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Notes to Accounts of MIRC Electronics Ltd.

Mar 31, 2015

Basis of Preparation

The financial statements of the company have been prepared in accordance with the generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the accounting standards notified under section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules 2014. The financial statements have been prepared on an accrual basis and under the historical cost convention. The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

1. SHARE CAPITAL

(a) Rights, Preferences and Restrictions Attached to Equity Shares

The company has only one class of equity shares having par value of Rs. 1 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, if any on the equity shares is recommended by the Board and approved by the shareholders at the 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.

(b) Aggregate number and class of shares allotted as fully paid up pursuant to contract(s) without payment being received in cash.

In FY 2009-10 : 7,48,96,669 Equity Shares were alloted and 7,48,96,575 Equity Shares were cancelled as per the Scheme of Amalgamation of Guviso Holdings Private Limited with the Company.

(c) Pursuant to rights issue of equity shares, the Company has allotted 5,44,82,524 equity shares of Rs. 1 each at a premium of Rs. 5 per share on 22nd October, 2014

2) There was a fire accident in February 2012 at Roorkee Plant of the Company. The Company had made a claim of Rs. 4995.50 lacs in respect of loss and damages covered by the insurance policy. Against the total claim, on account payment of Rs. 1632.45 lacs has been realised from the Insurance company . During the year, based on the communication received from surveyors appointed by the Insurance company, management has reassessed the recoverability of claim and consequently a further loss of Rs. 623 lacs has been charged to statement of Profit and Loss.

3) Contingent Liabilities and Commitments :

31st March 31st March 2015 2014 Rs.in lacs Rs.in lacs

Contingent Liabilities

a) Guarantees given to Bank against which 760.93 715.01 Rs. Nil (previous year Rs. Nil) has been deposited as margin money

b) Guarantees given to bank on behalf of subsidiary company

- Akasaka Electronics Limited 1,669.00 1,732.00

c) Income tax demands in respect of which appeals have been filed 323.42 -

d) Excise Duty, Service Tax and Custom Duty in respect of which appeals have 2,496.25 2,563.62 been filed

e) Claims made against the Company not acknowledged as debts 11,007.64 10,624.53

Commitments

Estimated amount of contracts remaining to be executed on capital account not provided - 2.46 for (net of advances)

In respect of the above contingent liabilities, the future cash outflows are determinable only on receipt of judgements pending at various forums / authorities.

4) Employee Benefits :

a) Defined contribution plans

The Company has recognised an expense of Rs. 221.41 lacs ( previous year Rs. 254.56 lacs) towards defined contribution plans, in respect of Provident Fund during the year and in respect of Provident Fund and Superannuation Fund until previous year.

b) Defined benefit plans Gratuity

Company has covered its gratuity liability by a Group Gratuity Policy named 'Employee Group Gratuity Assurance Scheme' issued by LIC of India. Under the plan, employee at retirement is eligible for benefit which will be equal to 15 days' salary for each completed year of service. In other words, the policy is a defined benefit plan. Accordingly, the aforesaid insurance policy is the plan asset.

c) The expected rate of return on plan assets which is 7.95% relates to the benchmark rate available on Government Securities (G. sec.) for the tenure of 10 years i.e the expected term of obligation. The rate is taken as per the deal rate as on 31st March, 2015 as suggested under AS 15 (Revised 2005)

d) The estimates of future salary increases, considered in acturial valuation, take in to account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

5) The Company has during the year allotted 5,44,82,524 equity shares at a premium of Rs. 5 per share. Consequently, the paid up share capital has increased from Rs. 1417.52 lacs to Rs. 1962.34 lacs and Securities Premium has increased by Rs. 2,621.96 lacs (net of rights Issue expenses).

Pursuant to stipulation imposed by the financial institutions the promoters in the previous year provided an unsecured loan of Rs. 3,200 lacs to the Company. The Company during the current year has issued equity shares of Rs. 2,646.05 lacs against the unsecured loan and has refunded the balance amount to the promoters.

6) The Company considers entire business under one segment i.e. Consumer Durable products. Further, there is no seperately identifable geographical segment and hence no reporting is made for segment.

7) Research and development expenses consist of personnel expenses and other expenses of Rs. 325.16 lacs ( previous year Rs. 399.82 lacs ), and Rs. 97.39 lacs ( previous year Rs. 131.90 lacs ) respectively. Depreciation on Research and Development assets is Rs. 32.45 lacs ( previous year Rs. 31.62 lacs ) shown under Fixed Assets.

8) There are no Micro and Small Enterprises, to whom the Company owes dues. This information as required to be disclosed under the Micro Small and Medium Enterprises Development Act, 2006, has been determined to the extent such parties have been identified on the basis of information available with the Company.

9) Related party Disclosure :

Related parties as defined under clause -3 of Accounting Standard ( AS - 18 ) " Related Party Disclosures " have been identified on the basis of representation made by key management personnel and information available with the company.

Names of related parties with whom transactions have taken place and description of relationship :

1. Subsidiary

Akasaka Electronics Ltd.

2. Key Management Personnel

Mr. G.L. Mirchandani - Chairman & Managing Director

Mr. V.J. Mansukhani - Managing Director

Mr. S. K. Dhoot - Whole - time Director

Mr. G. Sundar - Chief Executive Officer

Mr. Aashay S. Khandwala - Head Corporate Affairs, Legal and Company Secretary (Joined wef. 26th March, 2014)

Mr. Anoopkumar Pillai - Head Corporate Affairs, Legal and Company Secretary (Resigned wef. 19th November, 2013)

Mr. Muthu Elango - Chief Financial Officer (Joined wef. 7th November, 2014)

Mr. Predeep Gupta - Chief Financial Officer (Resigned wef. 7th November, 2014)

3. Relatives of Key Management Personnel

Mrs. Gita Mirchandani ( Wife of Mr. G.L. Mirchandani)

Mrs. Marissa Mansukhani (Wife of Mr. VJ.Mansukhani)

Mr. Kaval Mirchandani ( Son of Mr. G.L. Mirchandani)

Mr. Sasha Mirchandani ( Son of Mr. G.L. Mirchandani)

Mr. Akshay Mansukhani (Son of Mr. V.J. Mansukhani)

Ms. Ayesha Mansukhani (Daughter of Mr. V.J. Mansukhani)

G.L. Mirchandani (H.U.F.)

V.J. Mansukhani (H.U.F.)

4. Enterprise over which any person described in 2 & 3 is having significiant influence

Iwai Electronics Pvt. Ltd.

Adino Telecom Ltd.

Gulita Wealth Advisors Pvt. Ltd.

Adino Electronics Ltd.

IIFL Investment Adviser & Trustee Services Ltd. ( Formerly IIFL Trustee Services Ltd.)

Gulita Securities Ltd.

10) Provision for Warranty :

Warranty costs are provided based on technical estimate of the costs required to be incurred for repairs, replacement, material cost and past experience in repect of warranty costs. It is expected that this expenditure will be incurred over contractual warranty period.

11) Other income for the current year ended 31st March, 2015 includes profit on sale of land and building at Noida and Thane property of Rs. 944.87 lacs. Further an amount of Rs. 825 lacs is receivable on account of sale of land and building at Noida.

12) The Board of Directors of the Company at its meeting held on 24th April, 2015 have considered and approved issuance of 3,25,00,000 warrants (exercisable into equity shares) on preferential basis to persons other than promoters and promoter group at a price determined as per SEBI (Issue of Capital and Disclosure Requirements) Regulations 2009, as amended and the same is subject to approval of the shareholders.

13) The Company has incurred a net loss in its three immediately preceding financial years. Thus in accordance with Section 135 (5) of the Companies Act, 2013, the Company is not required to provide / spend any amount under its Corporate Social Responsibility policy.

14) The figures of previous year were audited by a firm of Chartered accountants other than S R B C & CO LLP. Figures for the previous year have been regrouped where necessary to conform to current year's classification.




Mar 31, 2013

1.1 Rights, Preferences and Restrictions attached to Equity Shares

The Company has one class of equity shares having a par value of Re. 1 per share. Each shareholder is entitled to one vote per equity share. The shareholders are entitled to dividend declared on proportionate basis. On liquidation of the Company, the equity shareholders are eligible to receive remaining assets of the Company after distribution of all preferential amounts in proportion to their shareholding.

1.2 Aggregate number and class of shares allotted as fully paid up pursuant to contract(s) without payment being received in cash.

In FY 2009-10 : 7,48,96,669 Equity Shares were alloted and 7,48,96,575 Equity Shares were cancelled as per the Scheme of Amalgamation of Guviso Holdings Pvt. Ltd. with the Company.

NOTE 2 - DEFFERED TAX LIABILITY

The Company has recognized Deferred Tax in accordance with the requirements of (Accounting Standard) AS-22 on "Accounting for Taxes on Income" as notifed under the Companies (Accounting Standards) Rules, 2006. The breakup of Net Deferred Tax Liabilty (DTL) is as follows :

3) a. Exceptional item of previous year represents expected loss of Rs. 501.22 lacs on account of major fre on 8th February, 2012 at one of the Company''s factory located at Roorkee Uttarkhand

b. In respect of the said fre incident the Company has made claim from insurance company and the amount (net of provision) of Rs. 4995.50 lacs for the loss made in the earlier year is carried as Insurance claim receivable under other current assets in the Balance Sheet. An adhoc amount of Rs. 1500 lacs has been received subsequent to the Balance Sheet date against the said receivables and the Management is confdent of balance recovery.

4) The Company has a normal operating cycle of less than twelve months, hence a period of twelve months has been considered for bifurcation of Assets and Liabilities into Current and Non-Current as required by Revised Schedule VI of the Companies Act, 1956 for preparation of the fnancial statements.

5) During the year net debit in respect of foreign exchange fuctuation is Rs. 639.88 lacs (previous year debit of Rs. 576.28 lacs). Out of this credit of Rs. 531.31 lacs (previous year debit of Rs. 102.33 lacs) is in respect of raw material purchases, debit of Rs. 44.86 lacs (previous year debit of Rs. 6.87 lacs) is in respect of export of goods (included in miscellaneous expenses), and debit of Rs. 1126.33 lacs (previous year debit of Rs. 467.08 lacs) is in respect of premium on forward contracts included in fnance cost .

6) Contingent Liabilities and Commitments

(Rs.in Lacs)

PARTICULARS 31st March 2013 31st March 2012

Contingent Liabilities

a) Guarantees given to Bank against which Rs.Nil (previous 1453.35 1565.22 year Rs.Nil) has been deposited as margin money

b) Guarantees given to bank on behalf of Subsidiary company 2132.00 2132.00

Akasaka Electronics Ltd.

c) Income tax demands in respect of which appeals have been fled 188.45 77.69

d) Excise Duty, Service Tax and Custom Duty in respect of which 2708.80 31136.40 appeals have been fled (Refer note below)

e) Claims made against the Company not acknowledged as debts 6661.85 3681.12 Commitments

Estimated amount of contracts remaining to be executed on capital 21.17 100.34 account not provided for (net of advances)

Note : In the earlier year, the Company has received a demand of Service Tax of Rs. 29777.33 lacs from the Commissioner of Central Excise. As per the management, the demand is not tenable and the Company has received favourable order from CESTAT for stay of the said demand.

7) Employee Defned Benefts :

a) Defned contribution plans

The Company has recognised an expense of Rs. 241.47 lacs (previous year Rs. 291.59 lacs) towards defned contribution plans, in respect of Provident Fund and Superannuation Fund

b) Description of the Plan

Gratuity

Company has covered its gratuity liability by a Group Gratuity Policy named ''Employee Group Gratuity Assurance Scheme'' issued by Life Insurance Corporation of India. Under the plan, employee at retirement is eligible for beneft which will be equal to 15 days salary for each completed year of service. In other words, the policy is a defned beneft plan. Accordingly, the aforesaid insurance policy is the plan asset.

Leave encashment

The leave encashment beneft scheme is a defned beneft plan and is wholly unfunded. Hence, there are no planned assets attributable to the obligation.

8) In the earlier year, Mobile Communication Device was treated as a separate segment and accordingly disclosure required under (AS) -17 on "Segment Reporting" was made in the Consolidated Financial Statements. Based on the composition of sales Mobile Communication Device is no longer considered as a seperate reportable segment and hence the Company is left with only one reportable segment ie. Consumer Durable products. Further, there is no seperately identifable geographical segment and hence no reporting is made for segment.

9) Research and Development expenses consist of personnel expenses and other expenses of Rs. 437.90 lacs (previous year Rs. 571.99 lacs), and Rs. 119.41 lacs (previous year Rs. 295.23 lacs) respectively. Depreciation on Research and Development assets is Rs. 33.79 lacs (previous year Rs. 39.53 lacs) shown under Fixed Assets.

10a) Balances of Trade Receivables, Loans and Advances and Deposits are subject to confrmation and reconciliation.

b) There is no amount due and outstanding, as at 31st March, 2013 to be credited to Investor Education and Protection Fund.

11) Previous year''s fgures have been rearranged and regrouped wherever necessary.


Mar 31, 2012

1) There was a major fire on 8th February, 2012 at one of the Company's factory located at Roorkee, Uttarakhand, affecting the entire operations of the factory. Fixed assets of written down value of Rs 2936.63 and stock valuing Rs 1773.17, aggregating Rs 4709.80 were destroyed in the fire. The assets were fully covered under the insurance policy. The amount of Rs 4409.80 is expected to be recovered from the insurance company and shown as insurance claim receivable. The management is confident of recovering the same. The balance amount of Rs 300 along with the expenditure incurred of Rs 201.22 (including salaries and wages of Rs 21.72) has been charged to the Profit and Loss Statement and the aggregate amount of Rs 501.22 has been treated as an exceptional item.

2) During the year net debit in respect of foreign exchange fluctuation is Rs 576.28 (previous year credit of Rs 937.57). Out of this debit of Rs 102.33 (previous year credit of Rs 1189.59) is in respect of raw material purchases, debit of Rs 6.87 (previous year debit of Rs 43.92) is in respect of export of goods (included in miscellaneous expenses), debit of Rs Nil (previous year debit of Rs 25.99 ) is in respect of secured loans ( included in finance cost ) and debit of Rs 467.08 ( previous year Rs 182.11 ) is in respect of premium on forward contracts included in finance cost .

Rs in lacs

3) Contingent Liabilities and Commitments

PARTICULARS 31st March, 2012 31st March, 2011

Contingent Liabilities

a) Guarantees given to Bank against which Rs Nil (previous year Rs Nil) has 1565.22 585.51 been deposited as margin money

b) Guarantees given to bank on behalf of subsidiary company - Akasaka Electronics Limited 2132.00 1870.00

c) Income tax demands in respect of which appeals have been filed 77.69 82.16

d) Excise and Custom Duty in respect of which appeals have been filed 31136.40 595.44

e) Claims made against the Company not acknowledged as debts 3681.12 5429.58

Commitments

Estimated amount of contracts remaining to be executed on capital account not 100.34 199.54 provided for (net of advances)

4) Employee Defined Benefits

a) Defined contribution plans

The Company has recognised an expense of Rs291.59 ( previous year Rs279.90 ) towards defined contribution plans, in respect of Provident Fund and Superannuation Fund.

b) Description of the Plan Gratuity

Company has covered its gratuity liability by a Group Gratuity Policy named 'Employee Group Gratuity Assurance Scheme' issued by LIC of India. Under the plan, employee at retirement is eligible for benefit which will be equal to 15 days salary for each completed year of service. In other words, the policy is a defined benefit plan. Accordingly, the aforesaid insurance policy is the plan asset.

Leave encashment

The leave encashment benefit scheme is a defined benefit plan and is wholly unfunded. Hence, there are no planned assets attributable to the obligation.

5) Segment information has been presented in the Consolidated Financial Statements as permitted by Accounting Standards (AS) - 17 on Segment Reporting as notified under the Companies (Accounting Standards) Rules, 2006.

6) Research and development expenses consist of personnel expenses and other expenses of Rs 571.99 (previous year Rs 815.62), and Rs 295.23 (previous year Rs 273.13) respectively. Depreciation on Research and Development assets is Rs 39.53 (previous year Rs 39.32) shown under Fixed Assets.

7) a) Balances of Trade Payable, Trade Recievable, Loans and Advances and Deposits are subject to confirmation and reconciliation.

b) There is no amount due and outstanding, as at 31st March, 2012 to be credited to Investor Education and Protection Fund.

8) Previous year's figures have been rearranged and regrouped wherever necessary.

Signatures to Note '1' to '28' forming part of the Balance Sheet and Profit and Loss Statement

 
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