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Notes to Accounts of National Fittings Ltd.

Mar 31, 2016

Note:

(i) Balances with banks include deposits with scheduled bank amounting to Rs. 8, 83, 82,831/- (As at 31 March, 2015 Rs. 6, 45, 28,623/-) which have an original of 12 months.

(ii) Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006 As per the information available with the company till date, none of the suppliers have informed the company about their having registered themselves under the “Micro, Small and Medium enterprises development Act, 2006. As such information required under the Act cannot be complied and therefore not disclosed for the year.

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

1. Employee benefit plans

2. a Defined contribution plans

The Company makes Provident Fund and Superannuation Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized Rs. 6,20,109 (Year ended 31 March, 2015 Rs.5,53,492) towards Provident Fund contribution and Rs.7,20,840 (Year ended 31 March, 2015 Rs.7,30,939) towards Employees State Insurance contribution in the Statement of Profit and Loss. The contributions payable are at the rates specified in the rules of the schemes.

3. b Defined benefit plans

The Company offers the following employee benefit schemes to its employees:

I. Gratuity

ii. Leave Encashment

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


Mar 31, 2015

(i) Terms / rights attached to shares

(a) The company has only one class of equity shares having at par value of Rs.10/- per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividend in Indian rupees. The Board of Directors have recommended a dividend of Rs.1/- per equity share of Rs.10/- each amounting to Rs.83.20 Lacs excluding Dividend Distribution Tax subject to approval of members in the Ensuing Annual General Meeting.

(b) The company has only one class of Preference shares having at par value of Rs.100/- per share which is non- convertible and non-cumulative. The preference shares are entitled to a dividend of 9% and will be redeemable at par subject to the provision of section 80 and other applicable provisions of the Companies Act, 1956 after the expiry of the sixth year but before the expiry of the twelfth year from the date of allotment of the shares by one or more installments at the option of the company by giving 3 month's notice. During the year, the company has redeemed 200,000 preference shares at Par. The Board of Directors have recommended a dividend of 9% on preference shares amounting Rs.27 lacs excluding dividend distribution tax. The Board of Directors have resolved to redeem 3,00,000 of preference shares of Rs.100/- each amounting to Rs.300 lacs.

(c) 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 proportion to the number of equity shares held by the shareholders.

# Working capital loans comprising of cash credit Export Packing Credit and other non fund based limits are secured by hypothecation of stocks and book debts and collaterally secured by Hypothecation of Machinery and equitable mortgage of property situate at Kaniyur Village.

Further the above are guaranteed personally by the Managing Director and a relative of the Managing Director and in addition to Corporate guarantee of M/s. Interfit India Limited, the holding company. During the year the company has not defaulted in repayment of loan and interest.

@ Demand Loan against Deposit was availed under the lien of Fixed Deposits with Bank of India. As at As at 31 March 2015 31 March, 2014

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

(i) (a) Contingent liabilities

(1) Claims against the Company not acknowledged as debt (In respect of the appeal filed by the Central Excise department for the Modvat claim of Rs3,85,764/ - the CECAT has decided in favour of the department, reducing the claim 283,658 283,658 to Rs2,83,658/- against which the Company has preferred an appeal with the High Court, Chennai. However the Company has paid the duty amount of Rs2,83,658/- under protest).

(2) Other money for which the Company is contingently liable

a) Sales Tax refund for exports disallowed for invisible loss from Sept'11 to Feb'13 by the Commercial Tax Department ___ 678 333 but claimed by the company pending decision before High , Court of Chennai.

b) Letter of Credit established by the Bankers and outstanding as on the date of the Balance Sheet 1,206,374 24,972,748

c) Export bills discounted with Bankers as on the date of the 28,294,07 7 33,808,103 Balance Sheet

d) Estimated differential Sales Tax liability on account of 374,432 328,354 non-receipt of C-Forms

(b) Commitments

Estimated amount of contracts remaining to be executed on 1 000 000 160 000 capital account and not provided for

(ii) Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006 As per the information available with the company till date, none of the suppliers have informed the company about their having registered themselves under the "Micro, Small and Medium enterprises development Act, 2006. As such information required under the Act can not be complied and therefore not disclosed for the year.

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

2.2 Employee benefit plans

2.2 a Defined contribution plans

The Company makes Provident Fund and Superannuation Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised ' 5,53,492 (Year ended 31 March, 2014'5,01,436) towards Provident Fund contribution and Rs7,30,939 (Year ended 31 March, 2014'6,21,684) towards Employees State Insurance contribution in the Statement of Profit and Loss. The contributions payable are at the rates specified in the rules of the schemes.

2.3 b Defined benefit plans

The Company offers the following employee benefit schemes to its employees:

i. Gratuity

ii. Leave Encashment

The following table sets out the funded status of the defined benefit schemes and the amount recognised in the financial statements:

2.4 Related party transactions

Description of relationship Names of related parties

Holding Company Interfit India Ltd

Enterprises in which Directors have

Significant influence Merit Industries Ltd

Serna Impex Pvt. Ltd.

Haitima India Pvt. Ltd.

Key Management Personnel A V Palaniswamy (Managing Director)

Panath Anitha (Executive Director - w.e.f. 14.02.2015)

J Saravanan (Chief Financial Officer - w.e.f. 01.10.2014)

Relatives of Key Management Personnel Mrs Kumudha Palaniswamy and their Enterprises (wife of Mr A V Palaniswamy)

Note: Related parties as identified by the Management.

In accordance with Accounting Standard 22, the deferred tax Asset of Rs. 18.70 lacs for the year have been recognised in Profit and Loss Statement.

2.5 Change in Accounting Estimate

a) Pursuant to the enactment of the Companies Act, 2013 (the 'Act'), the Company has, effective 1st April'2014, reviewed and revised the estimated useful lives of its Fixed Assets, generally in accordance with the provisions of Schedule II to the Act. The consequential impact (after considering the transition provision specified in Schedule II) on the depreciation charged and on the results for the year ended is higher by Rs. 62.87 lacs

b) The Input Tax Credit under the sales tax laws which had been accounted on accrual basis till last year is being accounted as cash basis from this year, amounting to Rs.82.86 lacs in view of the uncertainties in its realisation and to this extent the profit declared is lower by this amount.


Mar 31, 2014

1. Corporate Information

Interfit Techno Products Limited incorporated as a Public Limited Company under the Provision of Companies Act, 1956 to manufacture and market SG Iron Grooved and Screwed Pipe Fittings, Stainless Pipe Fittings and Ball Valves for industrial and non-industrial applications, have its name changed to National Fittings Limited with effect from 27.09.2013, to take advantage of the NATIONAL Brand name of the product.

2. Terms / rights attached to shares

(a) The company has only one class of equity shares having at par value of Rs.10/- per share. Each holder of equity shares is entilted to one vote per share. The company declares and pays in Indian Rupees. The Board of Directors have recommended a dividend of Re.1/- per equity share of Rs.10/- each, amounting to Rs. 83.20 lacs excluding divident tax subject to approval of members in ensuring Annual General Meeting.

(b) The company has only one class of Preference shares having at par value of Rs.100/- per share which is non-convertible and non-cumulative. The preference shares are entitled to a dividend of 9% and will be redeemable at par subject to the provision of section 80 and other applicable provisions of the Companies Act, 1956 after the expiry of the sixth year but before the expiry of the twelfth year from the date of allotment of the shares by one or more installments at the option of the company by giving 3 month''s notice. The Board of Directors have recommended a dividend of 9% on preference shares amounting to Rs.45 lacs excluding dividend tax. The Board of Directors have resolved to redeem 2,00,000 of preference shares of Rs.100/- each amounting to Rs.200 lacs.

(c) In the event of liquidation of the company, the holders of equity shares will be entilted to receive remaining assets of the company, after distibution of all preferential amounts. The distribution will be proportion to the number of equity shares held by the shareholders.

3. Working capital loans comprising of cash credit Export Packing Credit and other non fund based limits are secured by hypothecation of stocks and book debts and collaterally secured by the equitable mortgage of Block Assets and Hypothecation of Machinery.

Further the above are guaranteed personally by the Managing Director and a relative of the Managing Director and also by Corporate guarantee of M/s. Interfit India Limited, the holding company. During the year the company has not defaulted in repayment of loan and interest.

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

(i) (a) Contingent liabilities As at As at 31 March 2014 31 March, 2013

(1) Claims against the Company not acknowledged as debt (In respect of the appeal filed by the Central Excise department for the Modvat claim of Rs. 3,85,764/- the CECAT has decided in favour of the department, reducing the claim to Rs. 2,83,658/- 283,658 283,658 against which the Company has preferred an appeal with the High Court, Chennai. However the Company has paid the duty amount of Rs. 2,83,658/- under protest).

(2) Other money for which the Company is contingently liable

a) Sales Tax refund for exports disallowed for invisible loss from Sept''11 to Feb''13 by the Commercial Tax Department but claimed by the 678 333 678 333 company pending decision before High Court of Chennai.

b) Letter of Credit established by the Bankers and outstanding as on 24,972,748 5,64631 the date of the Balance Sheet

c) Export bills discounted with Bankers as on the date of the Balance Sheet 33,808,103 21,684,599



d) Estimated differential Sales Tax liability on account of non- 328,354 - receipt of C-Forms

(b) Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for 160,000 266,625

(ii) DisclosuresrequiredunderSection22oftheMicro,Smalland MediumEnterprisesDevelopmentAct,2006 As per the information available with the company till date, none of the suppliers have informed the company about their having registered themselves under the "Micro, Small and Medium enterprises development Act, 2006. As such information required under the Act can not be complied and therefore not disclosed for the year.

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

5. Employee benefit plans

a Defined contribution plans

The Company makes Provident Fund and Superannuation Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs. 5,01,436 (Year ended 31 March, 2013 Rs.4,50,960) towards Provident Fund contribution and Rs.6,21,684 (Year ended 31 March, 2013 Rs.5,82,448) towards Employees State Insurance contribution in the Statement of Profit and Loss. The contributions payable are at the rates specified in the rules of the schemes.


Mar 31, 2013

1.1 Employee benefit plans

1.1 a Defined contribution plans

The Company makes Provident Fund and Superannuation Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised '' Rs. 4,50,960 (Year ended 31 March, 2012 Rs.8,17,708) towards Provident Fund contribution and Rs.5,82,448 (Year ended 31 March, 2012 Rs.4,79,816) towards Employees State Insurance contribution in the Statement of Profit and Loss. The contributions payable are at the rates specified in the rules of the schemes.

1.1 b Defined benefit plans

The Company offers the following employee benefit schemes to its employees: i. Gratuity

ii. Leave Encashment

The following table sets out the funded status of the defined benefit schemes and the amount recognised in the financial statements:

1.2 Related party transactions

Description of relationship Names of related parties

Holding Company Interfit India Ltd

Associates Merit Industries Ltd

Mem Engineering Private Limited

Key Management Personnel AV Palaniswamy (Managing Director)

R Alagar (Director) M Loganathan ( Director) K Arunachalam ( Director) Philip K Baby (Director- up to 13.08.2012)

Relatives of Key Management Personnel Mrs Kumudha Palaniswamy and their Enterprises (wife of Mr A V Palaniswamy)

Note: Related parties as identified by the Management.

Details of related party transactions during the year ended 31 March, 2013 and balances outstanding as at 31 March, 2013

1.3 Taxation

a. Provision for Income Tax including Minimum Alternate Tax u/s 115 JB of the Income Tax Act, 1961 has been made considering the carried forward losses of earlier years.

The MAT credit entitlement of Rs. 41.42 lakhs has been accounted.

The Company''s financial projections for future years indicate that the unabsorbed depreciation and business losses allowable under under Income Tax Act 1961 will be utilized.

In accordance with Accounting Standard 22, the deferred tax Asset of Rs. 176.85 lacs for the year have been recognised in Profit and Loss Statement.


Mar 31, 2012

(i) Terms / rights attached to shares

(a) The company has only one class of equity shares having at par value of Rs 10/- per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividend in Indian rupees. No dividend has been proposed by the board of directors during the year

(b) The company has only one class of Preference shares having at par value of Rs 100/- per share which is non-convertible and non-cumulative. The preference shares are entitled to a dividend of 9% and will be redeemable at par subject to the provision of section 80 and other applicable provisions of the Companies Act, 1956 after the expiry of the sixth year but before the expiry of the twelfth year from the date of allotment of the shares by one or more installments at the option of the company by giving 3 month's notice.

(c) 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 proportion to the number of equity shares held by the shareholders.

# Working capital loans comprising of Cash Credit, Export Packing Credit and other non-fund based limits are secured by hypothecation of stocks and book debts and collaterally secured by the equitable mortgage of Block Assets and Hypothecation of Machinery. Further the above are guaranteed personally by the Managing Director and a relative of the Managing Director and also by Corporate guarantee of M/s. Interfit India Limited, the holding company. During the year the company has not defaulted in repayment of loan and interest.

@ Lien has been marked on the Term Deposit for the Loans availed.

## The Company has been granted Eligibility Certificate entitled to the benefit of IFST deferral scheme for manufacturing SS Fittings for nine years ending 30.11.03 for deferral of sales tax not exceeding Rs 390.45 lakhs against which the company had availed Rs 25.89 lakhs. Such sales tax deferred has to be repaid before November 2012 in stipulated instalments commencing from December 2003 and the company has so far paid Rs 19,64,158/- (Previous year Rs 13,50,177).

During the year the company has not defaulted in repayment of IFST Instalments.

Trade payables are dues in respect of goods purchased or services received (including from employees, professionals and others under contract) in the normal course of business.

@ Trade payables include Rs 44,74,804 due to M/s. Interfit India Limited, the Holding Company.

As at As at 31 March 2012 31 March, 2011

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

(i) Contingent liabilities

(a) Claims against the Company not acknowledged as debt (In respect of the appeal filed by the Central Excise department for the Modvat claim of Rs 3,85,764/- the CECAT has decided in favour of the department, reducing the claim 2,83,658 2,83,658 to Rs 2,83,658/- against which the Company has preferred an appeal with the High Court, Chennai. However the Company has paid the duty amount of Rs 2,83,658/- under protest).

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

Letter of Credit established by the Bankers and outstanding 81,45,490 68,48,644 as on the date of the Balance Sheet

Export bills discounted with Bankers as on the date of the 2,34,11,940 1,11,84,752 Balance Sheet

(ii) Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006 As per the information available with the company till date, none of the suppliers have informed the company about their having registered themselves under the "Micro, Small and Medium enterprises development Act, 2006. As such information required under the Act can not be complied and therefore not disclosed for the year.

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

1.2 Employee benefit plans

1.3 a Defined contribution plans

The Company makes Provident Fund and Superannuation Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs 8,17,708/- (Year ended 31 March, 2011 Rs 5,08,297/-) for Provident Fund contributions and Rs 4,79,816/- (Year ended 31 March, 2011 Rs 3,03,138/-) for Employees State Insurance contributions in the Profit and Loss Statement. The contributions payable to these plans by the Company are at rates specified in the rules of the respective schemes.

1.4 a Defined benefit plans

The Company offers the following employee benefit schemes to its employees:

i. Gratuity

ii. Leave Encashment

*** Since no Preference dividend on non-cumulative preference shares provided for in the books, entire profit after tax is attributed towards equity share holders.

1.5 Taxation

a. Provision for Income Tax including Minimum Alternate Tax u/s 115 JB of the Income Tax Act, 1961 has been made considering the carried forward losses of earlier years. Accordingly, the MAT credit entitlement of Rs 44.71 lakhs has been recognised.

The Company's financial projections for future years indicate that the unabsorbed depreciation and business losses allowable under under Income Tax Act 1961 will be utilized.

In accordance with Accounting Standard 22, the deferred tax Asset of Rs 3.85 lacs for the year have been recognised in Profit and Loss Statement.


Mar 31, 2010

1. CONTINGENT LIABILITIES NOT PROVIDED FOR:

Letter of Credit established by the Bankers and outstanding as on the date of the Balance sheet Rs. 17,56,845/-. (Previous year Rs. 17,91,216/-)

Export bills discounted with Bankers as on 31.03.2010 Rs. 85,04,380/- (Previous year Rs. 1,31,07,399/-)

In respect of the appeal filed by the Central Excise department for the Modvat Claim of Rs 3,85,764/- the CEGAT has decided in favour of the department, though reducing the claim to Rs.2,83,658/- against which the Company has preferred an appeal with the High Court, Chennai. However the Company has paid the duty amount of Rs.2,83,658/- under protest.

The Appeal preferred for 1999-2000 for levy of sales tax and penalty of Rs 2,57,100/- has been decided in favour of the Company and relief given to the extent of Rs 2,40,270/-. The Company has preferred further appeals seeking relief for the balance amount, which however has been paid.

2. Net Loss on account of Exchange fluctuation included in Profit & Loss Account Rs 86,207 (Previous Year Net Loss Rs 10,01,251/-)

3. Investments in National Savings Certificates, have been pledged with Sales Tax Authorities. 7. Disclosure Pursuant to Accounting Standard - 15 "Employee Benefits "

Defined Benefit Plan

The present Value of obligation is determined based on actuarial valuation using Projected Unit Credit method. Under this method the present value of the accrued service benefits is calculated after taking into account the usual decrements such as death, withdrawal etc before normal retirement date and projecting the qualifying salary up to the expected date of cessation of service as assumed in the probability distribution of decrements stated above using actuarial techniques based on multiple decrement table and related commutation function.

4. Plan Assets are managed by Life Insurance Corporation of India in terms of the Group Gratuity Scheme.

5. Disclosure as required by Accounting Standard 19 "Leases" issued by the Institute of Chartered Accountants of India are given below:

The Company has taken premises on lease which is generally non cancellable and the lease payments are recognised in the statement of Profit and Loss account under "Rent".

6. In the opinion of Directors, current assets, loans and advances have the values at which they are stated in the Balance Sheet, if realised in the ordinary course of business.

The Companys financial projections for future years indicate that the unabsorbed depreciation and business losses allowable under the provisions of income Tax Act 1961 will be utilized.

In accordance with Accounting Standard 22, the deferred tax Asset of Rs 4.30 lacs for the year have been recognised in Profit and Loss account.

7. Related party information:

1. RELATIONSHIP:

A. Where Control Exits:

a) INTERFIT INDIA LIMITED

b) MERIT INDUSTRIES LIMITED

B. Key Management Personnel:

A.V. Palaniswamy (Managing Director)

R. Alagar (Director)

M. Loganathan (Director)

K. Arunachalam (Director)

Philip K Baby (Director)

C. Relatives of Key Management Personnel and their Enterprises

Mrs. Kumudha Palaniswamy

Notes : 1. Related party relationship on the basis of the requirements of AS18 as in 1(A) to (C) is pointed and relied upon by the auditors.

8. The company has been granted Eligibility Certificate whereby the company is entitled to the benefit of IFST deferral scheme for manufacturing SS Fittings for nine years ending 30.11.03 for deferral of sales tax not exceeding Rs. 390.45 lakhs against which the company had availed Rs. 25.89 lakhs. Such sales tax deferred has to be repaid before November 2012 in stipulated installments commencing from December 2003 and the Company so for has paid Rs 9, 34,863/- (Previous Year Rs.6,96,206/-)

9. The Company is a subsidiary of Interfit India Ltd under the provisions of section 4(1)(b)(ii)of the Companies Act 1956. The total no of equity shares held by the holding company M/s Interfit India Ltd as on 31.03.2010 is 46,97,810. (Previous Year 46,97,810)

10. As per the information available with the company till date, none of the suppliers have informed the company about their having registered themselves under the "Micro, Small and Medium enterprises development Act, 2006. As such information as required under the Act can not be compiled and therefore not disclosed for the year.

11 Confirmations of Balances have been sought from parties and the necessary adjustments have been made wherever applicable from those received. In respect of others, the balances as appearing in the books have been adopted.

12. Previous years figures have been regrouped and reclassified wherever necessary and practicable.