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Notes to Accounts of Premier Explosives Ltd.

Mar 31, 2015

1 Corporate information

Premier Explosives Limited is a manufacturer of explosives having its registered office at Secunderabad, Telangana, India. The company's main manufacturing and research and development facilities are located at Peddakandukuru village in Nalgonda district of Telangana with other manufacturing units located in Madhya Pradesh, Maharashtra and Tamilnadu. Listed on Bombay Stock Exchange, Premier is an ISO 9001 company having accreditation of National Accreditation Board for Testing & Calibration Laboratories (NABL) and recognition of Department of Scientific & Industrial Research (DSIR).

2 Previous year figures have been regrouped/ recast/ rearranged wherever necessary to conform to current year classification.

3 Change in accounting estimates

As per the requirements of the Companies Act, 2013 ("the Act"), the Company has computed depreciation on the basis of the useful lives of tangible fixed assets in the manner prescribed in Schedule II of the Act. Consequently, depreciation for the year is higher by Rs. 76.91 lakhs and depreciation of Rs. 66.66 lakhs (net of deferred tax of Rs. 35.28 lakhs) on account of assets whose useful life is already exhausted as on 1st April, 2014 has been adjusted to Retained Earnings.

4 Confirmation letters have been issued in respect of trade receivables and other receivables, loans and advances and trade payables and other payables of the company but not responded to in some cases. Hence, unconfirmed balances are subject to reconciliation and consequent adjustments, if any, would be determined / made on receipt of confirmation. However, in the opinion of the Board, all assets other than fixed assets and non-current investments have a realizable value in the ordinary course of business which is not different from the amount at which it is stated.

5. Donations include Rs. 0.25 lakhs (Previous year: Rs. Nil) paid to Communist Party (Marxist) and Rs. 5.00 lakhs (Previous year: Rs. Nil) paid to Bharatya Janata Party.

6. Excise duty

Excise duty on sales for the year has been disclosed as reduction from turnover. Excise duty relating to the difference between closing stock and opening stock has been included in Note no. 24 "Changes in inventories of finished goods, work-in-progress and scrap".

7. Disclosure on utilization of proceeds of preferential issues in terms of SEBI (ICDR) Regulation 2009:

On 12th July, 2014 the company converted 5,00,000 warrants into equity shares. With this, entre 7,31,000 warrants have been converted into equity shares of Rs. 10.00 each at a premium of Rs. 51.77. The total amount of Rs. 451.54 lakhs thus received has been utilized for the objects of the preferential issue.

8. Other explanatory information

9. Segment reporting (Accounting Standard 17)

In accordance with Accounting Standard - 17 "Segment Reporting" issued under the Companies (Accounting Standard) Rules 2006, the Company's business consists of two reportable segments i.e., Explosives & Accessories and Wind power.

Segment information has been prepared in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company.

As part of secondary reporting, revenues are attributed to geographical markets based on the location of the customers.


Mar 31, 2013

1.1 Other explanatory information

1. Corporate information

Premier Explosives Limited is a manufacturer of explosives having its registered office at Secunderabad, Andhra Pradesh, India. The company''s main manufacturing and research and development facilities are located at Peddakandukuru village in Nalgonda district of Andhra Pradesh with other manufacturing units located in Madhya Pradesh, Maharashtra and Tamilnadu. Listed on Bombay Stock Exchange, Premier is an ISO 9001 company having accreditation of National Accreditation Board for Testing & Calibration Laboratories (NABL) and recognition of Department of Scientific & Industrial Research (DSIR).

2. Previous year figures have been regrouped/ recast/ rearranged wherever necessary to conform to current year classification.

3. Contingent liabilities and commitments (Rs. in lakhs)

As at As at Particulars 31st March, 2013 31st March, 2012

Contingent liabilities

On account of guarantees issued by the banks on behalf of the company 2,488.29 1,805.80

Sales tax demands disputed by the company pending in appeal 151.31 151.31

Guarantees issued by the company on behalf of an associate company 128.58 171.91

Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) 57.75 345.44

4. Confirmation letters have been issued in respect of trade receivables and other receivables, loans and advances and trade payables and other payables of the company but not responded to in some cases. Hence, unconfirmed balances are subject to reconciliation and consequent adjustments, if any, would be determined / made on receipt of confirmation. However, in the opinion of the Board, all assets other than fixed assets and non-current investments have a realizable value in the ordinary course of business which is not different from the amount at which it is stated.

5. Donations include Rs.0.25 lakh (Previous year: Rs.0.50 lakh) paid to Communist Party (Marxist).

6. Excise duty

Excise duty on sales for the year has been disclosed as reduction from turnover. Excise duty relating to the difference between closing stock and opening stock has been included in Note no. 24 "Changes in inventories of finished goods, work-in-progress and scrap".

7. Remuneration of Chairman and Managing Director, for a period of three years, had been approved by the shareholders in the Annual General Meeting held on 31st July, 2010, subject to the approval of Central Government, if required.

In view of satisfactory financial performance, approval of the Central Government had not been required for the managerial remuneration paid during the years 2010-11 and 2011-12. However, during the year 2012-13 there was an accident in the detonators plant and the operations had been adversely affected. Consequential inadequacy of profit resulted in the managerial remuneration being in excess of the amount payable in terms of sections 198 and 309 read with schedule XIII of the Companies Act, 1956 by an amount of Rs.51.29 lakhs. The company is taking necessary steps to obtain the approval of Central Government.

8.1. The Company had announced Voluntary Retirement Scheme (VRS) for the employees during the previous year. A sum of Rs.37.06 lakhs (Prevoius year: Rs.48.73 lakhs) has been paid during the year and debited to Statement of profit and loss under the head "Exceptional Items".

9. Segment reporting (Accounting Standard 17)

In accordance with Accounting Standard - 17 "Segment Reporting" issued under the Companies (Accounting Standard) Rules 2006, the Company''s business consists of two reportable segments i.e., Explosives & Accessories and Wind power.

Segment information has been prepared in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company.

As part of secondary reporting, revenues are attributed to geographical markets based on the location of the customers.

10. Accounting for Leases (Accounting Standard 19)

Operating lease income

Rental income received during the year on operating lease is Rs.1.43 lakhs (Previous year: Rs.1.56 lakhs). Operating lease expenses

The company has various operating leases for equipment, office facilities and vehicles that are renewable on a periodic basis, by mutual consent, on mutually agreeable terms and cancellable at its option. Rental expenses on operating leases recognised in the Statement of profit and loss for the year is Rs.1.43 lakhs (previous year: Rs.1.61 lakhs)


Mar 31, 2012

1. Corporate information

Premier Explosives Limited is a manufacturer of explosives having its registered office at Secunderabad, Andhra Pradesh, India. The company's main manufacturing and research and development facilities are located at Peddakandukuru village in Nalgonda district of Andhra Pradesh with other manufacturing units located in Madhya Pradesh, Maharashtra and Tamilnadu. Listed on Bombay Stock Exchange, Premier is an ISO 9001 company having accreditation of National Accreditation Board for Testing & Calibration Laboratories (NABL) and recognition of Department of Scientific & Industrial Research (DSIR).

2. Presentation and disclosure of financial statements

During the year ended 31st March 2012, the Revised Schedule VI notified under the Companies Act 1956, has become applicable to the company, for preparation and presentation of its financial statements. The adoption of Revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. The company has also reclassified the previous year figures in accordance with the requirements applicable in the current year.

3. Contingent liabilities and commitments

(Rs. in lakhs) As at As at

Particulars 31st March, 2012 31st March, 2011

Contingent liabilities

On account of guarantees issued by the banks on behalf of the company 1,805.80 2,656.13

Sales tax demands disputed by the company pending in appeal 151.31 151.31

Guarantees issued by the company on behalf of associate company 171.91 253.91

Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) 345.44 178.80

4. Confirmation letters have been issued in respect of trade receivables and other receivables, loans and advances and trade payables and other payables of the company but not responded to in some cases. Hence, unconfirmed balances are subject to reconciliation and consequent adjustments, if any, would be determined / made on receipt of confirmation. However, in the opinion of the Board, all assets other than fixed assets and non- current investments have a realizable value in the ordinary course of business which is not different from the amount at which it is stated.

5. Donations include Rs.0.50 lakh paid to Communist Party (Marxist). (Previous year Rs.1.00 lakh paid to Telangana Rashtra Samithi.)

6. Excise duty

Excise duty on sales for the year has been disclosed as reduction from turnover. Excise duty relating to the difference between closing stock and opening stock has been included in Note no. 25 "Changes in inventories of finished goods, work-in-progress and scrap".

7. Segment reporting

In accordance with Accounting Standard - 17 "Segment Reporting" issued under the Companies (Accounting Standard) Rules 2006, the Company's business consists of two reportable segments i.e., Explosives & Accessories and Wind power.

Segment information has been prepared in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company.

As part of secondary reporting, revenues are attributed to geographical markets based on the location of the customers.

Operating lease expenses

The company has various operating leases for equipment, office facilities and vehicles that are renewable on a periodic basis, by mutual consent, on mutually agreeable terms and cancellable at its option. Rental expenses on operating leases recognised in the Statement of profit and loss for the year is Rs.1.61 lakhs (previous year: Rs.3.46 lakhs)

8. Provision for taxation

(i) Provision for current tax has been made based on an estimate of assessable income determined by the company under the Income Tax Act, 1961.

(ii) The company estimates the deferred tax charge/(credit) using the applicable rate of taxation based on the impact of timing differences between financial statements and estimated taxable income for the current year.


Mar 31, 2011

1. Previous years figures have been regrouped wherever necessary to conform to this years classification.

2. Contingent liabilities (Amount in Rupees)

For the year ended For the year ended

Particulars 31st March, 2011 31st March, 2010

(a) On account of guarantees issued by the banks on behalf of the company 26,56,13,213 14,56,16,183

(b) Sales tax demands disputed by the company pending in appeal 1,51,30,507 1,51,30,507

(c) Income tax demands disputed by the company pending in appeal - 3,86,660

(d) Guarantees issued by the company on behalf of associate company 2,53,90,911 2,65,05,248

3. Revaluation reserve

During the year, the company has reversed the effect of the revaluation of fixed assets with the following result on the accounts:

Fixed assets net block has been reduced by Rs.34,02,055/-

Revaluation reserve has been reduced by Rs.34,02,055/-

4 Confirmation letters have been issued in respect of debts, loans and advances and sundry creditors of the company but no responses have been received in many cases. Hence, unconfirmed balances are subject to reconciliation and consequent adjustments, if any, would be determined / made on receipt of confirmation. However, in the opinion of the management the current assets, loans and advances are realisable in the ordinary course of business equal to the amount at which they are stated and provision for all known liabilities has been made.

5. Dues of micro and small enterprises

Information as required to be disclosed under schedule VI of the Companies Act,1956 with reference to micro and small enterprises under the Micro, Small and Medium Enterprises Development Act, 2006 (Act) as given below and the information mentioned at Schedule No.12 - Current Liabilities w.r.t. dues of micro and small enterprises, has been determined to the extent such parties have been identified on the basis of information available with the company and relied on by the auditors:


Mar 31, 2010

1. Previous years figures have been regrouped wherever necessary to conform to this years classification.

2. Contingent liabilities (Rupees) For the year ended For the year ended 31st March, 2010 31st March, 2009 (a) On account of guarantees issued by the banks on behalf of the company 14,56,16,183 13,65,32,390 (b) Sales tax demands disputed by the company pending in appeal 1,51,30,507 1,51,30,507 (c) Income tax demands disputed by the company pending in appeal 3,86,660 6,61,369 (e) Guarantees issued by the company on behalf of associate company 2,65,05,248 3,07,41,667

3. Estimated amount of contracts remaining to be executed

on capital account and not provided for (net of advances). 3,89,039 3,83,090

4. Confirmation letters have been issued in respect of debts, loans and advances and sundry creditors of the company but not responded to in many cases. Hence, unconfirmed balances are subject to reconciliation and consquent adjustments, if any, would be determined / made on receipt of confirmation.However, in the opinion of the management the current assets, loans and advances have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated and provision for all known liabilities has been made.

5. Dues of micro and small enterprises :

Information as required to be disclosed under schedule VI of the Companies Act,1956 with reference to Micro and Small Enterprises under the Micro,Small and Medium Enterprises Development Act, 2006 (Act) as given below and the information mentioned at Schedule No.12 - Current Liabilities w.r.t. dues of Micro and Small Enterprises, has been determined to the extent such parties have been identified on the basis of information available with the Company and relied on by the auditors:

6. Write offs/provisions relating to Joint Ventures:

The exceptional items in the Profit and Loss Account amounting to Rs.7,40,97,008 refer to the provisions in respect of loans, advances etc. made in Joint Ventures in Turkey and Georgia. Operations of these units have been closed as they have been found unviable. The amounts receivable from the Joint Ventures towards supply of machinery, materials, technical know how as well as the amounts of loans, interest thereon and royalty are found not recoverable. In the absence of any operations, value of equity also has diminished. In these circumstances it is considered prudent to make necessary provisions towards the said items. Accordingly an amount of Rs.7,40,97,008 in the current year and Rs.5,37,01,176 in the previous year have been provided as exceptional items to their full extent. Necessary regulatory permissions have already been received for writing off the export receivables and permissions for write off of other amounts are in process.

7. Segmental reporting:

In accordance with Accounting Standard - 17 " Segment Reporting" issued under the Companies (Accounting Standard) Rules 2006, the Companys business consists of two reportable segments i.e., Explosives and Accessories and Wind Power.

Segment information has been prepared in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company.

As part of secondary reporting, revenues are attributed to geographic areas based on the location of the customers.

The following tables present the revenue, profit, assets and liabilites information relating to the business/geographical segment for the year ended 31st March, 2010

8. As per Accounting Standard (AS - 18) on Related Party disclosures issued by the Institute of Chartered Accountants of India and notified by Companies (Accounting Standards), Rules 2006 the disclosure of transactions with the related party as defined in the accounting standard are given below :

I. List of Related parties with whom transactions have taken place and nature of relationships : a) Key management personnel : Mr.A.N.Gupta Mr. T.V.Chowdary Mr. K.Chalil Dr.N.V.Srinivasa Rao

b) Relatives of key management personnel :

Dr. (Mrs.) Kailash Gupta

Mrs. Shonika Gupta

Mrs. Parvathi Latish

Mrs.T.Malati

Ms.T.Shruti

Mr.T.Lohit

Mrs.P.P.Malu

c) Concerns in which key management personnel have substantial interest (Significant interest entities) :

Amar Leasing

A. N. Gupta (HUF)

Godavari Farms & Plantations

d) Concerns in which relatives of key management personnel have substantial interest (Significant interest entities) :

Godavari Explosives Limited

Ask Consultants Private Limited

Aims

Team Industries

e) Concerns in which the company has substantial interest : Premier Wire Products Limited

f) Joint Ventures : Premier Georgia Limited

Premier Sentas Patalayici Maddeler Ticaret Ve Sanayi A.S.

9. Information on leases as per Accounting Standard 19 on "Accounting for Leases":

Operating Lease Expenses:

The company has various operating leases for equipments, office facilities and vehicles that are renewable on a periodic basis by mutual consent on mutually agreeable terms and cancellable at its option. Rental expenses for operating leases recognised in the Profit and Loss Account for the year is Rs.5,51,200/- (Previous Year : Rs.2,42,447/-).

10. (i) Provision for current tax has been made based on an estimate of assessable income determined by the company under the Income Tax Act, 1961.

(ii) The Company estimates the deferred tax charge/(Credit) using the applicable rate of taxation based on the impact of timing differences between financial statements and estimated taxable income for the current year.

The companys interests in the Joint Ventures are reported as Long Term Investments (Schedule 7).

The companys share of each of the assets, liabilities, income and expenses, etc. related to its interests in the joint ventures are not given as audited / unaudited financial statements are not available.

11. Excise duty on sales for the year has been disclosed as reduction from turnover. Excise duty relating to the difference between closing stock and opening stock has been included in Schedule 24 "Increase/(Decrease) in stocks".

12. Information as required under part IV of Schedule VI of the Companies Act, 1956 is given in Annexure A.

 
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