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Notes to Accounts of NRB Industrial Bearings Ltd.

Mar 31, 2018

1. Corporate Information

NRB Industrial Bearings Limited (the Company) was incorporated on 24th day of February, 2011 as a Private Limited Company under the provisions of the Companies Act, 1956 (the 1956 Act) .On the acquisition of equity shares of the Company on 4th November, 2011 by NRB Bearings Limited, a public limited company, the Company in terms of Section 3 (1) (iv) (c) of the 1956 Act became a Public Limited Company and the name of the Company was changed from “NRB Industrial Bearings Private Limited” to “NRB Industrial Bearings Limited”.

The Scheme of Arrangement (the Scheme) for the transfer of Industrial Bearings Undertaking of NRB Bearings Limited (NRB) to the Company under section 391 to 394 read with section 100 to 103 of the Companies Act, 1956 was sanctioned by the Hon’ble High Court of Judicature, Bombay on 24th August 2012. The Scheme, which has become operative from 25th September, 2012 upon filing of the certified copies of the Orders of the Hon’ble High Court with the Registrar of Companies became effective from 1st October, 2012 (the Appointed Date). Pursuant to the Scheme, with effect from the Appointed date the Industrial Bearings Undertaking of NRB is transferred and vested in the Company as a going concern, with all its assets, liabilities, properties, rights, benefits and interest therein subject to existing charges thereon.

In terms of the Scheme, in consideration of the transfer and vesting of the Industrial Bearings Undertaking of NRB, in respect of every 4 equity shares of Rs. 2 each, held by the shareholders of NRB, 1 equity share of Rs. 2 each fully paid up aggregating 24,230,650 equity shares have been issued and allotted on 31st October, 2012, to the shareholders of NRB whose names appeared in the Register of Members, as on 25th October, 2012, being the record date.

All the staff, workmen and employees of Industrial Bearings Undertaking of NRB in service as on 1st October, 2012 have become staff, workmen and employees of the Company without any break in their service.

In terms of the Scheme, the Company recorded all the assets and liabilities pertaining to the Industrial Bearings Undertaking, at the respective book values appearing in the books of NRB as on the Appointed Date. The Company credited to its share capital account, the aggregate face value of the equity shares issued by it pursuant to the Scheme. The difference of Rs. 5,700.16 lakhs between excess of net assets and the amount credited as share capital after adjusting the cancellation of existing share capital of the Company held by NRB has been credited to Capital Reserve. The equity shares allotted have been listed on the Bombay Stock Exchange and the National Stock Exchange on 9th April, 2013.

The Company is engaged in the business of manufacturing and selling of all types of industrial bearings.

The address of its registered office is 2nd floor, Dhannur building, 15, Sir P.M. Road, Fort, Mumbai - 400 001, Maharashtra, India.

2 Use of estimates and judgments

The preparation of financial statements in conformity with Ind AS requires management to make judgments, estimates and assumptions, that affect the application of accounting policies and the reported amounts of assets, liabilities, income, expenses etc. at the date of these financial statements and the reported amounts of revenues and expenses for the years presented. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed at each balance sheet date. Revisions to accounting estimates are recognised in the period in which the estimate is revised and future periods affected.

In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are included in the following notes:

3 First-time adoption - mandatory exceptions, optional exemptions

Overall principle

The Company has prepared the opening balance sheet as per Ind AS as of April 1, 2016 (the transition date) by recognising all assets and liabilities whose recognition is required by Ind AS, by reclassifying items from previous GAAP to Ind AS as required under Ind AS, and applying Ind AS in measurement of recognised assets and liabilities. However, this principle is subject to the certain exception and certain optional exemptions availed by the Company as detailed below.

A. Exceptions applied:

(i) Use of Estimates:

The Company’s estimates in accordance with Ind AS at the date of transition are consistent with previous GAAP (after adjustments to reflect any difference in accounting policies) or as required under Ind AS but not under previous GAAP.

(ii) Derecognition of financial assets and financial liabilities

The Company has applied the derecognition requirements of financial assets and financial liabilities prospectively for transactions occurring on or after April 1, 2016 (the transition date).

(iii) Classification of debt instruments:

The Company has determined the classification of debt instruments in terms of whether they meet the amortised cost criteria or the FVTOCI criteria based on the facts and circumstances that existed as on the transition date.

(iv) Impairment of financial assets:

The Company has applied the impairment requirements of Ind AS 109 retrospectively; however, as permitted by Ind AS 101, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognised in order to compare it with the credit risk at the transition date. Further, the Company has not undertaken an exhaustive search for information when determining, at the date of transition to Ind AS, whether there have been significant increases in credit risk since initial recognition, as permitted by Ind AS 101.

B. Exemptions applied:

(i) Past business combinations:

The Company has elected not to apply Ind AS 103 -Business Combinations retrospectively to past business combinations that occurred before the transition date.

(ii) Deemed cost for property, plant and equipment and intangible assets

a) Property, plant and equipment

On transition to Ind AS, the Company has elected to consider fair value as deemed cost for plant and machinery recognised as at April 1, 2016. For other items of Property, Plant and Equipment, the Company has not elected the exemption of previous GAAP carrying value consequently, cost in respect of other items of Property, Plant and Equipment has been retrospectively remeasured in accordance with Ind AS.

b) Intangible assets

The Company has elected to continue with the carrying value of its intangible assets recognised as of April 1, 2016 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.

(iii) Deemed cost for investment in associates:

Under Ind AS, the Company has considered their previous GAAP carrying amount as their deemed cost.

4 Application of new and revised Ind ASs.

Ind AS 115 - Revenue from Contracts with Customers

This standard establishes a single comprehensive model for accounting of revenue arising from contracts with customers. Ind AS 115 will supersede the current revenue recognition guidance under Ind AS 11 ‘Construction Contracts’ and Ind AS 18 ‘Revenue’ The Company is currently assessing the impact of application of Ind AS 115 on Company’s financial statements.

Amendment to Ind AS 21 - The Effect of Changes in Foreign Exchange Rates

This amendment clarifies translation of advance payments denominated in foreign currency into functional currency at the spot rate on the day of payment. The guidance aims to reduce diversity in practice. The changes will not have any material impact on the financial statements of the Company.

Notes:

1 The cost of inventories recognised as an expense during the year was Rs. 1,892.55 lakhs (for the year ended March 31, 2017: Rs. 1,593.70 lakhs).

2 The cost of inventories recognised as an expense includes Rs. Nil (during 2016-2017: Rs.25 lakhs) in respect of writedowns of inventory to net realisable value, and has been reduced by Rs. 30.46 lakhs (during 2016-2017: Rs. 8.61 lakhs) in respect of the reversal of such write-downs.

3 The mode of valuation of inventories has been stated in note 2 (f).

4 Assets pledged as security

Refer Note 17 (A) and 17 (B) on Borrowings.

The credit period on sales of goods ranges from 30 to 75 days.

At 31 March 2018 and as at 31 March 2017, the Company had no customer that owed the Company more than 10% of total receivables outstanding and as at April 1 2016, one customer owed the company Rs. 187.78 lakhs and accounted for approximately 15.41 % of all the receivables outstanding.

The tax rate used for the year 2017-18 is 25.75% (25% education cess @ 2% secondary and higher education cess @ 1%) and year 2016-17 is 30.9% (30% and education cess @ 3%) payable by corporate entities in india taxable profits under the Income Tax Act, 1961.

(e) Amounts on which Deferred tax asset has not been created:

Deferred tax assets on carry forward unused tax losses have been recognised to the extent of deferred tax liabilities less deferred tax assets on other taxable temporary difference. It is expected that any reversals of the deferred tax liability would be offset against the reversal of the deferred tax asset.

(i) (a) Rights attached to equity shares:

1) The Company has only one class of equity shares having a face value of Rs. 2 each. The Equity Shareholders have all the rights of equity shares as provided by the Companies Act, 2013 and Rules & Regulations made thereunder.

2) The Company in General Meeting may declare dividend to be paid to members according to their respective rights, but no dividend shall exceed the amount recommended by the Board, but the Company in General Meeting may declare a smaller dividend.

3) 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.

(ii) Nature and purpose of each reserve within Other equity Deemed capital contribution

This represents the difference between fair valuation and transaction price on initial recognition of preference shares issued to a Promoter Shareholder.

Footnotes:

Secured

Term loans from Bank

(a) Rs. 139.71 lacs (March 31, 2017 Rs. 417.04 lacs and March 31, 2016 Rs. 710.82 lacs) secured by exclusive first charge over immovable Property, plant and equipment ( buildings ), leasehold land of the Company and its movable plant & machinery, furniture & fixtures and other movables at its factory at Shendra (near Aurangabad). The term loan is repayable in remaining 2 equal quarterly instalments by September 2018 and carries floating interest rate of LIBOR 350 bps. The present rate of interest is 4.98% .

(b) As at March 31, 2016 Rs. 1918.92 lacs was secured by security stated in (a) above. The term loan was fully repaid in November 2016.

(c) Rs. 1491.41 lacs (March 31, 2017 Rs. Nil and March 31, 2016 Rs. Nil) secured by subservient charge on current assets and movable Property, plant and equipment and pledge of 2,083,250 shares of NRB Bearings Limited held by a director of the Company . The working capital term loan is repayable in total 17 quaterly installments comprisinng of 5 Quaterly installment of Euro 0.38 lac each starting from 27 Feb , 2019 till 2nd March 2020 and 12 Quaterly installment of Euro 1.42 lacs each starting from 1 June , 2020 till 28 February 2023 and carries interest rate of EURIBOR 6M 3.05 % which has been converted in to a fixed rate loan carrying interest rate of a 6.3 % p.a through Interest rate Swap.

(d) Rs. Nil (March 31, 2017 Rs. 988.39 lacs and March 31, 2016 Rs. Nil) secured by subservient charge on current assets and movable Property, plant and equipment and pledge of 24,46,808 shares of NRB Bearings Limited held and personal guarantee by a director of the Company . The working capital term loan was repayable in two equal installments of Rs. 500 lacs each on 30 June, 2017 and on 30 December, 2017 and carried interest rate of one year MCLR 70 bps. The term loan is fully repaid in September 2017.

(e) Rs. Nil (March 31, 2017 Rs. 1077.57 lacs and March 31, 2016 Rs. Nil) secured by subservient charge on current assets and movable Property, plant and equipment and pledge of 20,95,238 shares of NRB Bearings Limited held by a promoter of the Company and personal guarantee by two directors and promoter of the Company . The working capital term loan was repayable in monthly installments of Rs. 10 lacs from April 2017 to June 2017 , of Rs. 15 lacs from July 2017 to September 2017, of Rs. 86 lacs October 2017 to August 2018 and of Rs. 79 lacs in September 2018 and carried interest rate of one year MCLR 85 bps. The term loan is fully repaid in October 2017.

Term loan from Others

(f) Rs. 23.12 lacs (March 31, 2017 Rs. 23.70 lacs and March 31, 2016 Rs. 30.88 lacs) secured by hypothecation of vehicles. Out of these , the term loan of Rs. 1.35 lacs (March 31, 2017 Rs. 3.83 lacs and March 31, 2016 Rs. 6.06 lacs) carrying interest rate of 10.71 % is repayable in remaining 6 equal monthly instalments by September, 2018, the term loan of Rs. 14.25 lacs (March 31, 2017 Rs. 19.87 lacs and March 31, 2016 Rs. 24.82 lacs) carrying interest rate of 12.75 % is repayable in remaining 24 equal monthly instalments by April, 2020 and the term loan of Rs. 7.52 lacs (March 31, 2017 Rs. Nil and March 31, 2016 Rs. Nil) carrying interest rate of 8.82 % is repayable in remaining 49 equal monthly instalments by April, 2022.

Unsecured Term loans from others

(g) Rs. 1639.06 lacs (March 31, 2017 Rs. Nil and March 31, 2016 Rs. Nil) secured by pledge of 2,458,597 shares of NRB Bearings Limited held by a director and a promoter of the Company. The term loan is repayable in eight equal quaterly installments of Rs. 206.25 lacs starting from 6 Dec , 2019 and carries interest rate of 10.5 % p.a.

Loans from related parties

(h) 100 lacs each 6 % Redeemable Cumulative Non -Convertible Preference shares of Rs. 10 each fully paid up were issued to a Promotor shareholder in March 2016 and in April 2016 respectively with redemption at the end of 5 years from the date of issue. During the year, the terms of existing Redeemable Cumulative Non -Convertible Preference shares were changed w.e.f. February 15, 2018 the preference dividend rate is modified to 2 % and redemption term is changed to 10 years for above said preference shares. 200 lacs 2 % Redeemable Cumulative Non -Convertible Preference shares of Rs. 10 each fully paid up were issued to a Promotor shareholder in February 2018 with redemption at the end of 10 years.

Footnotes:

(i) Loans repayable on demand from banks

a) Rs. 1637.35 lacs (March 31, 2017 Rs. 1,897.72 lacs and March 31, 2016 Rs. Nil) secured by first pari passu charge on all present and future stock and book debts of the Company and second pari pasu charge over immovable Property, plant and equipment ( buildings ), leasehold land of the Company and its movable plant & machinery, furniture & fixtures and other movables at its factory at Shendra (near Aurangabad). The present interest rate is in the range of 11.50% to 14.50 % p.a.

(b) As at March 31, 2016 Rs. 1,010.93 lacs secured by first exclusive charge on all present and future stock and book debts of the Company.

(c) As at March 31, 2016 Rs. 499.92 lacs secured by first pari pasu charge on all present and future stock and book debts of the Company.

ii) Other loans from banks

As at March 31, 2016 Rs. 419.82 lacs was secured by security stated in footnote (i) (b) above.

Notes:

1. The company does not have any dues outstanding to Micro and Small Enterprises as mentioned in the Micro, Small and Medium Enterprises Development Act 2006. This is determined on the basis of information available with the Company. This has been relied upon by by the auditors.

2. The credit period ranges from 45 days to 90 days .

(i) As at 31 March 2018, the increase in carrying amount of the provision for compensated absences result from further leave accumulation during the FY 2017-18 . As at 31 March 2017, the decrease in the carrying amount of the provision for compensated absences results from benefits being paid during the year ended March 31, 2017.

(ii) Refer note 35 for Employee Benefits related disclosures.

Note :

Excise duty on sale of products was included under Revenue from operations and disclosed separately under expenses upto all reporting periods ending June 30, 2017. Post implementation of Goods and Service Tax (GST) w.e.f. July 01, 2017, Revenue from operations is reported net of GST, as unlike Excise duty, GST is not a part of Revenue.

NOTE 5 : Leases

1. Lease Expense:

(a) The company has taken land, office and residential premises on operating lease. Lease rental charged to the Statement of Profit and Loss for the year ended 31 March, 2018 Rs.14.49 Lakhs (Previous year Rs.13.95 Lakhs).

(b) (i) Under some agreements, refundable interest free deposit have been given and contain a provision for renewal.

(ii) The agreements provide for early termination by either party with a notice period which varies from 1 month to 6 months.

2. Lease Income:

The Company has entered into lease agreement effective from 8 March, 2013 for certain portion of its factory and office premises including furniture and fixtures, electrical installation, etc. During the year, Rs. 76.80 lakhs lakhs (previous Rs. 76.80 lakhs) recognised as rental income in the Statement of Profit and Loss. The agreement contains renewal clause. The agreement is expired on 8 February, 2018 and is extended till 31 March, 2018 with same terms and conditions.

NOTE 6 : Employee Benefits Brief description of the Plans:

1) Defined contribution plans :

a) Provident and Family Pension Fund

The eligible employees of the company are entitled to receive post employment benefits in respect of provident and family pension fund, in which both employees and the company make monthly contributions at a specified percentage of the employees’ eligible salary (currently 12% of employees’ eligible salary). The contributions are made to the Regional Provident Fund Commissioner. Provident Fund and Family Pension Fund are classified as Defined Contribution Plans as the company has no further obligations beyond making the contribution

b) Superannuation

The eligible employees of the company are entitled to receive post employment benefits in respect of superannuation scheme, in which the company makes quarterly contributions at 15% of employees’ eligible salary. Superannuation scheme is classified as Defined Contribution Plan as the Company has no further obligations beyond making the contribution.

The Company has recognized, in the Statement of profit and loss for the year, an amount of Rs. 87.70 lakhs ( March 31, 2017 Rs. 78.64 lakhs) as expenses under defined contribution plans.

2) Defined Benefit Plans : (Gratuity Funded)

The Company has an obligation towards gratuity, a funded defined benefit retirement plan covering eligible employees. The plan provides for lump sum payment to vested employees at retirement, death while in employment or on termination of the employment of an amount equivalent to 15 days salary, as applicable, payable for each completed year of service, without any payment ceiling. Vesting occurs upon completion of five years of service.

Nature of benefits:

The gratuity benefits payable to the employees are based on the employee’s service and last drawn salary at the time of leaving. The employees do not contribute towards this plan and the full cost of providing these benefits are met by the Company.

Regulatory framework:

There are no minimum funding requirements for a gratuity plan in India. The trustees of the gratuity fund have a fiduciary responsibility to act according to the provisions of the trust deed and rules. Since the fund is income tax approved, the Company and the trustees have to ensure that they are at all times fully compliant with the relevant provisions of the income tax and rules. Besides this if the Company is covered by the Payment of Gratuity Act, 1972 then the Company is bound to pay the statutory minimum gratuity as prescribed under this Act.

Governance of plan:

The Trust establised for the purpose, has arrangement with Insurance Company (currently HDFC Standard Life Insurance Company Limited) for future payments of gratuties on behalf of the Trust.

Inherent risk

The plan is of a final salary defined benefit in nature which is sponsored by the Company and hence it underwrites all the risks pertaining to the plan. In particular, there is a risk for the Company that any adverse salary growth or demographic experience or inadequate returns on underlying plan assets can result in an increase in cost of providing these benefits to employees in future. Since the benefits are lump sum in nature the plan is not subject to any longevity risks.

The most recent actuarial valuation of the present value of the defined benefit obligation was carried out at March 31, 2018 by an independent actuary. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.

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

H. Sensitivity Analysis

Gratuity is a lump sum plan and the cost of providing these benefits is typically less sensitive to small changes in demographic assumptions. The key actuarial assumptions to which the benefit obligation results are particularly sensitive to are discount rate and future salary escalation rate. The following table summarizes the impact on the reported defined benefit obligation at the end of the reporting period arising on account of an increase or decrease in the reported assumption by 100 basis points.

These sensitivities have been calculated to show the movement in defined benefit obligation in isolation and assuming there are no other changes in market conditions at the accounting date. There have been no changes from the previous periods in the methods and assumptions used in preparing the sensitivity analyses.

The above sensitivity analyses are based on change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.

J. Other Disclosures

a) The weighted average duration of the obligations as at March 31, 2018 is 8 years (March 31, 2017: 8 Years; April 1, 2016: 9 Years).

b) The Company expects to contribute Rs. 35.24 lakhs to the plan during financial year 2018-19.

NOTE 7 : Segment information

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (“CODM”) of the Company. The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Managing Director and Chief Financial Officer of the Company. The Company operates only in one Business Segment i.e. industrial bearings, hence does not have any reportable Segments as per Ind AS 108 “Operating Segments”.

Information about major customers:

Revenues of approximately Rs. 417.69 Lakhs (March 2017: Rs. 429.13 Lakhs) arose from sales to one customer who contributed 10% or more to the Company’s revenue for both years ended March 31, 2018 and March 31, 2017.

NOTE 8 : Managerial Remuneration

The Board of Directors and the Members of the Company had approved the appointment and remuneration of Mr. Devesh Singh Sahney as Managing Director of the Company (“hereinafter MD”) for a term of 5 years effective October 01, 2012 to September 30, 2017 at their meetings held on October 04, 2012 and October 15, 2012 respectively.

The Central Government vide letter dated August 28, 2014 approved the appointment of MD for a term of five years and partially addressed the remuneration payable (Basic remuneration & Cash allowances) for the period upto March 31,2014 and has not specifically addressed Perquisites payable for that period. The Company has submitted an application for obtaining clarification/approval from the Central Government in respect of perquisites paid for the period upto March 31, 2014.

Accordingly remuneration paid to the MD of Rs. 34.81 lacs for the period from October 01,2012 to March 31, 2014 is subject to approval by the Central Government.

In terms of Clause 12.1 of the Scheme referred to in Note 1 above to the financial statement, the terms and conditions of the employment of all the employees transferred from NRB shall not be less favourable than those applicable to them with reference to NRB in relation to Industrial Bearing Undertaking on the effective date. Since the remuneration paid to the Managing Director is the same as that was paid to him by NRB as Executive Director, the Company is confident of getting approval from the Central Government for the remuneration paid / payable for the relevant period. Pending such clarification / approval, the Managing Director holds the remuneration paid in trust for the company.

Pursuant to provisions of section 197 read with Schedule V of the Companies Act, 2013, the Company had obtained approval by way of a special resolution from the members in the Annual General Meeting held on July 7, 2015 and amended the terms of remuneration of MD by reducing the tenure of remuneration payable to three years (April 01, 2014 to March 31, 2017). The Nomination & Remuneration Committee and Board of Directors of the Company approved remuneration payable to the MD from April 01, 2014 to March 31, 2017.

NOTE 9 : Capital management and Risk management

I Capital Management

The Company’s capital management strategy is to effectively determine, raise and deploy capital so as to create value for its shareholders. The same is done through a mix of either equity and/or preference and/or combination of short term / long term debt as may be appropriate.

The Company determines the amount of capital required on the basis of its product, capital expenditure, operations and strategic investment plans. The same is funded through a combination of capital sources be it either equity and/or preference and/or combination of short term/long term debt as may be appropriate.

II Financial Risk Management Framework

The Company’s activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk . In order to manage the aforementioned risks, the Company operates a risk management policy and a program that performs close monitoring of and responding to each risk factors.

A CREDIT RISK

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables).

Trade receivables

Customer credit risk is managed as per the Company’s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on payment performance over the period of time. The Company’s exposure of its customers are continuously monitored based on the customer’s past performance and business dynamics. Credit exposure is controlled by customer’s credit limits that are reviewed and approved by the management at regular intervals.

An impairment analysis is performed at each reporting date. The Company applies the simplified approach to providing for expected credit losses prescribed by Ind AS 109, which permits the use of the lifetime expected loss provision for all trade receivables. The Company has computed expected credit losses based on a provision matrix which uses historical credit loss experience of the Company and where applicable, specific provisions are made for individual receivables.

B LIQUIDITY RISK

(i) Liquidity risk management

Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidity risk management framework for the management of the Company’s short-, medium- and long-term funding and liquidity management requirements. The Company manages liquidity risk by way of banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

(ii) Maturities of financial liabilities

The following tables detail the Company’s remaining contractual maturity for its non-derivative financial liabilities . The amount disclosed in the tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows.

To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period. The contractual maturity is based on the earliest date on which the Company may be required to pay.

Interest Rate sensitivity

If interest rates had been 100 basis points higher/lower and all other variables were held constant, the Company’s loss for the year ended March 31, 2018 would increase/decrease by Rs.1.40 lakhs (year ended March 31, 2017 by Rs. 4.17 lakhs). This is mainly attributable to the Company’s exposure to borrowings at floating interest rates.

C Market Risks

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. The Company uses derivatives to manage any significant market risks. Derivatives are only used for economic hedging purposes and not as speculative investments. All such transactions are carried out within the guidelines set by the Board of Directors .

(i) Currency Risk

The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The Company’s exposure to currency risk relates primarily to the Company’s operating activities when transactions are denominated in a different currency from the Company’s functional currency.

The Company’s foreign currency exposure are denominated in US Dollar, Pound Sterling, Euro and Japanese Yen) which arise mainly from foreign exchange imports, exports and foreign currency borrowings.

As at the end of the reporting period, the carrying amounts of the company’s foreign currency denominated financial assets and financial liabilities are as follows:

(ii) Interest Rate Risk

Refer note B (ii) for interest rate sensitivity

The Company has entered in to Interest Rate Swap contract wherein the Company has converted its floating interest rate loan into a fixed interest rate loan, in order to reduce the Company’s cash flow exposure resulting from variable interest rates on borrowings.

(iii) Raw material price risk

The Company does not have significant risk in raw material price variations. In case of any variation in price same is passed on to the customer through appropriate adjustments to selling prices.

NOTE 10 : Fair Value Disclosures

This section explains the judgment and estimates made in determining the fair value of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair value are disclosed in financials statements. To provide an indication about the reliability of the inputs used in determining the fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standards.

c) Fair value of financial assets and financial liabilities that are not measured at fair value (but fair value disclosures are required):

The Company consider that the carrying amount of financial asset and financial liabilities recognised in the financial statements approximate their fair value.

NOTE 11 : First-time adoption of Ind-AS

First Time Ind AS Adoption reconciliations

(i) Reconciliation of Total Equity as at 31 March 2017 and 1 April 2016:

(iv) There are no material adjustments to the Statement of Cash Flows

(v) Notes to the reconciliation to previous GAAP:

A On transition to Ind AS, the Company has treated fair value as deemed cost for plant and machinery resulting in an increase in carrying value as compared to the previous GAAP. The consequential impact of additional depreciation on fair value increase is recognised in the Statement of profit or loss for year ended March 31, 2017.

The effect of this change is an increase in Property, Plant and Equipment-Tangible and total equity as at March 31, 2017 of Rs. 1,690.40 lakhs, as at April 1, 2016 of Rs. 1,825.88 lakhs and increase in depreciation and loss before tax for the year ended March 31, 2017 of Rs. 135.50 lakhs.

B Under previous GAAP, redeemable preference shares were classified as part of total equity. Dividends declared (if any) on these preference shares were required to be adjusted against retained earnings and not recognised as finance costs in profit or loss. However, under Ind AS, financial instruments are classified as a liability or equity according to the substance of the contractual arrangement and not its legal form.

Further, under Ind AS, at initial recognition, an entity is required to measure a financial liability at its fair value. The present value (i.e. fair value) of the liability component is calculated using the market interest rate for similar borrowings. The difference between the proceeds of the preference shares issued and the fair value of the liability has been assigned to the equity component.

The interest on liability component is recognized using the effective interest method and has been recognised as finance costs in profit or loss.

The effect of this change is as follows:

a) Decrease in total equity as at March 31, 2017 of Rs. 1558.06 lakhs and as at April 1, 2016 of Rs. 685.41 lakhs

b) Increase in non-current borrowings as at March 31, 2017 of Rs. 1558.06 lakhs and as at April 1, 2016 of Rs. 685.41 lakhs

c) Increase in finance cost and loss for the year ended March 31, 2017 of Rs. 186.63 lakhs

C Under previous GAAP, the Company had entered into derivative contracts in the nature of call spread currency options and interest rate swaps. These derivative contracts were marked-to-market and losses were recognised in the Statement of Profit and Loss while, gains arising on the same were not recognised on grounds of prudence. Premium / discount on such contracts were amortised over the period of the contracts if such contracts relate to monetary items as at the balance sheet date.

Under Ind AS, all derivatives contracts need to be recognised at fair values with resulting gains or losses due to changes in fair value recognised in the Statement of Profit and Loss.

The effect of this change is an increase in total equity and other current financial assets as at March 31, 2017 (Rs. Nil), as at April 1, 2016 of Rs. 168.37 lakhs and increase in loss before tax for the year ended March 31, 2017 of Rs. 168.37 lakhs.

D Under previous GAAP, actuarial gains and losses on remeasurement of net defined benefit obligation were recognized in statement of profit or loss. Under Ind AS, the actuarial gains and losses form part of remeasurement of the net defined benefit obligation which is recognised in other comprehensive income. The actuarial gain for the year ended March 31, 2017 was Rs. 13.30 lakhs . This change does not affect total equity, but there is a decrease in loss before tax and in loss for the year ended March 31, 2017 of Rs. 13.30 lakhs.

E Under previous GAAP, lease hold land was considered as tangible fixed assets and was amortised over the period of the lease. Under Ind-AS, interest in lease hold land is considered as leases as per definition and classification criteria in Ind AS 17. Accordingly in respect of net written down value of leasehold land as at March 31, 2017 Rs. 733.32 lakhs (as at April 1, 2016 Rs. 741.51 lakhs ) has been classified under non-current assets and Rs. 8.18 lakhs as at 31 March, 2017 (Rs. 8.18 lakhs as at 1 April, 2016) to other current assets.

Similarly the amortisation of lease hold land for the year ended on March 31, 2017 of Rs. 8.18 lakhs has been classified under other expenses as lease rent.

This change does not affect total equity as at April 1, 2016 and March 31, 2017 and the loss before tax or loss for the year ended March 31, 2017.

F Under previous GAAP, revenue from sale of product was presented net of excise duty under revenue from operations. Whereas, under Ind AS, revenue from sale of products includes excise duty. The corresponding excise duty expense of Rs. 319.53 lakhs for the year ended on March 31, 2017 is presented separately on the face of the statement of profit and loss as “Excise duty”. This change does not affect total equity as at April 1, 2016 and March 31, 2017 and the loss before tax or loss for the year ended March 31, 2017.

G Under previous GAAP, excise duty on closing stock of Rs. 55.74 lakhs for year ended on March 31, 2017 was presented under other expenses. Whereas, under Ind AS, the same is presented as part of “Changes in stock of finished goods, work-in-progress and stock-in-trade”. This change does not affect total equity as at March 31, 2017 and the loss before tax or loss for the year ended March 31, 2017.


Mar 31, 2017

Liabilities are classified as current when it satisfies any of the following criteria:

1. it is held primarily for the purpose of being traded;

2. it is due to be settled within twelve months after the reporting date; or

3. the company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

All other liabilities are classified as non-current.

4. Rights attached to equity shares:

5. The Company has only one class of equity shares having a face value of Rs. 2 each. The Equity Shareholders have all the rights of equity shares as provided by the Companies Act, 2013 and Rules & Regulations made there under.

6. The Company in General Meeting may declare dividend to be paid to members according to their respective rights, but no dividend shall exceed the amount recommended by the Board, but the Company in General Meeting may declare a smaller dividend.

7. 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.

8. Rights attached to Preference shares:

9. Preference Shares rank prior in respect to payment of Dividend or redemption amount compared to equity shareholders of the Company without having voting powers and that in the event of winding up right over the equity shareholders in participation of surplus funds, surplus assets and profits of the Company. Annual preference dividend is 6%. Preference shares shall be redeemed at the end of 5 years from the date of allotment.

10. On account of loss for the year, no dividend is proposed on preference shares. Arrears of the preference dividend as at the year end is Rs. 143.78 Lakhs ( as at 31 March, 2016 Rs. 0.24 Lakhs.)

Footnotes: Term loans from Bank

11. Rs. 417.04 lakhs (Previous year Rs. 710.82 lakhs) secured by exclusive first charge over immovable fixed assets (leasehold land and buildings thereon) of the Company and its movable plant & machinery, furniture & fixtures and other movables at its factory at Shendra (near Aurangabad). The term loan is repayable in remaining 6 equal quarterly installments by September 2018 and carries floating interest rate of LIBOR 350 bps. The present rate of interest is 4.45%.

12. Previous year Rs. 1,918.92 lakhs was secured by security stated in (a) above. The term loan is fully repaid in November 2016.

13. Rs. 1,000 lakhs (Previous year Rs. Nil) secured by subservient charge on current assets and movable fixed assets and pledge of 24,46,808 shares of NRB Bearings Limited held and personal guarantee by a director of the Company. The working capital term loan is repayable in two equal installments of Rs. 500 lakhs each on 30 June, 2017 and on 30 December, 2017 and carries interest rate of one year MCLR 70 bps. The present rate of interest is 10.40 %.

14. Rs. 1,100 lakhs ( Previous year Rs. Nil) secured by subservient charge on current assets and movable fixed assets and pledge of 20,95,238 shares of NRB Bearings Limited held by a promoter of the Company and personal guarantee by two directors and promoter of the Company. The working capital term loan is repayable in monthly installments of Rs. 10 lacs from April 2017 to June 2017 , of Rs. 15 lakhs from July 2017 to September 2017, of Rs. 86 lakhs October 2017 to August 2018 and of Rs. 79 lakhs in September 2018 and carries interest rate of one year MCLR 85 bps. The present rate of interest is 10.55 % .

Term loan from Others

15. Rs. 23.70 lakhs (Previous year Rs. 30.88 lakhs) secured by hypothecation of vehicles. Out of these , the term loan of Rs. 3.83 lakhs ( Previous year Rs. 6.06 lacs) carrying interest rate of 10.71 % is repayable in remaining 18 equal monthly installments by September, 2018 and the term loan of Rs. 19.87 lakhs (previous year Rs. 24.82 lakhs) carrying interest rate of 12.75 % is repayable in remaining 37 equal monthly installments by April, 2020.

16. Loans repayable on demand from bank

17. Rs. 1,897.72 lakhs (Previous year Rs. Nil) secured by first pari passu charge on all present and future stock and book debts of the Company and second pari pasu charge over immovable fixed assets (leasehold land and buildings thereon) of the Company and its movable plant & machinery, furniture & fixtures and other movables at its factory at Shendra (near Aurangabad). The present interest rate is in the range of 11.50% to 14.50 % p.a.

18. Rs. Nil (Previous year Rs. 1,010.93 lakhs) secured by first exclusive charge on all present and future stock and book debts of the Company.

19. Rs. Nil (Previous year Rs. 499.92 lakhs) secured by first pari pasu charge on all present and future stock and book debts of the Company.

20. Other short term borrowings

Previous year Rs. 419.82 lakhs was secured by security stated in footnote (i) (b) above.

21.- Disclosure under Accounting Standard 19 - " Leases"

22. Lease Expense

23. The company has taken office and residential premises on operating lease. Lease rental charged to the Statement of Profit and Loss for the year ended 31 March, 2017 Rs. 5.77 lakhs (previous year Rs. 2.82 lakhs).

24. Under some agreements, refundable interest free deposit have been given and contain a provision for renewal.

25. The agreements provide for early termination by either party with a notice period which varies from 1 month to 6 months.

26. Lease Income

The Company has entered into lease agreement effective from 8 March, 2013 for certain portion of its factory and office premises including furniture and fixtures, electrical installation, etc. During the year, Rs. 76.80 lakhs (previous Rs. 76.80 lakhs) recognized as rental income in the Statement of Profit and Loss. The agreement contain renewal clause. The agreement provide for termination prior to the expiry of the term, as per mutual understanding of the parties or due to breach of terms and conditions as mentioned in the agreement.

27- Managerial Remuneration

The Board of Directors and the Members of the Company had approved the appointment and remuneration of Mr. Devesh Singh Sahney as Managing Director of the Company ("hereinafter MD") for a term of 5 years effective October 01, 2012 to September 30, 2017 at their meetings held on October 04, 2012 and October 15, 2012 respectively.

The Central Government vide letter dated August 28, 2014 approved the appointment of MD for a term of five years and partially addressed the remuneration payable (Basic remuneration & Cash allowances) for the period up to March 31,2014 and has not specifically addressed Perquisites payable for that period. The Company has submitted an application for obtaining clarification/approval from the Central Government in respect of perquisites paid for the period up to March 31, 2014.

Accordingly remuneration paid to the MD of Rs. 34.81 lakhs for the period from October 01,2012 to March 31, 2014 is subject to approval by the Central Government.

In terms of Clause 12.1 of the Scheme referred to in Note 1 above to the financial statement, the terms and conditions of the employment of all the employees transferred from NRB shall not be less favourable than those applicable to them with reference to NRB in relation to Industrial Bearing Undertaking on the effective date. Since the remuneration paid to the Managing Director is the same as that was paid to him by NRB as Executive Director, the Company is confident of getting approval from the Central Government for the remuneration paid / payable for the relevant period. Pending such clarification / approval, the Managing Director holds the remuneration paid in trust for the company.

Pursuant to provisions of section 197 read with Schedule V of the Companies Act, 2013, the Company has obtained approval by way of a special resolution from the members in the Annual General Meeting held on July 7, 2015 and amended the terms of remuneration of MD by reducing the tenure of remuneration payable to three years (April 01, 2014 to March 31, 2017). The Nomination & Remuneration Committee and Board of Directors of the Company have approved remuneration payable to the MD from April 01, 2014 to March 31, 2017.

28- Issue of Preference Shares

The members of the Company have given their consent by passing special resolution through Postal Ballot on 12 March, 2016 to issue Preference Shares to Mr. Trilochan Singh Sahney, in one or more tranches, within one year from the approval of members, for an amount not exceeding Rs. 20,00,00,000/- (Rupees Twenty Crores Only) through private placement by issuance of 2,00,00,000 Cumulative, Redeemable, Non-convertible Preference Shares at face value of Rs. 10/- each and that the preference dividend be paid annually at 6% p.a. post tax expenses and shall be redeemed at the end of 5 years from the date of allotment.

The Company has allotted Cumulative, Redeemable, Non-convertible Preference Shares at face value of Rs. 10/- in four tranches. In previous year, 1st tranch of 50,00,000 Preference shares was allotted on 30 March, 2016 and 2nd Tranch of 50,00,000 Preference shares on 31 March, 2016. In Current year, 3rd tranch of 50,00,000 Preference shares was alloted on 5 April, 2016 and 4th and last tranch of 50,00,000 Preference shares on 6 April, 2016.

29. The figures for the previous year have been regrouped / restated where necessary to conform to the current year''s classification.


Mar 31, 2015

1. Corporate Information:

NRB Industrial Bearings Limited (The Company) was incorporated on 24th day of February, 2011 as a Private Limited Company under the provisions of the Companies Act, 1956 (the Act).On the acquisition of equity shares of the Company on 4th November, 2011 by NRB Bearings Limited, a public limited company, the Company in terms of Section 3 (1) (iv) (c) of the Act became a Public Limited Company and the name of the Company was changed from "NRB Industrial Bearings Private Limited" to "NRB Industrial Bearings Limited"

The Company is engaged in the business of manufacturing and selling of all types of industrial bearings.

The Scheme of Arrangement (the Scheme) for the transfer of Industrial Bearings Undertaking of NRB Bearings Limited (NRB) to the Company under section 391 to 394 read with section 100 to 103 of the Companies Act, 1956 was sanctioned by the Hon''ble High Court of Judicature, Bombay on 24th August 2012. The Scheme, which has become operative from 25th September, 2012 upon filing of the certified copies of the Orders of the Hon'' ble High Court with the Registrar of Companies became effective from 1st October, 2012 (the Appointed Date).

Pursuant to the Scheme, with effect from the Appointed date the Industrial Bearings Undertaking of NRB is transferred and vested in the Company as a going concern, with all its assets, liabilities, properties, rights, benefits and interest therein subject to existing charges thereon.

In terms of the Scheme, in consideration of the transfer and vesting of the Industrial Bearings Undertaking of NRB, in respect of every 4 equity shares of Rs. 2 each, held by the shareholders of NRB, 1 equity share of Rs. 2 each fully paid up aggregating 24,230,650 equity shares have been issued and allotted on 31st October, 2012, to the shareholders of NRB whose names appeared in the Register of Members, as on 25th October, 2012, being the record date.

All the staff, workmen and employees of Industrial Bearings Undertaking of NRB in service as on 1st October, 2012 have become staff, workmen and employees of the Company without any break in their service.

In terms of the Scheme, the Company recorded all the assets and liabilities pertaining to the Industrial Bearings Undertaking, at the respective book values appearing in the books of NRB as on the Appointed Date. The Company credited to its share capital account, the aggregate face value of the equity shares issued by it pursuant to the Scheme. The difference of Rs. 5,700.16 lacs between excess of net assets and the amount credited as share capital after adjusting the cancellation of existing share capital of the Company held by NRB has been credited to Capital Reserve. The equity shares allotted have been listed on the Bombay Stock Exchange and the National Stock Exchange on 9th April, 2013.

2. Rights attached to equity shares:

a) The Company has only one class of equity shares having a face value of Rs. 2 each. The Equity Shareholders have all the rights of equity shares as provided by the Companies Act, 2013 and Rules & Regulations made thereunder

b) The Company in General Meeting may declare dividend to be paid to members according to their respective rights, but no dividend shall exceed the amount recommended by the Board, but the Company in General Meeting may declare a smaller dividend.

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.

3. Footnotes:

Term loans from Bank

(a) Rs. 4224.88 lacs (Previous period Rs. 7162.37 lacs) secured by exclusive first charge over immovable fixed assets (leasehold land and buildings thereon) of the Company and its movable plant & machinery, furniture & fixtures and other movables at its factory at Shendra (near Aurangabad). The term loan is repayable in remaining 7 equal quarterly installments by November 2016. Interest rate swap taken to convert floating interest rate of LIBOR 300 bps under the loan agreement into fixed interest rate of 6.45% p.a.

(b) Rs. 938.86 lacs (Previous year Rs. 928.45) to be secured by security stated in (a) above (security created after the year end). The term loan is repayable by September 2018 in 14 equal quarterly installments commencing from June 2015 and carries floating interest rate of LIBOR 350 bps.

Term loan from Others

(a) Rs. 36.86 lacs (previous period Rs. 10.29 lacs) secured by hypothecation of vehicles. Out of these , the term loan of Rs. 8.06 lacs carrying interest rate of 10.71 % is repayable in remaining 42 equal monthly installments by September, 2018 and the term loan of Rs. 28.80 lacs carrying interest rate of 12.75 % is repayable in 60 equal monthly installments by April, 2020.

4. Contingent liabilities not provided for:

a) Bank guarantees

* To Indian Custom Department 3.95 55.00

* To Maharashtra Pollution Control Board 5.00 2.00

5. Disclosure under Accounting Standard - "Leases"

1) Lease Expense

(a) The company has taken vehicle and residential premises on operating lease. Lease rental charged to the Statement of Profit and Loss for the period ended 31.03.2015 Rs. 24.67 lacs (previous period Rs. 30.29 lacs includes minimum lease payment of 9.45 lacs for the non-cancellable period up to February, 2013)

(b) (i) Under some agreements, refundable interest free deposit have been given and contain a provision for renewal.

(ii) The agreements provide for early termination by either party with a notice period which varies from 1 month to 6 months.

2) Lease Income

The Company has entered into lease agreements for certain portion of its factory and office premises including furniture and fixtures, electrical installation, etc. During the period, Rs.96.00 lacs (previous period Rs. 68.90 lacs) recognised as rental income in the Statement of Profit and Loss. The agreement existing as at the year end provide for increase in rent after 3 years and contain renewal clause. The agreement provide for termination prior to the expiry of the term, as per mutual understanding of the parties or due to breach of terms and conditions as mentioned in the agreements.

5. Disclosure under Accounting Standard - " Segment Reporting"

The operations of the Company fall within a single primary segment viz. Industrial bearings.

6. Managerial Remuneration

The Board of Directors and the Members of the Company had approved the appointment and remuneration of Mr. Devesh Singh Sahney as Managing Director of the Company ( ""hereinafter MD"") for a term of 5 years effective October 01, 2012 to September 30, 2017 at their meetings held on October 04, 2012 and October 15, 2012 respectively.

The Central Government vide letter dated August 28, 2014 approved the appointment of MD for a term of five years and partially addressed the remuneration payable (Basic remuneration & Cash allowances) for the period upto March 31,2014 and has not specifically addressed Perquisites payable for that period. The Company has submitted an application for obtaining clarification/approval from the Central Government in respect to perquisites paid for the period upto March 31, 2014.

Pursuant to provisions of section 179 read with Schedule V of the Companies Act, 2013, the Company will seek approval by way of a special resolution from the members in the forthcoming Annual General Meeting to amend the terms of remuneration of MD by reducing the tenure of remuneration payable to three years (April 01, 2014 to March 31, 2017). The Nomination & Remuneration Committee and Board of Directors of the Company have approved remuneration payable to the MD from April 01, 2014 to March 31, 2017.

Accordingly remuneration paid to the MD of Rs. 6.00 lacs for the quarter ended March 31, 2014 and Rs. 28.81 lacs for the period ended December 31, 2013 is subject to approval by the Central Government and Rs. 65.03 lacs for the period from April 01, 2014 to March 31, 2015 is subject to approval by the members.

In terms of Clause 12.1 of the Scheme referred to in Note 1 above to the financial statement, the terms and conditions of the employment of all the employees transferred from NRB shall not be less favorable than those applicable to them with reference to NRB in relation to Industrial Bearing Undertaking on the effective date. Since the remuneration paid to the Managing Director is the same as that was paid to him by NRB as Executive Director, the Company is confident of getting approval from the Central Government and members for the remuneration paid / payable for the relevant period. Pending such clarification / approval, the Managing Director holds the remuneration paid in trust for the company.

7. (a) In terms of the separate Memorandum of Understanding entered into on 1st November, 2013 with NRB Bearings Limited, the Company has,

(i) assigned its leasehold rights in the plot of land at Aurangabad admeasuring 576 sq. mtrs. with building structure thereon admeasuring 144 sq. mtrs. of built up area for a consideration of Rs. 270 lacs. The profit on assignment of its leasehold rights of Rs. 268.44 lacs is included in Note 27 - Exceptional items.

(ii) granted exclusive rights to use 700 Sq. ft. of carpet area situated on the 3rd Floor of Building Dhannur at Mumbai, for a consideration of Rs. 185 Lacs . The profit on grant of exclusive rights of Rs. 185 lacs is included in Note 27 - Exceptional items.

8. NRB Bearings Ltd (NRB) had entered into a Joint Venture agreement in the year 2011 with IBC Industrial Bearings and Components AG, Switzerland to form a joint venture Company for manufacture of Angular Contact Bearings. Pending formation of the joint venture company, the Project was started in 2011 by NRB as a part of Industrial Bearings Undertaking and Loan of USD 2.5 Million was availed for the Project. In terms of the Scheme referred to in Note 1, Industrial Bearings Undertaking of NRB which included the said Project was transferred and vested in the Company. The Project of Angular Contact Bearings was completed in December, 2013 and Assets pertaining to the Project having aggregate cost of Rs. 3031.87 lacs (including capitalised interest on the Loan) were sold to NRB IBC Bearings Pvt. Ltd (NIBC). Also, liabilities of Rs. 694.14 lacs outstanding relating to machineries purchased were transferred. Further, premium of Rs.104.01 lacs on Call Spread Option Contract relating to the loan referred to above has been debited to NIBC. The amount of Rs. 2026.74 lacs is fully recovered during the period ended 31st March 2015.

9. The figures for the previous period have been regrouped / restated where necessary to conform to the current period''s classification.


Dec 31, 2013

1. Corporate Information:

NRB Industrial Bearings Limited (''the Company) was incorporated on 24th day of February, 2011 as a Private Limited Company under the provisions of the Companies Act, 1956 (the Act). On the acquisition of equity shares of the Company on 4th November, 2011 by NRB Bearings Limited, a public limited company, the Company in terms of Section 3 (1) (iv) (c) of the Act became a Public Limited Company and the name of the Company was changed from "NRB Industrial Bearings Private Limited" to "NRB Industrial Bearings Limited"

The Company is engaged in the business of manufacturing and sellingof all types of industrial bearings.

The Scheme of Arrangement (the Scheme) for the transfer of Industrial Bearings Undertaking of NRB Bearings Limited (NRB) to the Company under section 391 to 394 read with section 100 to 103 of the Companies Act, 1956 was sanctioned by the Humble High Court of Judicature, Bombay on 24th August 2012. The Scheme, which has become operative from 25th September, 2012 upon filing of the certified copies of the Orders of the Humble High Court with the Registrar of Companies is effective from 1st October, 2012 (the Appointed Date).

Pursuant to the Scheme, with effect from the Appointed date the Industrial Bearings Undertaking of NRB is transferred and vested in the Company as a going concern, with all its assets, liabilities, properties, rights, benefits and interest therein subject to existing charges thereon.

In terms of the Scheme, in consideration of the transfer and vesting of the Industrial Bearings Undertaking of NRB, in respect of every 4 equity shares of Rs. 2 each, held by the shareholders of NRB, 1 equity share of Rs. 2 each fully paid up aggregating 24,230,650 equity shares have been issued and allotted on 31st October, 2012, to the shareholders of NRB whose names appeared in the Register of Members, as on 25th October, 2012, being the record date.

All the staff, workmen and employees of Industrial Bearings Undertaking of NRB in service as on 1st October, 2012 have become staff, workmen and employees of the Company without any break in their service.

In terms of the Scheme, the Company recorded all the assets and liabilities pertaining to the Industrial Bearings Undertaking, at the respective book values appearing in the books of NRB as on the Appointed Date. The Company credited to its share capital account, the aggregate face value of the equity shares issued by it pursuant to the Scheme. The difference of Rs. 5,700.16 lacs being excess of net assets and the amount credited as share capital after adjusting the cancellation of existing share capital of the Company held by NRB has been credited to Capital Reserve. The equity shares allotted have been listed on the Bombay Stock Exchange and the National Stock Exchange on 9th April, 2013.

NOTE 2 - Contingent Liabilities not provided for:

As at As at 31.12.2013 30.09.2012 Rs. Lacs Rs. Lacs

a) Bank guarantees

- To Indian Custom Department 55.00

- To Maharashtra Pollution Control Board 2.00

NOTE 3 - Commitments

1. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) 607.96

2. Other commitment

- Premium payable for remaining period of Call Spread Option Contract. 618.53

2) Defined Benefit Plans : (Funded)

Gratuity- as per actuarial valuation as at the period end (based on Projected Unit Benefit Method). The Company has an obligation towards gratuity, a funded defined benefit retirement plan covering eligible employees. The plan provides for lump sum payment to vested employees at retirement, death while in employment or on termination of the employment of an amount equivalent to 15 days salary, as applicable, payable for each completed year of service, without any payment ceiling. Vesting occurs upon completion of five years of service.

Footnotes:

(i) There were no employees in the previous period and hence disclosure under Accounting Standard 15 was not applicable.

(ii) 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.

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

(iv) The discount rate is based on the benchmark rate yield of government of India security as at the Balance sheet date.

NOTE 4 - Disclosure under Accounting Standard 19 - " Leases"

1) Lease Expense

(a) The company has taken vehicle and residential premises on operating lease. Lease rental charged to the statement of profit and loss for the period ended 31.12.2013 Rs. 30.29 lacs (includes minimum lease payment of Rs. 9.45 Lacs for the non - cancellable period up to February, 2013)

(b) (i) Under some agreements, refundable interest free deposit have been given and contain a provision for renewal.

(ii) The agreements provide for early termination by either party with a notice period which varies from 1 month to 6 months.

2) Lease Income

The Company has entered into lease agreements for certain portion of its factory and office premises including furniture and fixtures, electrical installation, etc. During the period, Rs. 68.90 Lacs recognised as rental income in the Statement of Profit and Loss. The agreement existing as at the yearend provide for increase in rent after 3 years and contain renewal clause. The agreement provide for termination prior to the expiry of the term, as per mutual understanding of the parties or due to breach of terms and conditions as mentioned in the agreements.

NOTE 5 - Disclosure under Accounting Standard 17 - " Segment Reporting"

The operations of the Company fall within a single primary segment viz. Industrial bearings.

NOTE 6 - Managerial Remuneration

Mr. Devesh Singh Sahney was appointed as Managing Director of the Company w.e.f 1st October,2012 vide resolution passed by the Board of Directors in its meeting held on 4th October, 2012 in which the Board also approved the remuneration. Members of the Company in its Annual General Meeting held on 15th October, 2012 approved the said appointment and remuneration.

The Central Government has approved the appointment of the Managing Director on 14th February, 2014 for which an application was made by the Company on 10th February, 2014. The Company''s application to the Central Government made on 10th February, 2014 for the approval of remuneration to the Managing Director is pending for approval. Accordingly the remuneration of Rs 79.51 lacs to the Managing Director paid and debited to the Statement of Profit and Loss is subject to the approval of the Central Government. Pending such approval the Managing Director holds the remuneration paid in trust for the Company.

NOTE 7 - Advance against assignment of certain Rights

In terms of the seperate Memorandum of Understanding entered into on 1st November, 2013 with NRB Bearings Limited, the Company has agreed,

(i) to assign its leasehold rights in the plot of land at Aurangabad admeasuring 576 sq.mtrs. with building structure thereon admeasuring 144 sq.mtrs. of built up area for a consideration of Rs. 270 lacs subject to approval of the relevant Government Authorities, and

(ii) to grant exclusive rights to use 700 Sq. ft. of carpet area situated on the 3rd Floor of Building Dhannur at Mumbai, for a consideration of Rs. 185 Lacs Pending approval of the relevant Government Authorities/ completion of certain regulatory procedures, the aggregate amount of Rs. 455 Lacs received has been considered as advance and included under Note 10.

NOTE 8

NRB Bearings Ltd (NRB) had entered into a Joint Venture agreement in the year 2011 with IBC Industrial Bearings and Components AG, Switzerland to form a joint venture Company for manufacture of Angular Contact Bearings. Pending formation of the joint venture company, the Project was started in 2011 by NRB as a part of Industrial Bearings Undertaking and Loan of USD 2.5 Million was availed for the Project. In terms of the Scheme referred to in Note 1, Industrial Bearings Undertaking of NRB which included the said Project was transferred and vested in the Company. The Project of Angular Contact Bearings was completed in December, 2013 and Assets pertaining to the Project having aggregate cost of Rs. 3,031.87 lacs (including capitalised interest on the Loan) were sold to NRB IBC Bearings Pvt. Ltd (NIBC). Also, liabilities of Rs. 694.14 lacs outstanding relating to machineries purchased were transferred. Further, premium of Rs. 104.01 lacs on Call Spread Option Contract relating to the loan referred to above has been debited to NIBC. The amount of Rs. 2,026.74 lacs recoverable as at the year end on this account is included in Note 20 - Other current assets. The Loan availed continues to be in the books of the Company.

NOTE 9

Pursuant to the Scheme of Arrangement referred to in Note 1 investment in 112,500 equity shares of Rs. 10 each aggregating to Rs. 11.25 Lacs in joint venture, Schneeberger India Private Limited was transferred to the Company on 1st October, 2012.

In terms of the Share Purchase Agreement with Schneeberger Holding AG the above equity shares were sold for a consideration of Rs. 252.56 lacs on September 10, 2013. The profit on sale of Rs. 241.31 lacs is included in Note 27 - Exceptional items.

NOTE 10

During the month of October, 2012 the Company had placed Inter - Corporate Deposit of Rs. 10 Crores with NRB Bearings Limited, the Company covered under section 295 of the Companies Act, 1956 without obtaining previous approval of the Central Government as required under the said section. The deposit has been repaid by NRB Bearings Limited during November, 2012. The Company will be making an application to the Central Government for approval of the deposit placed.

NOTE 11

Consequent to the transfer and vesting of the Industrial Bearings Undertaking of NRB Bearings Limited to the Company in terms of the Scheme referred to in Note 1, the financial statements of the Company include the operations of the Industrial Bearings for the fifteen months period ended 31 December 2013 and therefore are strictly not comparable with the figures of the previous period ended 30 September 2012. The figures for the previous period have been regrouped / restated where necessary to conform to the current period''s classification.

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