Mar 31, 2023
General reserve: The Company has transferred a portion of the net profit of the Company before declaring dividend to general reserve pursuant to the earlier provisions of Companies Act, 1956. Mandatory transfer to general reserve is not required under Companies Act, 2013 and the Company can optionally transfer any amount from the surplus of profit or loss to the General Reserve.
Capital Reserve: The company recognises profit and loss purchase, sale, issue or cancellation of its own equity instruments to Capital Reserve. The Reserves is utilised in accordance with the provisions of Section 69 of the Companyies Act, 2013.
Retained earnings: Retained earnings are the profits that the Company has earned till date, less transfers to general reserve, dividends or other distributions paid to shareholders.
Remeasurement of defined benefit plans: The Company has recognised remeasurement gains/(loss) on defined benefit plans in OCI. These changes are accumalated within the OCI reserve within other equity. The Company transfers amount from this reserve to retained earning when the relevant obligations are derecognized.
Note:
1) Term loan from banks is secured by first charge on all property, plant and equipment of the Company, both present and future, equitable mortgage of certain immovable properties and futher secured by secured charge on entire current assets of the Company including hypothication of raw materials, semi finished goods and finished goods including goods in transit , books debts and other current assets of the Company.
2) Working capital finance from banks is secured by first charge on all current assets of the Company, both present and future, including hypothication of raw materials, semi finished goods and finished goods including goods in transit, books debts and further secured by equitable mortgage of certain immovable properties of the Company.
3) Working capital term loans from financial institutions is secured by mortgage of certain immovable properties of a wholly-owned subsidiary company and an associate company, inclunding hypothication of all property, plant and equipment of a wholly-owned subsidiary company and further secured by corporate guarantee of a wholly-owned subsidiary company and an associate company.
*The Company has received certain demand towards custom duty on account of mis-classification on import of coal, although the Company has availed the benefit of exemption notification and paid custom duty at a lower rate. Matter is in appeal but the Company has decided to make provision for the same of H 37.68 Lakhs.
**The Company has made provision towards mines closure obligations based on estimated outflow of resources based on past experience.
The Board provides guiding principles for overall risk management as well as policies covering specific areas such as foreign exchange risk, credit risk and investment of surplus liquidity.
A. Credit risk
Credit risk refers to the risk of a counter party default on its contractual obligation resulting into a financial loss to the Company. The maximum exposure of the financial assets represents trade receivables, work in progress and receivables from group companies and others.
Customer credit risk is managed by the Company through established policy and procedures and control relating to customer credit risk management. Trade receivables are non-interest bearing and are generally carrying upto 90 days credit terms. The Company has a detailed review mechanism of overdue customer receivables at various levels within organisation to ensure proper attention and focus for realisation. Trade receivables are consisting of a large number of customers. Export receivables are backed by forward contract. In respect of trade receivables, the Company uses a provision matrix to compute the expected credit loss allowances for trade recivables in accordance with the excepcted credit loss (ECL) policy of the Company.
B. Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in raising funds to meet its commitments associated with financial instruments. Liquidity risk may result from an inability to sell a fianncial aseets quickly at close to its fair value.
The Company manages liquidity risk by maintaining adequate reserves and banking facilities by continuously monitoring forcast and actual cash flows and by matching the maturity profiles of financial assets and liabilities.
Contractual maturities of significant financial liabilities are as follows:
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. Such changes in the values of financial instruments may result from changes in foreign currency exchange rates, interest rates, credit, liquidity and other market changes.
The Company has several balances in foreign currency and consequently, the Company is exposed to foreign exchange risk. The Company evaluates exchange rate exposure arising from foreign currency transactions and follows established risk management policies.
a) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Companyâs long-term debt obligations with floating interest rates. The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings.
b) Interest rate sensitivity:
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Company''s profit before tax is affected through the impact on floating rate borrowings, as follows:
c) Exposure in foreign currency:
The Company deals with foreign currency loan given, trade payables, trade receivables etc. and is therefore exposed to foreign exchange risk associated with exchange rate movement.
The Company operates internationally and portion of the business is transacted in several currencies and consequently the Company is exposed to foreign exchange risk through its sales in overseas and purchases from overseas suppliers in various foreign currencies.
Note 33
Capital management
The Company''s capital management objective is to maximise the total shareholders'' returns by optimising cost of capital through flexible capital structure that supports growth. Further, the Company ensures optimal credit risk profile to maintain/enhance credit rating.
The Company determines the amount of capital required on the basis of annual operating plan and long-term strategic plans. The funding requirements are met through internal accruals and long-term/short-term borrowings. The Company monitors the capital structure on the basis of net debt to equity ratio and maturity profile of the overall debt portfolio of the company.
Note 34 Contingent Liabilities |
||
Nos. Particulars |
March 31, 2023 |
March 31, 2022 |
1. Power claim matters related to the year 1995 decided in favour of the Company by the District Court (Civil Court, Senior Division, Porbandar) but Paschim Gujarat Vidyut Company Limited has gone into further appeal before Hon''ble High Court of Gujarat* |
338.02 |
338.02 |
2. Demand (including interest on Tax demand) raised by the Income tax authorities during the assessment process, being disputed by the Company** |
1989.04 |
1,989.04 |
3. Demand from Joint Commissioner Customs for payment of differential customs duty*** |
18.42 |
18.42 |
4. Interest on differential customs duty demand*** |
Amount to be determined |
|
5. Interest @ 15% p.a. on unpaid contribution to District Minerals Foundation and National Mineral Extraction Trust**** |
Amount to be determined |
|
6. Cases pending with Labour Courts1 |
Amount to be determined |
* In view of decision already in favour of Company by the District Court (Civil Court, Senior Division, Porbandar) and based on discussion with the solicitors, the management believes that the Company has a strong chance and hence no provision there against is considered necessary.
** Demand raised by Income tax authorities (during the assessment process for A.Y.2009-10, 2011-12, 2012-13, 2014-15 and 2017-18)
substantially pertains to dispute on dertermination of inter segment price for claiming tax holiday benefits on sale of power which are disallowed / disputed by such authorities. Further, dispute on account of allowance of 80-IA benefit due to late filing of return of income pertianing to A.Y.2015-16. The Management believes that its position is likely to be upheld in the appellate process.
*** Demand of differential custom duty is raised by the Office of Joint Commissioner Customs against few import shipment of coal. In
some cases many parties are involved. Few matters are pending with larger bench of Supreme Court and few matters are pending with CESTAT.
**** Demand raised by the Office of District Mineral Foundation and the Geology and Mining Department (District Mineral Foundation (Cell)) against interest on unpaid DMF and NMET. The petition is filed by the Company against such demand which is pending in the Honorable Gujarat High Court and the management believes that the decision will come in favor of the company.
Note 39
Segment reporting
For management purposes, the Company is organised into business units based on its products and services and has two reportable segments, as follows:
a) Alumina Refactories & Monolithics products & bauxite ores: Alumina Refactories & Monolithics products manufactures calcined bauxite, fused aluminium oxide abrasive grains and low cement castables which are mainly consumed in steel plants. Plant grade bauxite ores are captively consumed at the plant and Non plant grade bauxite ores are sold in the market
b) Power generation:The Company has a thermal power plant, furnace oil based power plant and windmills. Power generated from thermal power plant and furnace oil based power plant is captively consumed at the plant and power generated from windmills is sold to the respective state power distribution companies.
No operating segments have been aggregated to form the above reportable operating segments.
The Executive Management Committee monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements. The Companyâs financing (including finance costs and finance income) and income taxes are managed on a Company basis and are not allocated to operating segments.
Transfer prices between operating segments are on an armâs length basis in a manner similar to transactions with third parties.
b. The title deeds of all immovable properties (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee), disclosed in the financial statements included under Property, Plant and Equipment are held in the name of the Company as at the balance sheet date.
c. The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
d. The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
e. The Company has not been declared as a wilful defaulter by any lender who has powers to declare a company as a wilful defaulter at any time during the financial year or after the end of reporting period but before the date when the financial statements are approved.
f. The Company does not have any transactions with struck-off companies.
g. The Company has compiled with the number of layers prescribed under clause (87) of section 2 of the Companies Act 2013 read with Companies (Restrictions on number of Layers) Rules, 2017.
h. The company has not advanced or loaned or invested funds to any other person(s) or entity(is), including foreign entities(intermediaries), with the understanding that the intermediary shall;
i. Directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries), or
ii. Provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
i. The Company has not received any funds from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall;
i. Directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate beneficiaries), or
ii. Provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
j. The Company does not have any transactions which is not recorded in the books of accounts but has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 ( such as, search or survey or any other relevant provisions ofthe Income Tax Act, 1961).
k. Quarterly returns or statements of current assets filed by the Company with banks are generally in agreement with the books of accounts.
l. The Company has used the borrowings from banks for the specific purpose for which it was obtained.
m. The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
In view of large number of cases, it is not practicable to disclose individual details of all the cases. On the basis of current status of individual case and as per legal advice obtained by the Company, wherever applicable, the Company is of view that no provision is required in respect of these cases.
Mar 31, 2018
Note A
In view of decision already in favour of Company by the District Court (Civil Court, Senior Division, Porbandar) and based on discussion with the solicitors, the management believes that the Company has a strong chance and hence no provision there against is considered necessary.
Note B
Demands raised by Income tax authorities substantially pertains to dispute on determination of inter segment price for claiming tax holiday benefits which are disallowed / disputed by such authorities. The management believes that its position is likely to be upheld in the appellate process.
Note C
In view of large number of cases, it is not practicable to disclose individual details of all the cases. On the basis of current status of individual case and as per legal advice obtained by the Company, wherever applicable, the Company is of view that no provision is required in respect of these cases.
(a) Gratuity
The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.
Note 33 Leases Operating Lease : Company as Lessee
The Company has taken various residential, office and warehouse premises and plant and machinery under operating lease agreements. These are cancellable and are renewable by mutual consent on mutually agreed terms. The lease payment recognized in the statement of profit and loss for the year is Rs. 28.76 Lakhs (2016-17: Rs. 16.95 Lakhs)
Note 34 CSR Expenditure
Gross amount required to be spent during the year: Rs. 44.80 lakhs (2016-17: Rs. 44.33 lakhs)
Amount spent during the year (contribution to NPO, promotion of education, sanitation work and others), paid in cash: Rs. 44.92 lakhs (2016-17: Rs. 44.51 lakhs)
Note 35
Segment reporting
For management purposes, the Company is organized into business units based on its products and services and has two reportable segments, as follows:
a) Alumina Refactories & Monolithics products & bauxite ores: Alumina Refactories & Monolithics products manufactures calcined bauxite, fused aluminum oxide abrasive grains and low cement castables which are mainly consumed in steel plants. Plant grade bauxite ores are actively consumed at the plant and Non plant grade bauxite ores are sold in the market
b) Power generation: The Company has a thermal power plant, furnace oil based power plant and windmills. Power generated from thermal power plant and furnace oil based power plant is actively consumed at the plant and power generated from windmills is sold to the respective state power distribution companies
No operating segments have been aggregated to form the above reportable operating segments.
The Executive Management Committee monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements. The Companyâs financing (including finance costs and finance income) and income taxes are managed on a Company basis and are not allocated to operating segments.
Transfer prices between operating segments are on an armâs length basis in a manner similar to transactions with third parties.
The revenue information above is based on the locations of the customers. The Company does not have noncurrent assets located outside India. Revenue from one customer amounted to Rs.4865.51 lakhs (31 March 2017: Rs.3,618.58 lakhs), arising from sales in the Alumina Refractories, Monolithic Products & Bauxite Ores segment.
Note 36
Fair value disclosures for financial assets and financial liabilities
Set out below is a comparison, by class, of the carrying amounts and fair value of the Companyâs financial instruments, other than those with carrying amounts that are reasonabl approximations of fair values:e
The management assessed that cash and cash equivalents, trade receivables, trade payables, other current financial asset and other current financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The fair values of long-term variable-rate borrowings are evaluated by the Company based on parameters such as interest rates, specific country risk factors etc.
Note 38
Financial instruments risk management objectives and policies
The Company''s principal financial liabilities, comprise loans and borrowings, trade and other payables, and other financial liabilities. The main purpose of these financial liabilities is to finance the Company''s operations. The Company''s principal financial assets include trade and other receivables and cash and cash equivalents that derive directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks and ensures that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarized below.
(a) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as commodity risk. Financial instruments affected by market risk include borrowings, receivables and deposits.
The sensitivity analyses in the following sections relate to the position as at March 31, 2018 and March 31, 2017. The sensitivity analysis has been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt and the proportion of financial instruments in foreign currencies are all constant. The analysis excludes the impact of movements in market variables on the carrying values of gratuity and other post retirement obligations/provisions.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Companyâs long-term debt obligations with floating interest rates.
The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings.
Interest rate sensitivity:
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Company''s profit before tax is affected through the impact on floating rate borrowings, as follows:
In Lakhs)
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company transacts business in local currency and in foreign currency, primarily in USD. The Company has foreign currency trade payables and receivables etc. and is, therefore, exposed to foreign exchange risk.
The following table sets forth information relating to foreign currency exposure as at March 31, 2018, March 31, 2017 and April 1, 2016:
Commodity price risk
The Company is exposed to the risk of fluctuations in prevailing market commodity prices mainly on coal, furnace oil, bauxite ore and calcined bauxite. The Companyâs policy is to maintain an inventory level of such commodities based on the demand and price variations in the market. It is impracticable to determine the price sensitivity of these commodities.
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) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.
Customer credit risk is managed by each business unit subject to the Companyâs established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by letters of credit or other forms of credit insurance.
An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on exchange losses historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in seperate note. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets.
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the Companyâs treasury department in accordance with the Companyâs policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the Companyâs Board of Directors on an annual basis, and may be updated throughout the year subject to approval of the Companyâs Finance Committee. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through counterpartyâs potential failure to make payments.
The Companyâs maximum exposure to credit risk for the components of the balance sheet at March 31, 2018, March 31, 2017 and April 1,
2016 is the carrying amounts as illustrated in Note 7.
(c) Liquidity risk
Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses. The Companyâs objective is to, at all times maintain optimum levels of liquidity to meet its cash and collateral requirements. The Company closely monitors its liquidity position and deploys a robust cash management system. It maintains adequate sources of financing through term loans and working capital loans from domestic banks at an optimized cost.
The table below summarizes the maturity profile of the Companyâs financial liabilities based on contractual undiscounted payments:
* Includes current maturities of long term borrowings and interest accrued but not due on borrowings.
Note 39
Capital management
For the purpose of the Companyâs capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders. The primary objective of the Companyâs capital management is to maximize the shareholder value.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings less cash and cash equivalents (including other bank balances).
In order to achieve this overall objective, the Companyâs capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period.
No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2018, March 31, 2017 and April 1, 2016.
Note 41
Preferential Issue of equity shares
The Company has allotted 62,96,800 warrants ("Warrants") at INR 51.31/- per Warrant for an aggregate consideration of up to INR 3,230.89 lakhs and entitling the Warrant holder(s), being promoter and promoter group entities, to convert the Warrants into equivalent numbers of Equity Shares in the ratio of one equity share for one share warrant held, within eighteen months from the date of allotment of Warrants in accordance with provisions of Chapter VII of the SEBI ICDR Regulations or subject to other applicable laws and regulations as may be prevailing at the time of allotment of Warrants / conversion of Warrants into Equity Shares ("Preferential Issue").
Money received from warrants of Rs. 807.72 lakhs being 25% of exercise price is shown as Money received against share warrants as on balance sheet date.
Note 42
First- time adoption of Ind AS
These financial statements, for the year ended March 31, 2018, are the first annual Ind AS financial statements, the Company has prepared in accordance with Ind AS. For periods up to and including the year ended March 31, 2017, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).
Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on March 31, 2018, together with the comparative period data as at and for the year ended March 31, 2017, as described in the summary of significant accounting policies. In preparing these financial statements, the Companyâs opening balance sheet was prepared as at April 1, 2016, the Companyâs date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at April 1, 2016 and the previously published Indian GAAP financial statements as at and for the year ended March 31, 2017.
A. Exemptions availed:
Ind AS 101 âFirst-time Adoption of Indian Accounting Standardsâ allows first-time adopter certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:
a) Deemed cost
Since, there is no change in the functional currency, the Company has elected to continue with the carrying value of all of its property, plant and equipment as recognized in the financial statements as at the date of transition to Ind AS, measured as per Indian GAAP and used it as its deemed cost at the date of transition.
B. Exceptions applied:
a) Estimates
Estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with Indian GAAP, unless there is objective evidence that those estimates were in error. Ind AS estimates as at April 1, 2016 and March 31, 2017 are consistent with the estimates as at the same date made in the conformity with Indian GAAP .
b) Classification and measurement of financial assets
Ind AS 101 requires an entity to assess classification and measurement of financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS.
Reconciliations between Indian GAAP and Ind AS 1. Reconciliation of equity as at March 31, 2017 and April 1, 2016
The Company has prepared a reconciliation of equity as at 31st March, 2017 and 1st April, 2016 under the Indian GAAP with the equity as reported in these financial statements under Ind AS, that reflect the impact of Ind AS which is presented below:
Notes to the reconciliation of equity as at April 1, 2016 and March 31, 2017 and total comprehensive income for the year ended March 31, 2017
1. Proposed dividend
Under Indian GAAP, proposed dividends and related dividend distribution tax was recognized as a provision in the year to which they relate, irrespective of when they are declared. Under Ind AS, dividends and related dividend distribution tax are recognized as a liability in the year in which it is approved by the shareholders in the Annual General Meeting of the Company.
2. Defined benefit plans
Actuarial gain/(loss) - Under Indian GAAP, the actuarial gain/(loss) of defined benefit plans has been recognized in Statement of Profit and Loss. Under Ind AS, the remeasurement gain/(loss) on net defined benefit plans is recognized in Other Comprehensive Income net of tax.
3. Trade receivables
Under Indian GAAP, the Company has created provision for impairment of receivables only in respect of specific amount for incurred losses. Under Ind AS, impairment allowance has been determined based on Expected Loss model (ECL).
4. Deferred tax
Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The Company has recognized deferred tax on temporary differences arising on the transitional adjustments.
5. Other comprehensive income
Under Indian GAAP, the Company has not presented other comprehensive income (OCI) separately. Hence, it has reconciled Indian GAAP profit or loss to profit or loss as per Ind AS. Further, Indian GAAP profit or loss is reconciled to total comprehensive income as per Ind AS.
6. Statement of cash flows
There were no significant reconciliation items between cash flows prepared under Indian GAAP and those prepared under Ind AS.
Note 43
Standards issued but not yet effective
The amendments to standards that are issued, but not yet effective, up to the date of issuance of the Company''s financial statements are disclosed below. The Company intends to adopt these standards when they become effective
The Ministry of Corporate Affairs (MCA) has issued the Companies (Indian Accounting Standards) Amendment Rules, 2017 and Companies (Indian Accounting Standards) Amendment Rules, 2018 amending the following standard:
Ind AS 115 Revenue from Contracts with Customers :Ind AS 115 was issued on 29 March 2018 and establishes a five-step model to account for revenue arising from contracts with customers. Under Ind AS 115, revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The new revenue standard will supersede all current revenue recognition requirements under Ind AS. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after 1 April 2018. The Company plans to adopt the new standard on the required effective date using the full retrospective method. During 2017 - 18, the Company performed a detailed assessment of Ind AS 115 to determine the impact in its financial statement.
The Company is in the business of production and selling of alumina refractories and monolithics products, mining of bauxite ores and generation of power (including windmill). The Company''s manufacturing facilities are located at Porbandar (Gujarat) along with thermal power generation, bauxite mines located at various sites in Gujarat and windmill facilities in the state of Rajasthan & Karnataka.
a) Sale of goods:-
For contracts with customers in which the sale of goods is generally expected to be the only performance obligation, adoption of Ind AS 115 is not expected to have significant impact on the Company''s revenue and profit or loss. The Company expects the revenue recognition to occur at a point in time when control of the goods is transferred to the customer, generally on delivery of goods.
b) Sale of power:-
Revenue from sale of power is recognized on transfer of power to the customer is the only performance obligation, adoption of Ind AS 115 is not expected to have significant impact on the Company''s revenue and profit or loss.
Note 44
Events after the reporting date
The board of directors have proposed dividend after the balance sheet date which are subject to approval by the shareholders at the annual general meeting. Refer note 12(a) for details. There have been no other events after the reporting date.
Mar 31, 2016
b. Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of Rs. 1.00 per share. The holder of each fully paid equity share is entitled to one vote. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing annual general meeting.
For the current financial year ended March 31, 2016, the amount of per equity share dividend recognized as distributions to equity shareholders is Rs. 0.25 (Previous year Rs. 0.25)
In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
1. Segment Information Business Segments :
The Company operates in primarily two segments i.e. (a) Alumina Refractories & Monolithics products & bauxite ores and (b) power generation.
A description of the types of products and services provided by each reportable segment is as follows:
Alumina Refractories & Monolithics products manufactures calcined bauxite, fused aluminium oxide abrasive grains and low cement castables which are mainly consumed in steel plants. Plant grade bauxite ores are captively consumed at the plant and Non plant grade bauxite ores are sold in the market.
Power generation - The Company has a thermal power plant, furnace oil based power plant and windmills. Power generated from thermal power plant and furnace oil based power plant is captively consumed at the plant and power generated from windmills is sold to the respective state power distribution companies.
Geographical Segments:
The analysis of geographical segment is based on the geographical location of the customers. The Company operates primarily in India and has some presence in international markets as well through exports. Its business is accordingly aligned geographically, catering to two markets i.e. India and Outside India.
Note A
In view of decision already in favour of Company by the District Court (Civil Court, Senior Division, Porbandar) and based on discussion with the solicitors, the management believes that the Company has a strong chance and hence no provision there against is considered necessary.
Note B
Demands raised by Income tax authorities substantially pertains to dispute on determination of inter segment price for claiming tax holiday benefits which are disallowed / disputed by such authorities. The management believes that its position is likely to be upheld in the appellate process.
Note C
In view of large number of cases, it is not practicable to disclose individual details of all the cases. On the basis of current status of individual case and as per legal advice obtained by the Company, wherever applicable, the Company is of view that no provision is required in respect of these cases.
2. The Chief Financial Officer (CFO) and Company Secretary has resigned with effect from 13th November, 2015 and 30th April 2016 respectively, and as on date, the management is in process of appointing a CFO and Company Secretary. Hence, the financial statements are not signed by such authorities as required under section 134 of the Companies Act, 2013
3. Details of dues to micro and small enterprises as defined under the MSMED Act, 2006
Based on information available with the Company, there are no suppliers who are registered as micro, small or medium enterprise under "The Micro, Small and Medium Enterprise Development Act, 2006" (Act) till 31st March, 2016. Accordingly, no disclosures are required to be made under said Act.
4. Gratuity and other post-employment benefit plans
The Company has a defined benefit gratuity plan. Gratuity is computed as 15 days salary, for every completed year of service or part thereof in excess of 6 months and is payable on retirement/termination/resignation. The benefit vests on the employees after completion of 5 years of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.
The following tables summarize the components of net benefit expense recognized in the statement of profit and loss and the funded status and amounts recognized in the balance sheet for the Gratuity.
5. The Company has taken various residential, office and warehouse premises and some plant and machinery under operating lease agreements. These are cancellable and are renewable by mutual consent on mutually agreed terms. The lease payment recognized in the statement of profit and loss for the year is Rs. 36.71 lacs (Previous year Rs. 50.37 lacs).
6. Derivative instruments and unhedged foreign currency exposure information: a) Details of derivative contract outstanding as at Balance Sheet date
The Company had entered into Option contract over the borrowing term for hedging foreign currency exchange rate risk against Foreign Currency term loan. The receivable on derivative settlement as per the option contract and the Loan Liability in the Financial Statements at the end of previous year were shown separately.
7. The management believes that the net realizable value of stocks of non plant grade bauxite ore, at various mines located in Bhuj district (Gujarat) weighing 59,090 tonnes, is higher than its cost incurred. The management has filed an application for approval to sale such stock with the state government authorities and it is confident that the required approvals will be obtained shortly and accordingly the stock of Rs. 259.20 lacs (previous year Rs. 259.20 lacs) have been valued at cost.
8. Capital Commitments
Estimated amount of contracts remaining to be executed on capital account and not provided for (net of capital advance and capital work in progress) Rs. 519.77 (Previous Year : Rs. Nil).
Note:
a. The Company has received demand from the Joint Commissioner, Customs for payment of differential custom duty on account of mis-classification on import of coal in the earlier year 2014-15, whereby the Company has availed the benefit of exemption notification and paid custom duty at a lower rate. The Company has gone for further appeal to the Commissioner of Customs (Appeals). The Company on a conservative basis has made provision for the entire amount of Rs. 37.68 lacs.
b. The Company has made provision towards mines closure obligations based on estimated outflow of resources based on past experience.
9. Change in accounting estimates
The company has revised estimated useful life of windmill and thermal power plant assets based on technical evaluation made in the year. Had the company continued to use old useful life, depreciation for the current period would have been higher by Rs. 302 lacs. Profit and underlying fixed assets for the current period would correspondingly have been lower by Rs. 302 lacs (profit net of tax impact of Rs. 241.60 lacs).
10. The Company is liable to pay Minimum Alternate Tax (MAT) on income for financial year 2015-16 and accordingly the Company has made provision of Rs. 803 lacs for current year. The company has not recognized MAT credit in the books of Rs. 159 lacs as there is no convincing evidence of realization of the asset in near future.
11. CSR Expenditure
Gross amount required to be spent during the year : Rs. 45.02 lacs
Amount spent during the year (contribution to NPO, promotion of education, sanitation work and others) paid in cash : Rs. 31.66 lacs (previous year Rs. 14.96 lacs)
12. Previous year figures have been regrouped / reclassified, where necessary, to confirm to this yearâs classification.
Mar 31, 2015
1. CORPORATE INFORMATION
Orient Abrasives Limited ('The Company') is engaged in the production
and selling of fused aluminium oxide grains, calcined products, and
generation of power. The Company has manufacturing facilities at
Porbandar (Gujarat) and Power Generation facilities at Rajasthan and
Karnataka.
2. BASIS OF PREPARATION
The financial statements of the company have been prepared in
accordance with the generally accepted accounting principles in India
(Indian GAAP). The company has prepared these financial statements to
comply in all material respects with the accounting standards notified
under section 133 of the Companies Act 2013, read together with
paragraph 7 of the Companies (Accounts) Rules 2014. The financial
statements have been prepared on an accrual basis and under the
historical cost convention.
The accounting policies adopted in the preparation of financial
statements are consistent with those of previous year, except for the
change in accounting policy explained below.
b. Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of Rs.
1.00 per share. The holder of each fully paid equity share is entitled
to one vote. The company declares and pays dividends in Indian rupees.
The dividend proposed by the Board of Directors is subject to the
approval of the shareholders in the ensuing annual general meeting.
During the year ended March 31, 2015, the amount of per equity share
dividend recognized as distributions to equity shareholders is Rs. 0.25
(Previous year Rs. 0.20)
In the event of liquidation of the company, holders of equity shares
will be entitled to receive remaining assets of the company, after
distribution of all preferential amounts. The distribution will be in
proportion to the number of equity shares held by the shareholders.
* Foreign currency loan of Rs. 312.95 lacs (Previous year Rs. 907.35 lacs)
carries interest @ LIBOR plus 3% p.a., is repayable in 16 quarterly
installments of USD 250,000 each from the date of October 2011. It is
exclusively secured on all the wind mills of the company.
'Working capital loan from banks are secured by first pari passu
charge on all current assets of company, both present & future,
including stocks of raw materials, stores, spares, stocks in process &
finished goods etc lying in their premises, godowns, elsewhere
including those in transit and all present and future book-debts /
receivables of the company. These facilities are further secured by
second pari passu charge on the entire fixed assets of the Company. The
managing director has also given a personnel guarantee to the bank for
this facility. The working capital loan is repayable on demand and
carries interest @ 10.00% - 15.50 % p.a.
3. SEGMENT INFORMATION
Business Segments :
The Company operates in primarily two segments i.e. (a) Fused aluminium
oxide grains including calcined products, Monolithics and (b)
generation of power.
A description of the types of products and services provided by each
reportable segment is as follows:
Fused Aluminium Oxide Grains manufactures calcined bauxite and fused
aluminium oxide abrasive grains. Raw bauxite and calcined alumina are
the basic raw materials used for the manufacture of abrasive grains.
Raw bauxite is procured from mines owned by the Company and others and
Calcined alumina is purchased from aluminium companies. A portion of
these products is captively consumed for manufacturing of monolithics
and low cement castables which are mainly consumed in steel plants.
Power Generation segment - The Company has a thermal power plant and a
furnace oil based power plant with capacity of 9 MW each. The
electricity from these power plants is meant for captive consumption by
the manufacturing division at Porbandar (Fused aluminium oxide grain).
The Company has also set up windmills of total power generation
capacity of 11.1 MW. The power generated by these windmills is sold to
the respective state power distribution companies.
Geographical Segments:
The analysis of geographical segment is based on the geographical
location of the customers. The Company operates primarily in India and
has some presence in international markets as well. Its business is
accordingly aligned geographically, catering to two markets i.e India
and Outside India. The Company has considered domestic and exports
markets as geographical segments and accordingly considered them for
disclosure based on materiality of transactions.
SECONDARY SEGMENT REPORTING (BY GEOGRAPHICAL SEGMENTS)
Secondary segment reporting is based on the geographical location of
customers. The geographical segments have been identified based on
revenues within India (sales to customers within India) and revenues
outside India (deemed exports to customers located outside India).
Since the export market revenue, results and assets constitute less
than 10% of the total revenue, results and assets, the same has not
been disclosed.
4. RELATED PARTY DISCLOSURES
(a) Names of related parties and related party relationship
(i) Related parties with whom transactions have taken place during the
year a. Key management personnel
Name Relationship
1. Mr. S. G. Rajgarhia Managing Director
2. Mr. P. P. Khanna Executive Director
3. Mr. R. K. Khanna Whole Time Director
4. Mrs. Anisha Mittal Director
5. Mr. A. Sihag Chief Financial Officer
(w.e.f. April 1, 2014)
6. Mr. K. Mundra Company Secretary (w.e.f. May 7,
2014)
b. Relatives of Key management personnel
Name Relationship
1. Mrs. Usha Rajgarhia Wife of Managing Director
2. Mr. R. K. Rajgarhia Brother of Managing Director
3. Ms. Bhawna Rajgarhia Daughter of Managing Director
c. The Enterprises controlled, owned or significantly influenced by key
managerial personnel or their relatives.
1. Pyramid Abrasives Private Limited
2. Hindustan General Industries Limited
3. HGI Finance and Leasing Limited
4. Rovo Marketing Private Limited
5. Madhushree Properties Private Limited
6. Orient Coated Private Limited
7. Zipper Trading Enterprises Limited
8. BAMR Properties LLP
(Amount in Rs. Lacs)
March 31, 2015 March 31, 2014
5. Contingent liabilities
i) Power claim matters decided in
favour of the Company by the District
Court (Civil Court, Senior Division,
Porbandar) but Paschim Gujarat Vidyut
Company Limited has gone in to further
appeal before Hon'ble High Court
of Gujarat,. 338.02 338.02
(Refer Note A below)
ii) Sales tax and interest demand
raised by Kolkata Sales tax authorities
for non-submission of declarations
forms for the year 1993-94. 3.75 3.75
iii) Demand raised by the Income Tax
Authorities, being disputed by the
Company (Refer Note B below) 255.45 2,187.73
(vi) Entry tax demand for entry of
goods in Rajasthan relating to the
year 2006-07 36.06 36.06
v) Service Tax demand for input tax
credit availed on foreign business
auxiliary services and other
consulting services 85.48 85.48
In view of decision already in favour of Company by the District Court
(Civil Court, Senior Division, Porbandar) and based on discussion with
the solicitors, the management believes that the Company has a strong
chance and hence no provision there against is considered necessary.
Note B
Demand raised by the Income tax authorities relate to the following
matters:
i. The Company has a thermal power plant at Porbandar to meet the
energy needs of its abrasives grains division (AGD) at Porbandar. Under
Section 80IA of the Income Tax Act, 1961, the profit of the power plant
is not liable to income tax and therefore a deduction of an amount
equal to hundred percent of the profit derived from such business is
allowable from the total income of the Company for a period of 10
consecutive assessment years. During the financial year 2010-11, the
Company had received a demand in respect of the Assessment Year
('A.Y.') 2008-09 against which the Company filed an appeal with CIT(A).
and the said appeal was allowed by CIT(A). The department has appealed
against that order with ITAT. Tax amount involved for disallowance
under section 80IA in various years is Rs. 55.42 lacs (Previous year Rs.
1,715.16 lacs).
ii. The AO had initiated penalty proceedings against the Company for
return filed by the Company for the A.Y. 2009-10 as the Company has
erroneously claimed deduction on notional loss on derivative
transaction and unrealised exchange loss on capital account. The
Company filed an Appeal with CIT(A) but the CIT(A) dismissed the appeal
of the Company. Thereafter, the Company went into further appeal with
ITAT, New Delhi. ITAT allowed appeal of the Company but department went
into further appeal with Hon'ble High Court, Delhi. Hon'ble High Court
has dimissed the appeal of the department in its order dated February
6, 2015. Penalty amount involved is Rs. 159.79 lacs (Previous year Rs.
159.79 lacs). Since the Hon'ble High Court (Delhi) has asked the
Assessing Officer to reassess the assessment for the A.Y. 2009-10,
therefore, in management's view, the penalty imposed by the AO is not
sustainable.
iii. The assessing officer (AO) has made disallowances on account of
depreciation on windmills installed by the Company in the A.Y. 2010-11
stating that the windmills were not put-to-use in the said assessment
year. Further, the AO has disallowed depreciation claimed by the
Company in A.Y. 2010-11 on motor vehicles stating that the
non-refundable payment made by the employees for purchase of motor
vehicles should be reduced from the cost of the asset. The Company had
filed appeal against the same and in the current year, the Commissioner
of Income-tax (Appeals) ("CIT(A)") has passed an order (dated
February 2, 2015) directing AO to allow depreciation on all windmills
except one installed at Gajendra Garh, Karnataka on March 31, 2010 on
which depreciation was claimed Rs. 117.60 lacs. Further, depreciation on
vehicles were not allowed in the said order and the addition of Rs. 0.78
lac was confirmed by the CIT(A). Tax amount involved is Rs. 40.24 lacs
(Previous year Rs. 312.78 lacs). The Company on the basis of current
status of the cases and advice obtained from legal counsel is confident
that there would not be any probable outflow of resources in these
matters.
Note C
In view of large number of cases, it is not practicable to disclose
individual details of all the cases. On the basis of current status of
individual case and as per legal advice obtained by the Company,
wherever applicable, the Company is of view that no provision is
required in respect of these cases.
6. The Company has received demand from the Joint Commissioner,
Customs for payment of differential custom duty on account of
mis-classification on import of coal, whereby the Company has availed
the benefit of exemption notification and paid custom duty at a lower
rate. The Company has gone for further appeal to the Commissioner of
Customs (Appeals). The Company on a conservative basis has made
provision for the entire amount of Rs. 37.68 lacs.
7. GRATUITY AND OTHER POST-EMPLOYMENT BENEFIT PLANS
The Company has a defined benefit gratuity plan. Gratuity is computed
as 15 days salary, for every completed year of service or part thereof
in excess of 6 months and is payable on
retirement/termination/resignation. The benefit vests on the employees
after completion of 5 years of service. The scheme is funded with an
insurance Company in the form of a qualifying insurance policy. At the
end of accounting year actuarial valuation is done as per the Projected
unit credit method and any shortfall in the funding claims is further
provided for.
The Company has also provided long term compensated absences which are
unfunded.
The following tables summarize the components of net benefit expense
recognized in the statement of profit and loss and the funded status
and amounts recognized in the balance sheet for the Gratuity
8. Provision for Income tax Act has been made after taking into
consideration the benefits available under Section 80I A of the Income
Tax Act, 1961 in respect of windmills installed at Rajasthan and
Karnataka.
9. The Company has taken various residential, office and warehouse
premises and plant and machinery under operating lease agreements.
These are cancellable and are renewable by mutual consent on mutually
agreed terms. The lease payment recognized in the statement of profit
and loss for the year is Rs. 50.37 lacs (Previous year Rs. 57.08 lacs).
10. (a) Sale of non plant grade bauxite requires specific approval from
the state government. During the year, the Company has sold such stock
amounting to Rs. 69.27 lacs (Previous year Rs. 840.18 lacs) on the basis of
approval obtained.
(b) The management believes that the net realizable value of stocks of
non plant grade bauxite, at various mines in Bhuj district (Gujarat)
weighing 59,090 tonnes, is higher than its cost price. The management
has filed an application for approval to sale of such stock with the
state government and it is confident that the required approvals will
be obtained shortly and accordingly the stock of Rs. 259.20 lacs
(previous year Rs. 259.20 lacs) have been valued at cost.
11. Capital Commitments
Estimated amount of contracts remaining to be executed on capital
account and not provided for (net of capital advance and capital work
in progress) Rs. Nil (Previous Year : Rs. 140.57).
12. Corporate Social Responsibility (CSR) expenditure
The company is covered under the criteria for applicability of Section
135(1) of Companies Act 2013 under which the company has to follow the
requirements of the Companies Act for CSR activities and follow the
guidelines issued under the Companies (Corporate Social Responsibility
Policy) Rules, 2014.
13. Previous year figures have been regrouped / reclassified, where
necessary, to confirm to this year's classification.
Mar 31, 2013
1. CORPORATE INFORMATION
Orient Abrasives Limited (The Company'') is engaged in the production
and selling of fused aluminum oxide grains, calcined products, and
generation of power. The Company has manufacturing facilities at
Porbandar (Gujarat) and Power Generation facilities at Rajasthan and
Karnataka.
During the previous year, the Hon''ble High Court of Delhi approved the
demerger of the refractory undertaking with effect from April 1, 2011.
As per the scheme, one share of Orient Refractories Limited was issued
for one share of the Company (note 27).
2. BASIS OF PREPARATION
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in India
(Indian GAAP). The Company has prepared these financial statements to
comply in all material respects with the accounting standards notified
under the Companies (Accounting Standards) Rules, 2006, (as amended)
and the relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on an accrual basis and under the
historical cost convention except for derivative financial instruments
which have been measured at fair value.
The accounting policies adopted in the preparation of financial
statements are consistent with those of previous year.
3. SEGMENT INFORMATION Business Segments
The Company operates in primarily two segments i.e. (a) Fused aluminum
oxide grains including calcined products, refractories & monolithics
and (b) generation of power.
A description of the types of products and services provided by each
reportable segment is as follows:
Fused Aluminium Oxide Grains manufactures calcined bauxite and fused
aluminium oxide abrasive grains. Raw bauxite and calcined alumina are
the basic raw materials used for the manufacture of abrasive grains.
Raw bauxite is procured from mines owned by the Company and others and
Calcined alumina is purchased from aluminium companies. A portion of
these products is captively consumed for manufacturing of monolithics
low cement castables which are mainly consumed in steel plants.
Power generation segment - The Company has a thermal power plant and a
furnace oil based power plant with capacity of 9MW each. The
electricity from these power plants is meant for captive consumption by
the manufacturing division at Porbandar (Fused aluminium oxide grain).
The Company has also set up windmills of total power generation
capacity of 11.1 MW. The power generated by these windmills is sold to
the respective state power distribution companies.
Geographical Segments
The analysis of geographical segment is based on the geographical
location of the customers. The Company operates primarily in India and
has presence in international markets as well. Its business is
accordingly aligned geographically, catering to two markets i.e India
and Outside India. The Company has considered domestic and exports
markets as geographical segments and accordingly disclosed these as
separate segments. The geographical segments considered for disclosure
are as follows:
- Sales within India include sales to customers located within India.
- Sales outside India include sales to customers located outside India.
4. Pursuant to the scheme of arrangement between the Company and
Orient Refractories Limited ("ORL" or "transferee company"), the
refractory business of the Company carried at its manufacturing unit at
Bhiwadi (demerged undertaking), was transferred to the transferee
company with effect from April 01, 2011 (the Appointed Date). The said
scheme under Section 391 to 394 of the Companies Act, 1956 was approved
by the Hon''ble High Court of Delhi vide its order dated September 19,
2011 and it was effective from October 31, 2011 ("the effective date"),
i.e. date of filing the above order with the Registrar of companies.
The said scheme provided, inter alia, the transfer of demerged
undertaking on a going concern basis to the transferee company in
consideration of which, each shareholder of the Company whose name
appeared in the register of members of the Company on the record date
i.e. November 14, 2011, received one fully paid equity share of face
value of Rs. 1.00 each in the transferee company.
The scheme provided for its basis of transfer of certain specific
assets and liabilities and where not specifically provided in the
scheme, it authorized the ''Board of Directors'' of both the companies to
mutually decide through a resolution. In terms of above, following was
done in the previous year
5. RELATED PARTY DISCLOSURES Names of Related Parties A. Individuals
holding 20% or more voting rights
1. Mr S G Rajgarhia (Managing Director) upto November 28, 2012
2. S G Rajgarhia (HUF) upto November 28, 2012
C. The Enterprises controlled, owned or significantly influenced by
key managerial personnel or their relatives.
1. Unifrax India Ltd.
2. Pyramid Abrasives Pvt. Ltd.
3. Hindustan General Industries Ltd.
4. HGI Finance & Leasing Ltd.
5. Rovo Marketing Pvt. Ltd.
6. Madhushree Properties Pvt. Ltd.
7. Orient Coated Pvt. Ltd.
8. Orient Refractories Limited after November 15, 2011
9. Zipper Trading Enterprises Ltd.
Note: As individual holding 20% or more voting right is also a key
managerial personnel, his relative and transactions with relative are
covered under key management personnel and their relatives.
6. The assets of Rs. 205.00 Lacs (Previous year Rs. 322.00 Lacs)
recognized by the Company as ''MAT Credit Entitlement Account'' under
''Loans and Advances'' represents that portion of MAT liability, which
can be recovered and set off in subsequent years based on provisions of
Section 115JAA of the Income Tax Act, 1961. The management, based on
present trend of profitability and also the future profitability
projections, is of the view that there would be sufficient taxable
income in foreseeable future, which will enable the Company to utilize
MAT credit assets. The management is confident that no losses are
expected in this regard.
(Amount in Rs. Lacs)
March 31, 2013 March 31, 2012
7. CONTINGENT LIABILITIES
(NOT PROVIDED FOR) IN RESPECT OF
i) Power claim matters decided
in favour of the Company by the
District Court (Civil Court,
Senior Division, Porbandar)
but Paschim Gujarat
Vidyut Company Limited has
gone into further appeal
before Hon''ble High
Court of Gujarat.* 338.02 338.02
ii) Sales tax and interest
demand raised by Kolkata
Sales tax authorities for
non-submission of
declarations forms for the year 1993-94 3.75 3.75
iii) Demand raised by the Income
Tax Authorities, being
disputed by the Company (refer
note A below) 2,187.73 2,175.97
iv) Demand for payment of
royalty (refer note B below) 3,809.46 3,809.46
v) Cases pending with Labour Courts* (Amount unascertainable)
*ln view of decision already in favour of Company by the District Court
(Civil Court, Senior Division, Porbandar) and based on discussion with
the solicitors, the management believes that the Company has a strong
chance and hence no provision there against is considered necessary.
#ln view of large number of cases, it is not practicable to disclose
individual details of all the cases. On the basis of current status of
individual case and as per legal advice obtained by the Company,
wherever applicable, the Company is of view that no provision is
required in respect of these cases.
(A) Demand raised by the Income tax authorities relate to the following
matters
i. The Company has a thermal power plant at Porbandar to meet the
energy needs of its abrasives grains division (AGD) at Porbandar. Under
Section 80IA of the Income Tax Act, 1961, the profit of the power plant
is not liable to income tax and therefore a deduction of an amount
equal to hundred percent of the profit derived from such business is
allowable from the total income of the Company for a period of 10
consecutive assessment years. The Department allowed the benefit to
Company with respect to financial years 2001-02 and 2002-03. However in
respect of financial years 2003- 04, 2004-05, 2005-06 and 2006-07,
department denied the benefit by taking a different view. The Company
appealed against the same and Commissioner of Income Tax (Appeals)
[''CIT(A)''] decided appeal in favour of the Company by reversing the department''s order. Against this, the department has gone into appeal
before the Income Tax Appellate Tribunal (''ITAT''). Subsequently, the
department reopened the case for the year 2001-02 and disallowed the
benefit to the Company. The Company has appealed against this,
and CIT (A) and ITAT has passed orders in favour of the Company.
During the year 2009-10, ITAT has decided the cases in respect of
financial years 2001-02, 2003-04, 2004- 05, 2005-06 and 2006-07 in
favour of the Company. Again, regarding above orders of ITAT, the
department has filed an appeal with the Hon''ble High Court. Further
during the year 2010-11, the Company has also received demand in
respect of the financial year 2007-08 against which the Company filed
an appeal with CIT(A). In the current year, CIT(A) has allowed the
deduction under section 80IA of the Income tax Act for the financial
year 2002-03 in respect of power generated by it for captive
consumption. The Company had also received order in the previous year
from CIT(A) in relation to financial year 2007-08 allowing the
deduction. The department has appealed against this order with ITAT.
Also assessment order in relation to financial year 2008-09 was
received in the previous year, again denying the benefit. The
Company had preferred an appeal against this order.
However, an assessment order has been received by the Company during
the year for financial year 2009-10 in which no disallowance under
section 80IA has been made by AO. Aggregate tax amount involved in
relation to all these years is Rs. 1715.16 Lacs (Previous year Rs. 1,988.73
Lacs). The Company on the basis of current status of the case and
advice obtained from legal counsel is confident that there would not be
any probable outflow of resources in this matter.
ii. Disallowance in respect of treatment of surrender value of keyman
insurance policy with respect to financial year 2002-03 and 2008-09.
Tax amount involved is.Rs. Nil (Previous year Rs. 27.45 Lacs).
iii. The Company had claimed notional loss on account of derivative
transaction with respect to year 2008-09, which was later on disallowed
by the Company by way of revising its return. The assessing officer has
accepted the Company''s revised return, however, initiated penalty
proceedings. Tax amount involved is Rs. 159.79 Lacs (Previous year Rs.
159.79 Lacs).
iv. The assessing officer (AO) has made disallowances on account of
depreciation on windmills by the Company in the A.Y. 2010-11 stating
that the windmills were not put-to-use in the said assessment year.
Further, the AO has disallowed depreciation claimed by the Company in
A.Y. 2010-11 on motor vehicles stating that the non-refundable payment
made by the employee for purchase of motor vehicles should be reduced
from the cost of the asset. Tax amount involved is Rs. 312.78 Lacs
(Previous year Rs. Nil).
The Company on the basis of current status of the cases and advice
obtained from legal counsel is confident that there would not be any
probable outflow of resources in this matter.
B. (i) The Company has also received various demands for payment of
differential royalty on raw bauxite dispatched from the Company owned
mines. The amount involved is Rs. 1,289.07 Lacs. As the Company has
disputed this demand, it has also paid Rs. 100.00 Lacs as deposit.
Further the Company based on legal advice is of view that no provision
is necessary for the present demand.
(ii) During the year, the Company has received various demands from
Geology and Mining Department, for payment of royalty on difference
between quantity of raw bauxite dispatched from the Company owned mines
as per the its records and as computed by the department. The amount
involved is Rs. 2,520.39 Lacs.
The Company has disputed this demand and has filed an appeal with the
appropriate authority. Further, based on legal advice, the Company is
of the view that no provision for the same is required as of now.
8. GRATUITY AND OTHER POST- EMPLOYMENT BENEFIT PLANS
The Company has a defined benefit gratuity plan. Gratuity is computed
as 15 days salary, for every completed year of service or part thereof
in excess of 6 months and is payable on
retirement/termination/resignation. The benefit vests on the employees
after completion of 5 years of service. The scheme is funded with an
insurance Company in the form of a qualifying insurance policy. At the
end of accounting year actuarial valuation is done as per the Projected
unit credit method and any shortfall in the funding claims is further
provided for.
The Company has also provided long term compensated absences which are
unfunded.
9. Provision for Income tax Act has been made after taking into
consideration the benefits available under Section 80IA of the Income
Tax Act, 1961 in respect of power plant installed at Porbandar for
captive consumption.
10. The Company has taken various residential, office and warehouse
premises and plant and machinery under operating lease agreements.
These are cancellable and are renewable by mutual consent on mutually
agreed terms. The lease payment recognized in the statement of profit &
loss account for the year is Rs. 19.61 Lacs (Previous year Rs. 29.23 Lacs).
11. (a) Sale of non plant grade bauxite requires specific approval
from the state government. During the year, the Company has sold such
stock amounting to Rs. 2,488.39 Lacs (Previous year t Nil) on the basis
of approval obtained.
(b) The management estimates that the Company has stocks of non plant
grade bauxite at various mines in Jamnagar district, Gujarat weighing
207,658 tonnes for which it has not obtained any approval for sale (in
many cases not even applied for). In view of this, no realizable value
has been considered at the year end for such stocks and thus valued
accordingly.
12. Previous year figures have been regrouped / reclassified, where
necessary, to conform to this year''s classification.
Mar 31, 2012
1. CORPORATE INFORMATION
Orient Abrasives Limited ('The Company') is engaged in the production
and selling of Fused Aluminum Oxide Grains, Calcined Products, and
Generation of Power. The Company has manufacturing facilities at
Porbandar (Gujarat) and Power Generation facilities at Gujarat,
Rajasthan and Karnataka.
During the year, the Court approved the demerger of the refractory
undertaking with effect from April 1, 2011. As per the scheme, one
share of Orient Refractories Limited has been issued for one share of
the Company. (refer note 27)
2. BASIS OF PREPARATION
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in India
(Indian GAAP). The Company has prepared these financial statements to
comply in all material respects with the accounting standards notified
under the Companies (Accounting Standards) Rules, 2006, (as amended)
and the relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on an accrual basis and under the
historical cost convention.
The accounting policies adopted in the preparation of financial
statements are consistent with those of previous year, except for the
change in accounting policy explained below.
a. Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of Rs.
1.00 per share. The holder of each fully paid equity share is entitled
to one vote. The Company declares and pays dividends in Indian rupees.
The dividend proposed by the board of directors is subject to the
approval of the shareholders in the ensuing annual general meeting.
During the year ended March 31, 2012, the amount of per share dividend
recognized as distributions to equity shareholders is Rs. 0.20 (Previous
year Rs. 1.00)
In the event of liquidation of the Company, holders of equity shares
will be entitled to receive remaining assets of the Company, after
distribution of all preferential amounts. The distribution will be in
proportion to the number of equity shares held by the shareholders.
*Working Capital loans from banks are secured by first pari passu
charge on all current assets of the Company, both present & future,
including stocks of raw materials, finished and semi-finished goods and
book debts of the Company. These facilities are further secured by
second pari passu charge on the entire fixed assets of the Company.
The managing director has also given a personnel guarantee to the bank
for this facility. The working capital loans are repayable on demand
and carry interest @ 11.8 % p.a.
3. SEGMENT INFORMATION
Business Segments
The Company operates in primarily three segments i.e. Fused Aluminum
Oxide Grains including Calcined Products, Refractories and Monolithics
and generation of power.
A description of the types of products and services provided by each
reportable segment is as follows:
Fused Aluminium Oxide Grains manufactures calcined bauxite and fused
aluminium oxide abrasive grains. Raw bauxite and calcined alumina are
the basic raw materials used for the manufacture of abrasive grains.
Raw bauxite is procured from mines owned by the Company and others and
Calcined alumina is purchased from aluminium companies. A portion of
these products were being captively consumed by the refractory division
till the demerger of refractory devision.
Refractories and Monolothics manufacture various types of continuos
casting and slide gate refractories, low cement castables etc, which
are mainly consumed in steel plants. The segment exports a fair share
of its output to various overseas customers. The major export customers
are based in Egypt, Turkey, Indonesia, Italy, Pakistan, Kingdom of
Saudi Arabia, Sultanate of Oman and Greece etc. Post demerger of
refractory undertaking, this segment does not produce slide gate and
refractories and does not have any exports.
Power Generation segment - The Company has a thermal power plant and a
furnace oil based power plant with capacity of 9MW each. The
electricity from these power plants is meant for captive consumption by
the manufacturing division at Porbandar (Fused aluminium oxide grain).
The Company has also set up windmills of total power generation
capacity of 11.1 MW. The power generated by these windmills is sold to
the respective state power distribution companies.
Geographical Segments
The analysis of geographical segment is based on the geographical
location of the customers. The Company operates primarily in India and
has presence in international markets as well. Its business is
accordingly aligned geographically, catering to two markets i.e India
and Outside India. The Company has considered domestic and exports
markets as geographical segments and accordingly disclosed these as
separate segments. The geographical segments considered for disclosure
are as follows:
- Sales within India include sales to customers located within India.
- Sales outside India include sales to customers located outside India.
4. Pursuant to the scheme of arrangement between the Company and
Orient Refractories Limited ("ORL" or "transferee company"),
the Refractory business of the Company carried at its manufacturing
unit at Bhiwadi (demerged undertaking), was transferred to the
transferee company with effect from April 01, 2011 (the Appointed
Date). The said scheme under Section 391 to 394 of the Companies Act,
1956 has been approved by the Hon'ble High Court of Delhi vide its
order dated September 19, 2011 and has been effective from October 31,
2011 ("the effective date"), i.e. date of filing the above order
with the Registrar of Companies.
The said scheme provides, inter alia, the transfer of demerged
undertaking on a going concern basis to the transferee company in
consideration of which, each shareholder of the Company whose name
appeared in the register of members of the Company on the record date
i.e. November 14, 2011, received one fully paid equity share of face
value of Rs.1.00 each in the transferee company.
The scheme provides for its basis of transfer of certain specific
assets and liabilities and where not specifically provided in the
scheme, has authorized the 'Board of Directors' of both the companies
to mutually decide through a resolution. In terms of above, following
have been done
(i) The book value of assets, liabilities, reserves and surplus (as
agreed) of the demerged undertaking as on the Appointed Date has been
accounted for as assets and liabilities and reserves in the books of
the transferee as on the Appointed Date. Following is the amount of
such assets, liabilities and reserves:
(ii) Loans as identified for the demerged undertaking and transferred
to ORL have been recorded in the books of the transferee company.
(iii) Aggregate face value of the new equity shares (1,196.39 lacs
shares of Rs. 1.00 each amounting to Rs. 1,196.39 lacs) to be issued by the
transferee company to the members of the Company was credited to the
share capital account on the Appointed Date by the transferee company.
The transferee company in its board meeting dated November 15, 2011 had
allotted these shares. In view of the allotment of shares, the Company
is no longer the holding Company of the transferee company.
(iv) The employees of the demerged undertaking have been transferred to
ORL on their existing terms of employment with the Company.
(v) All contingent liabilities relating to demerged undertaking have
been transferred to the transferee company on the Appointed Date.
(vi) Deferred tax liability (net) pertaining to the demerged
undertaking and as agreed by the board of directors has been
transferred to the transferee company.
The Company was carrying on business of demerged undertaking in trust
on behalf of the transferee company for the period from the Appointed
Date till the Effective Date.
5. RELATED PARTY DISCLOSURES
Names of Related Parties
A. Parties where control exists
Orient Refractories Limited - Subsidiary Company up to November 15,
2011
B. Individuals holding 20% or more voting rights Mr. S.G.Rajgarhia
(Managing Director)
S.G.Rajgarhia (HUF)
C. Key Management personnel and their relatives
Name Relationship
1. Mr. S.G. Rajgarhia Managing Director
2. Mrs. Usha Rajgarhia Wife
3. Mr. R.K. Rajgarhia Brother
4. Ms. Anisha Mittal Daughter
5. Ms. Bhavna Rajgarhia Daughter
6. S G Rajgarhia (HUF) HUF
7. Mr. P.P. Khanna Executive Director
D. The Enterprises controlled, owned or significantly influenced by
key management personnel or their relatives.
1. Perfectpac Ltd.
2. Unifrax India Ltd.
3. Pyramid Abrasives Pvt. Ltd.
4. Hindustan General Industries Ltd.
5. HGI Finance & Leasing Ltd.
6. Rovo Marketing Pvt. Ltd.
7. Madhushree Properties Pvt. Ltd.
8. Orient Coated Pvt. Ltd.
9. Orient Refractories Limited after November 15, 2011
Note:- As individual holding 20% or more voting right is also a key
managerial personnel, his relative and transactionsn with relative are
covered under Key management personnel, and their relatives.
6. Contingent liabilities (not provided for) in respect of:
i) Power claim matters decided in favour of the
Company by the District Court (Civil Court, Senior
Division, Porbandar) but Pashim Gujarat Vidyut
Company Limited has gone into further appeal before
Hon'ble High Court of Gujarat* 338.02 338.02
ii) Sales tax and interest demand raised by
Kolkata Sales tax authorities for non-submission
of declarations forms for the year 1993-94. 3.75 3.75
iii) Demand raised by the Income Tax Authorities,
being disputed by the Company (note A below) 2,289.52 1,756.69
iv) Show cause issued by service tax authorities
for input tax credit availed on foreign business
auxiliary services, consulting engineer service,
telephone service and insurance service.
(Transfer to ORL under De-Merger Scheme) - 85.48
v) Demand for payment of royalty (note B below) 3,809.46 1,289.07
v) Cases pending with Labour Courts # (Amount unascertainable)
* In view of decision already in favour of Company by the District
Court (Civil Court, Senior Division, Porbandar) and based on discussion
with the solicitors, the management believes that the Company has a
strong chance and hence no provision there against is considered
necessary.
#In view of large number of cases, it is not practicable to disclose
individual details of all the cases. On the basis of current status of
individual case and as per legal advice obtained by the Company,
wherever applicable, the Company is of view that no provision is
required in respect of these cases.
(A) Demand raised by the Income tax authorities relate to the following
matters:
(i) The Company has a thermal power plant at Porbandar to meet the
energy needs of its abrasives grains division (AGD) at Porbandar. Under
Section 80 IA of the Income Tax Act, 1961, the profit of the power
plant is not liable to income tax and therefore a deduction of an
amount equal to hundred percent of the profit derived from such
business is allowable from the total income of the Company for a period
of 10 consecutive assessment years. The Department allowed the benefit
to Company with respect to financial year 2001-02 and 2002-03. However
in respect of year 2003-04, 2004-05, 2005-06, and 2006-07, department
denied the benefit by taking a different view. The Company appealed
against the same and Commissioner of Income Tax (Appeals) decided
appeal in favor of Company by reversing the department's order. Against
this, the department has gone into appeal before the Income Tax
Appellate Tribunal (ITAT). Subsequently, the department reopened the
cases for the year 2001-02 and disallowed the benefit to Company. The
Company has appealed against this, and CIT (Appeals) and ITAT has
passed orders in favor of Company. The department also reopened the
case for the year 2002-03 against which the Company has filled a writ
petition in Hon'ble High Court and Court has passed an interim order
staying further assessment by department. During the year 2009-10, ITAT
has decided the cases in respect of years 2001-02, 2003-04, 2004-05,
2005-06, and 2006-07 in favor of Company. Again, regarding above orders
of ITAT, the department has filed an appeal with the Hon'ble High
Court. Further during the previous year, the Company received demand in
respect of the financial year 2007-08 against which the Company filed
an appeal with CIT(A). During the year, the Company received
re-assessment order in relation to financial year 2002-03 where
assessing officer has disallowed the deduction. The Company has filed
an appeal against the same. Further, the Company has also received CIT
(A) order in relation to 2007-08 allowing the deduction. The department
has appealed against this order with ITAT. Also assessment order in
relation to financial year 2008-09 has been received during the year,
again denying the benefit. The Company has preferred an appeal against
this order. Aggregate amount involved in relation to all these years is
Rs. 1,988.73 lacs. The Company on the basis of current status of the case
and advice obtained from legal counsel is confident that there would
not be any probable outflow of resources in this matter.
(ii) The assessing officer has treated surrender value of keyman
insurance policy income on accrual basis and added the same to taxable
income with respect to financial year 2002-03 and 2008-09. Amount
involved is Rs. 27.45 lacs.
(iii) The assessing officer has disallowed unrealized foreign exchange
loss in respct of years 2007-08 and 2008-09 treating the same to be of
capital nature. The Company has appealed against the same and it has
been decided in its favour by CIT(A). Amount involved is Rs. 113.54 lacs.
(iv) The Company had claimed notional loss on account of derivative
transaction with respect to year 2008-09, which was later on disallowed
by the Company by way of revising its return. The assessing officer has
accepted the Company's revised return, however, initiated penalty
proceedings. Amount involved is Rs. 159.79 lacs.
(B) (i) The Company on the basis of current status of the cases and
advice obtained from legal counsel is confident that there would not be
any probable outflow of resources in this matter.
(ii) The Company has also received various demands for payment of
differential royalty on Raw bauxite dispatched from the company owned
mines. The amount involved is Rs. 1,289.07 lacs. As the company has
disputed this demand, it has also paid Rs.100 lacs as deposit. Further
the company based on legal advice is of view that no provision is
necessary for the present demand.
During the year, the Company has received various demands from Geology
and Mining Department, for payment of royalty on difference between
quantity of raw bauxite dispatched from the company owned mines as per
the its records and as computed by the department. The amount involved
is Rs. 2,520.39 lacs.
The Company has disputed this demand and has filed an appeal with the
appropriate authority. Further, based on legal advice, the company is
of the view that no provision for the same is required as of now.
7. DISCONTINUING OPERATIONS
The demerger of refractory undertaking has been done for the purpose of
better, efficient and economical management, control and operation of
the businesses of the Company and for a focused strategy and
independent planning and growth of the different businesses and also to
keep one business free from the regulatory or economic constraints
faced by the other.
8. GRATUITY AND OTHER POST- EMPLOYMENT BENEFIT PLANS
The Company has a defined benefit gratuity plan. Gratuity is computed
as 15 days salary, for every completed year of service or part thereof
in excess of 6 months and is payable on
retirement/termination/resignation. The benefit vests on the employees
after completion of 5 years of service. The scheme is funded with an
insurance company in the form of a qualifying insurance policy. At the
end of accounting year actuarial valuation is done as per the Projected
unit credit method and any shortfall in the funding claims is further
provided for.
The Company has also provided long term compensated absences which are
unfunded.
The following tables summarize the components of net benefit expense
recognized in the statement of profit and loss and the funded status
and amounts recognized in the balance sheet for the Gratuity
The estimates of future salary increases, considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
9. Provision for Income tax Act has been made after taking into
consideration the benefits available under Section 80IA of the Income
Tax Act, 1961 in respect of Power Plant installed at Porbandar for
captive consumption.
10. The Company has taken various residential, office and warehouse
premises and plant and machinery under operating lease agreements.
These are cancellable and are renewable by mutual consent on mutually
agreed terms. The lease payment recognized in the statement of profit &
loss account for the year is Rs. 29.23 lacs (previous year Rs. 47.41 lacs).
11. The assets of Rs. 323 lacs (Previous year Rs. 265 lacs) recognized by
the Company as 'MAT Credit Entitlement Account' under 'Loans and
Advances' represents that portion of MAT liability, which can be
recovered and set off in subsequent years based on provisions of
Section 115JAA of the Income Tax Act, 1961. The management, based on
present trend of profitability and also the future profitability
projections, is of the view that there would be sufficient taxable
income in foreseeable future, which will enable the Company to utilize
MAT credit assets. The management is confident that no losses are
expected in this regard.
Mar 31, 2011
(All amount in Rs. lacs, unless otherwise stated)
1. Nature of Operations
Orient Abrasives Limited ('The Company') is engaged in the production
and selling of Fused Aluminum Oxide Grains, Calcined Products,
Refractories and Monolithics and Ceramic Paper and generation of power.
The Company has manufacturing facilities at Porbandar (Gujarat) and
Bhiwadi (Rajasthan) and Wind Power Generation facilities at Rajasthan
and Karnataka and thermal Power Generation facilities at its works at
Porbandar, Gujarat.
During the year, the Company decided to demerge its refractory
undertaking situated at SP-148, RIICO Industrial Area, Bhiwadi,
District Alwar, Rajasthan (hereinafter referred as 'Refractory
Undertaking') at the board meeting held on December 8, 2010 and
transfer the same to a subsidiary company named Orient Refractories
Limited ('ORL') incorporated for this purpose. The scheme of demerger
is under process before the Hon'ble High court of Delhi. (Also Refer
Note 8).
2. Segment Information
Business Segments :
The Company operates in primarily three segments i.e. Fused Aluminum
Oxide Grains including Calcined Products, Refractories and Monolithics
and generation of power.
A description of the types of products and services provided by each
reportable segment is as follows: Fused Aluminium Oxide Grains
manufactures calcined bauxite and fused aluminium oxide abrasive
grains. Raw bauxite and calcined alumina are the basic raw materials
used for the manufacture of abrasive grains. Raw bauxite is procured
from mines owned by the Company and others and Calcined alumina is
purchased from aluminium companies. A portion of these products is
captively consumed by the Refractory division.
Refractories and Monolothics manufactures various types of continuos
casting and slide gate refractories, low cement castables etc, which
are mainly consumed in steel plants. The segment exports a fair share
of its output to various overseas customers. The major export customers
are based in Egypt, Turkey, Indonesia, Italy, Pakistan, Kingdom of
Saudi Arabia, Sultanate of Oman and Greece etc.
Power generation segment à The Company has a coal based thermal power
plant and a furnace oil based thermal power plant with capacity of 9MW
and 8.4MW respectively. The electricity from these power plants is
meant for captive consumption by the manufacturing division at
Porbandar (Fused aluminium oxide grain).
The Company has also set up windmills of total power generation
capacity of 9.6 MW. The power generated by these windmills is sold to
the respective state power distribution companies.
Geographical Segments:
The analysis of geographical segment is based on the geographical
location of the customers. The Company operates primarily in India and
has presence in international markets as well. Its business is
accordingly aligned geographically, catering to two markets i.e India
and Outside India. The Company has considered domestic and exports
markets as geographical segments and accordingly disclosed these as
separate segments. The geographical segments considered for disclosure
are as follows:
- Sales within India include sales to customers located within India.
- Sales outside India include sales to customers located outside India.
Segment Information
The following table presents revenue and profit information regarding
business segments for the years ended March 31, 2011 and March 31, 2010
and certain assets and liability information regarding business
segments at March 31, 2011 and March 31, 2010.
3. Related Party Disclosures
Names of Related Parties
A. Parties where control exists
Orient Refractories Limited à Subsidiary Company
B. Individuals holding 20% or more voting rights Mr. S.G.Rajgarhia
(Managing Director) S.G.Rajgarhia (HUF)
C. Key Management personnel and their relatives Relationship
1. Mr S.G. Rajgarhia Managing Director
2. Mrs. Usha Rajgarhia Wife
3. Mr R.K. Rajgarhia Brother
4. Mrs. Prabhadevi Rajgarhia Brother's Wife
5. Mr. N.K. Rajgarhia Brother
6. Mrs. Rajkumari Rajgarhia Brother's Wife
7. Mr. S.K. Rajgarhia Brother
8. Mrs. Sulabha Rajgarhia Brother's Wife
9. Mr. P.K. Rajgarhia Brother
10. Mrs. Madhushree Rajgarhia Brother's Wife
11. Mrs. Sunita Bagla Sister
12. Ms Anisha Mittal Daughter
13. Mr. Ashwin Mittal Son-in-Law
14. Ms Bhavna Rajgarhia Daughter
15. S G Rajgarhia (HUF) HUF
16. R.K. Rajgarhia & Sons (HUF) HUF
17. RKR Foundation Trust
18. Mr. P.P. Khanna Executive Director
19. Mrs. Prabha Khanna Wife of Executive Director
20. Mr. Sanjay Khanna Son of Executive Director
21. Mr. Sandeep Khanna Son of Executive Director
D. The Enterprises controlled, owned or significantly influenced by
key management personnel or their relatives.
1. Perfectpac Ltd.
2. Pyramid Abrasives Pvt. Ltd.
3. Orient Abratech Pvt. Ltd.
4. APM Industries Ltd.
5. Hindustan General Industries Ltd.
6. HGI Finance & Leasing Ltd.
7. Rovo Marketing Pvt. Ltd.
8. Madhushree Properties Pvt. Ltd.
9. Rajgarhia Leasing & Financial Services Pvt. Ltd.
10. AJR Fiscal Pvt. Ltd.
11. Faridabad Paper Mills Ltd.
12. Orient Abratool Pvt. Ltd.
13. Orient Coated Pvt. Ltd.
14. Orient Steel & Industries Ltd.
15. Rajat Leasing Limited
Note:- As individual holding 20% or more voting right is also a key
managerial personnel, his relative and transactions with relative are
covered under Key management personnel, and their relatives.
(A) The Company has a thermal power plant at Porbander to meet the
energy needs of its abrasives grains division (AGD) at Porbander. Under
Section 80 IA of the Income Tax Act, 1961, the profit of the power
plant is not liable to income tax and therefore a deduction of an
amount equal to hundred percent of the profit derived from such
business is allowable from the total income of the Company for a period
of 10 consecutive assessment years. The Department allowed the benefit
to the Company with respect to financial years 2001-02 and 2002-03.
However in respect of years 2003-04, 2004-05, 2005-06, and 2006-07,
department denied the benefit by taking a different view. The Company
appealed against the same and Commissioner of Income Tax (Appeals)
decided appeal in favor of Company by reversing the department's order.
Against this, the department went into appeal before the Income Tax
Appellate Tribunal (ITAT). Subsequently, the department reopened the
cases for the year 2001-02 and disallowed the benefit to Company. The
Company appealed against this, and CIT (Appeals) and ITAT passed orders
in favor of Company. The department had also reopened the case for the
year 2002-03 against which the Company filled a writ petition in
Hon'ble High Court and the court has passed an interim order staying
further assessment by department. During the previous year, ITAT
decided the cases in respect of years 2001-02, 2003-04, 2004-05,
2005-06, and 2006-07 in favor of Company. Again, regarding above orders
of the ITAT, the department has filed appeal with the Hon'ble High
Court. Further during the year, the assessment in respect of financial
year 2007-08 was completed and the Department again disallowed the
deduction u/s 80 IA, against which the Company has filed an appeal
before the CIT (Appeals).
The Company on the basis of current status of the case and advice
obtained from legal counsel is confident that there would not be any
probable outflow of resources in this matter.
(B) The company also received various demand notices for payment of
differential royalty on Raw bauxite extracted and dispatched from the
company owned mines. The amount involved is Rs 1,289.07 lacs. The
company has disputed this demand and has paid Rs.100 lacs as deposit.
Further the company, on basis of legal advice is of the view that no
provision is necessary for the present demand.
4. Discontinuing operations
The Proposed demerger of Refractory Undertaking is for the purpose of
better, efficient and economical management, control and operation of
the businesses of the Company and for a focused strategy and
independent planning and growth of the different businesses and also to
keep one business free from the regulatory or economic constraints
faced by the other.
5. Gratuity and other Post- employment benefit plans:
The Company has a defined benefit gratuity plan. Gratuity is computed
as 15 days salary, for every completed year of service or part thereof
in excess of 6 months and is payable on
retirement/termination/resignation. The benefit vests on the employees
after completion of 5 years of service. The scheme is funded with an
insurance company in the form of a qualifying insurance policy. At the
end of accounting year actuarial valuation is done as per the Projected
unit credit method and any shortfall in the funding claims is further
provided for. The Company has also provided long term compensated
absences which are unfunded. The following tables summarize the
components of net benefit expense recognized in the profit and loss
account and the unfunded status and amounts recognized in the balance
sheet for the Gratuity
6. Provision for Income tax Act has been made after taking into
consideration the benefits available under Section 80IA of the Income
Tax Act, 1961 in respect of Power Plant installed at Porbandar for
captive consumption.
7. The Company has taken various residential, office and warehouse
premises and plant & machinery under operating lease agreements. These
are not non-cancellable and are renewable by mutual consent on mutually
agreed terms. The lease payment recognized in the statement of profit &
loss account for the year is Rs. 47.41 lacs (Previous year Rs. 46.87
lacs).
8. Previous year Comparatives
Previous year's figures have been regrouped/rearranged where necessary
to confirm to this year's classification.
Mar 31, 2010
1. Nature of Operations
Orient Abrasives Limited (ÃThe CompanyÃ) is engaged in the production
and selling of Fused Aluminum Oxide Grains, Calcined Products,
Refractories and Monolithics and Ceramic Paper and generation of power.
The Company has manufacturing facilities at Porbandar (Gujarat) and
Bhiwadi (Rajasthan) and power generation facilities at Rajasthan and
Karnataka.
2. Segment Information
Business Segments :
The Company operates in primarily three segments i.e. Fused Aluminum
Oxide Grains including Calcined Products, Refractories & Monolithics
and generation of power.
Geographical Segments:
The analysis of geographical segment is based on the geographical
location of the customers. The Company operates primarily in India and
has presence in international markets as well. Its business is
accordingly aligned geographically, catering to two markets. The
Company has considered domestic and exports markets as geographical
segments and accordingly disclosed these as separate segments. The
geographical segments considered for disclosure are as follows:
- Sales within India include sales to customers located within India.
- Sales outside India include sales to customers located outside India.
Segment Information
Primary Segment à Reporting (by Business Segment)
The following table presents revenue and profit information regarding
business segments for the years ended March 31, 2010 and March 31, 2009
and certain assets and liability information regarding business
segments at March 31, 2010 and March 31, 2009.
3. Related Party Disclosures
Names of Related Parties
A. Individuals holding 20% or more voting rights and his relatives 1.
Mr S.G. Rajgarhia (Managing Director)
B. Key Management personnel and their relatives Relationship
1. Mr S.G. Rajgarhia Managing Director
2. Mrs Usha Rajgarhia Wife
3. Mr R.K. Rajgarhia Brother
4. Mrs Prabha Rajgarhia BrotherÃs Wife
5. Mr N.K. Rajgarhia Brother
6. Mrs Rajkumari Rajgarhia BrotherÃs Wife
7. Mr S.K. Rajgarhia Brother
8. Mrs Sulabha Rajgarhia BrotherÃs Wife
9. Mr P.K. Rajgarhia Brother
10 . Mrs Madhushree Rajgarhia BrotherÃs Wife
11. Mrs Sunita Bagla Sister
12. Ms Anisha Mittal Daughter
13. Mr Ashwin Mittal Son-in-Law
14. Ms Bhavna Rajgarhia Daughter
15. S G Rajgarhia (HUF) HUF
16. R.K. Rajgarhia & Sons (HUF) HUF
17. RKR Foundation Trust
18. Mr P.P. Khanna Executive Director
19. Mrs Prabha Khanna Wife
20. Mr Sanjay Khanna Son
21. Mr Sandeep Khanna Son
C. The Enterprises controlled by the above persons
1. Perfectpac Ltd. 9. Madhushree Properties Pvt. Ltd.
2. Unifrax India Ltd. 10. Rajgarhia Leasing & Financial Services Pvt.
Ltd.
3. Pyramid Abrasives Pvt. Ltd. 11. AJR Fiscal Pvt. Ltd.
4. Orient Abratech Pvt. Ltd. 12. Faridabad Paper Mills Ltd.
5. APM Industries Ltd. 13. Orient Abratool Pvt. Ltd.
6. Hindustan General Industries Ltd. 14. Orient Coated Pvt. Ltd.
7. HGI Finance & Leasing Ltd 15. Orient Steel & Industries Ltd.
8. Rovo Marketing Pvt. Ltd.
(Amount in Rs. lacs) 2010 2009
6. Contingent liabilities (not provided for)
in respect of:
i) Power claim matters decided in favour of
the Company by the District Court (Civil
Court, Senior Division, Porbandar) but Pashim
Gujarat Vidyut Company Limited
has gone into further appeal before Hon,ble
High Court of Gujarat,* 338.02 338.02
ii) Sales tax and interest demand raised by
Kolkata Sales tax authorities for
non-submission of declarations forms for
the year 1993-94. 3.75 3.75
iii) Demand raised by the Income Tax
Authorities, being disputed by the Company
(Refer Note A below) 1,469.84 1,469.84
iv) Show cause issued by service tax
authorities for input tax credit availed on 71.46 51.43
foreign business auxiliary services,
consulting engineer service, Telephone
service and insurance service.
v) Cases pending with Labour Courts (Amount unascertainable)
* In view of decision already in favour of the Company by the District
Court (Civil Court, Senior Division, Porbandar) and based on
discussions with the solicitors, the management believes that the
Company has a strong chance and hence no provision there against is
considered necessary.
In view of large number of cases, it is not practicable to disclose
individual details of all the cases. On the basis of current status of
individual case and as per legal advice obtained by the Company,
wherever applicable, the Company is of view that no provision is
required in respect of these cases.
(A) The Company has a thermal power plant at Porbander to meet the
energy needs of its abrasives grains division (AGD) at Porbander. Under
Section 80 IA of the Income Tax Act, 1961, the profit of the power
plant is not liable to income tax and therefore a deduction of an
amount equal to hundred percent of the profit derived from such
business is allowable from the total income of the Company for a period
of 10 consecutive assessment years. The Department allowed the benefit
to Company with respect to year 2001-02 and 2002-03. However in respect
of year 2003-04, 2004-05, 2005-06 and 2006-07, department denied the
benefit by taking a different view. The Company appealed against the
same and Commissioner of Income Tax (Appeals) decided appeal in favor
of Company by reversing the departmentÃs order. Against this, the
department has gone into appeal before the Income Tax Appellate
Tribunal (ITAT). Subsequently, the department reopened the cases for
the year 2001-02 and disallowed the benefit to Company. The Company has
appealed against this, and CIT (Appeals) and ITAT has passed orders in
favour of Company. The department also reopened the case for the year
2002- 03 against which the Company has filled a writ petition in
HonÃble High Court and court has passed an interim order staying
further assessment by department. During the current year, ITAT has
decided the cases in respect of years 2001-02, 2003-04, 2004-05,
2005-06 and 2006-07 in favour of Company. Thereafter department has
filed with High Court of Delhi against the order of ITAT in respect of
year 2003-04. The Company is not aware of any department appeals in
respect of other years where ITAT has decided the cases in favour of
Company. Company on the basis of current status of the case and advice
obtained from legal counsel is confident that there would not be any
probable outflow of resources in this matter.
4. The Company has taken a foreign currency loan of JPY 784.31 lacs
from Citibank. As per terms of the loan agreement, interest is payable
at LIBOR plus 150 basis points on a monthly basis. The loan is
repayable after one year from the date of agreement. The Company has
entered into cross currency and interest rate swap agreements with the
same bank for the repayment of principal and interest whereby the bank
will charge fixed rate on the principal in exchange for variable
interest (LIBOR plus 45 basis points) and repayment of principal at the
end of term.
As per the Announcement by Institute of Chartered Accountants of India,
the Company has accounted for cross currency and interest rate swap
agreement on the basis of principles of hedge accounting to the extent
the same does not conflict with the existing mandatory accounting
standards and other authoritative pronouncements. Consequently, the
net loss amounting to Rs. 30.64 lacs on restatement of loan and mark to
market valuation of derivative has been transferred to Hedge Reserve
Account.
5. Gratuity and other Post- employment benefit plans:
The Company has a defined benefit gratuity plan. Gratuity is computed
as 15 days salary, for every completed year of service or part thereof
in excess of 6 months and is payable on
retirement/termination/resignation. The benefit vests on the employees
after completion of 5 years of service. The scheme is funded with an
insurance company in the form of a qualifying insurance policy. At the
end of accounting year actuarial valuation is done as per the Projected
unit credit method and any shortfall in the funding claims is further
provided for.
The Company has also provided long term compensated absences which are
unfunded.
The following tables summarize the components of net benefit expense
recognized in the profit and loss account and the unfunded status and
amounts recognized in the balance sheet for the Gratuity
6. Provision for Income tax Act has been made after taking into
consideration the benefits available under Section 80IA of the Income
Tax Act, 1961 in respect of Power Plant installed at Porbandar for
captive consumption.
7. The Company has taken various residential, office and warehouse
premises and plant & machinery under operating lease agreements. These
are not non-cancellable and are renewable by mutual consent on mutually
agreed terms. The lease payment recognized in the statement of profit &
loss account for the year is Rs. 46.87 lacs (Previous year Rs. 38.99
lacs).
8. In accordance with Para 10 of Accounting Standard - 9 on Revenue
Recognition notified under Companies (Accounting Standard) Rules, 2006,
excise duty on sales amounting to Rs.2,191.70 lacs (Previous Year
Rs.2,934.53 lacs) has been reduced from sales in profit & loss account
and excise duty on (increase)/decrease in stock amounting to Rs.(59.19)
lacs (Previous Year Rs.(37.71) lacs) has been considered as
(income)/expense in Schedule 20 of the financial statements.
9 Additional information pursuant to the provisions of paragraphs 3,
4C and 4D of Part II of Schedule VI to the Companies Act, 1956
10. Previous year Comparatives
Previous yearÃs figures have been regrouped/rearranged where necessary
to confirm to this yearÃs classification.