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Notes to Accounts of Pokarna Ltd.

Mar 31, 2016

1. Terms / rights attached to equity shares:

The company has only one class of equity shares having a par value of Rs, 10/- per share. Each holder of equity shares is entitled to one vote per share. 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, 2016 the amount of per share dividend recognized as distribution to equity shareholders was Rs, 10.00 (previous year Rs, 3.00)

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.

2. Term Loans & Working capital facilities from Union Bank of India are secured by hypothecation of first charge on all immovable and movable properties including machineries, current assets such as inventories, book debts and other receivables of the company, both present and future besides personal properties of some of the directors and guarantee of the Directors (other than independent directors).

3. External Commercial Borrowings from Union Bank of India are secured by way of extension of charge on fixed assets of the company.

4 Hire Purchase loans are secured by hypothecation of respective assets purchased out of finance, and personal guarantee of some of the Directors (other than independent directors).

5. Investment in Equity Shares :

a. During the year 6,10,58,764 Optionally Convertible Unsecured Debentures of Rs, 10/- each in Pokarna Engineered Stone Limited, have been opted to convert into 40,70,584 Equity shares of Rs, 10/- each at a premium of Rs, 140/- as per the provisions under the scheme of arrangement approved by Hon’ble High court of Andhra Pradesh.

b. 51% of investment in Equity shares are pledged to Bankers against the borrowings by the subsidiary -Pokarna Engineered Stone Limited

6. Security Deposit includes Rs, 64.88 lacs pledged to Mines & Geology and other departments.

7. Capital Advances includes Rs, 132.01 Lacs (p.y. Rs, 92.06 Lacs) towards consideration paid for Land admeasuring 67.04 Acres (p.y. 49.87 Acres), which are in possession of the company. The title/conveyance/ lease deeds in respect of these assets are pending for execution in favour of the company.

8. Related Party Disclosures :

As per Accounting Standard 18, the disclosures of transactions with the related parties are given below:

(i) List of related parties where control exists and related parties with whom transactions have taken place and relationships:

a) Enterprises where control exits:

Pokarna Engineered Stone Limited - Wholly owned Subsidiary

b) Names of the Associates:

Pokarna Fabrics Limited, Pokarna Fashions Limited, Pokarna Marketing Limited, Southend, Southend Extension

c) Enterprises over which key Managerial Personnel are able to exercise significant influence Adam ‘N’ Eve

d) Names of Key Management Personnel Gautam Chand Jain, Rahul Jain, Apurva Jain

e) Names of Relatives

Prakash Chand Jain, Ashok Chand Jain, Raaj Kumar Jain, Vidya Jain, Rekha Jain, Anju Jain, Ritu Jain, Chaya Jain, Pratik Jain, Neha Jain, Nidhi Jain, Suvidh Chordia, Gautam Chand Jain (HUF), Prakash Chand Jain (HUF)

The information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the company, regarding the status of registration of such vendor under the said Act, as per the intimation received from them on the request made by the company.

9. In accordance with AS-17 "Segment Reporting", segment information has been given in the consolidated financial statements of Pokarna Limited and therefore no separate disclosure on segment information is given in these financial statements.

Defined Benefit Plan

The employees’ gratuity fund scheme managed by a Trust (Life Insurance Corporation of India for Granite Division of the company) is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for Compensated Absence is recognized in the same manner as gratuity.

10. Leases:

The company has operating leases for Office premises and retail outlets, that are

(a) Renewable on a periodic basis and are cancellable by giving a notice period ranging from 1 month to 6 months and

(b) Are non-cancellable for specified periods under arrangements. Rent escalation clauses vary from contract to contract.

11. Previous year’s figures have been regrouped, rearranged and reclassified, wherever considered necessary, in order to conform to the current year’s presentation.

towards performance linked incentive called as commission for achievement of targets for the year 2015 - 16.

- has been appointed as Managing Director w.e.f. May 02, 2016

12. The terms and conditions with regard to appointments of Chairman & Managing Director and Executive Directors are contained in the respective resolutions passed by the Board or Members in their respective meetings. There is no separate provision for payment of severance fee under the resolutions governing the appointment of Chairman & Managing Director/ Executive Directors.

C. Stakeholder Relationship Committee

1. The Stakeholders'' Relationship Committee (“SRC”) is constituted in line with the provisions of Regulation 20 of SEBI Listing Regulations read with section 178 of the Act.

2. The broad terms of reference of the SRC are as under:

- consider and resolve the grievances of security holders of the Company including redressal of investor complaints such as transfer or credit of securities, non-receipt of dividend / notice / annual reports, etc. and all other securities-holders related matters;

- consider and approve issue of share certificates (including issue of renewed or duplicate share certificates), transfer and transmission of securities, etc; and

- reviewing the information required as per SEBI Listing Regulations

3. One (1) SRC meetings were held on February 08, 2016.The necessary quorum was present for all the meetings.


Mar 31, 2014

1.1.2Terms / rights attached to equity shares:

The company has only one class of equity shares having a par value of Rs.10/- per share. Each holder of equity shares is entitled to one vote per share. 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 31 March 2014 the amount of per share dividend recognised as distribution to equity shareholders was Rs.2/- ( previous year -Nil-)

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.

2.3.1 Term Loans &Working capital facilities from Union Bank of India, Hyderabad, are secured by hypothecation of first charge on all immovable and movable properties including machineries, current assets such as inventories, book debts and other receivables of the company, both present and future besides personal guarantee / security of the Directors (other than independent directors) and their relative.

2.3.2 External Commercial Borrowings from Union Bank of India, Hong Kong Branch are secured by way of extension of charge on fixed assets of the company. USD 7.81 million has been utilised out of total loan sanctioned of USD 10.80 million.

2.3.4 Hire Purchase loans are secured by hypothecation of respective assets purchased out of finance, and personal guarantee of some of the Directors (other than independent directors).

2.5.1 Zero coupon Foreign Currency Convertible Bonds (12,000 Bonds of USD 1000 each), which were matured for payment on 29th March,2012, the company has redeemed 9539 bonds as on date and the balance 2461 bonds are under negotiation for redemption with the Bond Holders as on date of Balance Sheet.

2.5.2 The repayment of installment ofTerm Loan of Rs.59.87 lacs and interest of Rs.5.01 lacs for the last two months are overdue as on the date of Balance Sheet, the company has since repaid the same as on date.

2.7.2 Provision has been retained towards premium payable on redemption of FCCB''s which were matured on 29.03.2012 as per the subsisting terms and conditions. As on date bonds have been redeemed to the extent of 9539 bonds as per the negotiated terms with the said bond holders. The gain / benefit, cost, charges including foreign exchange gain / loss at the close of the year are transferred to Pokarna Engineered Stone Limited (subsidiary) as per the Scheme of Arrangement sanctioned by Hon''ble Andhra Pradesh High Court and agreement thereto.The corresponding receivable arising thereof is disclosed under the head''Loans and Advances to Subsidiary''. The company expects no further liability other than provided for in the books.

2.9.1 During the year 4,85,36,832 Optionally Convertible Unsecured Debentures of Rs.10/- each of Pokarna Engineered Stone Limited, have been converted into Series-II Optionally convertible Unsecured Debentures of Rs.10/- each on certain terms and conditions w.e.f 1st January, 2014, refer note no.2.9.3

2.9.2 Optionally Convertible Debentures

a. The aforesaid Optionally Convertible Debentures were acquired for net consideration in terms of order of the Hon''ble High Court of Andhra Pradesh sanctioning Scheme of Arrangement between the Company and Pokarna Engineered Stone Limited for transfer of assets, liabilities and expenses.

b. Terms and Conditions: Debentures are for tenor of 7 years from the date of allotment, during this period the option to convert / redeem shall vest solely with the Company. Upon maturity, failing the exercise of option by the debenture holder, the OCDs shall stand redeemed.

c. Variable coupon / interest on debentures is computed as equivalent to all costs / expenditure incurred or income / gains / benefits earned including foreign exchange gain / loss associated with the FCCBs, which belong to and to be borne by Pokarna Engineered Stone Limited. Consequently, no interest is chargeable in respect of the OCDs after the date of redemption / conversion of the FCCBs.

d. If OCDs are opted for redemption anytime before they are due for redemption, interest shall be payable in respect of the OCDs at the rate of 8% per annum. The coupon / interest on the OCDs shall accrue and be payable at the time of redemption of the OCDs.

e. Conversion obligation: 15 (Fifteen) OCDs shall be convertible into 1 (One) equity share of Rs.10/- each of Pokarna Engineered Stone Limited.

2.9.3 Optionally Convertible Debentures - Series - II

a. Optionally Convertible Debentures - Series-II have been issued on account of part conversion of earlier debentures.

b. Terms and Conditions: Debentures are for tenor of 7 years from the date of allotment, during this period the option to convert / redeem shall vest solely with the Company.

c. Interest on debentures shall be payable @ 3% p.a.

d. Redemption obligation: Redeemable at par in cash

e. Conversion obligation: 15 (Fifteen) OCDs shall be convertible into 1 (One) equity share of Rs.10/- each of Pokarna Engineered Stone Limited.

2.16.1 Gain / Benefit on redemption of FCCB''s:

Gain / benefit has arisen due to part redemption of 5839 ( previous year 3700 ) FCCB''s at discounted price and the same has been reimbursed to Pokarna Engineered Stone Limited as pe the Scheme of Arrangement and agreement thereto.

2.23.1 Variable coupon / interest on debentures has been computed as equivalent to all costs / expenditure incurred including foreign exchange gain / loss associated with the FCCBs, which belong to and to be borne by Pokarna Engineered Stone Limited and accordingly the same has been transferred.

2.24 1. Contingent Liabilities not provided for

Particulars 31.03.2014 31.03.2013

a) Bank Guarantees 1.22 1.22 b) Letter of Credits outstanding 223.39 335.01 Claims against the company / disputed liabilities not acknowledged as debts:

c) Income tax matters, pending decisions on various appeals made by the 27.76 27.76 company and by the Department. Amount deposited 12.47 Lacs (previous

year Rs.12.47 Lacs)

d) Excise matters (including service tax). Amount deposited Rs.5.57 Lacs (previous 233.60 231.67 year Rs.5.71 Lacs)

e) Customs matters, Amount deposited Rs.37.09 Lacs (previous year Rs.40.84 Lacs) 75.91 79.66

f) Sales tax matters, Amount deposited Rs.Nil (previous year Rs.Nil Lacs) - 61.50

g) Mines & Geology matters 138.20 138.20

h) Cross subsidy charges payable to Central Power Distribution Company 61.60 61.60

i) Other Matters disputed 142.15 131.05

Other Commitments:

j) Company remains exposed to liability towards fuel surcharge adjustment, which are notified by Power Distribution Companies of Andhra Pradesh pertaining to earlier years, which are being adjusted in future tariff payable for consumption. Accordingly charges are accounted in the year of payment / bill raised for the same.

k) The company is also involved in other lawsuits, claims, investigations and proceedings, including patent and commercial matters, which arise in the ordinary course of business. However, there are no material claims on such cases.

2.27 Related Party Transactions

a) Enterprises where control exits:

Pokarna Engineered Stone Limited — 100% subsidiary

b) Names of the Associate concerns:

Pokarna Fabrics Limited, Pokarna Fashions Limited, Pokarna Marketing Limited

c) Names of the Associate Firms: Southend, Southend Extension

d) Names of Key Management Personnel Gautam Chand Jain, Rahul Jain

e) Names of Relatives

Prakash Chand Jain, Ashok Chand Jain, Raaj Kumar Jain, Apurvajain, Nidhijain, Neha Jain (Arrush Creations) and Suvidh Chordia

f) Disclosure of transactions between the company and related parties and the status of Outstanding balances for the year 2013-14 (2012-13)

2.30 In accordance with AS-17 "Segment Reporting", segment information has been given in the consolidated financial statements of Pokarna Limited and therefore no separate disclosure on segment information is given in these financial statements.

Defined Benefit Plan

The employees'' gratuity fund scheme managed by aTrust ( Life Insurance Corporation of India for Granite Division of the company) is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for Compensated Absence is recognized in the same manner as gratuity.

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

g) The company expects to contribute Rs.10.00 Lacs to its Gratuity plan for the next year.

2.32 Leases:

The company has operating leases for Office premises and retail outlets, that are

(a) Renewable on a periodic basis and are cancellable by giving a notice period ranging from 1 month to 6 months and

(b) Are non-cancellable for specified periods under arrangements. Rent escalation clauses vary from contract to contract.

2.35 a) The Ministry of Corporate Affairs, Government of India, vide General Circular No.2 and 3 dated 8th February

2011 and 21st February 2011 respectively has granted a general exemption from compliance with section 212 of the Companies Act, 1956, subject to fulfilment of conditions stipulated in the circular. The Company has satisfied the conditions stipulated in the circular and hence is entitled to the exemption. b) Necessary information relating to the subsidiaries has been included in the Consolidated Financial Statements.

2.36 Previous year''s figures have been regrouped, rearranged and reclassified, wherever considered necessary, in order to conform to the current year''s presentation.


Mar 31, 2013

1. Capital Commitments

Estimated Amount of contracts remaining to be executed on Capital Account not provided for (net of advances) 56.33 129.53

1.1 Financial and Derivative Instruments

Foreign currency exposure that are not hedged by derivative or forward contracts as on 31st March 2013 amounts to Rs.. 9261.13 Lacs (previous year Rs. 10588.60 Lacs).

1.2 Related Party Transactions

a) Enterprises where control exits:

Pokarna Engineered Stone Limited – 100% subsidiary

b) Names of the Associate concerns:

Pokarna Fabrics Limited, Pokarna Fashions Limited, Pokarna Marketing Limited

c) Names of the Associate Firms: Southend, Southend Extension

d) Names of Key Management Personnel Gautam Chand Jain, Rahul Jain

e) Names of Relatives

Prakash Chand Jain, Ashok Chand Jain, Raaj Kumar Jain

f) Disclosure of transactions between the company and related parties and the status of Outstanding balances for the year 2012-13 (2011-12)

1.3 In accordance with AS-17 "Segment Reporting", segment information has been given in the consolidated f nancial statements of Pokarna Limited and therefore no separate disclosure on segment information is tre given in these f nancial statements.

1.4 Leases:

The company has operating leases for Of ce premises and retail outlets, that are

(a) Renewable on a periodic basis and are cancellable by giving a notice period ranging from 1 month to 6 months and

(b) Are non-cancellable for specif ed periods under arrangements. Rent escalation clauses vary from contract to contract.

1.5 a) The Ministry of Corporate Af airs, Government of India, vide General Circular No.2 and 3 dated 8th February 2011 and 21st February 2011 respectively has granted a general exemption from compliance with section 212 of the Companies Act, 1956, subject to fulf llment of conditions stipulated in the circular. The Company has satisf ed the conditions stipulated in the circular and hence is entitled to the exemption.

b) Necessary information relating to the subsidiaries has been included in the Consolidated Financial Statements.


Mar 31, 2012

1.1 1. Contingent Liabilities not provided for Particulars

a) Bank Guarantees 34.10 58.87

b) Letter of Credits outstanding 280.63 201.76

c) Premium payable on FCCBs issued - 472.94

Claims against the company not acknowledged as debts:

d) Direct & Indirect Taxes disputed

(Amount Deposited Rs.11.46 Lacs (previous year Rs. 11.46 lacs ) 184.68 109.80

e) Other Matters disputed 326.29 318.83

2. Capital Commitments

Estimated Amount of contracts remaining to be executed on Capital Account not provided for 129.53 580.00

1.2 Financial and Derivative Instruments

Foreign currency exposure that are not hedged by derivative or forward contracts as on 31st March 2012 amounts to Rs. 10588.60 Lacs (Previous Year Rs.9034.64 Lacs)

1.3 Related Party Transactions

a) Enterprises where control exits:

Pokarna Engineered Stone Limited — 100% subsidiary

b) Names of the Associate concerns:

Pokarna Fabrics Limited, Pokarna Fashions Limited, Pokarna Marketing Limited

c) Names of the Associate Firms:

Southend, Southend Extension

d) Names of Key Management Personnel Gautam Chand Jain, Rahul Jain, Siddharth Jain

e) Names of Relatives

Prakash Chand Jain, Ashok Chand Jain, Raaj Kumar Jain

f) Disclosure of transactions between the company and related parties and the status of Outstanding balances for the year 2011-12 (2010-11)

1.4 In accordance with AS-17 "Segment Reporting", segment information has been given in the consolidated financial statements of Pokarna Limited and therefore no separate disclosure on segment information is given in these financial statements.

Defined Benefit Plan

The employees' gratuity fund scheme managed by a Trust ( Life Insurance Corporation of India for Granite Division of the company) is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for Compensated Absence is recognized in the same manner as gratuity.

1.5 Leases:

The company has operating leases for Office premises and retail outlets, that are

(a) Renewable on a periodic basis and are cancellable by giving a notice period ranging from 1 month to 6 months and

1.6 General

a) In the opinion of the company, the current assets, loans and advances are approximately of their value stated if realized in the ordinary course of business.

b) On applicability of revised Schedule VI from current year, the Company has reclassified previous year figures to conform to this year's classification. The adoption of revised Schedule VI does not impact rec- ognition and measurement principles followed for preparation of the financial statements. However, it significantly impacts presentation and disclosures made in the financial statements, particularly presentation of Balance Sheet.

1.7 The Ministry of Corporate Affairs, Government of India, vide General Circular No.2 and 3 dated 8th February 2011 and 21st February 2011 respectively has granted a general exemption from compliance with section 212 of the Companies Act, 1956, subject to fulfillment of conditions stipulated in the circular. The Company has satisfied the conditions stipulated in the circular and hence is entitled to the exemption.

Necessary information relating to the subsidiaries has been included in the Consolidated Financial Statements.


Mar 31, 2011

1. Contingent Liabilities not provided for

Rupees in Lakhs Particulars As on As on 31.03.2011 31.03. 2010

a) Bank Guarantees 58.87 57.66

b) Letter of Credits outstanding 201.76 314.08

c) Premium payable on FCCB's issued 472.94 960.23

Claims against the company not acknowledged as debts: d) Direct & Indirect Taxes disputed 109.80 96.16 (Amount Deposited Rs. 11.46 Lakhs (previous year Rs. 16.11 Lakhs))

e) Other Matters disputed 318.83 179.88

2. Share Capital

Share capital includes:

a) 4,24,500 Equity shares of Rs. 10/- each as fully paid up for consideration other than cash pursuant to a contract.

b) 17,12,400 Equity shares of Rs. 10/- each were allotted as fully paid up Bonus shares by capitalization of reserves in the year 1994.

c) 31,00,400 Equity shares of Rs. 10/- each were allotted as fully paid up Bonus shares by capitalization of reserves in the year 2001.

3. Secured Loans

a) Term Loan & Working capital facilities for Granite & Apparel Division from Union Bank of India, Secunderabad, are secured by hypothecation by way of first charge on all immovable and movable properties including current assets such as inventories, book debts and other receivables of the company including machineries both present and future of these two divisions besides personal guarantee / security of the Directors (other than independent directors) and their relative.

b) Hire purchase loans are secured by hypothecation of respective assets purchased out of finance, and personal guarantee of the Directors (other than independent directors).

c) Secured Loans includes interest accrued and due amounting to Rs. 87.42 lakhs (Previous year Rs. 44.82 lakhs)

d) Term Loans includes installments due and payable with in one year amounting to Rs. 1196.90 lakhs (Previous year Rs. 1251.50 lakhs)

4. Foreign Currency Convertible Bonds

a) 12,000 Zero coupon Foreign Currency Convertible Bonds (FCCB) of USD 1000 each are: Convertible by the holders at any time on and after 12th April, 2007 and prior to 14th March, 2012.

i) Each bond will be converted into fully paid up Equity Share with par value of Rs.10/- per share at a reset conversion price of Rs. 236.51 (initial conversion price was Rs. 295.64) per share with a fixed rate of exchange on conversion at Rs. 44.08 = US$ 1.00.

ii) Redeemable on maturity date at 144.50 per cent of its principal amount (7.5% per annum calculated on a semi- annual basis), if not redeemed or converted earlier.

b) Premium payable on redemption of FCCB is amortized proportionately.

c) During the year there is no conversion of FCCB.

5 Investments in Debentures

In terms of order of the Hon'ble High Court of Andhra Pradesh sanctioning Scheme of Arrangement ("Scheme") between the Company and Pokarna Engineered Stone Limited, the net consideration as per Scheme of Rs. 667.03 Lakhs has been discharged by Pokarna Engineered Stone Limited through an issue of 66,70,280 Optionally Convertible Debentures (OCDs) of face value of Rs.10/- each in favour of the Company, the terms of these debentures are as per the Scheme. For the period between appointed date i.e., 1st July,2007 and the effective date i.e., 15th May,2009, the Engineered Stone Division was part of the Company. Hence, an agency entry had been passed in the books of the Company to transfer assets, liabilities, expenses, income recorded in the books in favour of Pokarna Engineered Stone Limited. The net consideration of Rs. 5438.84 Lakhs for transfer of assets, liabilities, income and expenses for the period from 1st July,2007 to 31st March, 2009 has been discharged by Pokarna Engineered Stone Limited through an issue of 5,43,88,484 OCDs of face value of Rs. 10/- each in favour of the Company. The terms of these debentures are same as that of OCDs as per the Scheme.

Terms and Conditions: Debentures are for tenor of 7 years from the date of allotment, during this period the option to convert / redeem shall vest solely with the Company.

Rate of interest is equivalent to the interest the Company is liable to pay on account of redemption of the FCCBs. Consequently, no interest shall be payable in respect of the OCD's after the date of redemption / conversion of the FCCBs. If OCDs are opted for redemption anytime before they are due for redemption, interest shall be payable in respect of the OCDs at the rate of 8% per annum. The coupon / interest on the OCDs shall accrue and be payable at the time of redemption of the OCDs.

Conversion obligation: 15 (Fifteen) OCDs shall be convertible into 1 (One) equity share of Rs. 10/- each of Pokarna Engineered Stone Limited.

7A. Managerial remuneration under section 198 of the Companies Act, 1956 paid or payable during the financial year, to the Directors as under:

Note: The contribution to Gratuity Funds has been made on a group basis and separate figures applicable to an individual employee are not available and thereof, contribution to Gratuity Funds has not been considered in the above computation.

6. Related Party Transactions

a) Enterprises where control exists:

Pokarna Engineered Stone Limited – 100% subsidiary

b) Names of the Associate concerns:

Pokarna Fabrics Limited, Pokarna Fashions Limited, Pokarna Marketing Limited

c) Names of the Associate Firms:

Southend, Southend Extension, Gautam Granites

d) Names of Key Management Personnel

Shri. Gautam Chand Jain, Shri. Siddharth Jain, Shri. Rahul Jain

e) Names of Relatives

Prakash Chand Jain, Dilip Kumar Jain, Ashok Chand Jain, Raaj Kumar Jain

f) Disclosure of transactions between the company and related parties and the status of Outstanding balances for the year 2010-11 (2009-10)

7. Provision for contingencies

Provision has been made for contingency towards the premium of Rs. 818.60 Lakhs (Previous year Rs. 357.48 Lakhs) which may be payable on redemption of FCCBs.

8. Financial and Derivative Instruments

i) Nominal amount of forward contracts entered into by the company for hedging currency related risks and outstanding as on 31st March 2011 amounts to Rs. Nil Lakhs (Previous year Rs. Nil Lakhs)

ii) Foreign currency exposure that are not hedged by derivative or forward contracts as on 31st March 2011 amounts to Rs. 9034.64 Lakhs (Previous year Rs. 9912.54 Lakhs)

9. General

a) In the opinion of the company, the current assets, loans and advances are approximately of their value stated if realized in the ordinary course of business.

b) Paise are rounded of to the nearest Rupee.

c) Previous year's figures have been regrouped / recast wherever considered necessary to make these comparable with those of the current year.

10. Employee Benefits

Defined Benefit Plan

The employees' gratuity fund scheme managed by a Trust ( Life Insurance Corporation of India for Granite Division of the company) is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for Compensated Absence is recognized in the same manner as gratuity.

The estimates of future salary increases, considered in actuarial valuation, take into account inflation, seniority,

f) promotion and other relevant factors.

g) The company expects to contribute Rs. 30.00 Lakhs to its Gratuity plan for the next year.

11. Additional information required as per clause 4C and 4D and notes thereon of part II of Schedule VI to the Companies Act, 1956

b) (i) The Ministry of Corporate Affairs, Government of India vide its General Notification No.S.O.301(E) dated 8th February 2011 issued under section 211 (3) of the Companies Act, 1956 has exempted certain classes of companies from disclosing certain information in their profit and loss account. The Company being as 'export oriented company' is entitled to the exemption. Accordingly, disclosures mandated by paragraphs 3(i)(a), 3(ii)(b) and 3(ii)(d) of Part II, Schedule VI to the Companies Act, 1956 have not been provided.

(ii) The Ministry of Corporate Affairs, Government of India, vide General Circular No.2 and 3 dated 8th February 2011 and 21st February 2011 respectively has granted a general exemption from compliance with section 212 of the Companies Act, 1956, subject to fulfillment of conditions stipulated in the circular. The Company has satisfied the conditions stipulated in the circular and hence is entitled to the exemption.

Necessary information relating to the subsidiaries has been included in the Consolidated Financial Statements


Mar 31, 2010

1. The company recognizes as Provisions, the liabilities being present obligations arising from past events, the settlement of which is expected to result in an outfow of resources and which can be measured only by using a substantial degree of estimation.

2. Contingent Liabilities are disclosed by way of a note to the fnancial statements after careful evaluation by the management of the facts and legal aspects of the matters involved.

3. Contingent Assets are neither recognized nor disclosed.

P. Accounting for Taxes on Income

1. Provision for current tax is made in accordance with and at the rates specifed under the Income-Tax Act, 1961, as amended.

2. Deferred tax is recognized on timing diferences, keeping in view the matching concept and the principles of prudence.

Deferred tax assets and liabilities are accounted for based on the diference between taxable income and accounting income that originates in one period and are expected to reverse in the subsequent periods.

Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted as of the Balance Sheet date.

Q. Cash Flow Statement

Cash fows are reported using the indirect method, whereby net proft before tax is adjusted for the efects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash fows from regular revenue generating, investing and fnancing activities of the company are segregated.

1. Contingent Liabilities not provided for

Rupees in Lakhs

As on As on

Particulars 31.03.2010 31.03.2009

a) Bank Guarantees 57.66 57.66

b) Letter of Credits outstanding 314.08 84.56

c) Premium payable on FCCBs issued 960.23 1627.97

Claims against the company not acknowledged as debts:

d) Direct & Indirect Taxes disputed (Amount Deposited Rs. 16.11 Lakhs (previous year Rs. 32.59 Lakhs)) 96.16 95.28

e) Other Matters disputed 179.88 79.50

3. Share Capital

Share capital includes:

a) 4,24,500 Equity shares of Rs. 10/- each as fully paid up for consideration other than cash pursuant to a contract.

b) 17,12,400 Equity shares of Rs. 10/- each were allotted as fully paid up Bonus shares by capitalization of reserves in the year 1994.

c) 31,00,400 Equity shares of Rs. 10/- each were allotted as fully paid up Bonus shares by capitalization of reserves in the year 2001.

4. Secured Loans

a) Term Loan & Working capital facilities for Granite & Apparel Division from Union Bank of India, Secunderabad, are secured by hypothecation by way of frst charge on all immovable and movable properties including current assets such as inventories, book debts and other receivables of the company including machineries both present and future of these two divisions besides personal guarantee/security of some of the Directors and their relative.

b) Hire purchase loans are secured by hypothecation of respective assets purchased out of fnance, and personal guarantee of some of the Directors.

c) Secured Loans includes interest accrued and due amounting to Rs. 44.82 lakhs (Previous year Rs. 66.52 lakhs)

d) Term Loans includes installments due and payable with in one year amounting to Rs.1251.50 lakhs (Previous year Rs. 215.44 lakhs)

5. Foreign Currency Convertible Bonds

a) 12,000 Zero coupon Foreign Currency Convertible Bonds (FCCB) of USD 1000 each are: Convertible by the holders at any time on and after 12th April, 2007 and prior to 14th March, 2012.

i) Each bond will be converted into fully paid up Equity Share with par value of Rs.10/- per share at a reset conversion price of Rs.236.51 (initial conversion price was Rs.295.64) per share with a fxed rate of exchange on conversion at Rs.44.08 = US$ 1.00.

ii) Redeemable on maturity date at 144.50 per cent of its principal amount (7.5% per annum calculated on a semiannual basis), if not redeemed or converted earlier.

b) Premium payable on redemption of FCCB is amortized proportionately.

c) During the year there is no conversion of FCCB.

6. Investments in Debentures

In terms of order of the Honble High Court of Andhra Pradesh sanctioning Scheme of Arrangement (“Scheme”) between the Company and Pokarna Engineered Stone Limited, the net consideration as per Scheme of Rs.667.03 Lakhs has been discharged by Pokarna Engineered Stone Limited through an issue of 66,70,280 Optionally Convertible Debentures (OCDs) of face value of Rs.10/- each in favour of the Company, the terms of these debentures are as per the Scheme. For the period between appointed date i.e., 1st July,2007 and the efective date i.e., 15th May,2009, the Engineered Stone Division was part of the Company. Hence, an agency entry had been passed in the books of the Company to transfer assets, liabilities, expenses, income recorded in the books in favour of Pokarna Engineered Stone Limited. The net consideration of Rs.5438.84 Lakhs for transfer of assets, liabilities, income and expenses for the period from 1st July,2007 to 31st March,2009 has been discharged by Pokarna Engineered Stone Limited through an issue of 5,43,88,484 OCDs of face value of Rs.10/- each in favour of the Company. The terms of these debentures are same as that of OCDs as per the Scheme.

Terms and Conditions: Debentures are for tenor of 7 years from the date of allotment, during this period the option to convert/redeem shall vest solely with the Company.

Rate of interest is equivalent to the interest the Company be liable to pay on account of redemption of the FCCBs. Consequently, no interest shall be payable in respect of the OCDs after the date of redemption/conversion of the FCCBs. If OCDs are opted for redemption anytime before they are due for redemption, interest shall be payable in respect of the OCDs at the rate of 8% per annum. The coupon/interest on the OCDs shall accrue and be payable at the time of redemption of the OCDs.

Conversion obligation: 15 (Fifteen) OCDs shall be convertible into 1 (One) equity share of Rs.10/- each of Pokarna Engineered Stone Limited.

Note: The contribution to Gratuity Funds has been made on a group basis and separate fgures applicable to an individual employee are not available and thereof, contribution to Gratuity Funds has not been considered in the above computation.

Remuneration to managerial personnel provided in the accounts during the year is within the limits prescribed under schedule XIII of the companies Act, 1956. Company has made an application to the Central Government for approval of excess remuneration paid to the managerial personnel during the year 2008-09 amounting to Rs.28.55 Lakhs. Approval from the Central Government is pending as on date.

7. Related Party Transactions

a) Enterprises where control exists:

Pokarna Engineered Stone Limited - 100% subsidiary

b) Names of the Associate concerns:

Pokarna Fabrics Limited, Pokarna Fashions Limited, Pokarna Marketing Limited

c) Names of the Associate Firms:

Southend, Southend Extension, Gautam Granites

d) Names of Key Management Personnel

Shri. Gautam Chand Jain, Shri. Siddharth Jain, Shri. Rahul Jain

e) Names of Relatives

Prakash Chand Jain, Dilip Kumar Jain, Ashok Chand Jain, Raaj Kumar Jain

The entire activity pertaining to sales outside India is carried out from India

Notes:

1. The company has disclosed Business Segment as the primary segment. Segments have been identifed taking into account the nature of the products, the difering risks and returns, the organisation structure and internal reporting system. The companys operations predominantly relate to Granite and Apparel divisions.

2. Segment Revenue, Segment Results, Segment Assets and Segment Liabilities include the respective amounts identifable to each of the segments as also amounts allocated on reasonable basis.

8. Provision for contingencies

Provision for contingencies represents an amount of Rs.357.48 Lakhs premium payable on FCCBs on redemption.

9. Financial and Derivative Instruments

i) Nominal amount of forward contracts entered into by the company for hedging currency related risks and outstanding as on 31st March, 2010 amounts to Rs. Nil lakhs (Previous year Rs. 540.27 lakhs)

ii) Foreign currency exposure that are not hedged by derivative or forward contracts as on 31st March, 2010 amounts to Rs. 9912.54 lakhs (Previous year Rs. 10732.35 lakhs)

Defned Beneft Plan

The employees gratuity fund scheme managed by MetLife India Insurance company Limited and Life Insurance Corporation of India is a defned beneft plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee beneft entitlement and measures each unit separately to build up the fnal obligation. The obligation for Compensated Absence is recognized in the same manner as gratuity.

10. Additional information required as per clause 4C and 4D and notes thereon of part II of Schedule VI to the Companies Act, 1956

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