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Notes to Accounts of Morganite Crucible (India) Ltd.

Mar 31, 2015

1. Employee benefits – Post employment benefit plans

Effective 1 January 2007, the Company adopted Accounting Standard 15 (revised 2005) on "Employee Benefits".

Defined contributions plans

The Company makes contributions, determined as specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund and Superannuation Scheme, which is a defined contribution plan. The Company has no obligations other than to make the specified contributions. The contributions are charged to the Statement of Profit and Loss as they accrue. The amount as an expense towards contribution to Provident Fund and Superannuation Scheme for the year aggregated to Rs. 5,375,735 (2014: Rs. 4,964,801).

Defined benefit plans Gratuity

The Company operates post employment defined benefit plans that provide gratuity benefit. The gratuity plan entitles an employee, who has rendered at least five years of continuous service, to receive 15 days salary for each year of completed service at the time of retirement / exit. The scheme is funded by plan assets.

a) Gratuity is payable to all eligible employees of the Company on superannuation, death, and permanent disablement, in terms of the provisions of the Payment of Gratuity Act, 1972.

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

c) 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.

d) The Company's gratuity fund is managed by Life Insurance Corporation of India. The plan assets under the fund are invested under approved securities.

2. Operating lease as lessee

The Company has entered into leases for cars for a period of 3 years. Total lease payments for non-cancellable leases recognized in the books for the year is Rs. 574,095 (2014 : Rs. 786,421)

3. Unhedged foreign currency exposures

The Company has entered into derivative contracts to hedge its risk associated with foreign currency fluctuations. However, none of these contracts can be co-related on one to one basis against the underlying exposure. As at the year end, the Company has outstanding foreign exchange forward contracts of GBP Nil, EURO Nil and USD Nil (2014: GBP 210,000), (2014: EURO 150,000), (2014: USD Nil) equivalent to Rs Nil (2014: Rs. 33,932,436). The Company has revalued these forward contracts as at the yearend by marking the same to market and recognized a loss of Rs.Nil (2014: Nil) by debiting the statement of profit and loss in compliance with the announcement dated 29 March 2008 made by the Institute of Chartered Accountants of India ('ICAI') regarding accounting for derivatives.

4. In accordance with AS-29 (Provisions, Contingent Liabilities and Contingent Assets), the movement in provision for warranty is as follows:

A provision is estimated for expected warranty claims in respect of products sold during the year on the basis of past experience regarding failure trends of products and costs of rectification or replacement. It is expected that most of this cost will be incurred over the next 12 months as per management estimate.

5. Corporate social responsibility

As per provisions of section 135 of Companies Act 2013, the Company was required to spend Rs. 2,791,425 (2014: Rs Nil) being 2% of average net profits made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy on the activities specified in Schedule VII of the Act. However, the Company has spent Rs Nil (2014: Nil) towards Corporate Social Responsibility activities. The Company is in process of exploring various options specified in Schedule VII on which it could do its spending of CSR for the benefit of society.

6. Transfer Pricing The Company has developed a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under section 92-92F of the Income Tax Act, 1961. The management is of the opinion that its international transactions are at arm's length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

The Domestic Transfer Pricing Regulations as prescribed under section 92BA of the Income Tax Act, 1961 was introduced from April 1, 2012. The Company has been consistently transacting with related parties on an Arm's Length basis in accordance with Group Transfer Pricing Policy. The Company is of the opinion that there will be no significant changes to Arm's length price under determination in order to comply with the requirement of section 92BA of Income Tax Act. Hence, there will no material impact on the financial statements.


Mar 31, 2014

1. Background

Morganite Crucible (India) Limited (''the Company'') was incorporated on 13 January 1986 under the Companies Act, 1956 and its shares are listed on the Bombay Stock Exchange (BSE). The Company is engaged in the business of manufacturing and selling of silicon carbide and clay graphite crucibles, its accessories and die lubes.

2. Rights, preferences and restrictions attached to equity shares The Company has only one class of equity shares having a par value of Rs.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.

The Company has proposed dividend per share of Re. 1 (2013: Re.1) for distribution to equity shareholders.

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.

3. Contingent liabilities and commitments

31 March 2014 31 March 2013

Contingent Liabilities:

a. Bonds in favour of the President 10,000,000 10,000,000 of India endorsed through Deputy Commissioner of Customs for import of goods.

b. Claims by employees towards unfair labour practices under Section 28 read with items 1(a), (b), (c), 2 (b), 3, 4(a), (e) and (f) of Schedule II and items 5, 6, 9 and - - 10 of Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 for which amounts are not ascertainable.

c. Disputed employees'' state insurance demand aggregating Rs.52,498 (2013: 52 498 52 498 Rs.52,498) against which the Company has preferred appeals.

Commitments:

a. Estimated amount of contracts remaining to be executed on capital account and not 558,701 3,791,851 provided for

1 Employee benefits - Post employment benefit plans Effective 1 January 2007, the Company adopted Accounting Standard 15 (revised 2005) on "Employee Benefits".

Defined contributions plans

The Company makes contributions, determined as specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund and Superannuation Scheme, which is a defined contribution plan. The Company has no obligations other than to make the specified contributions. The contributions are charged to the statement of profit and loss as they accrue. The amount as an expense towards contribution to Provident Fund and Superannuation Scheme for the year aggregated to Rs. 4,964,801 (2013: Rs. 4,775,021).

Defined benefit plans

Leave encashment

Amount of Rs. 835,756 (2013: Rs. 2,766,334) is recognised as an expense and included in "Employee costs" in the statement of profit and loss.

Gratuity

The Company operates post employment defined benefit plans that provide gratuity benefit. The gratuity plan entitles an employee, who has rendered at least five years of continuous service, to receive 15 days salary for each year of completed service at the time of retirement / exit. The scheme is funded by plan assets.

a) Gratuity is payable to all eligible employees of the Company on superannuation, death, and permanent disablement, in terms of the provisions of the Payment of Gratuity Act, 1972.

b) The discount rate is based on the prevailing market yields Indian Government securities as at the balance sheet date for the estimated term of the obligations.

c) 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.

d) The Company''s gratuity fund is managed by Life Insurance Corporation of India. The plan assets under the fund are invested under approved securities.

4 Related party disclosures A. Names of related parties

a. Parties (where controls exists) Morgan Advanced Materials Plc ( formerly known as The Morgan Crucible Company Plc UK) - Ultimate Holding Company

b. Investing Associates

Morganite Crucible Limited (holds 38.50% of issues, subscribed and paid up capital)

Morgan Terreassen BV (holds 36.50% of issues, subscribed and paid up capital)

c. Other related parties with whom transactions have taken place during the year

i. Subsidiary company Diamond Crucible Company Limited

ii. Fellow subsidiary companies Morganite Crucible Inc., USA

Morgan Molten Metal System GMBH Germany Morgan Molten Metal System (Suzhou) Co Ltd., China Morgan Karbon Grafit Sanayi Turkey Thermal Ceramics UK

Murugappa Morganite Thermal Ceramics Ltd.

Thermal Ceramics South Africa

d. Key Management Person Mr. Hitesh Saiwal - Managing Director

5 Operating lease as lessee

The Company has entered into leases for cars for a period of 3 years. Total lease payments for non-cancellable leases recognised in the books for the year is Rs. 786,422 (2013 : Rs. 1,299,650)

6 Unhedged foreign currency exposures

The Company has entered into derivative contracts to hedge its risk associated with foreign currency fluctuations. However, none of these contracts can be co-related on one to one basis against the underlying exposure. As at the year end, the Company has outstanding foreign exchange forward contracts of GBP 210,000, EURO 150,000 and USD Nil (2013: GBP Nil), (2013: EURO 900,000), (2013: USD 900,000) equivalent to Rs.33,932,436 (2013: Rs. 111,501,000). The Company has revalued these forward contracts as at the year end by marking the same to market and recognised a loss of Rs.NIL (2013: Nil) by debiting the statement of profit and loss in compliance with the announcement dated 29 March 2008 made by the Institute of Chartered Accountants of India (''ICAI'') regarding accounting for derivatives.

7 Transfer Pricing

The Company has developed a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under section 92-92F of the Income Tax Act, 1961. The management is of the opinion that its international transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

The Domestic Transfer Pricing Regulations as prescribed under section 92BA of the Income Tax Act, 1961 was introduced from April 1, 2012. The Company has been consistently transacting with related parties on an Arm''s Length basis in accordance with Group Transfer Pricing Policy. The Company is of the opinion that there will be no significant changes to Arm''s length price under determination in order to comply with the requirement of section 92BA of Income Tax Act. Hence, there will no material impact on the financial statements.


Mar 31, 2013

1. Background

Morganite Crucible (India) Limited (''the Company'') was incorporated on 13 January 1986 under the Companies Act, 1956 and its shares are listed on the Bombay Stock Exchange (BSE). The Company is engaged in the business of manufacturing and selling of silicon carbide and clay graphite crucibles, its accessories and die lubes.

2. Employee benefits – Post employment benefit plans

I. Effective 1 January 2007, the Company adopted Accounting Standard 15 (revised 2005) on "Employee Benefits".

II. Defined contributions plans The Company makes contributions, determined as specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund and Superannuation Scheme, which is a defined contribution plan. The Company has no obligations other than to make the specified contributions. The contributions are charged to the statement of profit and loss as they accrue. The amount as an expense towards contribution to Provident Fund and Superannuation Scheme for the year aggregated to Rs. 4,775021 (2012: Rs. 4,922,963).

Leave Encashment

Amount of Rs.2,766,334 (2012: Rs. 2,237,647) is recognised as an expense and included in "Employee costs" in the statement of profit and loss.

Gratuity

The Company operates post employment defined benefit plans that provide gratuity benefit. The gratuity plan entitles an employee, who has rendered at least five years of continuous service, to receive 15 days salary for each year of completed service at the time of retirement / exit. The scheme is funded by plan assets.

3. Segment reporting

The Company recognizes its sale of crucibles activity as its only primary business segment since its operations predominantly consist of manufacture and sale of crucibles to its customers. Accordingly, income from sale of crucibles comprises the primary basis of segmental information set out in these financial statements. Geographical segment will be the secondary segment for the purpose of AS-17 (Segment reporting). All the assets of the Company are located in India except for Trade receivables and advance to suppliers aggregating Rs.87,145,522 (2012: Rs. 104,807,237). The Company caters to the needs of the domestic and foreign market.

4. Related party disclosures

A. Names of related parties

Parties (where controls exists)

The Morgan Crucible Company Plc, U.K - Ultimate Holding Company b. Investing Associates

- Morganite Crucible Limited (holds 38.50% of issues, subscribed and paid up capital)

- Morgan Terreassen BV (holds 36.50% of issues, subscribed and paid up capital) Other related parties with whom transactions have taken place during the year

- Subsidiary company Limited Diamond Crucible Company

- Fellow subsidiary companies Morganite Crucible Inc., USA

Morgan Molten Metal System GMBH Germany Morgan Molten Metal System (Suzhou) Co Ltd., China Morgan Karbon Grafit Sanayi Turkey Thermal Ceramics UK

Murugappa Morganite Thermal Ceramics Ltd. Thermal Ceramics South Africa d. Key Management Person

Mr. Hitesh Saiwal - Managing Director

5. Operating leases as lessee

The Company ha s entered into operating leases for cars for a period of 3 years. Total lease payments for non - cancellable leases recognised in books for the year is Rs.1,299,650 (2012 : Rs.1,447,836).

6. Dues to Micro and Small Enterprises

Under Micro, Small, and medium Enterprises Development Act, 2006 (MSMED) which came in to force from 2 October, 2006, certain disclosures are required to be made relating to micro and small enterprises. On the basis of the information and records available with the management, the following disclosures are made for the amounts due to the Micro, small and medium enterprises:

On the basis of information and records available with the Company, the above disclosures are made in respect of amounts due to the micro, small and medium enterprises, who have registered with the relevant competent authorities. This has been relied upon by the auditors.

7. Unhedged foreign currency exposures

The Company has entered into derivative contracts to hedge its risk associated with foreign currency fluctuations. However, none of these contracts can be co-related on one to one basis against the underlying exposure. As at the year end, the Company has outstanding foreign exchange forward contracts of GBP Nil, EURO 900,000 and USD 900,000 (2012: GBP 725,000), (2012: EURO 825,000), (2012: USD 639,073) equivalent to Rs.111,501,000 (2012: Rs. 148,226,427). The Company has revalued these forward contracts as at the year end by marking the same to market and recognised a loss of Rs.NIL (2012: Rs.4,976,182) by debiting the statement of profit and loss in compliance with the announcement dated 29 March 2008 made by the Institute of Chartered Accountants of India (''ICAI'') regarding accounting for derivatives.

8. Transfer Pricing

The Company''s management is of the opinion that its international transactions are at arm''s length as per the independent accountants report for the year ended 31 March 2012. Further, the Indian Finance Bill, 2012 had sought to bring in certain class of domestic transactions in the ambit of the transfer pricing regulations with effect from 1st April 2012. The management is yet to carry out a detailed domestic / international transfer pricing study/ analysis for the year ending 31 March 2013 in accordance with these regulations and expects to commission and complete the same by the specified due date. Management continues to believe that its international transactions post March 2012 and the specified domestic transactions covered by the new regulations are at arm''s length and that the transfer pricing legislation will not have any impact on these financial statements, particularly on amount of tax expense and that of provision of taxation.

9. Change in Accounting Policy

With effect from 1 April 2012 the Company has changed its accounting policy for valuation of inventories from First in First Out (FIFO) method to Weighted Average Cost (WAC) method. This has resulted in figures for the year ended 31 March 2013, for ''Cost of materials consumed being lower by Rs. 1,256,485, ''Changes in inventories of finished goods, work in progress and stock-in-trade being lower by Rs. 1,157,275 and ''Net Profit for the year'' being higher by Rs.1,630,614. If the FIFO method of valuation of inventories would have been followed, the figures for the year ended 31 March 2013 for ''Cost of materials consumed would have been Rs.328,500,586, ''Changes in inventories of finished goods, work-in-progress and stock-in-trade'' would have been Rs.24,714,611 and ''Net Profit for the year'' would have been Rs.83,890,007.

10. Previous year figures

Previous year''s figure have been regrouped / reclassified as follows:

- Provision for tax aggregating to Rs. 1,753,847 has been reclassified from "Long-term provisions" to "Short-term provision (net of advance tax and tax deducted at source)".

Provision for tax aggregating to Rs. 1,553,663 has been reclassified from "Short-term provisions" to "Long-term loans and advances (net of provisions)".


Mar 31, 2012

1. Background

Morganite Crucible (India) Limited ('the Company') was incorporated on 13 January 1986. The Company is engaged in the business of manufacturing and selling of silicon carbide and clay graphite crucibles and its accessories.

Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs.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.

The Company has proposed per share dividend of Re.1 (2011: Rs.Nil) for distribution to equity shareholders.

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.

Details of shares held by shareholders holding more than 5% of the aggregate shares in the Company.

The only shareholders holding more than 5 percent shares as on the date of the balance sheet are Morganite Crucible Limited and Morgan Treason BV (as disclosed above), both of which are subsidiaries of The Morgan Crucible Company Plc.

"Management charges for the current year includes charges pertaining to previous year amounting to Rs.15,185,332.

2. Capital commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.9,712,297 (2011: Rs. 4,025,000).

3. Contingent liabilities

i) Bonds aggregating Rs.10,000,000 (2011: Rs.10,000,000) in favor of the President of India endorsed through Deputy Commissioner of Customs for import of goods.

ii) Claims by employees towards unfair labour practices under Section 28 read with items 1(a), (b), (c), 2 (b), 3, 4(a), (e) and (f) of Schedule II and items 5, 6, 9 and 10 of Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 for which amounts are not ascertainable.

iii) Disputed employees' state insurance demand aggregating Rs.52,498 (2011: Rs.52,498) against which the Company has preferred appeals.

4. The Company's operations consist of manufacturing and selling of crucibles and hence the information with regards to sales effected by the Company and the information with regard to opening and closing stock of finished goods as disclosed in the financial statements pertains to crucibles only.

**The value of consumption of raw materials has been arrived at on the basis of opening stock plus purchases less closing stock. The consumption, therefore, includes adjustments for raw materials write-off, shortage / excess, etc.

5. Employee benefits

I. Effective 1 January 2007, the Company adopted Accounting Standard 15 (revised 2005) on "Employee Benefits".

II. Contribution to Provident fund

Amount of Rs.3,167,663 (2011: Rs.2,638,039) is recognized as an expense and included in "Employee costs" in the statement of profit and loss.

Experience adjustment is on account of attrition in the number of employees as compared to the previous year and change in actuarial assumptions.

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

G Percentage of each category of Plan Assets to total Fair Value of Plan Assets as at 31 March 2012.

The Plan Assets are administered by Life Insurance Corporation of India ("LIC") as per Investment Pattern stipulated for Pension and Group Schemes Fund by Insurance and Regulatory Development Authority regulations.

The discount rate is based on the prevailing market yields on Indian government securities as at the balance sheet date for the estimated term of obligation.

6. Segment reporting

The Company recognizes its sale of crucibles activity as its only primary business segment since its operations predominantly consist of manufacture and sale of crucibles to its customers. Accordingly, income from sale of crucibles comprises the primary basis of segmental information set out in these financial statements. Geographical segment will be the secondary segment for the purpose of AS-17 (Segment reporting). All the assets of the Company are located in India except for Trade receivables aggregating Rs.104,807,237 (2011: Rs.68,049,633). The Company caters to the needs of the domestic and foreign market.

7. Related party disclosure

List of related parties

i. Parties (where control exists)

The Morgan Crucible Company Plc., U.K. - Ultimate holding company

ii. Investing associates

- Morganite Crucible Limited (holds 38.50% of issued, subscribed and paid up capital)

- Morgan Treason BV (holds 36.50% of issued, subscribed and paid up capital)

iii. Other related Parties where transactions have taken place during the year

Subsidiary company

- Diamond Crucible Company Limited Fellow subsidiary companies

- Morganite Crucible Inc., USA

- Morgan Molten Metal Systems GMBG Germany

- Morgan Molten Metal System (Suzhou) Co. Ltd., China

- Morgan Karbon Grafit Sanayi AS Turkey

- Thermal Ceramics UK

- Murugappa Morganite Thermal Ceramics Limited

- Morgan Thermal Ceramics - Shanghai

iv. Key Management Personnel

- Mr. Vijay Sabarwal - CEO and Whole time Director (upto 29 January 2011)

- Mr. Ashish Mehrotra - Director sales and marketing

- Mr. Vinod Mhalsekar - Director operations

- Mr.Hitesh Saiwal - Wholetime Director / Country Manager (from 17 May 2010)

8. The Company has entered into operating leases for cars for a period of 3 years. Total lease payments for non-cancellable leases recognised in books for the year is Rs.1,447,836 (2011: Rs.747,799).

9. Dues to Micro, Small and Medium Enterprises

Under Micro, Small, and Medium Enterprises Development Act, 2006 (MSMED) which came in to force from 2 October, 2006, certain disclosures are required to be made relating to Micro, Small and Medium enterprises.

On the basis of the information and records available with the management, the following disclosures are made for the amounts due to the Micro, small and medium enterprises:

10. Receivables and payables denominated in foreign currency

The Company has entered into derivative contracts to hedge its risk associated with foreign currency fluctuations. However, none of these contracts can be co-related on one to one basis against the underlying exposure. As at the year end, the Company has outstanding foreign exchange forward contracts of GBP 725,000, EURO 825,000 and USD 639,073 (2011: GBP 500,000) equivalent to Rs.148,226,427 (2011: Rs.36,075,000). The Company has revalued these forward contracts as at the yearend by marking the same to market and recognized a loss of Rs.4,976,182 (2011: Rs.107,000) by debiting the statement of profit and loss in compliance with the announcement dated 29 March 2008 made by the Institute of Chartered Accountants of India ('ICAI') regarding accounting for derivatives.

11. Transfer Pricing

Transactions with overseas related parties are governed by transfer pricing regulations of the Indian Income tax Act, 1961. The Company's international transactions with associated enterprises are at arm's length as per the independent accountants' report for the year ended 31 March 2011. Management believes that the Company's international transactions with related parties post 31 March 2011 continue to be at arm's length and that the transfer pricing legislation will not have any impact on the financial statements particularly on the amount of the tax expense for the year and the amount of the provision for taxation at the year end.

12. Previous year figures

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

 
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