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Notes to Accounts of NRB Bearings Ltd.

Mar 31, 2015

1. Corporate Information:

NRB Bearings Limited incorporated in 1965, is engaged in the manufacture of ball and roller bearings.

As at As at 31.03.2015 31.03.2014 Rs. lacs Rs. lacs

NOTE 2 - Contingent liabilities not provided for:

a) Income Tax 1388.62 1077.66

b) Sales Tax 316.30 230.25

c) Customs Duty 158.87 158.87

d) Bank guarantees 96.29 37.56

e) Stand by letter of credit given to bank on behalf of a subsidiary Company 271.94 606.79

f) Corporate guarantees issued on behalf of subsidiary companies / group Company 5406.59 7481.38

The Company is in further appeal in respect of matters stated in a) to c) above

NOTE 3 - Segment reporting

The Company has a single reportable business segment namely bearings for the purpose of Accounting Standard 17 on Segment Reporting.

Footnote:

i) Figures in brackets are in respect of the previous year.

ii) No amounts pertaining to related parties have been provided for as doubtful debts. Further, no amounts have either been written off or written back during the year except as disclosed above.

iii) Dividend paid/received has not been considered by the Company as a transaction falling under the purview of Accounting Standard 18 "Related Party Disclosures".

NOTE 4 - Lease Rentals

The Company has taken certain vehicles on operating lease. Lease rental charged to the statement of profit and loss for the year ended 31.03.2015 aggregated Rs. 73.13 lacs (for the year ended 31.03.2014: Rs. 64.73 lacs ). The minimum lease payments to be made in future as at the year end, in respect of non-cancellable lease are follows:

Footnotes:

(i) The expected rate of return on plan assets is based on the average long term rate of return expected on investments of the fund during the estimated term of obligation.

(ii) The assumption of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion, increment and other relevant factors.

(iii) The discount rate is based on prevailing market yield of government of India security as at the Balance sheet date for the estimated term of the obligation.

b) Compensated Expenses

(i) Compensated Expenses recognised in the statement of profit and loss for the year, under employee benefit expense, is Rs. 196.54 lacs (for the year ended 31.03.2014 : Rs. 85.33 lacs).

NOTE 5

Pursuant to the notification issued by the Central Government extending the applicability of amendment to Accounting Standard 11 on ''The Effects of Changes in Foreign Exchange Rates'' upto 31st March, 2020, which provides an option for adjustment of foreign exchange gain / loss arising on long term foreign currency borrowings against the carrying value of related fixed assets, the Company has continued to exercise the option and has adjusted exchange loss aggregating Rs. 389.35 lacs (for the year ended 31.03.2014 : Rs. 519.38 lacs) against the carrying value of fixed assets. The balance amount, based on aforesaid adjustments, of plant and machinery to be amortised, as at the year- end, aggregates Rs. 1309.82 lacs (Previous year Rs. 1042.05 lacs).

The depreciation and amortistation expense in the Statement of Profit and Loss for the year is lower by Rs. 703.81 lacs consequent to the change in the useful life of the assets.

NOTE 6

The Company has an investment of Rs. 1640.56 lacs in equity shares of NRB Bearings (Thailand) Limited (NRB, Thailand) a wholly owned subsidiary, whose net worth has eroded as per the latest audited financial statements as at 31st March 2015. To strengthen the operations and financial health of NRB, Thailand, the Company has initiated several measures to increase sales (via new customer acquisition and increased penetration of the existing customer base) and improve cash flows. Significant efforts are being implemented to mine synergies between the Company and NRB, Thailand thus improving efficiencies and profitability of NRB, Thailand. The Company is committed to NRB, Thailand as a key investment to achieve its overall growth plan. Therefore, in view of the Management, the diminution in value of investments in NRB, Thailand is temporary.

NOTE 7

Previous year''s figures have been regrouped / re-stated wherever necessary.


Mar 31, 2013

1. Corporate Information:

NRB Bearings Limited incorporated in 1965, is engaged in the manufacture of ball and roller bearings.

NOTE 2 - Segment reporting

The Company has a single reportable business segment namely bearings for the purpose of Accounting Standard 17 on Segment Reporting.

NOTE 3 - Lease Rentals

The company has taken certain vehicles on operating lease. Lease rental charged to the statement of profit and loss for the year ended 31.03.2013 aggregated Rs. 67.76 lacs (for the year ended 31.03.2012: Rs. 44.72 lacs ). The minimum lease payments to be made in future as at the year end, in respect of non-cancellable lease are follows:

NOTE 4 - Financial and Derivative Instruments

i) Forward Exchange Contracts entered into by the company that are outstanding as at 31st March, 2013:

These Forward Foreign Exchange Contracts are entered into for hedging purposes and not for speculation purposes

ii) Currency Swap transaction to hedge against fluctuations in exchange rates:

iii) Interest rate swaps to hedge against fluctuations in interest rate changes: No. of contracts: 3 (as at 31.3.2012: 4)

iv) Foreign currency exposures that have not been hedged by a derivative instrument or other wise outstanding as at 31.03.2013:

v) Figures in brackets are the corresponding figures in respect of the previous year.

NOTE 5

The scheme of arrangement for the demerger of industrial bearings undertaking of the Company into NRB Industrial Bearings Limited (NIBL) was approved by the Hon''ble high court vide its order dated 24th August 2011 on getting requisite approvals and completion of necessary formalities.

Consequent to the vesting of the industrial bearings undertaking of the Company in terms of the scheme, the financial statement of the Company for the year ended 31 March 2013 do not include the operations of the industrial bearings for the six months from 1 October 2012 to 31 March 2013 and therefore are strictly not comparable with the figures of the previous year ended 31 March 2012.

All the assets and liabilities relating to industrial bearings business of the Company on the appointed date have been transferred to NIBL on a going concern basis. The excess of assets over liabilities relating to industrial bearings business as on 1st October 2012 being the appointed and effective date, have been adjusted in terms of the scheme against the General reserve amounting to Rs. 6184.78 lacs.

Further as per the scheme, NIBL has allotted to the shareholders of the Company, fully paid up equity shares in the ratio of one share for every four shares held in NRB Bearings Limited as on record date 26th October, 2012.

NOTE 6

On 19th April, 2011, the Board of Directors approved the scheme of arrangement under applicable sections of Companies Act, 1956, the merger of Trilochan Investments Company Private Limited (TICPL) (formerly known as Trilochan Sahney Finance and Holdings Private Limited) and the Company with effect from 1st October, 2011 viz. appointed date. The same was approved by the Hon''ble High Court of Judicature at Bombay on 13th January, 2012 and filed with the Registrar of Companies on 2nd February, 2012 viz. effective date.

Consequent to the merger, accounted under pooling of interests method, the Company has cancelled Nil (as at 31.3.2012: 37755640) equity shares of the Company held by TICPL and equivalent number of equity shares have been issued to equity shareholders of TICPL namely, Trilochan Singh Sahney Trust 1 (held by the trustee in his individual name) as consideration for the merger.

The assets taken over of TICPL, an investment Company comprise of investments in equity shares of NRB Bearings Limited of Rs. Nil (as at 31.3.2012: 6785.63 lacs), bank balance of Rs. Nil (as at 31.3.2012: Rs. 24.58 lacs) and liabilities of Rs. Nil (as at 31.3.2012: Rs. 24.58 lacs). The reserves of TICPL namely, general reserve of Rs. Nil (as at 31.3.2012: Rs. 6172.64 lacs), securities premium of Rs. Nil (as at 31.3.2012: Rs. 601.89 lacs) and capital redemption reserve of Rs. Nil (as at 31.3.2012: Rs. 11.10 lacs) have been accounted for at their respective book values. The value of investments of Rs. Nil (as at 31.3.2012: Rs. 6785.63 lacs) have been adjusted against general reserve resulting in net adjustment of Rs. Nil (as at 31.3.2012: Rs. 612.99 lacs).

NOTE 7

The company has entered into a joint venture agreement with Schneeberger Holding AG, Switzerland to act as its exclusive agent in India and has formed a joint venture company with effect from 15th February, 2008 for which NRB Bearings Limited has contributed towards its share capital on 14th May, 2008. With effect from, 1st October, 2012 the joint venture is transferred to NRB Industrial Bearings Limited under the scheme of demerger (refer note 42). The proportionate share in assets, liabilities, income & expenditure of the joint venture company as on 30th September, 2012 is given below :

NOTE 8

Previous year''s figures have been regrouped / re-stated wherever necessary.


Mar 31, 2012

1. Corporate Information:

NRB Bearings Limited incorporated in 1965, is engaged in the manufacture of ball and roller bearings.

i) Rights attached to equity shares:

a) Right to receive dividend as may be approved by the Board / Annual General Meeting.

b) The equity shares are not repayable except in the case of a buy back, reduction of capital or winding up in terms of the provisions of the Companies Act, 1956.

c) Every member of the company holding equity shares has a right to attend the General Meeting of the company and has a right to speak and on a show of hands, has one vote if he is present in person and on a poll shall have the right to vote in proportion to his share of the paid-up capital of the company.

Footnotes:

i) 200, 11.5% privately placed non-convertible debentures of Rs. 1,000,000 each, redeemable at par, on 31st May, 2014. ii) Details of repayment of Loans

iii) For the amount of current maturities of long term borrowings, refer note 10 - Other current liabilities.

Footnote:

There are no amounts due to the suppliers covered under Micro, Small and Medium Enterprise Development Act, 2006; this information takes into account only those suppliers who have responded to the enquiries made by the Company for this purpose. This has been relied upon by auditors.

i. Refer footnote ii(a) and ii(c) in note 5 - Long term borrowings for details of security

ii. There is no amount outstanding and due as at the balance sheet date to be credited to the Investor Education and Protection Fund.

Note 1 - Contingent liabilities not provided for:

As at As at 31.03.2012 31.03.2011 Rs. Lacs Rs. Lacs

a) Income Tax 1035.04 812.00

b) Sales Tax 118.08 118.08

c) Customs Duty 158.87 158.87

d) Bank guarantees 7.75 3.75

e) Stand by letter of credit given to bank on behalf of a subsidiary company 1119.36 981.20

f) Corporate guarantees issued on behalf of subsidiary companies 2082.86 1899.85

The Company is in further appeal in respect of matters stated in a) to c) above

NOTE 2 - Segment reporting

The Company has a single reportable business segment namely bearings for the purpose of Accounting Standard 17 on Segment Reporting.

Footnote:

i) Figures in brackets are in respect of the previous year.

ii) No amounts pertaining to related parties have been provided for as doubtful debts. Further, no amounts have either been written off or written back during the year.

iii) Dividend paid has not been considered by the company as a transaction falling under the purview of Accounting Standard 18 "Related Party Disclosures".

iii) Interest rate swaps to hedge against fluctuations in interest rate changes: No. of contracts: 4 (as at 31.3.2011: 1)

Footnotes:

(i) The expected rate of return on plan assets is based on the average long term rate of return expected on investments of the fund during the estimated term of obligation.

(ii) The assumption of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion, increment and other relevant factors.

(iii) The discount rate is based on prevailing market yield of Government of India security as at the Balance sheet date for the estimated term of the obligation.

b) Compensated Expenses recognised in the statement of proft and loss for the year, under employee benefit expense, is Rs. 261.25 lacs (for the year ended 31.03.2011 : Rs 218.64 lacs).

NOTE 3 -

On 19th April, 2011, the Board of Directors approved the scheme of arrangement under applicable sections of Companies Act, 1956, the merger of Trilochan Investments Company Private Limited (TICPL) (formerly known as Trilochan Sahney Finance and Holdings Private Limited) and the Company with effect from 1st October, 2011 viz appointed date. The same was approved by the Hon'ble High Court of Judicature at Bombay on 13th January, 2012 and fled with the Registrar of Companies on 2nd February, 2012 viz. effective date.

Consequent to the merger, accounted under pooling of interests method, the Company has cancelled 37755640 equity shares of the Company held by TICPL and equivalent number of equity shares have been issued to equity shareholders of TICPL namely, Trilochan Singh Sahney Trust 1 (held by the trustee in his individual name) as consideration for the merger. The consequent change in the register of members has been made subsequent to 31st March, 2012 on receipt of approval from stock exchanges.

The assets taken over of TICPL, an investment Company comprise of investments in equity shares of NRB Bearings Limited of Rs. 6785.63 lacs, bank balance of Rs. 24.58 lacs and liabilities of Rs. 24.58 lacs. The reserves of TICPL namely, general reserve of Rs. 6172.64 lacs, securities premium of Rs. 601.89 lacs and capital redemption reserve of Rs. 11.10 lacs have been accounted for at their respective book values. The value of investments of Rs. 6785.63 lacs have been adjusted against general reserve resulting in net adjustment of Rs. 612.99 lacs.

NOTE 4 -

The board of directors in its meeting held on 12th October, 2011 approved the demerger of the industrial bearings undertaking of the Company into NRB Industrial Bearings Limited (NIBL), a wholly owned subsidiary incorporated to carry out the business of manufacturing and selling industrial bearings under the Scheme of Arrangement (the scheme), subsequently also approved by the shareholders on 3rd February, 2012 in an extra ordinary general meeting convened by the court. The said scheme is subject to statutory and contractual approvals, as may be required. Upon the scheme becoming effective, in consideration of the transfer and vesting of the industrial bearings undertaking in to NIBL, NIBL will allot to all shareholders of NRB Bearings Limited, fully paid up equity shares in the ratio of one share for every four shares held in NRB Bearings Limited. The appointed date for the scheme is 1st October, 2012.

Considering the industrial bearings undertaking's in significant scale of operations as compared to the Company's total operations, the demerger of the industrial bearings undertaking will not have a material impact on the Company's financials.

There are no capital commitment nor contingent liabilities.

Figures in brackets are the corresponding figures in respect of the previous year.

# net after deducting shareholders' funds.

NOTE 5 -

The Revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped wherever necessary.


Mar 31, 2011

As at As at

31.03.2011 31.03.2010

Rs. lacs Rs.lacs

1. Contingent liabilities not provided for:

a) Income Tax 812.00 378.92

b) Sales tax 118.08 118.08

c) Customs duty 158.87 158.87

d) Bank guarantees 3.75 13.15

e) Stand by letter of credit given to bank on behalf of a subsidiary company 981.20

f) Corporate guarantees issued on behalf of subsidiary companies. 1899.85 1770.28

The Company is in further appeal in respect of matters stated in a) to c) above.

2. There are no amounts due to the suppliers covered under Micro, Small and Medium Enterprises Development Act, 2006; this information takes into account only those suppliers who have responded to the enquiries made by the Company for this purpose. This has been relied upon by the auditors.

3. As the company's activity falls within a single segment viz. bearings and the sales substantially being in the domestic market, the disclosure requirements of Accounting Standard 17 "Segment Reporting" is not applicable.

4. Related party disclosures

(i) Names of related parties and nature of relationship

Sr. no Names of related parties Nature of relationship

(a) SNL Bearings Limited Subsidiary company

(b) NRB Bearings (Thailand) Limited Subsidiary company

(c) Schneeberger India Private Limited A Joint Venture of the Company

(d) Mr. T. S. Sahney, Individual having substantial interest in the voting Executive Chairman power and the power to direct by agreement, the financial and operating policies of the company.

(e) Ms. H. S.Zaveri, Managing Director Key management personnel

(f) Mr. D. S. Sahney, Key management personnel Whole time Director

(g) New Indo Trading Company A firm where executive chairman is a partner

(h) Mrs. H. K. Sahney Relative of executive chairman

9. Values used in calculating Earnings Per Share

The Company has allotted bonus shares in the ratio of 1:1 based on the shareholdings as per record date of 6th September, 2010 by capitalising the Share Premium Account. This has resulted in increase in issued and paid up equity share capital from Rs. 969.23 lacs to Rs. 1938.45 lacs. Accordingly, the Earnings Per Share for the year ended 31st March, 2010 have been restated to give the effect of bonus shares in accordance with Accounting Standard 20 (AS 20) - 'Earnings per share'.

b) Compensated absenses recognised in the statement of profit and loss account for the year, under employee cost, in Schedule 15, is Rs 218.64. Lacs (for the year ended 31.03.2010 : Rs. 112.86 Lacs).

5. Previous year's figures have been regrouped wherever necessary.


Mar 31, 2010

1. Contingent Liabilities

Contingent liabilities are disclosed in the notes on accounts. Provision is made in the accounts if it becomes probable that an outflow of resources embodying economic benefits will be required to settle the obligation.

As at As at 31.03.2010 31.03.2009 Rs. lacs Rs.lacs

1. Contingent liabilities not provided for:

a) Income Tax 378.92 60.25

b) Sales tax 118.08 46.01

c) Customs duty 158.87 158.87

d) Bank guarantees 13.15 8.00

e) Corporate guarantees issued on behalf of subsidiary companies. 1770.28 1973.56

The Company is in further appeal in respect of matters stated in a) to c) above.

2. Estimated amount of contracts remaining to be executed on capital account and not

provided for (net of advances) 625.77 1542.17

Year ended Year ended 31.03.2010 31.03.2009 Rs. lacs Rs.lacs

3. a) The amount of exchange differences (net): i) (credited) / debited to the profit and loss account is (170.67) 971.26

ii) added to/(deducted from) the carrying amount of fixed assets is (153.01) 555.14

b) Pursuant to the option available under the Companies (Accounting Standards) Amendment Rules, 2009, the Company had with effect from 1st April, 2007 changed its accounting policy wherein exchange differences arising on long term foreign currency monetary items relating to acquisition of depreciable capital asset has been added to or deducted from the cost of the asset and depreciated over its balance useful life. This had in the previous year resulted in reduction in general reserve by Rs. 130.66 lacs (net of deferred tax Rs. 67.21 lacs).

4. The company has investments of Rs. 1174.72 lacs (as at 31.03.2009 Rs.1174.72 lacs) comprising 2484176 Equity shares of Rs.10 each and 1000000 6% Cumulative redeemable preference shares of Rs.100 each, in SNL Bearings Limited (SNL), a subsidiary company. The company has also granted to SNL, advances and loans of Rs.300.00 lacs (as at 31.03.2009: Rs.300.00 lacs). Although SNL has substantial accumulated losses, in the opinion of the management, having regard to the long term prospects of SNL and the efforts being made to turnaround its financial position and performance, no provision for the loss is considered necessary.

5. There are no amounts due to the suppliers covered under Micro, Small and Medium Enterprises Development Act, 2006; this information takes into account only those suppliers who have responded to the enquiries made by the Company for this purpose. This has been relied upon by the auditors.

Year ended Year ended 31.03.2010 31.03.2009 Rs. lacs Rs.lacs

6. Expenditure on Research and Development:

a) charged to the profit and loss account 283.53 251.11

b) capitalized to fixed assets 35.10 44.72

7. As the companys activity falls within a single segment viz. bearings and the sales substantially being in the domestic market, the disclosure requirements of Accounting Standard 17 "Segment Reporting", is not applicable.

8. Related party disclosures

(i) Names of related parties and nature of relationship where control exists

(a) SNL Bearings Limited - subsidiary company

(b) NRB Bearings (Thailand) Limited - subsidiary company

(c) Mr. T. S. Sahney, Chairman and Managing Director - individual having substantial interest in the voting power and the power to direct by agreement, the financial and operating policies of the company.

 
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