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Notes to Accounts of KSB Pumps Ltd.

Dec 31, 2013

Note 1 - Research and Development expenditure debited to the Statement of Profit and Loss aggregating Rs. 2.43 Million (previous year - Rs. 2.06 Million) has been incurred by the Company and disclosed under appropriate account heads.

Note 2 - The net exchange differences arising during the year recognised appropriately in the Statement of Profit and Loss - net loss- Rs. 0.43 Million (previous year - net loss - Rs. 17.61 Million)

Note 3 Disclosures under Accounting Standards

1.1 Details of Employee Benefits as required by the Accounting Standard 15 (Revised) Employee benefits are as under:

1.2.a Defined contribution Plan Amount recognised as an expense in the Statement of Profit and Loss in respect of Defined Contribution Plan is Rs. 48.63 Million (previous year Rs. 43.72 Million). 36.1.b Defined benefit plans

i. Actuarial gains and losses in respect of defined benefit plans are recognised in the Statement of Profit & Loss.

ii. The Defined Benefit Plans comprise of Gratuity and superannuation.

Gratuity is a benefit to an employee based on 15/ 20/ 25/ 30 days (depending on the grade/ category of the employee and the completed years of service) last drawn salary for each completed year of service. Superannuation is a benefit to certain employees at Rs. 1000/ 500/ 250 (depending on the grade/ catagory of the employee and the completed years of service) per month for each completed year of service. Both the plans are funded.

Note 3 - Where a financial report contains both consolidated financial statements and separate financial statement for the parent, segment information needs to be presented only in case of consolidated financial statements. Accordingly, segment information has been provided only in the consolidated financial statements.

Note 4 - Earnings per Share

(a) The amount used as the numerator in calculating basic and diluted earnings per share is the Profit for the year after tax disclosed in the Statement of Profit and Loss.

(b) The weighted average number of equity shares used as the denominator in calculating both basic and diluted earnings per share is 34,807,844.

Note 5 - Repairs to machinery include Rs. 43.17 Million (previous year - Rs. 40.23 Million) spares consumed.

Note 6 - Provision for taxation for the year is an aggregate of the provision made for the year ended 31st March, 2013 as reduced by the provision for 9 months up to 31st December, 2012 and the provision based on the figures for the remaining 9 months up to 31st December, 2013. However, the ultimate tax liability for the remaining 9 months up to 31st December, 2013 will be determined based on the results for the year 1st April, 2013 to 31st March, 2014.

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


Dec 31, 2012

1 Company Overview

Products:

The Company is engaged in the business of manufacture of different types of power driven pumps and industrial valves. Castings are mainly produced for captive consumption.

Operations:

The Company has factories at the following places:-

A) Irrigation and Process Pumps Division (I.P.D.) at Pimpri

Manufacturing of submersible pumps, vertical and horizontal pumps, series and non-series pumps, Multistage pumps, chemical process pumps, non-clog pumps and water pumps.

B) Power Projects Division (P.P.D.) at Chinchwad

Manufacturing of primary heat transfer pumps, moderator pumps, main boiler feed pumps and multistage condense extraction pumps, re-heater drain pumps and auxiliary boiler feed pumps.

C) Foundry Division at Vambhori

Manufacturing of steel &c iron castings including for captive consumption.

D) Coimbatore Unit

Manufacturing of valves (Globe, Gate, Check, Butterfly & Ball valves).

E) Nasik Unit (Sinnar)

Established in 1995, this unit is engaged in the manufacture of high pressure and submersible pumps.

(i) 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 any of the remaining assets of the Company, after distribution of all preferential amounts. However, no such preferential amount exists currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

Note 2 - Contingent Liabilities and Commitments

Particulars As at 31st As at 31st December, 2012 December, 2011 Rs. in Million Rs. in Million

(i) Contingent Liabilities

(a) Claims against the Company not acknowledged as debts 7.44 5.97

(b) Taxation matters in dispute pending at various stages of appeal 50.61 63.82

(c) Bills Discounted / Cheques Purchased with banks 26.79 25.55

(d) Excise matters 70.83 58.20

(e) Guarantees given by the bankers on behalf of the Company 970.70 922.36

(ii) Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for -

- Tangible Assets 83.85 73.86

Note 3

a) Principal amount payable to Micro and Small Enterprises (to the extent identified by the Company from available information) as at 31/12/2012 is Rs. Nil (Previous year - Rs. 3.29 million) including unpaid amounts of Rs. Nil (Previous year - Rs. 1.44 million) outstanding for more than 45 days. Estimated interest due thereon is Rs. Nil (Previous year - Rs. 0.05 million).

b) Amount of payments made to suppliers beyond 45 days during the year is Rs. 0.45 million (Previous year - Rs. 103.45 million). Interest paid thereon is Rs. Nil (Previous year - Rs. Nil) and the estimated interest due and payable thereon is Rs. Nil (Previous year - Rs. 1.26 million).

c) The amount of estimated interest accrued and remaining unpaid as at 31/12/2012 is Rs. 1.71 million (Previous year - Rs. 1.71 million).

d) The amount of estimated interest due and payable for the period from 01/01/2013 to actual date of payment or 08/02/2013 (whichever is earlier) is Rs. Nil

Notes:

1. As the Company also sells as spare parts (for goods manufactured and sold by it ), some of its bought-out components, the items shown above as consumption include cost of such items sold, this being an activity ancillary to its manufacturing activity.

2. The Company is of the opinion that the purchase & sale of such bought-out components is a part of its activity to manufacture and deliver a complete pump unit and, therefore, is not a trading activity as referred to in paragraph 5(ii)(b) of Part II of Revised Schedule VI to the Companies Act, 1956.

3. The consumption figures in value are balancing figures ascertained on the basis of opening stocks plus purchases less closing stocks and therefore, include adjustments for excesses and shortages ascertained on physical count, etc.

1. In addition to spares purchased for re-sale, the Company also sells as spares some of its bought-out components. The Company is of the opinion that the purchase and sale of such bought-out components is a part of its activity to manufacture and deliver a complete pump unit and therefore, is not a trading activity as referred to in paragraph 5(ii)(b) of revised Schedule VI of the Companies Act, 1956.

Note 4 - Research and Development expenditure debited to the Statement of Profit and Loss aggregating Rs. 2.06 million (previous year - Rs. 1.07 million) has been incurred by the Company and disclosed under appropriate account heads.

Note 5 - The net exchange differences arising during the year recognised appropriately in the Statement of Profit and Loss - net loss- Rs. 17.61 million (previous year - net loss- Rs. 13.27 million)

Note 6 - Particulars of assets taken on finance lease on or after 1st April, 2001:

(i) Total minimum lease payments as at the balance sheet date is Rs. 0.04 million (previous year - Rs. 0.22 million) and the present value of total minimum lease payments as at the balance sheet date is Rs. 0.02 million (previous year - Rs. 0.20 million)

Note 7 Disclosures under Accounting Standards

7.1 Details of Employee Benefits as required by the Accounting Standard 15 (Revised) Employee benefits are as under:

7.1.a Defined contribution Plan

Amount recognised as an expense in the Statement of Profit and Loss in respect of Defined Contribution Plan is Rs. 43.72 million (previous year Rs. 44.23 million)

7.1.b Defined benefit plans

i. Actuarial gains and losses in respect of defined benefit plans are recognised in the Profit & Loss Account.

ii. The Defined Benefit Plans comprise of Gratuity and superannuation.

Gratuity is a benefit to an employee based on 15/20/25/30 days (depending on the grade/ category of the employee and the completed years of service) last drawn salary for each completed year of service.

Superannuation is a benefit to certain employees at Rs. 1000 / 500 / 250 (depending on the grade/ catagory of the employee and the completed years of service) per month for each completed year of service.

Both the plans are funded.

Note 8 - Where a financial report contains both consolidated financial statements and separate financial statement for the parent, segment information needs to be presented only in case of consolidated financial statements. Accordingly, segment information has been provided only in the consolidated financial statements.

Note 9 - Earnings per Share

(a) The amount used as the numerator in calculating basic and diluted earnings per share is the Profit for the year after tax disclosed in the Statement of Profit and Loss.

(b) The weighted average number of equity shares used as the denominator in calculating both basic and diluted earnings per share is 34,807,844.

Note 10 - Repairs to machinery include Rs. 40.23 million (previous year - Rs. 24.13 million) spares consumed.

Nore 11 - Income Tax

Provision for taxation for the year is an aggregate of the provision made for the year ended 31st March, 2012 as reduced by the provision for 9 months up to 31st December, 2011 and the provision based on the figures for the remaining 9 months up to 31st December, 2012. However, the ultimate tax liability for the remaining 9 months up to 31st December, 2012 will be determined based on the results for the year 1st April, 2012 to 31st March, 2013.

Note 12 - The Revised schedule VI has become effective from 1st April, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year''s figures have been regrouped/reclassified wherever necessary to correspond with the current year''s classification/disclosure.


Dec 31, 2010

1. Contingent liabilities not provided in respect of:

(i) taxation matters in dispute pending at various stages of appeal Rs. 42,271,000 (previous year - Rs. 42,765,642);

(ii) claims against the Company not acknowledged as debts Rs.5,481,000 (previous year - Rs. 2,569,000);

(iii) bills discounted/cheques purchased with banks Rs. 20,281,403; (previous year - Rs. 20,824,548);

(iv) excise matters - Rs. 49,975,869 (previous year - Rs. 46,989,068);

2. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 54,289,595 (previous year - Rs. 70,307,175).

3. Guarantees amounting to Rs. 934,906,075 (previous year - Rs. 693,489.196) have been given by the bankers on behalf of the Company, and are secured by the hypothecation of stocks (including loose tools, stores and spares) and book debts.

4. Repairs to machinery include Rs. 25,896,138 (previous year - Rs. 17,810,796) spares consumed.

5. Research and Development expenditure debited to the Profit and Loss Account aggregating Rs. 4,748,150 (previous year - Rs. 5,669,000) has been incurred by the Company and disclosed under appropriate account heads.

6. The net exchange differences arising during the year recognised appropriately in the profit and loss account - net gain- Rs. 29,821,365 (previous year - net gain Rs. 8,228,180)

7 Related party disclosures

(A) Name of the related party and nature of relationship where control exists:

Name of the party Nature of relationship

1. KSB AG Controlling Company

2. Canadian Kay Pump Ltd. Controlling Company

3. Klein Pumpen GmbH Controlling Company

4. Pofran Sales & Agency Ltd. Subsidiary Company

2) The related parties included in the various categories above, where transactions have taken place are given below:

- Controlling Companies

KSB AG

Canadian Kay Pump Ltd.

- Associate Company

MIL Controls Ltd.

- Subsidiary Company

Pofran Sales & Agency Ltd.

- Common Control

KSB S.A.

KSB Inc., USA

KSB Pumps (S.A.) (Pty.) Ltd., South Africa

KSB Australia

KSB Chile S.A.

KSB Singapore (Asia Pacific) PTE Ltd.Singapore

KSB Limited, Hongkong

KSB Pumps Co.Ltd., Thailand

P.T. KSB., Indonesia

KSB Taiwan Co.Ltd.

KSB Ltd, Tokyo

KSB Brazil

KSB Korea

KSB Mexico

KSB Nederland

DP Industries B.V., Nederland

KSB Pumps Arabia Ltd.

KSB Ltd., U.K.

KSB Italia S.p.A., Italy

KSB Pompa Turkey

KSB Shanghai Pump Co. Ltd., China

KSB Valves (Shanghai) Co. Ltd., China

Mercantile-KSB Oy AB, Finland

KSB Pakistan

Delian KSB Amri Valves Co. Ltd., China

Bombas 1TUR S.A., Spain

KSB TESMA S.A., Griechenland

KSB Tech. Pvt. Ltd., India

G1W Industries Inc., USA

KSB Middle East FZE, Dubai

KSB Pumpy + Armatury spol. sr. o, Czech

KSB Service LLC

KSB Pompy Armatura Poland

KSB Compania Sudamericana

KSB Belgium SA

KSB China

KSB Pumps & Valves Malaysia

KSB Finanz SA

KSB AMV SA Spain

KSB Finland

KSB Work AB , Sweden

KSB Lindflaten, Norway.

KSB Ajax Pumps PTY

- Key Management Personnel

Mr. W. Spiegel

- Individuals having significant influence over the enterprise

Mr. Gaurav Swarup

- Relatives of individuals having significant influence over the enterprise

Mrs. Gyan M Swarup

Mahendra Swarup & Sons HUF

Mr. Vikram Swarup

Mrs. Bindu Swarup

Mrs. Parul Swarup

- Enterprises over which individuals having significant influence overthe reporting enterprise exercise significant influence

The Industrial & Prudential Investment Co. Ltd.

New Holdjng and Tradjng Company Ltd.

Paharpur Cooling Towers Ltd.

8. Earnings per Share

(a) The amount used as the numerator in calculating basic and diluted earnings per share is the Net Profit for the year disclosed in the Profit and Loss Account.

(b) The weighted average number of equity shares used as the denominator in calculating both basic and diluted earnings per share is 17,403,922.

9 (a) Principal amount payable to Micro and Small Enterprises (to the extent identified by the Company from available information) as at 31/12/2010 is Rs. 1,891,400 (previous year - Rs. 1,324,529) including unpaid amounts of Rs. 719,262 (previous year - Rs, 658,851) outstanding for more than 45 days. Estimated interest due thereon is Rs, 4,811 (previous year - Rs. 20,364),

(b) Amount of payments made to suppliers beyond 45 days during the year is Rs,14,586,344 (previous year - Rs. 9,366,765). Interest paid thereon is Rs. Nil (previous year - Rs. Nil) and the estimated interest due and payable thereon is Rs. 236,312 (previous year Rs, 159,107).

(c) The amount of estimated interest accrued and remaining unpaid as at 31/12/2010 is Rs. 241,123. (previous year - RS. 179,471)

(d) The amount of estimated interest due and payable for the period from 01/01/2011 to actual date of payment or 10/02/2011 (whichever is earlier) is Rs. 18,108.

10, Details of Employee Benefits as required by the Accounting Standard 15 (Revised) Employee benefits are as under:

(A) Defined Contribution Plan

Amount recognised as an expense in the Profit and loss Account in respect of Defined Contribution Plans is Rs. 35,699,623 (previous year - Rs. 34,969,368)

(B) Defined Benefit Plan

i) Actuarial gains and losses in respect of defined benefit plans are recognised in the Profit & Loss Account.

11. Previous years figures have been regrouped/restated wherever necessary to conform with this years classification. Signature to Schedules 1 to 19

 
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