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Notes to Accounts of McNally Bharat Engineering Company Ltd.

Mar 31, 2015

1. As per the Scheme of Arrangement as sanctioned by the Hon'ble High Court at Calcutta vide its Order dated 28th July 2009 which was filed with the Registrar of Companies, West Bengal, Kolkata on 1st September 2009 , for reconstruction of McNally Bharat Engineering Company Limited (MBECL) and its subsidiary viz McNally Sayaji Engineering Ltd (MSEL) - the Products Division of MBECL engaged in the business of manufacture and/or procuring equipments for various engineering and infrastructure projects and having its units at Kumardhubi, in the State of Jharkhand and Asansol, in the State of West Bengal and Bangalore, in the State of Kamataka has been transferred to MSEL with effect from the appointed date, i.e. 01.04.2008 .As per the scheme of arrangement the transfer and vesting of Products Division of MBECL to MSEL shall be subject to the existing charges, mortgages and encumbrances, if any, over the assets or any part thereof, provided however, that such charges, mortgages and/or encumbrances shall be confined only to the assets of MBECL or part thereof on or over which they are subsisting on transfer to and vesting of such assets in MSEL and no such charges, mortgages and/ or encumbrances shall extend over or apply to any other asset(s) of MSEL. Thus the existing charges on the assets of the Products Division for facilities enjoyed by MBECL will continue and vice versa. Accordingly, working capital demand loans, cash credit facilities, term loans and other non fund based facilities of the Company are secured by assets which include those of the Product Division of MSEL.

2. The Company had entered in September 2003 a joint venture agreement with Elsamex S.A. where officially it was appointed as a subcontractor in "West Bengal Corridor Development Project - Improvement of Gazole Hilli Section of SH 10 with a link to Balurghat from Patiram," (the project). However consequent to considerable delay in execution of the project the Public Works Department of Government of West Bengal (PWD) had unilaterally terminated the contract in January 2006. The company and Elsamex S.A. felt that such delay in execution was due to the inability of PWD to hand over the stretch of encumbrance free land for widening of road and non-availability of construction drawings on time by PWD. The company has a legitimate claim of Rs. 1517 lacs towards receivable (included in Note No. 19) and Rs.1133 lacs on account of deposit against Performance Guarantee (included in Note No.21). Elsamex S.A. moved to arbitration and had claimed an amount of Rs.7334 lacs including an additional claim on consequential losses as per guidelines of "Federation Internationale Des Ingenieurs-Conseils" (FIDIC). Arbitral Board in their meeting held on 25th October 2010 has upheld Elsamex S As claim and has given award in favour of Elsamex S A. Under the award, a total amount of Rs.3535 lacs is receivable by the Company. A claim has already been lodged with PWD. PWD has preferred to challenge the verdict of the Arbitrators and has appealed to the High Court for a stay in the matter of payment of award money.

3. RELATED PARTY DISCLOSURES

Related party disclosures as required by Accounting Standard 18 on "Related Party Disclosures" are given below: Relationships

(a) Subsidiaries of the Company:

(i) MBE Coal & Minerals Technology, India Pvt. Ltd. (formerly Humboldt Wedag Minerals India Pvt. Ltd.)

(ii) McNally Sayaji Engineering Limited ( MSEL)

(iii) McNally Bharat Equipments Limited (MBEL)

(iv) McNally Bharat Infrastructure Limited (MBIL)

(v) MBE Mineral Technologies Pte Limited (formerly MBE Holdings Pte Limited)

(vi) MBE Minerals Zambia Ltd

(vii) McNally Bharat Engineering (SA) Proprietary Ltd

(b) Subsidiaries of MBE Mineral Technologies Pte Limited : (i) MBE EWB Technologies Kft

(ii) MBE Cologne Engineering Gmbh*

(c) Associates of MBE Mineral Technologies Pte Limited : (i) MBE Coal & Minerals Technologies GmbH**

(d) Subsidiaries of MBE Coal & Minerals Technologies GmbH : (i) MBE Mineral Processing Technology (Beijing) Co.Ltd . (ii) MBE Mineral Processing of Brazil LTDA

(iii) PT MBE Coal & Minerals Technology , Indonesia

(iv) MBE Minerals S.A Pty Limited.

(v) OOO MBE OUM, Russia

(vi) Coal & Mineral Technology Holding Gmbh, Germany

(e) Key Management Personnel:

(i) Mr. Deepak Khaitan - Executive Chairman***

(ii) Mr. Prasanta Kumar Chandra - Whole-time Director & COO

(iii) Mr. Prabir Ghosh- Whole-time Director & Group CFO

* 90% stake of the subsidiary has been sold on 30th April 2014. ** 70% stake of the subsidiary has been sold on 24th March 2015. *** Expired on 9th March 2015

4. The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. The expected return on plan assets is based on actuarial expectation of the average long term rate of return expected on investment of funds during the estimated term of the obligation..

5. The fair value of plan asset have been segregated between the Company and the erstwhile product division of MBECL now a part of McNally Sayaji Engineering Limited on the basis of the present value of the obligations as at the end of the year.

6. Provident Fund

Provident fund for certain eligible employees is managed by the Company through the "McNally Bharat Employees Provident Fund" in line with the Employees Provident Fund and Miscellaneous Provisions Act, 1952. The plan guarantees interest at the rate notified by the Provident Fund Authorities. The contribution by the employer and employee together with the interest accumulated thereon are payable to employees at the time of their separation from the company or retirement, whichever is earlier. The benefits vest immediately on rendering of the services by the employee. The Guidance on Implementing AS 15, Employee Benefits (Revised 2005) issued by Accounting Standard Board (ASB) states that benefits involving employers established provident funds, which require interest shortfalls to be compensated are to be considered as defined benefit plans. The Actuarial Society of India has issued the final guidance for measurement of provident fund liabilities. The actuary has accordingly provided a valuation and there is no additional liability as at 31st March, 2015, in respect of interest rate guarantee . The Company has contributed amount of Rs. 473.42 Lacs towards Provident Fund during the year 2014-15 (2013- 14 Rs. 485.03 Lacs)


Mar 31, 2014

1 General Information

McNally Bharat Engineering Company Ltd (MBE) is a leading Engineering Turnkey Project Execution Company in India. The Company''s shares are listed on National Stock Exchange and Bombay Stock Exchange.

2 As per the Scheme of Arrangement as sanctioned by the Hon''ble High Court at Calcutta vide its Order dated 28th July 2009 which was filed with the Registrar of Companies, West Bengal, Kolkata on 1st September 2009, for reconstruction of McNally Bharat Engineering Company Limited (MBECL) and its subsidiary viz McNally Sayaji Engineering Ltd (MSEL) the Products Division of MBECL engaged in the business of manufacture and/or procuring equipments for various engineering and infrastructure projects and having its units at Kumardhubi, in the State of Jharkhand and Asansol, in the State of West Bengal and Bangalore, in the State of Kamataka has been transferred to MSEL with effect from the appointed date, i.e. 01.04.2008 .As per the scheme of arrangement the transfer and vesting of Products Division of the MBECL to MSEL shall be subject to the existing charges, mortgages and encumbrances, if any, over the assets or any part thereof, provided however, that such charges, mortgages and/or encumbrances shall be confined only to the assets of MBECL or part thereof on or over which they are subsisting on transfer to and vesting of such assets in MSEL and no such charges, mortgages and/ or encumbrances shall extend over or apply to any other asset(s) of MSEL. Thus the existing charges on the assets of the Products Division for facilities enjoyed by MBECL will continue and vice versa. Accordingly working capital demand loans, cash credit facilities, term loans and other non fund based facilities of the Company are secured by assets which include those of the Product Division of MSEL.

3 There are no dues payable to Micro enterprises and Small enterprises on the basis of information available with the company regarding Micro and Small Enterprises under Micro, Small and Medium Enterprises Development Act, 2006.

4 The company had entered in September 2003 a joint venture agreement with Elsamex S.A where officially it was appointed as a subcontractor in "West Bengal Corridor Development Project - Improvement of Gazole Hilli Section of SH 10 with a link to Balurghat from Patiram," (the project). However consequent to considerable delay in execution of the project the Public Works Department of Government of West Bengal (PWD) had unilaterally terminated the contract in January 2006. The company and Elsamex S.A. felt that such delay in execution was due to the inability of PWD to hand over the stretch of encumbrance free land for widening of road and non-availability of construction drawings on time by PWD. The company has a legitimate claim of Rs. 1517 lacs towards receivable (included in Note No. 19) and Rs.1133 lacs on account of deposit against Performance Guarantee (included in Note No.21). Elsamex S.A. moved to arbitration and had claimed an amount of Rs.7334 lacs including an additional claim on consequential losses as per guidelines of "Federation Internationale Des Ingenieurs-Conseils" (FIDIC). Arbitral Board in their meeting held on 25th October 2010 has upheld Elsamex S As claim and has given award in favour of Elsamex S A. Under the award, a total amount of Rs.3535 lacs is receivable by the company. A claim has already been lodged with PWD PWD has preferred to challenge the verdict of the Arbitrators and has appealed to the High Court for a stay in the matter of payment of award money.



(All figures in Rs. Lacs, unless otherwise stated)

As at March As at March 31,2014 31,2013

5 CONTINGENT LIABILITIES

(a) Claims against the company not acknowledged as debt 100 100

(b) Other money for which the Company is contingently liable:

(i) Excise Duty matters pending in appeal related to 130 130 issues of applicability and classification

(ii) Sales Tax/VAT matters pending in appeal relating to disputes 957 922 regarding assessable value and exemptions claimed

(iii) Service Tax Matters pending in appeal relating to issues of applicability 27 21

(iv) Income Tax Matters pending in appeal relating to disputes regarding 1,340 - the taxable value and the deductions claimed

(v) Corporate guarantees given in favour of Subsidiary Companies 12,997 32,912

(vi) Other guarantees given 1,732 3,200

(vii) Standby letter of credit 3,252 1,670

(viii) Liquidated damages relating to contract sales Amount not readily Amount not readily ascertainable ascertainable

The probable cash outflow in respect of the above matters is not determinable at this stage

6 PROVISION FOR ONEROUS CONTRACTS

The Company is engaged in the business of executing projects on turnkey basis. Progress in some such contracts have suffered for various reasons and mostly beyond the control of the Company. Against these contracts which are now being considered as onerous in nature, the Company as a measure of abundant precaution has decided to make an omnibus provision of Rs. 75 Crores to take care of any future losses that may arise.

7 RELATED PARTY DISCLOSURES

Related party disclosures as required by Accounting Standard 18 on "Related Party Disclosures" are given below:

Relationships

(a) Subsidiaries of the Company:

(i) MBE Coal & Minerals Technologies, India Pvt. Ltd. (formerly Humboldt Wedag Minerals India Pvt. Ltd.)

(ii) McNally Sayaji Engineering Limited ( MSEL)

(iii) McNally Bharat Equipments Limited (MBEL)

(iv) McNally Bharat Infrastructure Limited (MBIL)

(v) MBE Mineral Technologies Pte Limited (formerly MBE Holdings Pte Limited)

(vi) MBE Minerals Zambia Ltd

(vii) McNally Bharat Engineering (SA) Proprietary Ltd

(b) Subsidiaries of MBE Mineral Technologies Pte Limited : (i) MBE Coal & Minerals Technology GmbH

(ii) MBE Cologne Engineering GmbH (iii) MBE EWB Technologies Kft

(c) Subsidiaries of MBE Coal & Minerals Technology GmbH : (i) MBE Mineral Processing Technology (Beijing) Co.Ltd . (ii) MBE Mineral Processing of Brazil LTDA

(iii) PT MBE Coal & Minerals Technology, Indonesia

(iv) MBE Minerals S.A Pty Limited.

(v) OOO MBE OUM, Russia

(vi) Coal & Mineral Technology Holding Gmbh, Germany

(d) Key Management Personnel:

(i) Mr. Deepak Khaitan - Executive Chairman

(ii) Mr. Prasanta Kumar Chandra - Whole-time Director & COO

(iii) Mr. Prabir Ghosh- Whole-time Director & Group CFO

8 LEASES

As a Lessee

The company has significant operating leases for premises. These lease arrangements include both cancellable and non-cancellable leases. Most of the leases are renewable for further period on mutually agreeable term. The aggregate lease rentals payable are charged as Rent under Note No. 28. With respect to non- cancellable operating leases, the future minimum lease payments are as follows:

Not later than one year

9 A. GRATUITY (FUNDED)

The Company operates a gratuity plan through the "McNally Bharat Executive Staff Gratuity Fund". Every employee is entitled to a benefit equivalent to fifteen days salary last drawn for each completed year of service in line with the Payment of Gratuity Act, 1972. The same is payable at the time of separation from the Company or retirement, whichever is earlier. The benefits vest after five years of continuous service.

10 Change in the estimate of contract revenue or contract costs have an effect on the current period and/or subsequent periods. It is impracticable to quantify the impact of such change in estimate.

11 RESEARCH AND DEVELOPMENT (R&D) EXPENDITURE

Expenditure on R & D - In pursuit of R & D endeavors the company is continuously incurring R&D expenditure both on Capital and Revenue, which has not been separately reflected but is being shown as part of regular heads of accounts in fixed assets and in Statement of Profit and Loss respectively. Accordingly R&D revenue expenditure incurred during the year debited to various account heads is Rs. 143.17 Lacs (2012-13: Rs 230.32 Lacs) and on account of capital expenditure is Rs 18.12 Lacs (2012-13: Rs. 101.63 Lacs).

12 The company has only one "Business segment" and one "Geographical segment" as defined in Accounting Standard -17 on "Segment Reporting".

13 Previous year''s figures have been rearranged and / or regrouped wherever necessary to make them comparable with that of current year.


Mar 31, 2013

1 General Information

McNally Bharat Engineering Company Ltd (MBE) is a leading Engineering Turnkey Project Execution Company in India. The Company''s shares are listed on National Stock Exchange and Bombay Stock Exchange.

2 As per the Scheme of Arrangement as sanctioned by the Hon''ble High Court at Calcutta vide its Order dated 28th July, 2009, which was filed with the Registrar of Companies, West Bengal, Kolkata on 1st September 2009, for reconstruction of McNally Bharat Engineering Company Limited (MBECL) and its subsidiary viz McNally Sayaji Engineering Ltd (MSEL) the Products Division of MBECL engaged in the business of manufacture and/or procuring equipments for various engineering and infrastructure projects and having its units at Kumardhubi, in the State of Jharkhand and Asansol, in the State of West Bengal and Bangalore, in the State of Karnataka has been transferred to MSEL with effect from the appointed date, i.e. 01.04.2008 .As per the scheme of arrangement the transfer and vesting of Products Division of the MBECL to MSEL shall be subject to the existing charges, mortgages and encumbrances, if any, over the assets or any part thereof, provided however, that such charges, mortgages and/or encumbrances shall be confined only to the assets of MBECL or part thereof on or over which they are subsisting on transfer to and vesting of such assets in MSEL and no such charges, mortgages and/ or encumbrances shall extend over or apply to any other asset(s) of MSEL. Thus the existing charges on the assets of the Products Division for facilities enjoyed by MBECL will continue and vice versa. Accordingly, working capital demand loans, cash credit facilities, term loans and other non fund based facilities of the Company are secured by assets which include those of the Product Division of MSEL.

3 There are no dues payable to Micro enterprises and Small enterprises on the basis of information available with the company regarding Micro and Small Enterprises under Micro, Small and Medium Enterprises Development Act, 2006.

4 The company had entered in September 2003 a joint venture agreement with Elsamex S.A. where officially it was appointed as a subcontractor in "West Bengal Corridor Development Project - Improvement of Gazole Hilli Section of SH 10 with a link to Balurghatfrom Patiram," (the project). However, consequent to considerable delay in execution of the project, the Public Works Department of Government of West Bengal (PWD) had unilaterally terminated the contract in January 2006. The company and Elsamex S.A. felt that such delay in execution was due to the inability of PWD to hand over the stretch of encumbrance free land for widening of road and non-availability of construction drawings on time by PWD. The company has a legitimate claim of Rs. 1517 lacs towards receivable (included in Note No.19) and Rs.1133 lacs on account of deposit against Performance Guarantee (included in Note No.21). Elsamex S.A. moved to arbitration and had claimed an amount of Rs.7334 lacs including an additional claim on consequential losses as per guidelines of "Federation Internationale Des Ingenieurs-Conseils" (FIDIC). Arbitral Board in their meeting held on 25th October 2010 has upheld Elsamex S As claim and has given award in favour of Elsamex S A. Under the award, a total amount of Rs.3535 lacs is receivable by the company. A claim has already been lodged with PWD . PWD has preferred to challenge the verdict of the Arbitrators and has appealed to the High Court for a stay in the matter of payment of award money.

(All figures in Rs. Lacs, unless otherwise stated)

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

5 CONTINGENT LIABILITIES

(a) Claims against the company not acknowledged as debt 100 100

(b) Other money for which the Company is contingently liable:

(i) Excise Duty matters pending in appeal related to issues 130 130 of applicability and classification

(ii) Sales Tax/VAT matters pending in appeal relating to disputes 922 944 regarding assessable value and exemptions claimed

(iii) Service Tax Matters pending in appeal relating to issues of applicability 21 72

(iv) Corporate guarantees given in favour of Subsidiary Companies 32,912 29,070

(v) Other guarantees given 3,200 3,200

(vi)Standby letter of credit 1,670 4,860

(vii) Liquidated damages relating to contract sales Amount not Amount not readily readily ascertainable ascertainable

The probable cash outflow in respect of the above matters is not determinable at this stage.

6 RELATED PARTY DISCLOSURES

Related party disclosures as required by Accounting Standard 18 on Related Party Disclosures are given below:

Relationships

(a) Subsidiaries of the Company:

(i) MBE Coal & Minerals Technologies India Pvt. Ltd. (formerly Humbolt Wedag Minerals India Pvt. Ltd.)

(ii) McNally Sayaji Engineering Limited (MSEL)

(iii) McNally Bharat Equipments Limited (MBEL)

(iv) McNally Bharat Infrastructure Limited (MBIL)

(v) MBE Mineral Technologies Pte Limited (formerly MBE Holdings Pte Limited)

(vi) MBE Minerals Zambia Ltd

(vii) McNally Bharat Engineering (SA) Proprietary Ltd

(b) Subsidiaries of MBE Mineral Technologies Pte Limited (i) MBE Coal & Minerals Technologies Gmbh

(ii) MBE Cologne Engineering Gmbh (iii) MBEEWBTechnologiaiKft

(c) Associate of MBE Mineral Technologies Pte Limited (i) Hayward Tyler Group Pic.

(d) Subsidiaries of MBE Coal & Mineral Technology GmbH

(i) MBE Mineral Processing Technology (Beijing) Co.Ltd .

(ii) MBE Mineral Processing of Brazil LTDA

(iii) PT MBE Coal & Minerals Technology, Indonesia

(iv) MBE Minerals SAPty Limited.

(v) OOO MBE OUM, Russia

(vi) Coal & Mineral Technology Holding Gmbh, Germany

(e) Key Management Personnel

(i) Mr. Deepak Khaitan - Executive Chairman

(ii) Mr. Prasanta Kumar Chandra - Whole-time Director & COO

(iii) Mr. Prabir Ghosh - Whole-time Director & Group CFO

7 Research and Development (R&D) Expenditure

Expenditure on R & D - In pursuit of R & D endeavors the company is continuously incurring R&D expenditure both on Capital and Revenue which has not been separately reflected but is being shown as part of regular heads of accounts in fixed assets and in Statement of Profit and Loss respectively. Accordingly R&D revenue expenditure incurred during the year debited to various account heads is Rs. 230.32 Lacs (2011-12: Rs 222.53 Lacs) and on account of capital expenditure is Rs 101.63 Lacs (2011-12: Rs. 179.55 Lacs)

8 The company has only one "Business segment" and one "Geographical segment" as defined in Accounting Standard-17 on "Segment Reporting".

9 Previous year''s figures have been rearranged and / or regrouped wherever necessary to make them comparable with that of current year.


Mar 31, 2012

1 General Information

McNally Bharat Engineering Company Ltd (MBE) is a leading Engineering Turnkey Project Execution Company in India. The Company's shares are listed on National Stock Exchange and Bombay Stock Exchange.

2 As per the Scheme of Arrangement as sanctioned bythe Hon'ble High Court at Calcutta vide its Order dated 28th July 2009 which was filed with the Registrar of Companies, West Bengal, Kolkata on 1st September 2009, for reconstruction of McNally Bharat Engineering Company Limited (MBECL) and its subsidiary viz McNally Sayaji Engineering Ltd (MSEL) the Products Division of MBECL engaged in the business of manufacture and/or procuring equipments for various engineering and infrastructure projects and having its units at Kumardhubi, in the State of Jharkhand and Asansol, in the State of West Bengal and Bangalore, in the State of Karnataka has been transferred to MSEL with effect from the appointed date, i.e. 01.04.2008 .As per the scheme of arrangement the transfer and vesting of Products Division of the MBECL to MSEL shall be subject to the existing charges, mortgages and encumbrances, if any, over the assets or any part thereof, provided however, that such charges, mortgages and/or encumbrances shall be confined only to the assets of MBECL or part thereof on or over which they are subsisting on transfer to and vesting of such assets in MSEL and no such charges, mortgages and/ or encumbrances shall extend over or apply to any other asset(s) of MSEL. Thus the existing charges on the assets of the Products Division for facilities enjoyed by MBECL will continue and vice versa. Accordingly working capital demand loans, cash credit facilities, term loans and other non fund based facilities ofthe Company are secured by assets which include those of the Product Division of MSEL.

3 There are no dues payable to Micro enterprises and Small enterprises on the basis of information available with the company regarding Micro and Small Enterprises under Micro, Small and Medium Enterprises DevelopmentAct, 2006.

4 The company had entered in September 2003 a joint venture agreement with Elsamex S.A. where officially it was appointed as a subcontractor in "West Bengal Corridor Development Project - Improvement of Gazole Hilli Section ofSH 10 with a link to Balurghat from Patiram, " (the project). However consequent to considerable delay in execution of the project the Public Works Department of Government of West Bengal (PWD) had unilaterallyterminated the contract in January 2006. The company and Elsamex S.A. felt that such delay in execution was due to the inability of PWD to hand over the stretch of encumbrance free land for widening of road and non-availability of construction drawings on time by PWD. The company has a legitimate claim of Rs. 1517 lacs towards receivable (included in Note No.19) and Rs.1133 lacs on account of deposit against Performance Guarantee (included in Note No.21). Elsamex S.A. moved to arbitration and had claimed an amount of Rs.7334 lacs including an additional claim on consequential losses as per guidelines of "Federation Internationale Des Ingenieurs-Conseils" (FIDIC). Arbitral Board in their meeting held on 25th October 2010 has upheld Elsamex S.A's claim and has given award in favour of Elsamex S A. Under the award, a total amount of Rs.3535 lacs is receivable bythe company. A claim has already been lodged with PWD . PWD has preferred to challenge the verdict of the Arbitrators and has appealed to the High Court for a stay in the matter of payment of award money.

(All figures in Rs. Lacs, unless otherwise stated)

As at As at March 31, 2012 March 31,2011

5 Contingent Liabilities

(a) Claims against the company not acknowledged as debt 100 100

(b) Other money for which the Company is contingently liable:

(i) Excise Duty matters pending in appeal related to 130 129 issues of applicability and classification

(ii) Sales Tax/VAT matters pending in appeal relating to disputes 944 980 regarding assessablevalue and exemptions claimed

(iii) Service Tax Matters pending in appeal relating 72 3,004 to issues of applicability

(iv) Corporate guarantees given in favour of Subsidiary Companies 29,070 28,814

(v) Other guarantees given 3,200 3,200

(vi) Standby letter of credit 4,860 4,236

(vii) Liquidated damages relating to contract sales Amount not readily Amount not readily ascertainable ascertainable

The probable cash outflow in respect of the above matters is not determinable at this stage

6 Related party disclosures

Related party disclosures as required by Accounting Standard 18 on Related Party Disclosures are given below: Relationships

(a) Subsidiaries of the Company :

(i) MBE Coal & Minerals Technologies India Pvt. Ltd. (formerly Humbolt Wedag Minerals India Pvt. Ltd.)

(ii) McNallySayaji Engineering Limited ( MSEL )

(iii) McNally Bharat Equipments Limited (MBEL)

(iv) McNally Bharat Infrastructure Limited (MBIL)

(v) MBE Mineral Technologies Pte Limited (formerly MBE Holdings Pte Limited)

(vi) MBE Minerals Zambia Ltd

(b) Subsidiaries of MBE Mineral Technologies Pte Limited

(i) MBE Coal & Minerals Technologies GmbH

(ii) EWB Kornyezetvedelmi Limited

(iii) MBE Cologne Engineering Gmbh

(iv) MBE Minerals ( S.A.) (Proprietory) Limited Subsidiaries of MBE Coal & Mineral Technologies GmbH:

(v) MBE Mineral Processing Technology (Beijing) Co.Ltd .

(vi) MBE Mineral Processing of Brazil LTDA

(vii) PT MBE Coal & Minerals Technology, Indonesia (c ) Key Management Personnel :

(i) Mr. Deepak Khaitan - Executive Chairman

(ii) Mr. Prasanta Kumar Chandra - Whole-time Director & COO

(iii) Mr. Prabir Ghosh - Whole-time Director & Group CFO

7 Change in the estimate of contract revenue or contract costs have an effect on the current period and/or subsequent periods. It is impracticable to quantify the impact of such change in estimate.

8 Research and Development (R&D) Expenditure

Expenditure onR&D - In pursuit ofR & D endeavors the company is continuously incurring R&D expenditure both on Capital and Revenue which has not been separately reflected but is being shown as part of regular heads of accounts in fixed assets and in Statement of Profit and Loss respectively. Accordingly R&D revenue expenditure incurred during the year debited to various account heads is Rs. 222.53 Lacs (2010-11: Rs 286.62 Lacs) and on account of capital expenditure is Rs 179.55 Lacs (2010-11: Rs. 107.91 Lacs)

9 The company has only one "Business segment" and one "Geographical segment" as defined in Accounting Standard -17on "Segment Reporting".

10 The financial statements for the year ended March 31, 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended March 31, 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year's classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of financial statements.


Mar 31, 2011

1. As per the Scheme of Arrangement as sanctioned by the Hon'ble High Court at Calcutta vide its Order dated 28th July 2009 which was filed with the Registrar of Companies, West Bengal, Kolkata on 1st September 2009 , for reconstruction of McNally Bharat Engineering Company Limited (MBECL) and its subsidiary viz McNally Sayaji Engineering Ltd (MSEL) the Products Division of MBECL engaged in the business of manufacture and/or procuring equipments for various engineering and infrastructure projects and having its units at Kumardhubi, in the State of jharkhand and Asansol, in the State of West Bengal and Bangalore, in the State of Kamataka has been transferred to MSEL with effect from the appointed date, i.e. 01.04.2008. As per the scheme of arrangement the transfer and vesting of Products Division of the MBECL to MSEL shall be subject to the existing charges, mortgages and encumbrances, if any, over the assets or any part thereof, provided however, that such charges, mortgages and/or encumbrances shall be confined only to the assets of MBECL or part thereof on or over which they are subsisting on transfer to and vesting of such assets in MSEL and no such charges, mortgages and/ or encumbrances shall extend over or apply to any other asset(s) of MSEL. Thus the existing charges on the assets of the Products Division for facilities enjoyed by MBECL will continue and vice versa. Accordingly working capital demand loans, cash credit facilities, term loans and other non fund based facilities of the Company are secured by assets which include those of the Product Division of MSEL.

2. The company had entered in September 2003 a joint venture agreement with Elsamex S.A. where officially it was appointed as a subcontractor in "West Bengal Corridor Development Project - Improvement of Gazole Hilli Section of SH 10 with a link to Balurghatfrom Patiram," (the project). However consequent to considerable delay in execution of the project the Public Works Department of Government of West Bengal (PWD) had terminated the contract in January 2006. The company and Elsamex S.A. felt that such delay in execution was due to the inability of PWD to hand over the stretch of land for widening of road and non-availability of construction drawings on time by PWD. The company has a legitimate claim of Rs.15,16,90,568 towards receivable and Rs.11,33,09,901 on account of deposit against Performance Guarantee. Elsamex S.A. moved to arbitration and had claimed an amount of Rs.73,34,03,024 including an additional claim on consequential losses as per guidelines of "Federation Internationale Des Ingenieurs-Conseils" (FIDIC). Arbitral Board in their meeting held on 25th October 2010 has upheld Elsamex S.A.'s claim and has given favourable award in favour of Elsamex S.A. Under the award, a total amount of Rs. 35-35 crores is receivable by the company. A claim has already been lodged with PWD. PWD has preferred to challenge the verdict of the Arbitrators and has appealed to the High Court for a stay in the matter of payment of award money.

3. There are no dues payable to Micro enterprises and Small enterprises on the basis of information available with the Company regarding Micro and Small Enterprise under Micro, Small and Medium Enterprises Development Act, 2006.

4. The Company has leasing arrangements in respect of operating leases for premises (residential, office, etc.). These leasing arrangements which are not non-cancellable are for a period of 3 years, or longer, and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable are charged as Rent under Schedule 16.

Notes:

(a) The estimates of future salary increases, considered in actuarial valuations, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. The expected return on plan assets is based on actuarial expectation of the average long term rate of return expected on investment of funds during the estimated term of the obligation.

(b) The fair value of plan asset have been segregated between the company and the erstwhile product division of MBECL now a part of McNally Sayaji Engineering Limited on the basis of the present value of the obligations as at the end of the year.

(c) Amount recognized as an expense:

(i) Contribution to Salaries, wages, bonus include charge on account of Leave Enachment Rs.26,030,114/- (2009-10-Rs. 19,925,293/-).

(ii) Contribution to Provident and other Funds includes charge on account of Gratuity Rs.17,809,426/- (2009-10-Rs. 13,778,311).

(iii) Contribution to Workmen and staff welfare includes charge on account of Long Service Award of Rs. 111,921/- (2009- 10-Rs. 271,692/-) Sick Leave of Rs. 5,968,034/- (2009-10-Rs. 10,369,023/-) and on account of post Retriement Medical Benefit Rs. (72,130/-) (2009-10- Rs. 194,885/-).

(iv) Contribution to provident and other funds in Schedule 16 includes Rs. 36,090,932/- (2009-10 Rs. 37,515,218/-) towards contribution to Defined Contribution plans viz. Provident Fund, Pension Fund and Superannuation Fund.

5. Related party disclosures as required by Accounting Standard 18 on Related Party Disclosures are as given below:

Relationships

a) Subsidiaries of the Company

(i) EWB Kornyezetvedelmi Limited

(ii) McNally Sayaji Engineering Limited (MSEL)

(iii) McNally Bharat Equipments Limited (MBEL)

(iv) McNally Bharat Infrastructure Limited (MBIL)

(v) MBE Mineral Technologies Pte Limited (formerly MBE Holdings Pte Limited)

(vi) MBE Minerals Zambia Ltd (w.e.f 21.07.10)

b) Subsidiary ofMBE Mineral Technologies Pte Limited

(i) MBE Coal & Minerals Technology Gmbh

(ii) MBE Cologne Engineering Gmbh

(iii) MBE Minerals (S.A.) (Proprietory) Limited

(iv) McNally Humbolt Wedag Minerals India (Private) Limited. [formerly HumboltWedag Minerals India (Private) Limited]

Subsidiaries of MBE Coal & Mineral Technologies GmbH

(v) MBE Mineral Processing Technology (Beijing) Co. Ltd

(iv) MBE Mineral Processing of Brazil LTDA

c) Key Management Personnel:

Mr. Prasanta Kumar Chandra - Wholetime Director & COO (14.02.11 - 31.03.11)

Mr. Srinivash Singh - Managing Director (01.04.10 -17.06.10)

6. Pursuant to the Announcement on Accounting for derivatives issued by the Institute of Chartered Accountants of India in March , 2008 , the company has accounted for during the year net loss amounting to Rs 3,31,00,641 (31.3.10-52,826,056) in respect of outstanding derivative contracts at the balance sheet date by marking them to market as indicated in Note 1 (viii) above. The aforesaid mark to market loss was included in "Gain on Exchange Fluctuation" in Schedule 14 to accounts .

7. Expenditure on R & D - In pursuit of R & D endeavors the company is continuously incurring R&D expenditure both on Capital and Revenue which has not been separately reflected but is being shown as part of regular heads of accounts in fixed assets and in Profit and Loss account respectively. Accordingly R & D revenue expenditure incurred during the year debited to various account heads is Rs. 28,662,473 (2009-10: Rs. 86,77,129) and on account of capital expenditure is Rs. 10,790,594 (2009-10: Rs. Nil).

8. Previous years figures have been regrouped or rearranged where considered necessary Signatories to Schedule 1 to 19




























Mar 31, 2010

1. As per the Scheme of Arrangement as sanctioned by the Honble High Court at Calcutta vide its Order dated 28th July 2009 which was filed with the Registrar of Companies, West Bengal, Kolkata on 1 st September 2009, for reconstruction of McNally Bharat Engineering Company Limited (MBECL) and its subsidiary viz McNally Sayaji Engineering Ltd (MSEL) the Products Division of MBECL engaged in the business of manufacture and/or procuring equipments for various engineering and infrastructure projects and having its units at Kumardhubi, in the State of jharkhand and Asansol, in the State of West Bengal and Bangalore, in the State of Karnataka has been transferred to MSEL with effect from the appointed date, i.e. 01 04.2008. As per the scheme of arrangement the transfer and vesting of Products Division of the MBECL to MSEL shall be subject to the existing charges, mortgages and encumbrances, if any, over the assets or any part thereof, provided however, that such charges, mortgages and/or encumbrances shall be confined only to the assets of MBECL or part thereof on or over which they are subsisting on transfer to and vesting of such assets in MSEL and no such charges, mortgages and/ or encumbrances shall extend over or apply to any other asset(s) of MSEL. Thus the existing char|es on the assets of the Products Division for facilities enjoyed by MBECL will continue and vice versa. Accordingly working capital demand loans, cash credit facilities, term loans and other non fund based facilities of the Company are secured by assets which include those of the Product Division of MSEL.

2. The company had entered in September 2003 a joint venture agreement with Elsamex S.A. where officially it was appointed as a subcontractor in "West Bengal Corridor Development Project - Improvement of Gazole Hilli Section of SH 10 with a link to Balurghat from Patiram," (the project). However consequent to considerable delay in execution of the project the Public Works Department of Government of West Bengal (PWD) had terminated the contract in January 2006. The company and Elsamex S.A. felt that such delay in execution was due to the inability of PWD to hand over the stretch of land for widening of road and non-availability of construction drawings on time by PWD. The company has a legitimate claim of Rs.15,16,90,568 towards receivable and Rs.11,33,09,901 on account of deposit against Performance Guarantee. Elsamex S.A. has already moved to arbitration and has claimed an amount of Rs.73,34,03,024 including an additional claim on consequential losses as per guidelines of "Federation Internationale Des Ingenieurs-Conseils" (FIDIC). Arbitration proceedings are almost complete and the company is confident in recovering at least an amount not less than the recoverable shown in its books and considers that no provision towards such amounts recoverable is necessary at this stage.

3. There are no dues payable to Micro enterprises and Small enterprises on the basis of information available with the Company regarding Micro and Small Enterprise under Micro, Small and Medium Enterprises Development Act, 2006.

4. The Company has leasing arrangements in respect of operating leases for premises (residential, office, etc.). These leasing arrangements which are not non-cancellable are for a period of 3 years, or longer, and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable are charged as Rent under Schedule 17.

5. Related party disclosures as required by Accounting Standard 1 8 on Related Party Disclosures are as given below: Relationships

a) Subsidiaries of the Company

(i) EWB Kornyezetvedelmi Limited

(ii) McNally Sayaji Engineering Limited (MSEL)

(iii) McNally Bharat Equipments Limited (MBEL)

(iv) McNally Bharat Infrastructure Limited (MBIL)

(v) MBE Holdings Pte Limited

b) Subsidiary of MBE Holdings Pte Limited

(i) MBE Coal & Minerals Technology Gmbh

(ii) MBE Cologne Engineering Gmbh

(iii) MBE Minerals ( S.A.) Proprietory Limited

(iv) Humbolt Wedag Minerals India ( Private) Limited

8. Pursuant to the Announcement on Accounting for derivatives issued by the Institute of Chartered Accountants of India in March, 2008, the company has accounted for during the year net loss amounting to Rs 52,826,056 (31.3.09-Nil) in respect of outstanding derivative contracts at the balance sheet date by marking them to market as indicated in Note 1 (viii) above. The aforesaid mark to market loss was included in "Loss on Exchange Fluctuation" in schedule 17 to accounts.

9. During the year the company has set up a wholly owned subsidiary company, MBE Holdings Pte Limited in Singapore. MBE Holdings Pte Limited has in turn acquired the Coal and Mineral Technology division of KHD Humboldt Wedag GmbH. The Coal and Mineral Technology division operates through four legal entites which are subsidiaries of MBE Holdings Pte Limited viz MBE Coal and Mineral Technologies GmbH, MBE Calogne Engineering GmbH, MBE Minerals SA Pty Ltd. and Humboldt Wedag Minerals India Private Limited.

10. Previous years figures have been regrouped or rearranged where considered necessary.

 
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