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Notes to Accounts of Orient Refractories Ltd.

Mar 31, 2015

1. CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR)

(i) Contingent liabilities

Particulars As at As at 31 March, 2015 31 March, 2014

Claims against the Company not acknowledged as debts*

- Demand from income tax authorities 862.40 Nil

*No provision is considered necessary since the Company expects favorable decisions.

(ii) Commitments

Particulars As at As at 31 March, 2015 31 March, 2014

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

- Tangible assets 132.51 299.78

- Intangible assets 0.33 22.68

132.84 322.46

(iii) The Company has other commitments, for purchases/sales orders which are issued after considering requirements as per operating cycle for purchase/sale of goods and services and employee benefits, in normal course of business. The Company does not have any long term commitments/contracts including derivative contracts for which there will be any material foreseeable losses.

2. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

3. UNEXPIRED FOREIGN EXCHANGE FORWARD CONTRACTS

The following forward contracts are open as at 31 March, 2015. These transactions have been undertaken to act as economic hedges for the Company''s exposures to various risks in foreign exchange markets and may/may not qualify or be designated as hedging instruments.

(i). Forward exchange contracts, which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

4. Pursuant to the scheme of arrangement between Orient Abrasives Limited (transferor company) and the Company, the refractory business of the transferor company carried out at its manufacturing unit at Bhiwadi (demerged undertaking), was transferred to the Company with effect from 1 April, 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 19 September, 2011 and has been effective from 31 October, 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 Company in consideration of which, each shareholder of Orient Abrasives Limited whose name appeared in the register of members of Orient Abrasives Limited on the record date i.e. 14 November, 2011, received one fully paid equity share of face value of Rs. 1.00 each in the 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, the following was done in the financial year 2011-12:

ii. Loans as identified for the demerged undertaking and transferred from Orient Abrasives Limited were recorded in the books. Later on, the Company obtained its own credit facility and loans transferred from the transferor company were repaid.

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) were issued by the Company to the members of the transferor company and was credited to the share capital account on the appointed date. The Company in its board meeting dated 15 November, 2011 allotted these shares. In view of the allotment of shares, the transferor company ceased to be the holding company of the Company.

iv. The employees of the demerged undertaking were transferred to the Company on their existing terms of employment with the transferor company.

v. All contingent liabilities relating to demerged undertaking were transferred to the Company on the appointed date.

vi. Deferred tax liability (net) pertaining to the demerged undertaking and as agreed by the board of directors were transferred to the Company.

The transferor company was carrying on business of demerged undertaking in trust on behalf of the Company for the period from the appointed date till the effective date.

5. Employee benefit plans

i. Defined contribution plans

The Company makes Provident Fund, National Pension Scheme and Employees'' State Insurance contributions which are defined contribution plans for qualifying employees. Under the schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized Rs.148.37 Lacs (31 March, 2014: Rs. 119.20 Lacs) for Provident Fund, Rs. 15.35 Lacs(31 March, 2014: Rs. Nil) for National Pension Scheme and Rs. 15.08 Lacs (31 March, 2014: Rs. 17.91 Lacs) for Employees'' State Insurance contributions in the statement of profit and loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

ii. Defined benefit plans

The Company offers employee benefit schemes of gratuity to its employees. Benefits payable to all employees of the Company with respect to gratuity, a defined benefit plan is accounted for on the basis of an actuarial valuation as at the balance sheet date.

The estimates of future salary increases, considered in actuarial valuation, take into account of inflation, seniority, promotion and other relevant factors.

The expected rate of return on plan assets is determined after considering several applicable factors, such as the composition of the plan assets, investment strategy, market scenario etc.In order to protect the capital and optimize returns within acceptable risk parameters, the plan assets are well diversified. The gratuity fund plan assets of the Company are managed by Orient Refractoriness Employees Group Trust through Kotak Mahindra Old Mutual Life Insurance Ltd. The categories of plan assets as a percentage of total plan assets are based on information provided by Kotak Mahindra Old Mutual Life Insurance Ltd.

6. SEGMENT INFORMATION

Business Segments

The Company is engaged in the business of manufacturing and selling of refractoriness and monolithic. The entire operations are governed by the same set of risk and returns and, hence, the same has been considered as representing a single primary segment.

Since the Company''s business activity falls within a single business segment, there are no additional disclosures to be provided under Accounting Standard-17 ''Segment Reporting'' other than those already provided in the financial statements.

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. For customers located outside India, the Company has assessed that they carry same risk and rewards. 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.

28.4 RELATED PARTY TRANSACTIONS: A. Details of related parties

a. Ultimate holding company

RHI AG, Austria (w.e.f. 26 April, 2013)

b. Holding company

Dutch US Holding B.V., Netherlands (w.e.f. 26 April, 2013)

c. Fellow subsidiaries

RHI Clasil Limited (w.e.f. 26 April, 2013)

RHI India Private Limited (w.e.f. 26 April, 2013)

RHI Refractories Asia Ltd, Hong Kong (w.e.f. 26 April, 2013)

RHI Urmitz AG & Co. KG, Germany (w.e.f. 26 April, 2013)

RHI Refractories Liaoning Co Ltd, China(w.e.f. 26 April, 2013)

Veitsch- Radex America LLC, USA (w.e.f.2 6 April, 2013)

RHI Refractories UK Ltd (w.e.f. 26 April, 2013)

d. Individuals/entities having significant influence over the Company through their voting rights of 20% or more

Dutch US Holding B.V., Netherlands (from 4 March, 2013 till 25 April, 2013)

e. Key Managerial Personnel (KMP)

Mr. Subhash Chander Sarin, Executive Director (up to 30 April, 2015)

Mr. Parmod Sagar, Managing Director

Mr. Shri Gopal Rajgarhia, Executive Director (up to 8 April, 2015)

f. Relative of KMP

Ms. Anisha Mittal, (Mr. Shri Gopal Rajgarhia''s daughter) Mr. Christophar Parvesh, (Mr. Parmod Sagar''s brother)

g. Entities in which KMP / relatives of KMP can exercise significant influence

Orient Abrasives Limited

APM Industries Limited

Hindustan General Industries Limited

Rovo Marketing Private Limited

7. Consequent to the enactment of the Companies Act, 2013 (the Act) and its applicability for accounting periods commencing after 1 April, 2014, the Company has reassessed the useful life of its fixed assets and has computed depreciation with reference to the useful life of assets recommended in Schedule II to the Act. The depreciation for the year is higher by Rs. 171.94 Lacs consequent to the change in the useful life of assets. Further, depreciation related to the assets having written down value of Rs. 68.79 Lacs as on 1 April, 2014, whose life had expired, has been adjusted from the opening balance of surplus of statement of profit and loss amounting to Rs. 45.41 Lacs (net of deferred tax credit of Rs. 23.38 Lacs).

8. During the year, the Corporate Social Responsibility (CSR) committee has been formed by the Company to monitor CSR related activities. The Company has contributed and expensed Rs. 39.17 Lacs out of the total contributable amount of Rs. 124.00 Lacs for the year ended 31 March, 2015 in accordance with Section 135 read with schedule VII of the Companies Act, 2013 to various trusts and social organization. The contributions have been made towards promoting education, sanitation, medical and society welfare activities. The management has not spent the remaining amount of Rs. 84.83 Lacs.

9. Previous year figures

Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.


Mar 31, 2014

1. CORPORATE INFORMATION

Orient Refractories Limited (''the Company''), incorporated on 26 November, 2010 is engaged in manufacturing, production and distribution of refractories, monolithics and ceramic paper and has a manufacturing facility in Bhiwadi (Rajasthan).

2. TRANSFER PRICING

The Company has established a comprehensive system on maintenance of information and documents as required by the transfer pricing legislation under 92-92F of the Income Tax Act, 1961 and has documented Transfer Pricing Benchmarking study for financial year 2012-13. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company is in the process of updating the documentation for the domestic and international transactions entered into with the associated enterprises during the year and expects such records to be in existence latest by the due date as required under law. The management is of the opinion that its international and domestic transactions are at arm''s length and the aforesaid legislation will not have any impact on the financial statements.

2.1 Pursuant to the scheme of arrangement between Orient Abrasives Limited (transferor company) and the Company, the refractory business of the transferor company carried out at its manufacturing unit at Bhiwadi (demerged undertaking), was transferred to the Company with effect from 1 April, 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 19 September, 2011 and has been effective from 31 October, 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 Company in consideration of which, each shareholder of Orient Abrasives Limited whose name appeared in the register of members of Orient Abrasives Limited on the record date i.e. 14 November, 2011, received one fully paid equity share of face value of Rs. 1 each in the 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, the following was done in the financial year 2011-12:

(i) The book value of assets, liabilities, reserves and surplus (as agreed) of the demerged undertaking as on the appointed date was accounted for as assets and liabilities and reserves in the books of the Company 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 from Orient Abrasives Limited were recorded in the books. Later on, the Company obtained its own credit facility and loans transferred from the transferor company were repaid.

(iii) Aggregate face value of the new equity shares (1,196.39 Lacs shares of Rs. 1 each amounting to Rs. 1,196.39 Lacs) were issued by the Company to the members of the transferor company and was credited to the share capital account on the appointed date. The Company in its board meeting dated 15 November, 2011 allotted these shares. In view of the allotment of shares, the transferor Company ceased to be the holding company of the Company.

(iv) The employees of the demerged undertaking were transferred to the Company on their existing terms of employment with the transferor Company.

(v) All contingent liabilities relating to demerged undertaking were transferred to the company on the appointed date.

(vi) Deferred tax liability (net) pertaining to the demerged undertaking and as agreed by the Board of Directors were transferred to the Company.

The transferor company was carrying on business of demerged undertaking in trust on behalf of the Company for the period from the appointed date till the effective date.

2.2 EMPLOYEE BENEFIT PLANS

(i) Defined contribution plans

The Company makes Provident Fund and Employees'' State Insurance contributions which are defined contribution plans for qualifying employees. Under the schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs. 137.11 Lacs (31 March, 2013: Rs. 107.65 Lacs) for Provident Fund and Employees'' State Insurance contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

(ii) Defined benefit plans

The Company offers employee benefit schemes of Gratuity to its employees. Benefits payable to all employees of the Company with respect to gratuity, a defined benefit plan is accounted for on the basis of an actuarial valuation as at the balance sheet date.

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

The estimates of future salary increases, considered in actuarial valuation, take into account of inflation, seniority, promotion and other relevant factors.

The expected rate of return on plan assets is determined after considering several applicable factors, such as the composition of the plan assets, investment strategy, market scenario, etc.In order to protect the capital and optimise returns within acceptable risk parameters, the plan assets are well diversified. The gratuity fund plan assets of the Company are managed by Orient Refractories Employees Group Trust through Kotak Mahindra Old Mutual Life Insurance Ltd. The trust has been recognised by the Income Tax authorities during the current year. The categories of plan assets as a percentage of total plan assets are based on information provided by Kotak Mahindra Old Mutual Life Insurance Ltd.

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

2.3 SEGMENT INFORMATION

Business Segments:

The Company is engaged in the business of manufacturing and selling of refractories and monolithics. The entire operations are governed by the same set of risk and returns and, hence, the same has been considered as representing a single primary segment.

Since the Company''s business activity falls within a single business segment, there are no additional disclosures to be provided under Accounting Standard-17 ''Segment Reporting'' other than those already provided in the financial statements.

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. For customers located outside India, the Company has assessed that they carry same risk and rewards. 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.

All other assets (other than trade receivables) used in the Company''s business are located in India and are used to cater to both the categories of customers (within India and outside India), accordingly the total cost incurred during the period to acquire tangible and intangible fixed assets has not been disclosed.

2.4 RELATED PARTY TRANSACTIONS:

a. Ultimate holding company

RHI AG, Austria(w.e.f. 26 April, 2013)

b. Holding company

Dutch US Holding B.V., Netherlands (w.e.f. 26 April, 2013)

c. Fellow subsidiaries

RHI Clasil Limited(w.e.f. 26 April, 2013)

RHI India Private Limited (w.e.f. 26 April, 2013)

RHI Refractories Asia Ltd, Hong Kong (w.e.f. 26 April, 2013)

RHI Urmitz AG & Co. KG, Germany (w.e.f. 26 April, 2013)

d. Individuals/ entities having significant influence over the Company through their voting rights of 20% or more

Mr. S. G Rajgarhia, Managing Director (till 3 March, 2013) Dutch US Holding B.V. (from 4 March, 2013 till 25 April, 2013)

e. Key Managerial Personnel (KMP)

Mr. S.C. Sarin

Mr. Parmod Sagar, Managing Director (w.e.f.4 March, 2013)

Mr. S.G. Rajgarhia, Executive Director (w.e.f.4 March, 2013. Managing Director till 3 March, 2013)

f. Relatives of KMP

Mr. R. K. Rajgarhia, Director''s (Mr. S. G. Rajgarhia) brother

g. Entities in which KMP/ Relatives of KMP can exercise significant influence

Orient Abrasives Limited

APM Industries Limited

Hindustan General Industries Limited

Perfectpac Limited

2.5 DETAILS OF LEASING ARRANGEMENTS

The Company has entered into operating lease arrangements for certain facilities and office premises. These are cancellable by giving notice and are renewable by mutual consent on mutually agreed terms. There is no lock in period.

2.6 EXCEPTIONAL ITEMS

a. During the previous year, the Company had announced a voluntary retirement scheme (VRS) on 20 June, 2012. The scheme was open till 30 June, 2012. In response to the VRS, 43 employees had opted for the same. Expenditure of Rs. 125.86 Lacs on VRS had been charged to the Statement of Profit and Loss.

b. A fire has occurred at the warehouse in the Company''s factory at Bhiwadi on 25 September, 2011. As a result, the Company had estimated a loss of Rs. 149.76 Lacs (including raw materials, packing materials, repairs and maintenance and other expenses). The Company had filed a claim with the insurance company for the equivalent amount and recognised the same as the management was confident that the claim receivable would not be lower than the above amount. During the previous year, the insurance claim filed by the company in respect of the fire claim was settled for a lesser amount and accordingly a net loss of Rs. 55.73 Lacs had been accounted for during the previous year.

2.7 Previous year figures have been audited by another firm of chartered accountants.

3 PREVIOUS YEAR FIGURES

Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.


Mar 31, 2013

1. CORPORATE INFORMATION

Orient Refractories Limited (‘the Company''), incorporated on November 26, 2010 is engaged in manufacturing, production and distribution of Refractories, Monolithics and Ceramic Paper and have manufacturing facilities in Bhiwadi (Rajasthan).

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.

3. SEGMENT INFORMATION

BUSINESS SEGMENTS

The Company is engaged in the business of manufacturing and selling of refractories and monolithics. The entire operations are governed by the same set of risk and returns and, hence, the same has been considered as representing a single primary segment.

Since the company''s business activity falls within a single business segment, there are no additional disclosures to be provided under Accounting Standard-17 ‘Segment Reporting'' other than those already provided in the financial statements.

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. For customers located outside India, the Company has assessed that they carry same risk and rewards. 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 Orient Abrasives Limited (transferor company) (OAL) and the Company, the refractory business of the transferor company carried at its manufacturing unit at Bhiwadi (demerged undertaking), was transferred to the 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 Company in consideration of which, each shareholder of Orient Abrasives Limited whose name appeared in the register of members of Orient Abrasives Limited 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 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 previous year.

5. EXCEPTIONAL ITEMS

A. During the year, the Company announced a voluntary retirement scheme (VRS) on June 20, 2012. The scheme was open till June 30, 2012. In response to the VRS, 43 employees opted for the same. Expenditure of Rs. 125.86 Lacs on VRS has been charged to statement of profit and loss.

B. During the previous year, a fire occurred at the warehouse in the Company''s factory at Bhiwadi on September 25, 2011. As a result, the Company estimated the loss of Rs. 149.76 Lacs (including raw material, packing material, repair and maintenance and other expenses). The Company filed a claim with the insurance company for the equivalent amount and recognized the same as the management was confident that claim receivable shall not be lower than the above amount. During the year the insurance claim filed by the Company in respect of fire claim in the previous year was settled for a lesser amount and accordingly net loss of Rs. 55.73 Lacs has been accounted for in current year.

6. 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. 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 table summarise 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 gratuity.

7. LEASES

Operating Lease: Company as Lessee

The Company has taken various residential, office and warehouse premises under operating lease agreements. These are cancellable by giving notice and are renewable by mutual consent on mutually agreed terms. There is no lock in period. The lease payment recognized in the statement of profit and loss for the year is Rs. 26.51 Lacs (previous year: Rs. 26.91 Lacs).

8. RELATED PARTY DISCLOSURES

NAMES OF RELATED PARTIES AND RELATED PARTY RELATIONSHIP

I. PARTIES WHERE CONTROL EXISTS

A. HOLDING COMPANY

Orient Abrasives Limited (till November 15, 2011)

II. RELATED PARTIES WITH WHOM TRANSACTIONS HAVE TAKEN PLACE DURING THE YEAR

A. Individuals having significant influence over the Company through their voting rights of 20% or more

Mr. S G Rajgarhia, Managing Director (till March 3, 2013)

B. Associates

Dutch US Holding BV (Holds more than 20% shares)

C. Key Managerial Personnel

Mr. S C Sarin, Executive Director (w.e.f. October 18, 2011) Mr. Parmod Sagar, Managing Director (w.e.f March 4, 2013) Mr. S G Rajgarhia, Executive Director (w.e.f March 4, 2013)

D. Relatives of the persons having significant Influence over the Company (as covered in A above)

1. Mr R K Rajgarhia, Director Brother

E. The enterprises controlled, owned or significantly influenced by individuals having significant influence over the Company or their relatives (as covered in A and C above)

1. Orient Abrasives Limited

2. APM Industries Limited

3. Hindustan General Industries Limited

4. Perfectpac Limited

9. CAPITAL AND OTHER COMMITMENTS

At March 31, 2013, the Company has Rs. 21.84 Lacs (previous year: Rs. 36.53 Lacs) as amount of contracts remaining to be executed on capital account (net of advances).

10. PREVIOUS YEAR FIGURES

Previous year figures have been regrouped/reclassified, where necessary, to confirm to this year''s classification.


Mar 31, 2012

1. CORPORATE INFORMATION

Orient Refractories Limited (The Company'), incorporated on November 26, 2010 is engaged in manufacturing, production and distribution of Refractories, Monolithics and Ceramic Paper and have manufacturing facilities in Bhiwadi (Rajasthan), (also refer note 25).

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. 1.00 (Previous period: Rs. Nil)

*The cash credit loan is taken from bank are secured by first pari pasu charge on the current assets of the Company and second pari passu charge on movable fixed assets of the Company both present and future. Mr. S. G. Rajgarhia has also given personal guarantee for this facility to the bank. These are payable on demand and carries interest rate of bank base rate plus 305 basis points (currently 13.05% p.a.).

3. SEGMENT INFORMATION BUSINESS SEGMENTS

Since the Company's business activity falls within a single business segment, there are no additional disclosures to be provided under Accounting Standard-17 'Segment Reporting' other than those already provided in the Financial Statements.

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. For customers located outside India, the Company has assessed that they carry same risk and rewards. 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.

SECONDARY SEGMENT REPORTING (BY GEOGRAPHICAL SEGMENTS)

The following is the distribution of the Company's consolidated revenue of operations by geographical market, regardless of where the goods were produced (Amount in Rs. Lacs)

For the year ended March 31, 2012

India 25,429.45

Outside India 4,612.16

Total 30,041.61

The following table shows the carrying amount of trade receivable by geographical segments

As at March 31, 2012

India 4,698.38

Outside India 1,185.90

Total 5,884.28

All other assets (other than trade receivables) used in the Company's business are located in India and are used to cater both the customers (within India and outside India), accordingly the total cost incurred during the period to acquire tangible and intangible fixed assets has not been disclosed.

4. Pursuant to the scheme of arrangement between Orient Abrasives Limited (transferor company) and the Company, the Refractory business of the transferor company carried at its manufacturing unit at Bhiwadi (demerged undertaking), was transferred to the 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 Company in consideration of which, each shareholder of Orient Abrasives Limited whose name appeared in the register of members of Orient Abrasives Limited 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 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 Company 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 from OAL have been recorded in the books. Later on, the company has obtained its own credit facility and loans transferred from the transferor company have been repaid.

(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 Company to the members of the transferor Company was credited to the share capital account on the Appointed Date. The Company in its board meeting dated November 15, 2011 had allotted these shares. In view of the allotment of shares, the transferor company is no longer the holding company of the Company.

(iv) The employees of the demerged undertaking have been transferred to the Company on their existing terms of employment with the transferor company.

(v) All contingent liabilities relating to demerged undertaking have been transferred to the 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 Company.

The transferor company was carrying on business of demerged undertaking in trust on behalf of the Company for the period from the Appointed Date till the Effective Date.

5. During the year, a fire occurred at the warehouse in the Company's factory at Bhiwadi on September 25, 2011. As a result, the Company has estimated a loss of Rs. 149.76 lacs (including raw material, packing material, repair and maintenance and other expenses). The Company has filed a claim with the insurance company for the equivalent amount and recognized the claim. The surveyor appointed by the insurance company has already completed the inspection. In view of the same, the management is confident that claim receivable shall not be lower than the above amount. Expenses incurred in this regard have also been provided for.

6. 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 period actuarial valuation is done as per the projected unit credit method and any shortfall in the funding claims is further provided for.

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.

The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

7. LEASES

Operating Lease: Company as Lessee

The Company has taken various residential, office and warehouse premises under operating lease agreements. These are cancellable by giving notice and are renewable by mutual consent on mutually agreed terms. The lease payment recognized in the statement of profit and loss account for the year is Rs. 26.91 Lacs (previous period: Rs. Nil).

8. RELATED PARTY DISCLOSURES

Names of related parties and related party relationship

A. Parties where control exists

Orient Abrasives Limited (upto November 15, 2011), (also refer note 25)

B. Individuals having significant influence over the company through their voting rights of 20% or more

Mr. S.G. Rajgarhia, Managing Director

C. Key Managerial Personnel

Mr. S.C. Sarin (w.e.f. October 18,2011)

D. Relatives of the persons having significant Influence over the Company (as covered in B above)

1. Mrs. Usha Rajgarhia Wife

2. Mr. R.K. Rajgarhia Brother

3. Ms. Bhawna Rajgarhia Daughter

E. The Enterprises controlled, owned or significantly influenced by individuals having significant influence over the Company or their relatives (as covered in B and C above)

1. Orient Abrasives Limited (from November 15, 2011), (also refer note 25)

2. APM Industries Limited -

3. Hindustan General Industries Ltd.

4. Madhushree Properties Pvt. Ltd.

5. Perfectpac Ltd. '

9. CAPITAL AND OTHER COMMITMENTS

a. At March 31, 2012, the company has Rs. 36.53 Lacs (Previous period: - nil) as amount of contracts remaining to be executed on capital account (Net of advances).

b. For Commitments relating to lease arrangements, please refer note no 28.

 
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