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Notes to Accounts of PTC Industries Ltd.

Mar 31, 2015

A) Terms and rights attached to equity shares

The Company has only one class of eguity shares having par value ofRs. 10 per share. Each holder of eguity shares is entitled to one vote per share.

The Company declares and pays dividend in Indian rupees.The dividend proposed by the Board of Directors is subject to theapproval oftheshareholdersintheensuing Annual General Meeting.

In theeventofliguidation of the Company, the holders of eguity 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 eguity shares held by the shareholders.

b) The Company has submitted a project proposal amounting to Rs. 18,00,00,000 to the Department of Scientific and Industrial Research, Ministry of Science and Technology, New Delhi, for development and commercialization of RapidCast™Technology of single piece Stainless Steel Casting of upto 5,000 kgs.The department has committed partial support as a grant of Rs. 5,00,00,000 out of total cost of Rs. 18,00,00,000 under the Technology Development and Demonstration Programme (TDDP) of Department of Scientific and Industrial Research (DSIR) fora project duration of 24 months vide their letterno.DSIR/TDDP/PTCIL-41/2010-11 dated September 20,2011 and after that this was extended by DSIR upto September 8,2014 vide their letter dated December 23,2013. This has been further extended by DSIR up to September 30, 2015. The Company had received grant ofRs. 4,00,00,000 during previous years and incurred the expense of Rs. 82,29,279 during theyeartowards the project.

(c) Term loansfrom StateBankoflndia aresecured byway of:

i) Equitable mortgage on pari-passu basis on the land d building of Lucknow Plant 1, Lucknow Plant 2, land atVill- Bani d Vill-Sarai Shahajadi, Pargana-Bijnor and land at Surajbari (Windmill) and first pari-passu charge on all movable fixed assets of the Company.

ii) Personal guarantee of four directors.

C) Vehicle loans from Tata Capital financial Services Limited are secured by way of absolute charge on specific assets

purchased under tine scheme and repayable within a period of 36 months. Entire loan is repayable up to Lebruary,2018.

(d) Compulsory Convertible Debentures (CCDs)

Pursuant to the resolution passed by the shareholders of the Company at the Annual General Meeting held on 16 July 2013, the Company had issued Zero Coupon Compulsory Convertible Debentures of face value of Rs. 1,000 each for a consideration of Rs. 40,00,00,000 to Pragati India Lund Limited and PI International LP through preferential issue. Further, 1,39,130 CCDs were converted in to 3,64,456 fully paid equity shares by the Board of Directors in their meeting held on April 23, 2014 in first tranche and 2,60,870 CCDs were converted in to 6,83,357 fully paid equity shares by the Board of Directors in their meeting held on November 8, 2014 in second tranche during the financial year.

(e) Rate of interest

The Company's long term borrowings from banks and others have an effective weighted average rate of 4.69% p.a. (previous year 4.72% p.a.) calculated using interest rates effective as on March 31,2015 for the respective borrowings.

a) Short term borrowing from State Bank of India and Punjab National Bank are secured by way of:

i) First charge ranking pari-passu on the whole of the present and future current assets of the Company.

ii) Second charge on eguitable mortgage on pari-passu basis on the land & building of Lucknow Plant 1, Lucknow Plant2, landatVill-Bani andVill-Sarai Shahajadi and landatSurajbari (Windmill).

iii) Personal guarantee of four directors.

Based on the information available of the Company, no principal or interest is payable to micro, small and medium enterprises at the balance sheet date. Further, no interest during the year bias been paid or was payable in this respect. The above disclosure has teen determined to the extent such parties have been identified on the basis of information available with the Company.

2 The Company has entered into operating leases for its guest houses and employees' residences that are renewable on a periodic basis and are cancellable at Company's option. Total lease payments recognized in the statement of profit and loss with respect to aforementioned premises is Rs 23,64,065 (previous year Rs. 28,1

2.1 Contingent Liabilities and Commitments (A) Contingent Liabilities

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

(i) In respect of non fund-based working capital facilities from banks:

Bank guarantees 12,20,000 2,57,44,887

Letter of credit 10,73,07,910 99,17,040

(ii) Disputed demands for excise duty and service tax (refer note a below) 1,36,170 4,69,23,008

(iii) Disputed demands for sales tax (refer note b below) 9,93,750 -

(iv) Disputed demands for income tax - 10,02,053

rtes:

a) In the case of Lucknow Plant-1, show-cause notices were issued by the Central Excise Department for the year under review and earlier years. The Company has given replies to all the show-cause notice/demands to the department and the appeals are pending with Appellate authorities.

b) Assessment for the financial year 2011-12 for sales tax has been completed. An appeal for the financial year 2013-14 is pending at Tribunal, CommercialTax against demand for Rs. 15,90,000 and the Company has deposited as a security for Rs. 5,96,250.

Based on advice of subject matter experts, the management is of the opinion that above matters will be allowed in favour of the Company and hence no provision is required for the above.

2 2 Employee Benefit Obligations Defined contribution plans

Amount of Rs. 1,22,87,311 (previous year - Rs. 1,04,03,112 ) has been recongnized as an expense in respect of contribution for Provident Fund and Employee State I nsurance Fund deposited with the government authorities.

Defined benefit plans

The Company makes contribution towards gratuity to a defined contribution retirement benefits plan for qualifying employees. The Company has taken policy with Life Insurance Corporation of India to provide for payment of retirement benefits to vested employees. The present value of obligation is determined based on actuarial valuation.

The following table sets forth the status of the Gratuity Plan of the Company and the amounts recognised in the Balance Sheet and Statement of Profit and Loss.

Salary escalation rate:

The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors.

Investment details of plan assets:

The details of investment maintained by Life Insurance Corporation are not available witt the Company and have not been disclosed.

2.3 Segment Reporting

Accounting Standard 17 "Segment Reporting" issued by the Institute of Chartered Accounts of India which reguires disclosure of information on the basis of reportable segment. The Company recognizes manufacturing ofstainless steel castings, alloy steel castings, non alloy steel castings, steel structures and assembly items as its primary segment.

a) Business segment has been disclosed as the primary segment. The Company is organised into two business segments namely engineering division and power division.

b) Secondary segment reporting is performed on the basis of location of all customers. The location of customers is classified into two geographic segments namely in India and outside India.

2.4 Related Party Disclosure:

The disclosure of transactions with the related party as defined in the Accounting Standard are given below:

Key Management Personnel ("KMP") of the Company

1. Mr. Satish Chandra Agarwal

2. Mr. Sachin Agarwal

3. Mr. PriyaRanjan Agarwal

4. Mr.AlokAgarwal

Entities controlled by KMPsand/or their relatives

1. Mapple Commerce Private Limited

2. e.SoftTechnologies Limited

3. Nirala Merchants Private Limited

4. PTC Foundation

Subsidiary company

1. Modrany Power and PTC Piping Systems Private Limited

Relatives of Key Management Personnel 1. Mrs. Saroj Agarwal

2. Mrs. Smita Agarwal

3. Ms. Kanchan Agarwal

4. Mrs.AnshooAgarwal

5. Mrs. Reena Agarwal


Mar 31, 2014

1. SHARE CAPITAL

a) There is no movement in equity share capital and preference share capital during the current year and the previous year.

b) Terms and rights attached to equity shares

The Company has only one class of equity shares having par value of Rs 10 per share. Each holder of equity shares is entitled to one vote per share.

The Company declares and pays dividend 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.

In the event of Iiquidation 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.

c) Share capital includes 27,60,000 equity shares of Rs10 each allotted as fully paid bonus shares in the year 1993-94 by capitalisation of general reserve and revaluation reserve.

2. Compulsory Convertible Debentures (CCDs)

Pursuant to the resolution passed by the shareholders of the Company at the Annual General Meeting held on 16 July 2013, the Company has issued Zero Coupon Compulsory Convertible Debentures of face value of Rs 1,000 each for a consideration of Rs 40,00,00,000 to Pragati India Fund Limited and PI International LP through preferential issue. Further, 1,39,130 CCD's were converted in to 3,64,456 fully paid equity shares by the Board of Directors in their meeting held on April 23,2014.2,60,870 CCD's are outstanding for conversion and shareholders' permission is being sought for extension oftenure of balance CCD's from 12 months to 18 months as per SEBI (ICDR) Regulations, 2009.

3. The Company has entered into operating leases for its guest houses and employees' residences that are renewable on a

periodic basis and are cancellable at Company's option.Total Lease payments recognized in the statement profit and loss with respect to aforementioned premises is Rs 28,1 (previous year Rs. 23,40,166)

4. Contingent Liabilities and Commitments (A) Contingent Liabilities

Particulars As at As at March 31 March 31 2014 2013

(i) In respect of non fund-based working capital facilities from banks:

Bank guarantees 2,57,44,887 84,20,000

Letter of credit (Inland/Foreign) 99,17,040 1,85,22,342

(ii)Contingent Liability in respect of factoring of receivables with IFCI - 1,02,95,799

Factors Limited.

(iii)Disputed demands for excise duty and service tax (refer note a below) 4,69,23,008 4,61,09,256

(iv) Disputed demands for income tax (refer note b below) 10,02,053 -



Notes:

a) In the case of Lucknow Plant-1, show-cause notices were issued by the Central Excise Department for the year under review and earlier years.The Company has given replies to all the show-cause notice/demands to the department and the appeals are pending with Appellate authorities.

b) Assessment for the assessment year 2010-11 has been done by assessing officer and penalty has been determined against which the Company has filed appeal before the CIT(A) against the order u/s 271(1)(c) and application u/s 154.

Based on advice of subject matter experts, the management is of the opinion that above matters will be allowed in favour of the Company and hence no provision is required for the above.

(B) Commitments

Particulars As at As at March 31 March 31 2014 2013

Estimated amount of contracts remaining to be executed on capital account 4,08,16,765 2,93,99,645

and not provided for (net of advance)

5. Employee Benefit Obligations

Defined Contribution Plans

Amount of rs 1,04,03,112 (previous year - Rs 1,02,47,979) has been recongnized as an expense in respect of contribution for Provident Fund and Employee State Insurance Fund deposited with the government authorities.

Defined Benefit Plans

The Company makes contribution towards gratuity to a defined contribution retirement benefits plan for qualifying employees. The Company has taken policy with Life Insurance Corporation of India to provide for payment of retirement benefits to vested employees.The present value of obligation is determined based on actuarial valuation.

Salary Escalation Rate:

The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors.

Investment detaiIs of Plan Assets:

The details of investment maintained by Life Insurance Corporation are not available with the Company and have not been disclosed.

Note:The previous year includes gratuity liability of discontinued operations and excludes gratuity on account of the Chairman.

6. Segment Reporting

Accounting Standard 17 "Segment Reporting" issued by the Institute of Chartered Accounts of India which reguires disclosure of information on the basis of reportable segment. The Company recognizes manufacturing of stainless steel castings, alloy steel castings, non alloy steel castings and steel structures and assembly items as its primary segment.

7. Related Party Disclosure:

As per Accounting Standard (AS-18) on related party disclosure issued by the Institute of Chartered Accountants of India, the disclosure of transactions with the related party as defined in the Accounting Standard are given below:

Note: Related party relationship is as identified by the Company and relied upon by the Auditors.

Enterprises controlled by directors/relatives

1. Mapple Commerce Private Limited

2. Precision Overseas Private Limited

3. Homelike Motels and Resorts Private Limited

4. e.Soft Technologies Limited

5. PTC Energas Flow Private Limited

6. Nirala Merchants Private Limited

Subsidiary company

1. Modrany Power and PTC Piping Systems Private Limited

Key Management Personnel of the Company

1. Mr. Satish Chandra Agarwal

2. Mr. Sachin Agarwal

3. Mr. PriyaRanjan Agarwal

4. Mr.AlokAgarwal

5. Mr. Narayanan Shadagopan (w.e.fJuly24,2013)

6. Mr.Arvind Agarwal (till March 31,2013)

Relatives of Key Management Personnel

1. Mrs. Saroj Agarwal

2. Ms. Kanchan Agarwal

3. Mrs. Smita Agarwal

4. Mrs.Anshoo Agarwal

5. Mrs. Reena Agarwal

6. Mr. Manu Agarwal (till May,2013)

7. Mrs. Kiran Prasad (till September, 2012)

8. Mrs. Anita Agarwal (till March 31,2013)

8. Discontinuing Operations

The shareholders of the Company have approved the sale of "Bhiwadi Unit" through Postal Ballot on 21st April, 2012.The Board of Directors of the Company, at their meeting held on 15th February, 2013 approved the sale of the Bhiwadi Unit, hereinafter referred to as the "Bhiwadi Unit" to Precon Technology Castings Limited (hereinafter referred to as "PreCon").The Bhiwadi Unit with its respective assets and liabilities, was transferred to PreCon on a 'slump sale" basis as a going concern, for a cash consideration of Rs. 3,50,00,000 to be adjusted for any net working capital changes as on closing date, i.e.. March 31,2013 and accordingly, the 'Bhiwadi Unit' is considered as a 'Discontinued Operation' as at March 31,2013.

9. During the year, the Company has entered into a Joint Venture Agreement with Modrany Power, leading Czech producer and supplier of piping systems for the power industry. Modrany Power & PTC Piping Systems Private Limited has been incorporated in India as a wholly owned subsidiary of PTC Industries Limited during the year to jointly acquire knowledge and bid and execute projects for high pressure piping systems and allied equipments.

10. Previous year figures have been regrouped/rearranged wherever considered necessary to make them comparable with those of the currenty ear.


Mar 31, 2013

(A) Terms / rights attached to equity shares

The Company has only one class of equity shares having par value of Rs. 10/- per share. Each holder of equity shares is entitled to one vote per share.

The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Board Meeting.

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.

The company has submitted a project proposal amounting to Rs.1800 lakhs to the Department of Scientific & Industrial Research, Ministry of Science & Technology New Delhi, for development and commercialization of Rapid Cast Technology of single piece Stainless Steel Casting of upto 5000 Kgs. The department has committed partial support as a grant of Rs.500 lakhs out of total cost of Rs.1800 lakhs under the Technology Development and Demonstration Programme (TDDP) of Department of Scientific and Industrial Research (DSIR) for a project duration of 24 months vide their letter no.DSIR/TDDP/PTCIL-41/2010-11 dated 20th September, 2011. The company has received the second installment of Rs.100 lakhs (Total of Rs 300 lakhs including first installment of Rs 200 lakhs received during the previous year) during the year and incurred the expense of Rs. 416.43 lakhs during the year towards the project.

SECURITIES

(a) Term loans from State Bank of India & Punjab National Bank are secured by way of:

-First charge ranking pari-passu on the whole of the present and future fixed assets of the Company.

-Personal guarantee of five directors, pari-passu charge on the whole of the present and future current assets of the Company. -Secured by the additional security of residential house at Lucknow owned by a director (mortgaged with SBI).

-Vehicle loans from Tata Capital Limited are secured by way of absolute charge on specific assets purchased under the scheme and repayable within a period of 36 months as per the repayment schedule.

1.1 Scientific Research & Development capital expenditure pertaining to the Company''s Research & Development Division aggregated to Rs. 11,73,089 as Capital expenditure and Rs. 84,89,226 as revenue expenditure (previous year Rs. 32,24,104 as Capital Expenditure and Rs. 1,21,89,853 as revenue expenditure charged in respective heads)

1.2 The amount of excise duty on finished goods not cleared from the factory as at 31 March, 2013, estimated on the basis of sales price of goods / excise rates prevailing on the said date was Rs. 4,886 (previous year Rs. 13,97,829). This has not been provided for in the accounts and hence not included in the valuation of such goods. Non-provision of this liability has no affect on the profit for the year.

AS AT AS AT 31 MARCH, 2013 31 MARCH, 2012

2.1 Contingent Liabilities (to the extent not provided for)

(i) Session Court, Faridabad has given a decision against the Company on a case filed by a supplier amounting to Rs.1,07,680 (previous year Rs.1,07,680 ). Against this, the complainant has claimed Rs. 1,50,000 (previous year 1,50,000) alongwith the interest @12% p.a. from the date of the suit i.e. 09.01.1997. This Case pertained to the Bhiwadi Unit of the Company which has been sold under Slump Sale w.e.f. 31.3.2013 hence no further provision for interest has been made : - 1,97,084

(ii) In respect of non fund-based working capital facilities from State Bank of India: -

Counter guarantees furnished by the Company against 84,20,000 29,32,000 various guarantees given by the bank.

Letter of credit (Inland/Foreign) opened by the bank 1,85,22,342 29,40,382

(iii) Estimated amount of contracts remaining to be executed on capital account and not provided for, net of advance (as certified by a Director) 2,93,99,645 94,44,182

(iv) Contingent Liability in respect of factoring of receivables with IFCI Factors Limited. 1,02,95,799 4,87,84,795

(v) In the case of Lucknow Plant-1, show-cause notices were issued by the Central Excise Department for the year under review and earlier years Against Cenvat credit 4,60,95,098 4,24,67,915

Against Service Tax 14,158 14,158

The Company has given replies to all the show-cause notice/demands to the department and the appeals are pending with Appellate authorities.

(vi) Show Cause Notice/Demands have been raised by the Central Excise Department against Cenvat credits claimed by the Bhiwadi Plant on inputs and capital goods upto 31 March, 2012. The Company has given its replies to all Show Cause Notices the Department and the same are under consideration. - 58,921

(vii) Income Tax Case Status:-

Assessment Status as at 31.03.2013 year

2011-12 The Income Tax Department has issued scrutiny notice u/s 143(2), Case is pending with ACIT

2008-09 ITAT Appeal has been filled on dt 24.01.2013 against the order passed by CIT(A)

2007-08 The Order of CIT (A) has been received and application on dt 30.08.2011 for CIT(A) order effect is pending

2005-06 The Order of ITAT has been received and application on dt 19.04.2011 for ITAT order effect is pending

2004-05 The Income Tax department had ordered Special Audit u/s 142(2A) of the Income Tax Act, 1961. Pursuant to the Audit, the department has issued demand notice for Rs. 14,60,700.

Against the said order, the Company has deposited Rs. 10,00,000 and balance amount has been adjusted from the refund of the AY 2006-07, however an appeal with CIT (A) has been decided but the effect of appeal is still pending at income tax department. The Income Tax assessments of erstwhile Ashman Tool Engineers Private Limited (ATEPL) and Sunika Alloys Private Limited (SAPL) has been completed up to the pre-amalgamation period i.e. A.Y. 1997- 98. Further an order under section 154 of the Income Tax Act, 1961 was passed on 25-06- 2004 for the assessment year 1997-98 in case of erstwhile M/s Ashman Tool Engineers Private Limited subsequently merged with the Company. A demand of Rs. 23,592 towards the charge of interest was raised against the Company. The Company has deposited Rs. 15,028 in compliance to notice of demand.

(viii) Sales Tax Case Status

Assement Year Status as at 31.03.2013

2009-10 The Sales Tax assessment of Lucknow Plant-1 & 2 has been completed*.

2008-09 The Sales Tax assessment of Mehsana Plant has been completed.

2010-11 The Sales Tax assessment of Bhiwadi Plant has been completed.

Note: *Appeals are pending with appelate authorities on different issues filed by us, The Company has given all replies of Notices issued by the department on time to time, security money has also been deposited by the company against the appeal.

(ix) Department of Scientific & Industrial Research, Ministry of Science & Technology New Delhi, has accepted the project proposal of the company for development and commercialization of Rapid Cast Technology of single piece Stainless Steel Casting of upto 5000 Kgs. The department has committed partial support in the form of a grant of Rs. 500 Lakhs out of total cost of Rs. 1800 Lakhs. In lieu of this grant, the company shall be obliged to pay to DSIR annual royalties on the monies actually disbursed by DSIR to the project amounting to 1.3 times the grant. This will be for a period of 5 years from the start of the production of the product for captive use or commercial sale (whichever is earlier) from the pilot/commercial or new producing plant installed on the basis of the result of the TDDP project.

2.2 The Wealth Tax return of the Company has been filed upto the assessment year 2012-2013.

2.3 The Company''s recognition as an EXPORT HOUSE is valid upto 31.03.2014.

2.4 The Company has taken residential accommodation for its employees on operating lease, with the option of renewal at the end of the lease. Minimum lease payments charged during the year to the Profit and Loss Account aggregate to Rs. 23,40,166 (previous year Rs. 25,59,967).

2.5 The Company has been permitted by the Gujarat Energy Development Agency (GEDA) to set up a Wind Farm of 0.75 M.W. in district Kutch Gujarat in accordance with the provisions of the Wind Power Generation Policy, 2002 issued under the Resolution No. vide G.R. EDA-10-2001-3054-BC Part-(II) of the Government of Gujarat dated 20 June, 2002. The Company has opted to wheel the energy generated at the Wind Farm to its own other manufacturing unit at Mehsana, North Gujarat. An agreement has been executed between the Company, GEDA and Gujarat Energy Transmission Corporation Limited (GETCO) whereby a tripartite Wheeling and Banking agreement has been made. During the year, income of Rs. 59,68,225 (previous Rs. 48,10,388) accrued through electricity generation at the Wind Farm which will be adjusted in terms of the aforesaid tripartite agreement.

2.6 Employee Benefit Obligations

Defined Contribution Plan

An amount of Rs. 54,92,837 for the year ended 31 March, 2013 has been recognized as an expense in respect of contribution for Provident fund and Employees State Insurance Fund deposited with the Government Authorities.

Defined Benefit Plans

The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to 15 days of total basic salary last drawn for each completed year of service. Gratuity is payable to all eligible employees of the company on retirement, separation, death or permanent disablement, in terms of the provisions of The Payment of Gratuity Act,1972. The following tables sets forth the status of the Gratuity Plan of the Company and the amounts recognised in the Balance Sheet and the Profit and Loss Account.

Discount Rate:

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

Salary Escalation Rate:

The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors.

Investment details of Plan Assets:

The Plan Assets are maintained with Life Insurance Corporation-Group Gratuity Scheme. The details of investment maintained by Life Insurance Corporation are not available with the company and have not been disclosed.

2.7 During the year 2012-2013 company has captively consumed 1.004 M.T. (previous year 2.238 M.T.) of casting for assembly production.

2.8 SEGMENT REPORTING

Accounting Standard 17 "Segment Reporting" issued by the Institute of Chartered Accounts of India which requires disclosure of information on the basis of reportable segment. The Company recognizes manufacturing of Stainless Steel Castings, Alloy Steel Castings, Non Alloy Steel Castings and Steel Structures as its primary segment while the Company has presented secondary segment reporting on the basis of geographical location of customers.

2.9 Discontinuing Operations

The shareholders of the Company have approved to sale of "Bhiwadi Unit" through Postal Ballot on 21st April, 2012. The Board of Directors of the Company, at their meeting held on 15th February, 2013 approved the sale of the Bhiwadi Unit, hereinafter referred to as the "Bhiwadi Unit" to Precon Technology Castings Limited (hereinafter referred to as "PreCon"). The Bhiwadi Unit with its respective assets and liabilities, was transferred to PreCon on a ''slump sale'' basis as a going concern, for a cash consideration of Rs. 3,50,00,000/- to be adjusted for any net working capital changes as on closing date, ie. 31 March 2013.

In this connection, the company had signed the Slump Sale Agreement dated 25th March, 2013. The advance money of Rs. 1,00,00,000 against consideration towards Bhiwadi Unit was received from PreCon on 25th March, 2013. The balance consideration of Rs. 2,50,00,000 has been received on 6th June 2013. The Loss on account of the above transaction is disclosed as an exceptional item in the Profit and Loss Account.

Accordingly, the ''Bhiwadi Unit'' is considered as a ''Discontinued Operation'' w.e.f. 31.03.2013 in terms of Accounting Standard 24 on ''Discontinued Operations'' (AS-24)

Notes:

1. The above cash flow statement has been prepared under the ''Indirect Method'' as set out in the Accounting Standard-3 on Cash Flow Statements as notified under Section 211(3C) of the Companies Act, 1956.

2. Previous year''s figures have been regrouped and reclassified to conform to those of the current year (including discontinued operations).


Mar 31, 2012

1.1 Scientific Research & Development capital expenditure pertaining to the Company''s Research & Development Division aggregated to Rs. 32,24,104 as Capital expenditure and Rs. 1,21,89,853 as revenue expenditure ( previous year Rs. 1,32,20,043 as Capital Expenditure and Rs. 1,69,70,837 as revenue expenditure charged in respective heads)

2.2 The amount of excise duty on finished goods not cleared from the factory as at 31 March, 2012, estimated on the basis of sales price of goods /excise rates prevailing on the said date was Rs. 13,97,829 (previous year Rs. 88,996). This has not been provided for in the accounts and hence not included in the valuation of such goods. Non-provision of this liability has no affect on the profit for the year.

AS AT AS AT 31 MARCH, 2012 31 MARCH, 2011

2.3 Contingent Liabilities (to the extent not provided for)

(i) Session Court, Faridabad has given a decision against the Company on a case filed by a supplier amounting to Rs.1,07,680 (previous year Rs.1,07,680). Against this, the complainant has claimed Rs. 1,50,000 (previous year 1,50,000) alongwith the interest ©12% p.a. from the date of the suit i.e. 09.01.1997.The Company is exploring avenues to settle the issue out of court. Interest for the period 09.01.1997 to 31.03.2012: 1,97,084 1,84,162

(ii) In respect of non fund-based working capital facilities from State Bank of India: - -

Counter guarantees furnished by the Company against 29,32,000 45,62,370 various guarantees given by the bank

Letter of credit (Inland/Foreign) opened by the bank 29,40,382 1,43,56,667

(iii) Estimated amount of contracts remaining to be executed on capital account and not provided for, net of advance (as certified by a Director). 94,44,182 81,55,553

(iv) Contingent Liability in respect of factoring of receivables with IFCI Factors Limited. 4,87,84,795 6,94,03,404

(v) In the case of Lucknow Plant-1, show-cause notices were issued by the Central Excise Department for the year under review and earlier years

Against Cenvat credit 4,24,67,915 4,25,67,812

Against Service Tax 14,158 14,158

The Company has given replies to all the show-cause notice/demands to the department and the appeals are pending with Appellate authorities.

(vi) Show Cause Notice/Demands have been raised by the Central Excise Department against Cenvat credits claimed by the Bhiwadi Plant on inputs and capital goods upto 31 March, 2012. The Company has given its replies to all Show Cause Notices the Department and the same are under consideration. 58,921 58,921

2.4 The Company''s recognition as an EXPORT HOUSE is valid upto 31.03.2014.

2.5 The Company has taken residential accommodation for its employees on operating lease, with the option of renewal at the end of the lease. Minimum lease payments charged during the year to the Profit and Loss Account aggregate to Rs. 25,59,967 (previous year Rs. 21,95,779).

2.6 The Company has been permitted by the Gujarat Energy Development Agency (GEDA) to set up a Wind Farm of 0.75 M.W. in district Kutch Gujarat in accordance with the provisions of the Wind Power Generation Policy, 2002 issued under the Resolution No. vide G.R. EDA-10-2001 -3054-BC Part-(ll) of the Government of Gujarat dated 20 June, 2002. The Company has opted to wheel the energy generated at the Wind Farm to its own other manfacturing unit at Mehsana, North Gujarat. An agreement has been executed between the Company, GEDA and Gujarat Energy Transmission Corporation Limited (GETCO) whereby a tripartite Wheeling and Banking agreement has been made. During the year, income of Rs. 48,10,388 (previous Rs. 46,05,782) accrued through electricity generation at the Wind Farm which will be adjusted in terms of the aforesaid tripartite agreement.

2.7 Employee Benefit Obligations Defined Contribution Plan

An amount of Rs. 54,04,920 for the year ended 31 March, 2012 has been recognized as an expense in respect of contribution for Provident fund and Employees State Insurance Fund deposited with the Government Authorities.

Defined Benefit Plans

The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to 15 days of total basic salary last drawn for each completed year of service. Gratuity is payable to all eligible employees of the company on retirement, separation, death or permanent disablement, in terms of the provisions of The Payment of Gratuity Act, 1972.

The following tables sets forth the status of the Gratuity Plan of the Company and the amounts recognised in the Balance Sheet and the Profit and Loss Account.

Discount Rate:

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

Salary Escalation Rate:

The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors.

Investment details of Plan Assets:

The Plan Assets are maintained with Life Insurance Corporation-Group Gratuity Scheme. The details of investment maintained by Life Insurance Corporation are not available with the company and have not been disclosed.

2.8 During the year 2011 -2012 company has captively consumed 2.238 M.T. (previous year 3.210 M.T.) of casting for assembly production.

2.9 Shifting of Assembly Division

The Assembly Division at Lucknow Plant-1 has been w.e.f. 1st July, 2011 to Lucknow Plant-2, situated at C-5, Sarojini Nagar Industrial Area, Lucknow - 226008. Earlier only machining activities were done at Lucknow Plant-2. The value of assets transferred from Lucknow Plant-1 to Lucknow Plant-2 amounts to Rs. 1,18,64,822.

2.10 The plantwise installed capacity is recognised on the basis of melting capacity of Induction Melting furnaces at single shift basis. Being of a technical nature has been relied upon by the Auditors.

Lucknow Plant-1 1850.000 MTPA

Bhiwadi Plant 1800.000 MTPA

Mehsana Plant 1500.000 MTPA

2.11 SEGMENT REPORTING

Accounting Standard 17 "Segment Reporting" issued by the Institute of Chartered Accounts of India which requires disclosure of information on the basis of reportable segment. The Company recognizes manufacturing of Stainless Steel Castings, Alloy Steel Castings, Non Alloy Steel Castings and Steel Structures as its primary segment while the Company has presented secondary segment reporting on the basis of geographical location of customers.

Notes:

1. The above cash flow statement has been prepared under the ''Indirect Method'' as set out in the Accounting Standard-3 on Cash Flow Statements as notified under Section 211 (3C) of the Companies Act, 1956.

2. Previous year''s figures have been regrouped and reclassified to conform to those of the current year.


Mar 31, 2011

1. Share Capital includes 27,60,000 Equity shares of Rs. 10 each allotted as fully paid bonus shares by capitalisation of General Reserve and Revaluation Reserve.

2. Aggregate market value of quoted investments as at the end of the year was Rs. 358243 (previous year Rs. 413680).

3. Fixed deposit with Bank (Schedule ''I'') is "Under Bankers lien" as margin money for non-fund based facilities.

4. Advance payment of tax as at the end of the year represents advance payment of Tax and Tax deducted at source for and during the year under review. Advance payment of Income Tax less provision for tax for earlier years, if any, has been included in Balance with Income Tax/ Excise/Sales Ta x department (Schedule ''J'').

5. Scientific Research & Development Expenditure pertaining to the Company''s Research & Development Division aggregated to Rs. 13220043 as Capital Expenditure and Rs. 16970837 as revenue expenditure (previous year Rs. 5297541 as capital expenditure and Rs. 4905284 as revenue expenditure) charged in respective heads.

6. As per method of accounting consistently followed by the Company, excise duty payable on finished goods, other than those meant for exports, is accounted for on clearance of such goods from the factory. The amount of excise duty on such finished goods not cleared from the factory as at 31st March 2011, estimated on the basis of sales price of goods/excise rates prevailing on the said date, at Rs. 88996 (previous year Rs. 95313) has not been provided for in the accounts and hence not included in the valuation of such goods. Non-provision of this liability has no affect on the profit for the year.

7. During the year, the Company has been permitted by the Central Excise Department to clear export shipments without payment of excise duty amounting to Rs. 20992907 (previous year Rs. 8828743) against bond in favour of the department. The Company has cleared deemed export to EOU against FORM C.T.3, certificate for removal of excisable goods under bond & Form CT-1, certificate for procurement of excisable goods for export without payment of duty amounting 6656598 (previous year 4189969). A few export shipments have been cleared against payment of Excise Duty amounting to Rs. 16072380 (previous year Rs. 10943339), refund claims for which have been lodged in process of lodgement with the appropriate authorities. The Company has received Rs. 12512982, during the financial year 2010-2011 (Rs. 13582152 during the previous year).

8. Amount due from officers of the Company as at the end of the year was Rs. Nil (previous year Rs. Nil). Maximum amount due at any time during the year was Rs. 2025151 (previous year Rs. 1420610).

9. Term Loans & Working Capital Loans

1. Working Capital Loans (Fund/Non Fund based) from State Bank of India & Punjab National Bank are secured by way of :

- First charge ranking pari-pasu on the whole of the present and future current assets of the Company.

- Personal guarantee of five directors. Pari-pasu charge on the entire fixed assets of the Company.

- Secured by the additional security of residential house at Lucknow owned by a director (Mortgaged with SBI).

2. Term Loans from State Bank of India & Punjab National Bank is Secured by way of :

- First charge ranking pari-pasu on the whole of the present and future fixed assets of the Company.

- Personal guarantee of five directors. Pari-pasu charge on the whole of the present and future current assets of the Company.

- Secured by the additional security of residential house at Lucknow owned by a director (Mortgaged with SBI).

3. Vehicle Loans from ICICI Bank Limited, HDFC Bank & Tata Capital Ltd. are secured by way of hypothecation of vehicles & assets financed.

10. (a) Sessions Court, Faridabad has given a decision against the Company on a case filed by a supplier amounting to Rs.107680 (Previous Year Rs. 107680) against this complainant has claimed Rs. 150000 (previous year 150000) alongwith the interest @ 12% p.a. from the date of the suit i.e. 09/01/1997. Interest from 09/01/1997 to 31/03/2011 comes to Rs.184162. The Company is exploring the avenues to settle the issue, out of court.

(b) In respect of non fund-based working capital facilities from State Bank of India:

(In Rs.) 2010-2011 2009-2010

Counter guarantees furnished by the Company against various guarantees given by the Bank 4562370 7273081

Letter of Credit (Inland/ Foreign) opened by the Bank 14356667 11878290

(c) Estimated amount of contracts remaining to be executed on capital account and not provided for, net of advances (as certified by a Director) was Rs. 9444182 at the end of year (previous year Rs. 8155553).

(d) Contingent Liability in respect of factoring of receivables with IFCI Factors Limited Rs. 69403404 (previous year with HSBC Rs. 26898344).

11. The Income Tax assessment for A.Y. 2008-2009 has been completed during the year with refund of Rs. 27535 and appeal at CIT (A) (II) has been filed on 27.01.2011. The order of CIT (A) for A.Y. 2007-2008 has been received and appilication for CIT (A) order effect is pending. The Income Tax department had ordered Special Audit u/s 142(2A) of the Income Tax Act, 1961 for the Assessment Year 2004-05. Pursuant to the audit, the department has issued demand notice for Rs. 1460700. Against the said order, the Company has deposited Rs. 1000000 and balance amount has been adjusted from the refund of the A.Y. 2006-2007, however an appeal with CIT(A) has been decided but the effect of appeal is still pending at Income Tax Department. The Income Tax assessments of erstwhile Ashman Tool Engineers Private Limited (ATEPL) and Sunika Alloys Private Limited (SAPL) has been completed upto the pre-amalgamation period i.e. A.Y. 1997-98. Further an order under section 154 of the Income Tax Act, 1961 was passed on 25-06-2004 for the assessment year 1997-98 in case of erstwhile M/s Ashman Tool Engineers Private Limited subsequently merged with the Company. A demand of Rs. 23592 towards the charge of interest was raised against the Company. The Company has deposited Rs. 15028 in compliance to notice of demand.

12. (a) The Sales Tax assessments of the Lucknow Plant -1 have been completed upto the year 2007-2008.

(b) Sales Ta x Assessment of Bhiwadi Plant has been completed upto the year 2008-2009.

(c) The Sales Tax assessments of the Lucknow Plant-2 have been completed upto the year 2007-2008.

(d) Sales Tax Assessment of Mehsana Plant has been completed upto the year 2006-2007.

13. The Wealth Tax assessment of the Company has been filed upto the assessment year 2010-2011.

14. (a) In the case of Lucknow Plant-1, Show-cause notices against CENVAT credit of Rs.42567812 (previous year Rs. 115935) and Rs.14158 (Previous year Rs. 14158) relating to Service Ta x were issued by the Central Excise Department for the year under review and earlier years. The Company has given replies to all the show cause notice/demands to the department and the appeals are pending with Appellate authorities.

(b) Show Cause Notices/Demands of Rs. 58921 (previous year Rs. 58921) has been raised by the Central Excise Department against CENVAT credits claimed by the Bhiwadi Plant on inputs and capital goods up to 31st March, 2011. The Company has given its replies to all Show Cause Notices to the Department and the same are under consideration.

15. The Company''s recognition as an EXPORT HOUSE was valid upto 31.03.2014.

16. The Company has taken residential accommodation for its employees on operating lease, with an option of renewal at the end of the lease term. Minimum lease payments charged during the year to the Profit and Loss Account aggregate to Rs. 2195779 (previous year Rs. 2410601).

17. The Company has no amounts payable to micro, small and medium enterprises as defined in section 7(1) of The Micro, Small and Medium Enterprises Development Act, 2006 to the extent such party have been identified from the available information.

18. The Company has been permitted by the Gujarat Energy development Agency (GEDA) to set up a Wind Farm of 0.75 M W in district Kutch, Gujarat in accordance with the provisions of the Wind Power Generation Policy, 2002 issued under the Resolution No. vide G.R. EDA-10-2001-3054-BC Part- (II) of the Government of Gujarat dated 20 June, 2002. Consequently a tripartite ''Wheeling and Banking Agreement'' has been executed between the Company, GEDA and Gujarat Energy Transmission Corporation Limited (GETCO) whereby the Company has opted to wheel the energy generated at the Wind Farm to its own other manufacturing unit at Mehsana, North Gujarat. During the year income of Rs. 4605782 (previous Rs. 4838492) accrued through electricity generation at the wind form which will be adjusted in terms of the aforesaid tripartite agreement.

19. Employee Benefit Obligations Defined Contribution Plan

An amount of Rs. 4236940.55 for the year ended 31/03/2011 has been recognised as an expense in respect of contribution for Provident Fund and Employee State Insurance Fund deposited with the Government Authorities.

Defined Benefit Plan

The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to 15 days of total basic salary last drawn for each completed year of services. Gratuity is payable to all eligible employees of the Company on retirement, separation, death or permanent disablement, in terms of the provisions of the payment of Gratuity Act, 1972.

Discount Rate:

The Discount rate is based on the prevailing market yields of Indian Government Securities as at the Balance Sheet date for the estimated term of the obligations.

Salary Escalation Rate:

The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors.

Investment details of Plan Assets:

The Plan Assets are maintained with Life Insurance Corporation - Group Gratuity Scheme. The details of Investment maintained by Life Insurance Corporation are not available with the Company and have not been disclosed.

20. Foreign exchange fluctuation gain of Rs. 9948425 (Previous Year Loss Rs. 4758806) on account of recognition of exchange difference on foreign currency transactions.

The activities of the Lucknow Plant-2 are basically of tool-room and job-work on different machines and equipment are done on the goods supplied by the Lucknow Plant-1. Hence, due to practical difficulties and large number of items, it is not possible to give quantitative information pursuant to para 3, 4C and 4D of Part-II of Schedule VI of the Companies Act, 1956.

(a) Inter-Plant transactions relating to sales, purchases, job-work, sundry debtors and sundry creditors have been squared-off. However, the quantitative details as given hereunder with respect to production of castings includes 299.002 M.T. (previous year 337.94 M.T.) transferred inter-plant for further processing.

(b) Bhiwadi Plant has exported castings 102.036 M.T. (Previous year 137.066 M.T.) on behalf of Lucknow Plant-1

21. Segment Reporting :

Accounting Standard 17-"Segment Reporting" issued by the Institute of Chartered Accountants of India which requires disclosure of information on the basis of reportable segment. The Company recognizes manufacturing of Stainless Steel Castings, Alloy Steel Castings, Non Alloy Steel Castings and Steel Structure as its primary segment while the Company has presented secondary segmental reporting on the basis of geographical location of customers.

22. Figures have been rounded-off to the nearest Rupee and previous year''s figures have been recasted and regrouped, wherever necessary, to conform to this year''s presentation.

23. Comparative financial information in the respect to preceding year is included as an integral part of the current year''s financial statements and is to be read in relation to the amounts and other disclosure relating to the current year.

24. Borrowing costs capitalised during the year Rs. 1173561 (Previous year Rs. 427245) in compliance with AS-16.

 
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