in the process of acquiring the land.

Note 9

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 classifi cation/disclosure.

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Mar 31, 2010

1. Estimated amount of Contracts remaining to be executed on capital account Rs. 1,620 Lac (Previous Year Rs. 1,117 Lac).

2. Contingent liabilities:

a) Guarantees and Letters of Credit issued by Banks Rs. 2,821.29 Lac (Previous Year Rs. 1,885.97 Lac) against which FDR of Rs. 392.77 Lac (Previous Year Rs. 356.38 Lac) pledged with Banks.

b) Demand notice from DGFT for non-fulfilling of export obligations Rs. 137 Lac (Previous Year Rs. 137 Lac). The Company expects no liability on this account.

c) The Company is a party to litigation by certain ex-employees in respect of claim for superannuation fund dues / retrenchment compensation arising around the year 2000-2001. The Company has

in prior years provided for the probable obligation (included under Provision for Contingencies). Based on legal opinions obtained, no additional liability is expected and the matters are subjudice.

d) Other claims not acknowledged as debts Rs. 0.80 Lac (Previous Year Rs. 0.80 Lac)

3. The Company entered in to an MOU in November 2007, for sale of property at Bhandup for an aggregate consideration of Rs. 11,500 Lac. During the year 2008 - 09, the Company executed the conveyance deed and accounted for the balance profit of Rs. 7,391.72 Lac (net of tax of Rs. 830 Lac and after adjustment of Minimum Alternate Tax of Rs. 190 Lac). Rs. 5,650 Lac was received till 31st March 2009 and the balance of Rs. 5,850 Lac was received in the current year.

4. Pursuant to the termination of the agreement entered into with Conwood Pre-fab Ltd. for the purchase of 8 acres of land, the Company has received back the advance of Rs. 800 Lac paid to them. Further, the Company has on November 17, 2009 entered into a Deed of Assignment with Chemetall - Rai India Ltd. for transfer of lease hold rights in the land located at Plot No.6, MIDC Saravali, Bhiwandi - Kalyan Road, Dist. Thane, admeasuring 30,960 sq. mtrs. at a total consideration of Rs. 867 Lac exclusive of stamp duty, registration fees, site development expenses, MIDC charges, etc. The Company has commenced the implementation of a state-of-the-art manufacturing facility at this location which is expected to be completed by the end of 2010 - 2011.

5. The Company had received an allotment letter dated 21st May 2008 for 20 acres of land from Asansol - Durgapur Development Authority. No further development has taken place in this regard as yet.

6. Secured Loans: Banks

The credit facilities are secured by:

I. Hypothecation of present and future stocks of raw materials, semi finished goods, finished goods and book debts by way of first charge and also by hypothecation of movable plant and machinery by way of first charge.

II. English mortgage of all the Companys immovable properties both present and future on pari- passu second charge basis. The immovable property of the Company situated at Bhandup which was mortgaged to the Banks has been disposed off. The Company is in the process of securing the facilities by way of equilable mortgage of the Companys immovable property acquired at Plot No.6, MIDC Saravali, Bhiwandi - Kalyan Road, Dist. Thane.

7. Unsecured Loans:

The amount of Rs. 30.85 Lac (Previous Year Rs. 30.85 Lac) represents liability on account of Purchase of machinery from NBFCs on lease / Hire Purchase basis. The amount is payable over a period of six years in accordance with the BIFR Scheme, without interest.

Note :

The remuneration for the FY 2009-10 has been paid as per the revised Basic Salary of Rs. 3,50,000/- p.m which was approved by the Board of Directors of the Company at their meeting held on January 8, 2010 and which is within the Basic Salary Grade of Rs. 2,50,000 to Rs. 4,50,000 p.m. as approved by the Central Government vide letter no. SRN/A 40311862-CL.VII dated December 12, 2008 and amendment dated May 6, 2009.

8. In accordance with the Accounting Standard on Accounting for Taxes on Income, Deferred Tax Asset / Liability has been recognized in the Accounts as of the year end as under:

9. Research & Development:

The total amount incurred on Research & Development activities during the year amount to Rs. 36.45 Lac (Previous Year Rs. 29.40 Lac).

10. Employee Benefits:

a) Defined Contribution Plan:

The Company has recognised, in the profit and loss account for the year ended 31st March, 2010, following amounts as expenses under defined contribution plan under the head Contribution to Provident and Other Funds in Schedule 15 - Operating Expenses.

b) Defined Benefit Plans:

As per Actuarial valuations as on 31st March, 2010 and in accordance with the revised Accounting Standard 15 on Employee Benefits issued by The Institute of Chartered Accountants of India; Particulars of Gratuity benefit are provided below.

Since the balance in the fund is higher than the Defined benefit obligation as at 31st March 2010, no provision has been made in the books.

Notes

1 Discount rate / return on plan assets taken at 8% p.a considering the benchmark rate available on Government Securities for the tenure of payment.

2 The estimate of future salary increases considered at 5% p.a taking into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

3 100% of Plan Assets are invested in group gratuity scheme offered by LIC of India.

11. The amount of Net Exchange Loss / (Gain) of (Rs. 37.51 Lac) (Previous Year Rs. 172.66 Lac) is included in Sales.

12. Segment information for primary segment reporting (by business segments):

Based on the guiding principles given in the Accounting Standard on Segment Reporting (AS-17) issued by the Institute of Chartered Accountants of India, the primary segment of the Company is business segment which comprises of Engineering Segment. As the Company operates in a single primary business segment, no segment information thereof is given.

13. Micro Enterprises and Small Enterprises:

The information as required to be disclosed under the Act and provided in Schedule 11 has been determined to the extent such parties have been identified on the basis of information available with the Company. No interest has been paid or accrued in the books. Considering the volume and payment cycle such amount is not considered to be significant.

14. Disclosures under AS-19 in respect of operating leases:

i) Significant Leasing Agreements :

a) The Company has taken a factory shed and appurtanent land on Leave and Licence basis for the purpose of manufacturing, fabrication, storage of plants and machinery and other allied and permissible commercial activities.

b) The tenure of the agreement is for a period of 3 years commencing from 7th May 200,8.

c) The agreement is non cancellable for a period of 2 years.

ii) Lease payments recognised in the Profit and Loss Account : Rs. 179.55 Lac (Previous year 171.48 Lac)

iii) Total of future minimum lease payments under the non-cancellable period of the lease :

a) Not later than 1 year : Rs. 132.00 Lac (Previous year Rs. 132.00 Lac)

b) Later than 1 year and not later than 5 years: Rs. 11.00 Lac (Previous year NIL)

15. Pursuant to the Buyback offer made by the Company during the previous year, 2,40,032 equity shares were bought back for an aggregate amount of Rs. 63.54 Lac by utilizing Share premium account to the extent of Rs. 39.53 Lac. Capital Redemption Reserve of Rs. 24.01 Lac has been created being the nominal value of shares bought back. All the Bought back shares have been extinguished and the Buyback has closed on January 29, 2010.

16. Comparative financial information is presented in accordance with the Corresponding Figure financial reporting framework set out in Auditing and Assurance Standard on Comparatives. Accordingly, amounts and other disclosures for the preceding year are included as an integral part of the current year financial statements, and are to be read in relation to the amounts and other disclosures relating to the current year. Figures of the previous year have been regrouped / reclassified wherever necessary to correspond with the figures of the current financial year. Figures have been rounded off to the nearest Rs. In Lac as per approval from Department of Company Affairs obtained u/s 211 of the Companies Act, 1956.