Mar 31, 2018
1. Corporate Information
Srikalahasthi Pipes Limited (âthe Companyâ), is a public limited company in India having itâs registered office at Rachagunneri, Srikalahasthi Mandal, Chittoor district in the state of Andhra Pradesh, India engaged in the manufacture and supply of Ductile Iron Pipe as its core business and produces and supplies Pig Iron and Cement in the process. It also produces Low Ash Metallurgical Coke, Sinter and Power for captive consumption in its integrated complex. The company predominantly caters to the needs of Water Infrastructure Development. The companyâs shares are listed on the National Stock Exchange Limited (NSE) and the BSE Limited.
2. Statement of Compliance and Recent Pronouncements
2.1 Statement of Compliance
The Company has adopted Indian Accounting Standards (referred to as âInd ASâ) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) read with Section 133 of the Companies Act, 2013 (âthe Actâ) with effect from April 1, 2016 and therefore Ind ASs issued, notified and made effective till the financial statements are authorized have been considered for the purpose of preparation of these financial statements.
Accounting Policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing Accounting standard requires a change in the accounting policy hitherto in use.
Financial Statements for the year ended as at March 31, 2017 were audited by previous auditors - K R Bapuji & Co., Chartered Accountants.
2.2 Recent Pronouncements
On March 28, 2018, Ministry of Corporate Affairs (âMCAâ) has issued the Companies (Indian Accounting Standards) Amendment Rules, 2018 notifying Ind AS 115, âRevenue from Contract with Customersâ and Appendix B to Ind AS 21 âForeign currency transactions and advance considerationâ which are applicable with effect from financial periods beginning on or after April 1, 2018.
Ind AS 115 - Revenue from Contract with Customers
The standard requires that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entityâs contracts with customers. This amendment is not likely to have any material impact on the financial statements of the company.
Ind AS 21 - Appendix B âForeign currency transactions and advance considerationâ
This Appendix applies to a foreign currency transaction (or part of it) when an entity recognises a non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration before the entity recognises the related asset, expense or income (or part of it). The effect of this amendment on the financial statements of the company is being evaluated.
3. Critical accounting judgments, assumptions and key sources of estimation and uncertainty
The preparation of the financial statements in conformity with measurement principle of Ind AS requires management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Differences between the actual results and estimates are recognized in the year in which the results are known / materialized and, if material, their effects are disclosed in the notes to the financial statements.
Application of accounting policies that require significant areas of estimation, uncertainty and critical judgments and the use of assumptions in the financial statements including key assumptions concerning the future and key sources of estimation and uncertainty at the balance sheet date, that have a significant risk of causing material adjustment to the carrying amount of assets and liabilities within the next financial year are given here under:
a. Depreciation / amortization of and impairment loss on property, plant and equipment / intangible assets.
Property, plant and equipment are depreciated and intangible assets are amortized on straight-line basis over the estimated useful lives (or lease term if shorter) in accordance with Schedule II of the Companies Act, 2013, taking into account the estimated residual value, wherever applicable.
The Company reviews its carrying value of its Tangible and Intangible Assets whenever there is objective evidence that the assets are impaired. In such situation assets recoverable amount is estimated which is higher of assetâs or cash generating units (CGU) fair value less cost of disposal and its value in use. In assessing value in use the estimated future cash flows are discounted using pre-tax discount rate which reflect the current assessment of time value of money. In determining fair value less cost of disposal, recent market realisations are considered or otherwise in absence of such transactions appropriate valuations are adopted. The Company reviews the estimated useful lives and residual life of the assets regularly in order to determine the amount of depreciation / amortization and also amount of impairment expense to be recorded during any reporting period. Subsequent reassessment or review may result in change of estimates in future periods.
b. Arrangement contain leases and classification of leases
The Company enters into service / hiring arrangements for various assets / services. The determination of lease and classification of the service /hiring arrangement as a finance lease or operating lease is based on an assessment of several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lesseeâs option to purchase and estimated certainty of exercise of such option, proportion of lease term to the assetâs economic life, proportion of present value of minimum lease payments to fair value of leased asset and extent of specialized nature of the leased asset.
c. Impairment loss on trade receivables
The Company evaluates whether there is any objective evidence that trade receivables are impaired and determines the amount of impairment loss as a result of the inability of the debtors to make required payments. The Company bases the estimates on the ageing of the trade receivables balance, credit-worthiness of the trade receivables and historical write-off experience. If the financial conditions of the trade receivable were to deteriorate, actual write-offs would be higher than estimated.
d. Income taxes
Significant judgment is required in determination of taxability of certain income and deductibility of certain expenses during the estimation of the provision for income taxes.
e. Defined Benefit Obligations (DBO)
Critical estimate of the DBO involves a number of critical underlying assumptions such as standard rates of inflation, mortality, discount rate, anticipation of future salary increases etc. as estimated by Independent Actuary appointed for this purpose and Management. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
f. Provisions and Contingencies
Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability requires the application of judgement to existing facts and circumstances, which can be subject to change.
Management judgment is required for estimating the possible outflow of resources, if any, in respect of contingencies/claim/ litigations/ against the Company as it is not possible to predict the outcome of pending matters with accuracy.
The carrying amounts of provisions and liabilities and estimation for contingencies are reviewed regularly and revised to taking into account changing facts and circumstances.
4.1 Refer Note no. 21.1 to financial statements in respect of charge created against borrowings
5.1 Particulars of Investments as required in terms of Section 186(4) of the Companies Act, 2013 has been disclosed herein above.
5.2 Includes INR 1848.07 lakhs (31st March 2017: Nil) out of QIP proceeds pending utilisation thereof in terms of the issue (Refer Note no. 46).
6.1 Refer Note no. 21.1 to financial statements in respect of charge created against borrowings
7.1 Includes INR 20,000 lakhs (31st March 2017: Nil) out of QIP proceeds pending utilisation thereof in terms of the issue (Refer Note no. 46).
8.1 Margin Fixed Deposits with banks include Fixed Deposit of INR 110.69 lakhs (31st March 2017: INR 75.41 Lakhs) have been lodged with banks against guarantee issued by them
9.1 Includes INR 169.20 lakhs (March 31, 2017 INR 141.97 lakhs) lying with customers in terms of agreement/ order with/ from customers
Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of INR 10/- per share, each holder of equity share is entitled to one vote per share. In the event of liquidation of the company, the holders of equity shares will be entitled to receive any of the 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.
10.1.1 Refer Statement of Changes in Equity for movement in balance of reserves
10.1.2 Nature of reserves
a) Securities Premium Reserve
Securities Premium Reserve represents the amount received in excess of par value of securities and is available for utilisation as specified under Section 52 of Companies Act, 2013
b) General Reserve
The general reserve represents appropriation of profits at the discretion of the Company. It is transferous from one component of equity to another.
c) Retained Earnings
Retained Earnings generally represent the undistributed profits /amount of accumulated earnings of the Company. This includes INR 2,48,85.21 lakhs which is not available for distribution as dividend as these are represented by change in carrying amount of an PPE being measured at Fair Value as on the date of transition to Ind AS and Other Comprehensive Income of INR (77.24 lakhs) (31st March 2017: INR (99.83 lakhs)) relating to re-measurement of defined benefit plans which cannot be reclassified to Statement of Profit and Loss.
10.1.3 Subsequent to the balance sheet date, the Board of Directors has recommended a dividend of INR 6/- per share to be paid on fully paid equity shares in respect of the financial year ended March 31, 2018. This equity dividend is subject to approval by shareholders at the ensuing Annual General Meeting and has not been included as a liability in these financial statements. The total estimated equity dividend to be paid is INR 2,801.90 lakhs and the dividend distribution tax thereon amounts to INR 591.36 lakhs.
11.1 Terms of Repayment and rate of interest:
a Rupee Term Loan outstanding as on 31st March 2018 INR 2,500.00 Lakhs (31st March 2017 INR 3,250.00 lakhs) is repayable in 10 Quarterly instalment of INR 250.00 Lakhs each and carries an Interest @ 9.80% p.a. payable monthly.
b External Commercial Borrowings outstanding as on 31st March 2018 INR 3,906.29 Lakhs (Equivalent US$ 59.94 Lakhs) (31st March 2017 INR 6,740.77 lakhs (Equivalent US$ 83.95 lakhs)) is repayable in 4 half yearly instalments in November and March every year of US$ 12,00,600 each and last installment of US$ 11,91,600 and carries an interest at LIBOR plus 4.6262% p.a payable half yearly.
11.2 Nature of security :
The above Loans are secured by way of first pari-passu charge on the Movable & Immovable Property, Plant and Equipment of the company, both present and future.
12.1 Nature of Security and rate of interest
Loan repayable on demad being Working Capital facilities from banks (both fund based and non-fund based) are secured by first pari passu charge by way of hypothecation of raw materials, semi finished goods , finished goods, consumables, stores and spares, book debts, both present and future.
Reconciliation of Income Tax expense for the year with accounting profit is as follows:
Taxable Income differs from âprofit before taxâ as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. Details in this respect are as follows:
The tax rate used for reconciliations above is the corporate tax rate of 30% plus applicable surcharge and cess etc. payable by corporate entities in India on taxable profits under the Indian tax laws.
The fair values of the financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Fair Valuation Techniques:
The following methods and assumptions were used to estimate the fair values:
1. The fair value of cash and cash equivalents, trade receivables, trade payables, current financial liabilities and borrowings approximate their carrying amount largely due to the short-term nature of these instruments. The Board considers that the carrying amounts of financial assets and financial liabilities recognized in the financial statement approximate their fair value.
2. Long-term debt has been contracted at floating rates of interest, which are reset at short intervals. Fair value of variable interest rate borrowings approximates their carrying value subject to adjustments made for transaction cost.
3. Investments in liquid and short-term mutual funds are measured using quoted market prices at the reporting date multiplied by the quantity held.
4. The fair value of derivative financial instruments is determined based on observable market inputs including currency spot and forward rates, yield curves, currency volatility etc. These derivatives are estimated by using the pricing models, where the inputs to those models are based on readily observable market parameters basis contractual terms, period to maturity, maturity parameters and foreign exchange rates. These models do not contain a high level of subjectivity as the valuation techniques used do not require significant judgment, and inputs thereto are readily observable from actively quoted market prices. The said valuation has been carried out by an Independent Agency with whom the contract has been entered with. Management has evaluated the credit and a non-performance risk associated with the counterparties and believes them to be insignificant and not requiring any credit adjustments.
Fair value hierarchy
The following table presents fair value hierarchy of assets and liabilities measured at fair value on a recurring basis as of March 31, 2018:
During the year ended March 31, 2018 and March 31, 2017, there were no transfers between Level 1 and Level 2 fair value measurements.
The Inputs used in fair valuation measurement are as follows:
Fair valuation of Financial assets and liabilities not within the operating cycle of the company is amortised based on the borrowing rate of the company.
Derivative financial instruments are valued based on quoted prices for similar assets and liabilities in active markets or inputs that are directly or indirectly observable in the market place. The inputs used for forward contracts are Forward foreign currency exchange rates and Interest rates to discount future cash flow.
Financial instruments are valued based on quoted price for similar assets and liabilities in active market or similar inputs that are directly or indirectly observable in the market place.
Derivatives financial assets and liabilities:
The Company follows established risk management policies, including the use of derivatives to hedge its exposure to foreign currency fluctuations on foreign currency assets / liabilities. The counter party in these derivative instruments is a bank and the Company considers the risks of nonperformance by the counterparty as non-material.
a) The following table presents the aggregate contracted principal amounts of the Companyâs derivative contracts outstanding:
Sale of Financial Assets
In the normal course of business, the Company transfers its bill receivables to banks. Under the terms of the agreements, the Company surrenders control over the financial assets and the transfer is with recourse. Under arrangement with recourse, the company is obligated to repurchase the uncollected financial assets, subject to limits specified in the agreement with banks. Accordingly, in such cases the amount received are adjusted against the receivables. As at March 31, 2018 and March 31, 2017, the maximum amount of recourse obligation in respect of transferred financial assets are INR 2,815.40 lakhs and INR 8,453.46 lakhs respectively.
FINANCIAL RISK FACTORS
The companyâs activities exposed it to a variety of financial risks. The key financial risks include Market risk, Credit risk and liquidity risk. The companyâs focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance.
The Board of Directors review and approves policy for managing these risks. The risks are governed by appropriate policies and procedures and accordingly financial risks are identified, measured and managed in accordance with the Companyâs policies and risk objectives.
MARKET RISK
Market risk is the risk or uncertainty arising from possible market price movements resulting in variation in the fair value of future cash flows of a financial instrument. The major components of Market risks are currency risk, interest rate risk and price risk. Financial instruments affected by market risk include trade receivables, borrowings, investments and trade and other payables.
Foreign Currency Risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Companyâs exposure to the risk of changes in foreign exchange rates relates primarily to the Companyâs foreign currency denominated borrowing and trade and other payables.
The Company has adopted a comprehensive risk management review system wherein it actively hedges its foreign exchange exposures within defined parameters through use of hedging instruments such as forward contracts, options and swaps. The Company periodically reviews its risk management initiatives and also takes experts advice on regular basis on hedging strategy.
The carrying amount of the various exposure to foreign currency at the end of the reporting period are as follows:
(*) Figures in round brackets indicate figures as on 31st March 2017.
Derivative financial assets and liabilities dealing with outstanding derivative contracts and unhedged foreign currency exposure have been detailed in earlier paras. Unhedged foreign currency exposure is primarily on account of long term foreign currency borrowings for which hedge cover is taken as per the policy followed by the company depending upon the remaining period of maturity of the installments falling due for payment.
Sensitivity analysis resulting in profit or loss arising mainly from USD denominated payables are as follows:
A 5% strengthening of INR would have an equal and opposite effect on the Companyâs financial statements.
Interest rate risk
The companyâs exposure in market risk relating to change in interest rate primarily arises from floating rate borrowing with banks and financial institutions. Borrowings at fixed interest rate exposes the company to the fair value interest rate risk. The Company has entered into interest rate swap contracts in respect of certain foreign currency borrowings whereby interest at an agreed rate are to be applied on agreed upon principal amount. As of March 31, 2018, substantially all of the Company borrowings were subject to floating interest rates, which are reset at short intervals.
Further there are deposits with banks which are for short term period are exposed to interest rate risk, falling due for renewal. These deposits are however generally for trade purposes as such do not cause material implication.
With all other variables held constant, the following table demonstrates the impact of the borrowing cost on floating rate portion of loans and borrowings and excluding loans on which interest rate swaps are taken.
Other Price Risk
The companyâs current investments which are fair valued through profit and loss are not material. Accordingly, other price risk of the financial instrument to which the company is exposed is not expected to be material.
CREDIT RISK
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables). The management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Major water infrastructure projects are Government funded or foreign aided and the risk involved in payment of default is minimum with respect to these customers. The Company periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends and ageing of accounts receivable. Individual risk limits are set accordingly and the company obtains necessary security including letter of credits and / or bank guarantee to mitigate its credit risk.
The carrying amount of respective financial assets recognised in the financial statements, (net of impairment losses) represents the Companyâs maximum exposure to credit risk. The concentration of credit risk is limited due to the customer base being backed by the government order. Of the trade receivables balance at the end of the year, one customer having outstanding balance of INR 5,145.67 lakhs (Previous year INR 2,315 lakhs) which accounts for more than 10% of the accounts receivable and 10% of revenue as at and for the year ended March 31, 2018.
The Company establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. Receivables are reviewed/evaluated periodically by the management and appropriate provisions are made to the extent recovery there against has been considered to be remote.
The Companyâs current investments are valued at with respect to market quotation on the reporting date. These investments are diversified across various sectors and are periodically reviewed and managed in accordance with the companyâs policy and risk objective
Financial assets that are neither past due nor impaired
Cash and cash equivalents, investment and deposits with banks are neither past due nor impaired. Cash and cash equivalents with banks are held with reputed and credit worthy banking institutions.
Financial assets that are past due but not impaired
Trade receivables amounts which are past due at the end of the reporting period, no credit losses there against are expected to arise.
LIQUIDITY RISK
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Companyâs objective is to maintain optimum level of liquidity to meet its cash and collateral requirements at all times. The company relies on internal accruals and borrowings to meet its fund requirement. The current committed line of credit are sufficient to meet its short to medium term fund requirement.
Liquidity and interest risk tables
The following tables detail the Companyâs remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows as at balance sheet date.
The Company has current financial assets which will be realized in ordinary course of business. The Company ensures that it has sufficient cash on demand to meet expected operational expenses.
The Company relies on mix of borrowings and operating cash flows to meet its need for funds and ensures that it does not breach any financial covenants stipulated by the lender.
Capital Management
The primary objective of the Companyâs capital management is to ensure that it maintains a healthy capital ratio in order to support its business and maximize shareholder value. The Companyâs objective when managing capital is to safeguard its ability to continue as a going concern so that they can continue to provide returns for shareholders and benefits for other stakeholders. The Company is focused on keeping strong total equity base to ensure independence, security, as well as a high financial flexibility for potential future borrowings, if required without impacting the risk profile of the Company.
The company also manages its capital to meet financial covenants, if any attached to the borrowings. Non-compliances may result in levy of higher rate of interest on loans charged by the lenders. At present the company has generally complied with the financial covenants of the borrowings during the reported period.
Note:
1. The Company has tax disputes in appeals as disclosed above and certain litigations in respect of land. Based on the facts of each dispute / litigation and opinion of the management including that of advice of our legal advisors, the company believes that the outcome of the said disputes / litigations will not result in material impact that would affect the financial position or operations of the Company.
2. The Companyâs pending litigations comprises of claim against the company and proceedings pending with Taxation/ Statutory/ Government Authorities. The Company has reviewed all its pending litigations and proceedings and has made adequate provisions, and disclosed contingent liabilities, where applicable, in its financial statements. The company does not expect the outcome of these proceedings to have a material impact on its financial position. Future cash outflows, if any, in respect of (d) above is dependent upon the outcome of judgments / decisions.
3. The matter related to Forest Department fee has been decided in favour of the company by the Honâble High Court of Karnataka. However, the Government of Karnataka has filed a Special Leave Petition before the Honâble Supreme Court and the matter is pending thereof.
13. Post Retirement Employee Benefits
The disclosures required under Ind AS 19 âEmployee Benefitsâ, are given below: -
a. Defined Contribution Plan
Contribution to Defined Contribution Plan, recognized for the year are as under:
b. Defined Benefit Plans
The employeeâs gratuity fund scheme managed by Life Insurance Corporation of India 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.
Compensated absences
The obligation for compensated absences is determined in the same manner as gratuity and is recognised in the Statement of Profit and Loss. The actuarial liability of Compensated Absences (unfunded) of accumulated privileged and sick leaves of the employees of the Company as at March 31, 2018 is given below:
Notes:
i. Assumptions relating to future salary increases, attrition, interest rate for discount & overall expected rate of return on Assets have been considered based on relevant economic factors such as inflation, market growth & other factors applicable to the period over which the obligation is expected to be settled.
The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (projected unit credit method) has been applied as when calculating the defined benefit obligation recognised within the Balance Sheet.
14. Segment Reporting:
The Companyâs operates mainly in one business segment viz. Pipes being primary segment and all other activities revolve around the main activity.
15. The company has opted for continuing accounting policy in respect of exchange difference arising on reporting of long term foreign currency monetary items in accordance with Ind AS 101 âFirst time adoption of Indian Accounting Standardsâ. Accordingly, during the year ended 31st March 2018 the net exchange difference loss of INR 274.16 lakhs (previous year INR 161.66 lakhs gain) on foreign currency loans have been adjusted in the carrying amount of fixed assets. The unamortised balance in this respect is INR 3909.01 lakhs (March 31, 2017: INR 3945.60 lakhs).
16. Disclosure of Related Parties/Related Party Transactions:
Name of the Related Parties with whom transactions were carried out during the year and description of relationship:
a. Key Management Personnel & their relatives (KMP):
i. Shri. G. Maruthi Rao, Chairman
ii. Shri. Mayank Kejriwal, Managing Director
iii. Shri. G. S. Rathi, Whole Time Director
iv. Shri. V. Poyyamozhi, Whole Time Director
v. Shri. S. Y. Rajagopalan, Director
vi. Shri. R. K. Khanna, Director
vii. Smt. S. Hemamalini, Director
viii. Smt. Priya Manjari Todi, Director
ix. Shri. Karthikeya Misra, Director
x. Shri. N. Sivalai Senthilnathan, Chief Financial Officer
xi. Shri. G. Kodanda Pani, Company Secretary
b. Enterprise where KMP and/or Close member of the family have significant influence or control
i. Electrosteel Castings Limited
ii. Amit Trexim Private Limited
iii. Global Exports Limited
Note:
1. The above related party information is as identified by the management and relied upon by the auditor.
2. In respect of above parties, there is no provision for doubtful debts as on March 31, 2018 and no amount has been written back or written off during the year in respect of debts due from/ to them.
3. Post-Employee benefits and other long term employee benefits have been disclosed made on retirement/resignation of services but does not include provision made on actuarial basis as the same is available for all the employees together.
17. The Company has operating lease arrangement for Land and office accommodation etc. Expenditure incurred on account of rent during the year amounting to INR 129.33 lakhs (Previous year INR 123.81 lakhs) is recognized in the Statement of Profit and Loss.
As required under Ind AS 17 - âLeasesâ the future minimum lease payments under non-cancelable operating leases in aggregate are as follows.
18. The Company has allotted on 28th December 2017, 6,934,812 equity shares of INR 10.00 each at a premium of INR 350.50 per share amounting to INR 25,000.00 lakh pursuant to a Qualified Institutions Placement (QIP) under Securities Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009.
19. These financial statements have been approved by the Board of Directors of the Company on 28th April, 2018, for issue to the shareholders for their adoption.
Mar 31, 2017
1. Disclosure of Related Parties/Related Party Transactions:
Name of the Related Parties with whom transactions were carried out during the year and description of relationship:
a. Associate Company:
M/s.Electrosteel Castings Limited
b. Key Management Personnel& their relatives (KMP):
Shri. G. Maruthi Rao, Chairman
Shri. Mayank Kejriwal, Managing Director Shri. G. S. Rathi, Whole Time Director Shri. S.Y. Rajagopalan, Director Shri. R.K. Khanna, Director Smt. S. Hemamalani, Director Shri. Karthikeya Misra, Director
Shri. Atosh R Surana, Chief Financial Officer (till 19th September 2016)
Shri. N. Sivalai Senthilnathan, Chief Financial Officer (from 01st December 2016)
Shri. K. Raghuram, Company Secretary
c. Enterprise where Key Management Personnel have control:
Amit Trexim Private Limited
Global Exports Limited
2. (a). MANDATORY EXCEPTIONS AND OPTIONAL EXEMPTIONS
These financial statements are covered by Ind AS 101, "First Time Adoption of Indian Accounting Standards", as they are the Company''s first Ind AS financial statements for the year ended March 31, 2017.
Overall principle:
The Company has prepared the opening balance sheet as per Ind AS as of April 1, 2015 (the transition date) by recognizing all assets and liabilities whose recognition is required by Ind AS, not recognizing items of assets or liabilities which are not permitted by Ind AS, by reclassifying certain items from Previous GAAP to Ind AS as required under the Ind AS, and applying Ind AS in the measurement of recognized assets and liabilities. The accounting policies that the Company used in its opening Ind-AS Balance Sheet may have differed from those that it used for its previous GAAP. The resulting adjustments arise from events and transactions before the date of transition to Ind-AS had recognized directly in retained earnings at the date of transition.
However, this principle is subject to certain mandatory exceptions and certain optional exemptions availed by the Company as detailed below.
De-recognition of financial assets and financial liabilities
The Company has applied the de-recognition requirements of financial assets and financial liabilities prospectively for transactions occurring on or after April 1, 2015 (the transition date).
Fair Value as deemed cost for Property, Plant and Equipment
Property, plant and equipment has been valued at Fair value at the date of transition, which has been considered as deemed cost.
Deemed cost for Intangible assets
The Company has elected to continue with the carrying value of all of its intangible assets recognized as of transition date measured as per the Previous GAAP and used that carrying value as its deemed cost as of the transition date.
Impairment of financial assets
Ind AS 109 "Financial Instruments" requires the impairment to be carried out retrospectively; however, as permitted by Ind AS 101, the Company, has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognized in order to compare it with the credit risk at the transition date. Further, the Company has not undertaken an exhaustive search for information when determining, at the date of transition to Ind AS, whether there have been significant increases in credit risk since initial recognition, as permitted by Ind AS 101.
Determining whether an arrangement contains a lease
The Company as on the date of transition complied with Ind AS 17 "Leases" to determine whether an arrangement contains a Lease on the basis of facts and circumstances existing at the date of transition to Ind AS, accordingly leasehold land has been reclassified as operating lease.
Long Term Foreign Currency Monetary items
The Company has adapted to continue the accounting policy related to exchange difference arising from translation of existing long term foreign currency monetary items recognized in the financial statements under previous GAAP as on the date of transition, accordingly the company has continued the policy of capitalization of forex on such long-term loans outstanding as on 1st April 2015 and such capitalized amount is being amortized over the remaining useful life of the assets.
3. (C). Explanatory Notes to reconciliation between Previous GAAP and Ind AS: (a) Property, Plant & Equipment (''PPE''):
The company has used fair value of the PPE as carried out by an external valuer in its opening Ind AS statement of financial position as deemed cost.
i) the aggregate of those fair values is Rs. 80906.23 Lakhs; and
ii) the aggregate adjustment to the carrying amounts of land reported under previous GAAP is Rs.32176.37 lakhs.
The fair value of PPE has been determined based on the valuation carried out by External independent valuers. The fair value of the properties was determined based on market value of similar assets, significantly adjusted for differences in the nature, location or condition of the specific items of PPE. The fair valuation involves higher degree of uncertainty and subjectivity.
The company has ascertained major components of Plant & Machinery earlier and reviewed its useful life in terms of Ind AS as on the date of transition. This has resulted in additional depreciation to the extent of Rs. 761.05 lakhs and Rs. 307.27 lakhs for the year ended 31st March 2016 and as on 01st April 2015 respectively.
The company has reclassified leasehold land as explained in point (f) below, accordingly an amount of Rs. 76.78 lakhs and Rs. 79.89 lakhs are adjusted for the year ended 31st March 2016 and as on 01st April 2015 respectively.
Cumulatively, the above has resulted in a total adjustment of Rs.31031.24 lakhs and Rs. 31789.20 lakhs for the year ended 31st March 2016 and as on 01st April 2015 respectively.
(b) Borrowings:
Ind AS requires Finance Liabilities consisting of Long Term Borrowings to be designated and measured at amortised cost based on Effective Interest Rate (EIR) method. The transaction costs incurred towards origination of borrowings are required to be deducted from the carrying amount of borrowings on initial recognition. These costs are recognized in profit or loss over the tenure of the borrowing as part of the interest expense by applying the effective interest rate method.
Under previous GAAP, transaction costs incurred in connection with borrowings are accounted upfront and charged to profit or loss for the period in which such transaction costs is incurred.
Accordingly, Finance costs have been reduced by Rs. 411.81 Lakhs and Rs. 246.20 Lakhs as on 1st April 2015 and 31st March 2016 respectively. This has resulted in increase in total equity of Rs.411.81 lakhs and Rs.246.20 lakhs as on 1st April 2015 and 31st March 2016 respectively.
(c) Derivative financial Instruments
Under previous GAAP, exchange difference arising with respect to forward contracts other than those entered into, to hedge foreign currency risk on unexecuted firm contracts or of highly probable forecast transactions were recognized in the period in which they arise and the difference between the forward contract and exchange rate at the date of transaction is recognized as revenue/expense over the life of the contract.
Under Ind AS, both reductions and increases to the fair value of derivative contracts are recognized in Statement of Profit and Loss.
On transition, the Company has fair valued the outstanding forward contract/Swap and Options resulting in loss of Rs. 161.11 lakhs and gain of Rs. 333.88 lakhs as on 1st April 2015 and 31st March 2016 respectively. This has resulted in decrease in total equity of Rs.161.11 lakhs as on 1stApril 2015 and net increase in equity of Rs. 172.77 lakhs as at 31st March 2016.
(d) Investment in Mutual Funds
Under previous GAAP, current investments were measured at lower of cost or market price. Under Ind AS, Investments are measured at fair value through profit and loss and accordingly, difference between the fair value and carrying value is recognized in the Statement of Profit and Loss.
On transition, the Company has recognized a gain of Rs. 127.38 lakhs in respect of mutual funds for the year ended 31st March 2016. This has resulted in increase in Rs.127.38 lakhs (income) and total equity by Rs. 127.38 lakhs for the year ended 31st March 2016.
(e) Fair Valuation of financial assets and liabilities
Under previous GAAP, receivables and payables were measured at transaction cost less allowances for recoverability, if any. Under Ind AS, the financial assets and liabilities are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less allowances for impairment, if any. The resulting changes are recognized either under finance income or expenses in the Statement of Profit and Loss. On transition, the company has fair valued certain financial assets resulting in loss of Rs.0.01 lakhs and reduction of other financial assets by Rs.2.74 lakhs for the year ended 31st March 2017.
(f) Reclassification of Lease
Under previous GAAP, leasehold land in the form of perpetual agreement was classified as finance lease.
Under Ind AS, finance lease includes leases that substantially transfer all the risks and rewards incidental to ownership of assets. Land is considered to have an indefinite life and whose value appreciates with passage of time. Accordingly, on transition the company has reclassified such leasehold land to operating lease amounting to Rs. 79.89 lakhs as on 1st April 2015 and Rs 76.78 lakhs as on 31st March 2016.
(g) Defined benefit liabilities
Both under previous GAAP and Ind AS, the Company recognizes costs related to its post-employment defined benefit plan on an actuarial basis. Under previous GAAP, the entire cost, including actuarial gains and losses, are charged to Statement of Profit and Loss. Under Ind AS, re-measurements [comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability] are recognized immediately in the balance sheet with a corresponding debit or credit to equity through Other Comprehensive Income (OCI).
Under Ind AS, the entity is permitted to transfer amounts recognized in the Other Comprehensive Income within equity. The Company has taken recourse of the said provision and has transferred all re-measurement costs recognized relating prior to the transition date from Retained earnings as on the date of transition as permitted under Ind AS.
Thus, the employee benefit cost is reduced by Rs. 74.19 lakhs on transition date i.e 01.04.2015 and Rs.18.76 lakhs for the year 2015-16 and re-measurement losses on defined benefit plans have been recognized in the Other Comprehensive Income, net of tax.
(h) Taxation
he Company has accounted for current and deferred tax on various adjustments between previous GAAP and Ind AS at the tax rate at which they are expected to be reversed.
MAT credit entitlement being of the nature of deferred tax, accordingly, on transition the company has reclassified such MAT Credit from current tax to deferred tax amounting to Rs. 331 1.25 lakhs as on 1st April 2015 and Rs 2607.17 lakhs as on 31st March 2016.
(i) Proposed Dividend
Under previous GAAP, proposed dividend as recommended by the Board of Directors is recognized as liability in the period to which they relate irrespective of the approval of the shareholders.
Under Ind AS, such dividends are recognized as liability in the period in which they are approved by the shareholders or paid. Accordingly, on the date of transition the company has derecognized proposed dividend and dividend tax amounting to Rs. 1,435.74 lakhs and recognized them during the year 2015-16 on approval by the Shareholders. Similarly, proposed dividend and dividend tax of Rs 2,392.90 lakhs have been derecognized during the year 2015-16. This has resulted in increase in total equity of Rs. 1435.74 lakhs and Rs. 957.16 lakhs as on 1st April 2015 and 31st March 2016 respectively.
Previous GAAP figures have been reclassified / regrouped wherever necessary to conform with financial statements prepared under Ind AS.
4. These financial statements have been approved by the Board of Directors of the Company on 12th May,2017 for issue to the shareholders for their adoption.
Mar 31, 2016
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 share is entitled
to one vote per share. In the event of liquidation of the company, the holders of equity shares will be entitled to receive any
of the 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.
A dividend of 50% has been recognized as distribution to equity shareholders for the year ended 31.03.2016 (31.03.2015: 30%). The
dividend proposed by the Board of Directors is subject to the approval of the Shareholders in the ensuing Annual General Meeting.
Terms of Repayment and rate of interest:
a Rupee Term Loan of Rs.3750 Lakhs is repayable in 6 Quarterly installments of Rs.125.00 lakhs each starting from
01/04/16 to 01/09/17 and 12 Quarterly installments of Rs.250 Lakhs from 30/09/18 to 30/06/21 and carries an interest
@ 10.25% p.a. payable monthly. b Rupee Term Loan of Rs.1000 lakhs repayable in 8 Quarterly installments of Rs.78.125 lakhs each
starting from 30/9/16
to 30/6/18 and 2 Quarterly installments of Rs.156.25 Lakhs from 30/9/18 to 31/12/18, and balance Rs.62.50 Lakhs on
31/3/2019. It carries an interest @ 11.25% p.a. payable monthly. c Foreign Currency loan of Rs. 7152.61 Lakhs (US$ 107.964
Lakhs) is repayable in 8 half yearly installments in September
and March every year of US$ 12,00,600 each and last installment of US$ 11,91,600 and carries an interest at LIBOR
plus 4.6262% p.a payable half yearly. d Foreign Currency loan of Rs. 3312.5 Lakhs (US$ 50 Lakhs) is repayable in 3 half yearly
installments of US$ 15 lakhs
each on 22/5/2016, 22/11/2016 and US$ 20 lakhs on 22/5/2017 and carries an interest at LIBOR plus 3.7239% p.a
payable half yearly.
nature of security :
Rupee term loan of Rs 3750 lakhs is secured by way of first pari-passu charge on the movable & immovable Fixed Assets of the
company and subservient charge on raw materials, semi finished goods and finished goods, consumables, stores and spares, book
debts, both present and future.
Rupee term loans of Rs 1000 lakhs and Foreign Currency loans from Banks are secured by way of first pari-passu charge on the
movable & immovable Fixed Assets of the company both present and future.
nature of Security and rate of interest
Working Capital facilities availed from banks are secured by hypothecation of raw materials, semi finished goods and finished
goods, consumables, stores and spares, book debts, both present and future of the company and rank pari-passu among themselves
and the rate of interest ranges from 10% to 13.5% p.a and are payable on demand.
1. In the opinion of the Management, Current Assets and Loans & Advances have the value at which these are stated in the
Balance Sheet, if, realized in the ordinary course of business, unless otherwise stated and adequate provisions for all known
liabilities have been made and are not in excess of the amount reasonably required.
2. Disclosure of Trade Payables under Current/Non-Current liabilities is based on the information available with the company
regarding the status of the suppliers as defined under the "Micro, Small and Medium Enterprises Development Act, 2006" (the Act).
There are no delays in payment made to such suppliers and there is no overdue amount outstanding as at the Balance Sheet date.
Based on the above the relevant disclosure u/s 22 of the Act are as follows:-
3. A) Pursuant to the Companies (Accounting Standards) Amendment Rules, 2011 vide GSR 914(E) dated 29th December, 2011, the
Company has exercised the option of adjusting the cost of assets, for the exchange differences arising on long term foreign
currency monetary items, in respect of accounting periods commencing from 1st April, 2011, which were hitherto recognized as
income or expenses in the period in which they arose. As a result, such exchange differences so far as they relate to the
acquisition of depreciable capital assets have been adjusted with the cost of such assets, to be depreciated over the balance
useful life of the respective assets. Consequently, the Fixed Assets â Rs.899.09 lakhs (Previous year Rs.692.66 lakhs) and
Capital work-in-progress Nil (Previous year Nil) is higher and charge to the Statement of Profit and Loss is lower to that
extent.
The Company has tax disputes in appeals as disclosed above and certain litigations in respect of land. Based on the facts of each
dispute / litigation and opinion of the management including that of advice of our legal advisors, the company believes that the
outcome of the said disputes / litigations will not result in material impact that would affect the financial position or
operations of the Company.
4. Segment Reporting:
The Company''s main business is manufacturing and selling pipes. In addition, the Company is also manufacturing & selling Cement
and producing Pig Iron and LAM Coke for captive use, which does not qualify as a reportable segment as per Accounting Standard
â17 on segment reporting issued by the Institute of Chartered Accountants of India. Accordingly, in the opinion of the management
Pipes is the only reportable segment.
5. Disclosure of Related Parties/Related Party Transactions:
Name of the Related Parties with whom transactions were carried out during the year and description of relationship:
a. Associate Company:
M/s. Electrosteel Castings Limited
b. Key Managerial Personnel (KMP):
Shri. Mayank Kejriwal, Managing Director Shri. G. S. Rathi, Whole Time Director Shri. Atosh R Surana, Chief Financial Officer
Shri. Manoj K. Shah, Company Secretary Shri. K. Raghuram, Company Secretary
c. Enterprise where Key Managerial Personnel have control:
Amit Trexim Private Limited*
6. As stipulated in AS-28, the Company assessed potential generation of economic benefits from its business units and is of the
view that assets employed in continuing business are capable of generating adequate returns over their useful lives in the usual
course of business, there is no indication to the contrary and accordingly, the management is of the view that no impairment
provision is called for in these accounts.
7. The Company has operating lease arrangement for office accommodation etc. with tenure extending up to one year. Expenditure
incurred on account of rent during the year amounting to Rs.91.86 Lakhs (Previous year Rs.82.88 Lakhs) is recognized in the
Statement of Profit and Loss.
As per the hedging policy of the Company, all foreign currency exposures that are due in the next 12 months are fully hedged. In
respect of external commercial borrowings which relates to acquisition of depreciable capital assets, the exchange differences
will be adjusted with the cost of such assets as per the Policy of the Company [Refer Note No. 31(A)] and the Management believes
that the same will not have any material adverse affect on the financial position or operations of the Company. Hence no
provision is required for material losses on derivative contracts.
8. Disclosure of loans and advances as per the requirement of Regulation 34(3) of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 with the Stock Exchanges in India.
(i) The Company does not have any subsidiary and has not given any loans and advances in the nature of loans to its associates.
(ii) Interest free loans as per general rules of the Company have been given to its employees. Aggregate amount of such advances
and loans outstanding at the year end is Rs.13.56 lakhs (Previous year Rs.14.93 lakhs).
9. Previous year figures
The Previous Year''s Figures have been re-grouped / re-arranged wherever necessary.
Mar 31, 2015
1. Corporate information
Srikalahasthi Pipes Limited, incorporated under the Companies Act in
the year 1991, is engaged in the manufacture and supply of Ductile Iron
Pipe as its core business with its domicile presence in the State of
Andhra Pradesh, India. The Company''s name was earlier Lanco Industries
Limited and the name was changed with effect from 29th September, 2014
to its present name. The company is a leading Public Utility Services
company predominantly catering to the needs of Water Infrastructure
Development.The company also produces Low Ash Metallurgical Coke,
Sinter and Power for captive consumption in its integrated complex. It
also manufactures and supply Pig Iron and Cement, in the process. The
Company''s shares are listed on the National Stock Exchange Limited and
the Bombay Stock Exchange Limited and the shares are traded regularly.
Terms of Repayment and rate of interest:
a) Rupee Term Loan of Rs. 4687.50 Lakhs is repayable in 15 Quarterly
instalments of Rs. 312.50 lakhs each starting from 30/06/2015 and it
carries an interest @ 11% p.a. payable monthly.
b) Rupee Term Loan of Rs. 375.00 Lakhs repayable in 4 Quarterly
instalments of Rs. 93.75 lakhs each and it carries an interest @ 13.50%
p.a. payable monthly.
c) Rupee Term Loan of Rs. 5000 Lakhs (Drawn Rs. 4000 lakhs) repayable
in 8 Quarterly instalments of Rs. 156.25 lakhs each starting from
1/12/15 to 1/9/17 and 12 Quarterly instalments of Rs. 312.50 Lakhs from
1/12/17 to 1/9/20, it carries an interest @ 11.45% p.a. payable
monthly.
d) Rupee Term Loan of Rs. 2500 Lakhs (Drawn Rs.1000 lakhs) repayable in
8 Quarterly instalments of Rs. 78.125 lakhs each starting from 30/9/16
to 30/6/18 and 12 Quarterly instalments of Rs. 156.25 Lakhs from
30/9/18 to 30/6/21, it carries an interest @ 12.25% p.a. payable
monthly.
e) Foreign Currency loan of Rs. 8247.47 Lakhs (US$ 131.976 Lakhs) is
repayable in 11 half yearly instalments of US$ 12,00,600 in September
and March and carries an interest at LIBOR plus 4.6262% p.a. payable
half yearly.
f) Foreign Currency loan of Rs. 4687.50 Lakhs (US$ 75 Lakhs) is
repayable in 5 half yearly instalments of US$ 10 lakhs on 22/5/2015,
US$ 15 lakhs each on 22/11/2015, 22/5/2016, 22/11/2016 and US$ 20 lakhs
on 22/5/2017 and carries an interest at LIBOR plus 3.7239% p.a.
payable half yearly
Nature of security:
Rupee term loan of Rs. 8687.50 lakhs is secured by way of first
pari-passu charge on the movable & immovable Fixed Assets of the
company and subservient charge of raw materials, semi finished goods
and finished goods, consumables, stores and spares, book debts, both
present and future.
Rupee term loans of Rs. 1375 lakhs and Foreign Currency loans from
Banks are secured by way of first pari-passu charge on the movable &
immovable Fixed Assets of the company both present and future.
3. Contingent Liabilities not provided for:
2014-15 2013-14
Rs. in Lakhs Rs. in Lakhs
a) Guarantees given by banks on
behalf of the Company. 839.63 927.31
b) Bills discounted with banks 9890.39 2874.28
c) Outstanding Letter of Credits 5426.10 455.69
d) Various demands raised, which in the
opinion of the management are not
tenable and are pending
with various forums / authorities:
i) Sales Tax 1347.08 1514.66
ii) Excise, Custom Duty & Service Tax 230.47 183.00
iii) Income Tax 37.72 37.72
The Company has no litigations, other than the tax disputes in appeals
as disclosed above. Based on the facts of each case and opinion of the
management including that of advice of the tax advisors, it believes
that the outcome of the said appeals will not result in material tax
demands that would affect the financial position or operations of the
Company.
4. In the opinion of the Management, Current Assets and Loans &
Advances have the value at which these are stated in the Balance Sheet,
if, realized in the ordinary course of business, unless otherwise
stated and adequate provisions for all known liabilities have been made
and are not in excess of the amount reasonably required.
5. A) Pursuant to the Companies (Accounting Standards) Amendment
Rules, 2011 vide GSR 914(E) dated 29th December, 2011, the Company has
exercised the option of adjusting the cost of assets, for the exchange
differences arising on long term foreign currency monetary items, in
respect of accounting periods commencing from 1st April, 2011, which
were hitherto recognized as income or expenses in the period in which
they arose. As a result, such exchange differences so far as they
relate to the acquisition of depreciable capital assets have been
adjusted with the cost of such assets, to be depreciated over the
balance useful life of the respective assets. Consequently, the Fixed
Assets - Rs. 692.66 lakhs (Previous year Rs. 1692.29 lakhs) and Capital
work-in-progress Nil (Previous year Rs. 104.30 lakhs) is higher and
charge to the Statement of Profit and Loss is lower to that extent.
C) With effect from 1st April, 2014, the company revised the estimated
useful value of certain of its assets based on a technical study and
evaluation of the useful life of the assets conducted in this regard
and Management assessment thereof. Consequent to it, current years
depreciation amount also include the amount of depreciation determined
based on such evaluation and re-assessment of useful life less residual
value as on 1st April 2014.
Due to the said revision of estimated useful life of certain assets the
charge of depreciation for the year is higher by Rs. 117.35 lakhs for
the assets existing as at April 1, 2014 as compared to the depreciation
based on previously adopted method of evaluation of lives of assets.
6. Balances of Sundry Debtors/Creditors are subject to confirmation
and reconciliation, if any.
7. Segment Reporting:
The Company''s main business is manufacturing and selling pipes. In
addition, the Company is also manufacturing & selling Cement and
producing Pig Iron and LAM Coke for captive use, which does not qualify
as a reportable segment as per Accounting Standard -17 on segment
reporting issued by the Institute of Chartered Accountants of India.
Accordingly, in the opinion of the management, Pipes is the only
reportable segment.
8. Disclosure of Related Parties/Related Party Transactions:
Name of the Related Parties with whom transactions were carried out
during the year and description of relationship:
a. Associate company:
M/s. Electrosteel Castings Limited
b. Key Management personnel & their relatives (KMp):
Shri Mayank Kejriwal, Managing Director
Shri Atosh R Surana, Chief Financial Officer & Company Secretary
c. Enterprise where other directors have significant influence or
control:
1) Lanco Infratech Limited* (applicable to the extent of previous years
figures)
9. As stipulated in AS-28, the Company assessed potential generation
of economic benefits from its business units and is of the view that
assets employed in continuing business are capable of generating
adequate returns over their useful lives in the usual course of
business, there is no indication to the contrary and accordingly, the
management is of the view that no impairment provision is called for in
these accounts.
10. The Company has operating lease arrangement for office
accommodation etc. with tenure extending upto one year. Expenditure
incurred on account of rent during the year amounting to Rs. 82.88
Lakhs (Previous year Rs. 57.84 Lakhs) is recognized in the Statement of
Profit and Loss.
11. Disclosure of loans and advances as per the requirement of Clause
32 of the listing agreement with the Stock Exchanges in India.
i) The Company does not have any subsidiary and has not given any loans
and advances in the nature of loans to its associates.
ii) Interest free loans as per general rules of the Company have been
given to its employees. Aggregate amount of such advances and loans
outstanding at the year end is Rs. 14.93 lakhs (Previous year Rs. 14.43
lakhs).
12. Previous year figures
The Previous Year''s Figures have been re-grouped / re-arranged wherever
necessary.
Mar 31, 2014
Corporate Information
Lanco Industries Limited (the company), incorporated under the
Companies Act, 1956, in the year 1991, is engaged in the manufacture
and supply of Ductile Iron Pipe as its core business with its domicile
presence in the State of Andhra Pradesh, India. The company is a
leading Public Utility Services company predominantly catering to the
needs of Water Infrastructure Development. The company also produces
Low Ash Metallurgical Coke, Sinter and Power for captive consumption in
its integrated complex. It also manufactures and supply Pig Iron and
Cement, in the process. The company''s shares are listed on the
National Stock Exchange Limited and the Bombay Stock Exchange Limited
and the shares are traded regularly.
1. contingent liabilities not provided for:
2013-14 2012-13
rs. in lakhs Rs. in Lakhs
a) Guarantees given by banks on
behalf of the Company. 927.31 1031.67
b) Bills discounted with banks 2874.28 7984.53
c) Outstanding Letter of Credits 455.69 -
d) Various demands raised, which
in the opinion of the management are
not tenable and are pending with
various forums / authorities:
i) Sales Tax 1514.66 1364.76
ii) Excise, Custom Duty & Service Tax 183.00 395.68
iii) Income Tax 37.723 7.72
2. In the opinion of the Management, Current Assets and Loans &
Advances have the value at which these are stated in the Balance Sheet,
if, realized in the ordinary course of business, unless otherwise
stated and adequate provisions for all known liabilities have been made
and are not in excess of the amount reasonably required.
3. Disclosure of Trade Payables under current/Non Current liabilities
is based on the information available with the company regarding the
status of the suppliers as Defined under the "Micro, Small and Medium
Enterprises Development Act, 2006" (the Act). There are no delays in
payment made to such suppliers and there is no overdue amount
outstanding as at the Balance Sheet date. Based on the above the
relevant disclosure u/s 22 of Act are as follows:
4. A) Pursuant to the Companies (Accounting Standards) Amendment
Rules, 2011 vide GSR 914(E) dated 29th December, 2011, the Company has
exercised the option of adjusting the cost of assets, for the exchange
differences arising on long term foreign currency monetary items, in
respect of accounting periods commencing from 1st April, 2011, which
were hitherto recognized as income or expenses in the period in which
they arose. As a result, such exchange differences so far as they
relate to the acquisition of depreciable capital assets have been
adjusted with the cost of such assets, to be depreciated over the
balance useful life of the respective assets. Consequently, the Fixed
Assets  Rs.1692.29 Lakhs (Previous year Rs.496.24 Lakhs) and Capital
work-in-progress  Rs.104.30 Lakhs (Previous year Rs.28.29 Lakhs) is
higher and charge to the Statement of Profit and Loss is lower to that
extent.
5. Balances of Sundry Debtors/Creditors are subject to confrmation and
reconciliation, if any.
6. segment reporting:
The Company''s main business is manufacturing and selling pipes. In
addition, the Company is also manufacturing & selling Cement and
producing Pig Iron and LAM Coke for captive use, which does not qualify
as a reportable segment as per Accounting Standard  17 on segment
reporting issued by the Institute of Chartered Accountants of India.
Accordingly, in the opinion of the management Pipes is the only
reportable segment.
7. Disclosure of related parties/related party transactions:
Name of the Related Parties with whom transactions were carried out
during the year and description of relationship:
a) associate company:
M/s. Electrosteel Castings Limited M/s. Electrosteel Steels Limited
b) key management personnel & their relatives (kmp):
Shri Mayank Kejriwal, Managing Director
c) enterprise where other directors have signifcant infuence or
control:
1) Lanco Infratech Limited*
8. As stipulated in AS-28, the Company assessed potential generation
of economic benefits from its business units and is of the view that
assets employed in continuing business are capable of generating
adequate returns over their useful lives in the usual course of
business, there is no indication to the contrary and accordingly, the
management is of the view that no impairment provision is called for in
these accounts.
9. The Company has operating lease arrangement for offce accommodation
etc. with tenure extending upto one year. Expenditure incurred on
account of rent during the year amounting to Rs. 57.84 Lakhs (Previous
year Rs. 57.37 Lakhs) is recognized in the Statement of Profit and Loss.
10. Disclosure of loans and advances as per the requirement of Clause
32 of the listing agreement with the Stock Exchanges in India.
i) The Company does not have any subsidiary and has not given any loans
and advances in the nature of loans to its associates.
ii) Interest free loans as per general rules of the Company have been
given to its employees. Aggregate amount of such advances and loans
outstanding at the year end is Rs. 14.43 Lakhs (Previous year Rs. 10.76
Lakhs).
11. Previous year fgures
The Previous Year''s Figures have been re-grouped / re-arranged wherever
necessary.
Mar 31, 2013
Corporate Information
Lanco Industries Limited (the company), incorporated under the
Companies Act, 1956, in the year 1991, is engaged in the manufacture
and supply of Ductile Iron Pipe as its core business with its domicile
presence in the State of Andhra Pradesh, India. The company is a
leading Public Utility Services company predominantly catering to the
needs of Water Infrastructure Development. The company also produces
Low Ash Metallurgical Coke and Power for captive consumption in its
integrated complex. It also manufactures and supply Pig Iron and
Cement, in the process. The company''s shares are listed on the National
Stock Exchange Limited and the Bombay Stock Exchange Limited and the
shares are traded regularly.
1. Contingent Liabilities not provided for:
2012-13 2011-12
Rs. in Lakhs Rs. in Lakhs
a) Guarantees given by banks on
behalf of the Company
b) Bills discounted with banks 7,984.53 2,772.12
c) Outstanding Letter of Credits 1,044.37
d) Various demands raised, which in
the opinion of the management
are not tenable and are pending
with various forums / authorities:
i) Sales Tax 1,364.76 1,319.84
ii) Excise, Custom Duty & Service Tax 395.68 496.29
iii) Income Tax 37.72 37.72
2. In the opinion of the Management, Current Assets and Loans &
Advances have the value at which these are stated in the Balance Sheet,
if, realized in the ordinary course of business, unless otherwise
stated and adequate provisions for all known liabilities have been made
and are not in excess of the amount reasonably required.
3. Disclosure of Trade Payables under current/Non Current liabilities
is based on the information available with the company regarding the
status of the suppliers as defined under the "Micro, Small and Medium
Enterprises Development Act, 2006" (the Act). There are no delays in
payment made to such suppliers and there is no overdue amount
outstanding as at the Balance Sheet date. Based on the above the
relevant disclosure u/s 22 of Act are as follows:
4. (A) Pursuant to the Companies (Accounting Standards) Amendment
Rules, 2011 vide GSR 914(E) dated 29th December, 2011, the Company has
exercised the option of adjusting the cost of assets, for the exchange
differences arising on long term foreign currency monetary items, in
respect of accounting periods commencing from 1st April, 2011, which
were hitherto recognized as income or expenses in the period in which
they arose. As a result, such exchange differences so far as they
relate to the acquisition of depreciable capital assets have been
adjusted with the cost of such assets, to be depreciated over the
balance useful life of the respective assets. Consequently, the Fixed
Assets - Rs. 496.24 (Previous year Rs. 514.23 lakhs) and Capital
work-in-progress - Rs. 28.29 lakhs (Previous year Rs. 608.38 lakhs) is
higher and charge to the Statement of Profit and Loss is lower to that
extent:
(B) During the year the company has capitalized the following interest
during construction and Pre-operative expenses, allocating them to
respective Fixed Assets, consequently the expenses disclosed under the
respective heads are net of amounts capitalized by the company:
5. Balances of Sundry Debtors/Creditors are subject to confirmation
and reconciliation, if any.
6. Segment Reporting:
The Company''s main business is manufacturing and selling pipes. In
addition, the Company is also manufacturing & selling Cement and
producing Pig Iron and LAM Coke for captive use, which does not qualify
as a reportable segment as per Accounting Standard -17 on segment
reporting issued by the Institute of Chartered Accountants of India.
Accordingly, in the opinion of the management Pipes is the only
reportable segment.
7. Disclosure of Related Parties/Related Party Transactions:
Name of the Related Parties with whom transactions were carried out
during the year and description of relationship:
a) Associate Company:
M/s. Electrosteel Castings Limited
b) Key Management Personnel & their relatives (KMP):
Shri Mayank Kejriwal, Managing Director
c) Enterprise where other directors have significant influence or
control:
1) Lanco Infratech Limited*
8. As stipulated in AS-28, the Company assessed potential generation
of economic benefits from its business units and is of the view that
assets employed in continuing business are capable of generating
adequate returns over their useful lives in the usual course of
business, there is no indication to the contrary and accordingly, the
management is of the view that no impairment provision is called for in
these accounts.
9. The Company has operating lease arrangement for office
accommodation etc. with tenure extending upto one year. Expenditure
incurred on account of rent during the year amounting to Rs. 57.37
Lakhs (Previous year Rs. 47.93 Lakhs) is recognized in the Statement of
Profit and Loss.
10. Disclosure of loans and advances as per the requirement of Clause
32 of the listing agreement with the Stock Exchanges in India.
i) The Company does not have any subsidiary and has not given any loans
and advances in the nature of loans to its associates.
ii) Interest free loans as per general rules of the Company have been
given to its employees. Aggregate amount of such advances and loans
outstanding at the year end is Rs. 10.76 lakhs (Previous year Rs. 12.00
lakhs).
11. Previous year figures
The Previous Year''s Figures have been re-grouped / re-arranged wherever
necessary.
Mar 31, 2012
Corporate Information
Lanco Industries Limited (the company), incorporated under the
Companies Act, 1956, in the year 1991, is engaged in the manufacture
and supply of Ductile Iron Pipe as its core business with its domicile
presence in the State of Andhra Pradesh, India. The company is a
leading Public Utility Services company predominantly catering to the
needs of Water Infrastructure Development. The company also produces
Low Ash Metallurgical Coke and Power for captive consumption in its
integrated complex. It also manufactures and supply Pig Iron and
Cement, in the process. The company's shares are listed on the National
Stock Exchange of India Limited and the Bombay Stock Exchange Limited
and the shares are traded regularly.
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 share is entitled to one vote
per share. The dividend proposed by the Board of Directors is subject
to the approval of the shareholders in the ensuing Annual General
Meeting.
No dividend has been recognized as distribution to equity shareholders
for the year ended 31.03.2012. (31st March 2011:Rs. 1.50 )
In the event of liquidation of the company, the holders of equity
shares will be entitled to receive any of the 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
Terms of Repayment and rate of interest:
Rupee Term Loan of Rs. 3125 Lakhs is repayable in 10 Quarterly
instalments of Rs. 312.50 Lakhs each and it carries an interest @
11.09% p.a. payable monthly.
Rupee Term Loan of Rs. 1500 Lakhs repayable in 16 Quarterly instalments
of Rs. 93.75 Lakhs each and it carries an interest @ 12.50% p.a.
payable monthly.
Rupee Term Loan of Rs. 1250 Lakhs repayable in 5 Quarterly instalments
of Rs. 250 Lakhs each and it carries an interest @ 12.25% p.a. payable
monthly.
Foreign Currency loan of US$ 180 Lakhs (Rs. 9156.60 Lakhs) is repayable
in 15 half yearly instalments of US$ 12 Lakhs starting from 15/09/2013
and carries an interest at LIBOR plus 4.3% p.a payable half yearly
Sales tax Deferrement - Rs. 490.84 Lakhs in 2013-14 & Rs. 61.28 Lakhs
in 2014-15 and is interest free.
Nature of security:
Rupee term loans and Foreign Currency loan from Banks are secured by
way of first pari-passu charge on the movable & immovable Fixed Assets
of the company both present and future.
Nature of Security and rate of interest
Working Capital facilities availed from banks are secured by
hypothecation of raw materials, semi finished goods and finished goods,
consumables, stores and spares, book debts, both present and future of
the company and rank pari-passu among themselves and the rate of
interest ranges from 10% to 12.5% p.a and are payable on demand.
1. Contingent Liabilities not provided for:
2011-12 2010-11
Rs. in
Lakhs Rs. in
Lakhs
a) Guarantees given by banks on behalf of the
Company 1205.49 1774.03
b) Bills discounted with banks 2772.12 5689.14
c) Outstanding Letter of Credits 1044.37 369.72
d) Various demands raised, which in the
opinion of the management are not tenable and
are pending with various forums / authorities:
i) Sales Tax 1319.84 1278.24
ii) Excise, Custom Duty & Service Tax 496.29 649.22
iii) Income Tax 37.72 59.76
2. In the opinion of the Management, Current Assets and Loans &
Advances have the value at which these are stated in the Balance Sheet,
if, realized in the ordinary course of business, unless otherwise
stated and adequate provisions for all known liabilities have been made
and are not in excess of the amount reasonably required.
3. Disclosure of Trade Payables under current/Non Current liabilities
is based on the information available with the company regarding the
status of the suppliers as defined under the "Micro, Small and Medium
Enterprises Development Act, 2006" (the Act). There are no delays in
payment made to such suppliers and there is no overdue amount
outstanding as at the Balance Sheet date. Based on the above the
relevant disclosure u/s 22 of Act are as follows:
4. Pursuant to the Companies (Accounting Standards) Amendment Rules,
2011 vide GSR 914(E) dated 29th December, 2011, the Company has
exercised the option of adjusting the cost of assets, for the exchange
differences arising on long term foreign currency monetary items, in
respect of accounting periods commencing from 1st April, 2011, which
were hitherto recognized as income or expenses in the period in which
they arose. As a result, such exchange differences so far as they
relate to the acquisition of depreciable capital assets have been
adjusted with the cost of such assets, to be depreciated over the
balance useful life of the respective assets. Consequent upon this
adoption of new amendment rules, the Fixed Assets - Rs. 514.23 Lakhs
and Capital work-in-progress - Rs. 608.37 Lakhs is higher and charge to
the Statement of Profit and Loss is lower to that extent.
During the year the Company has capitalized the following expenses of
revenue nature to the cost of fixed assets/ capital work-in-progress as
per the accounting standard. Consequently, the expenses disclosed under
the respective notes are net of amounts capitalized by the Company.
5. Balances of Sundry Debtors/Creditors are subject to confirmation
and reconciliation, if any.
6. Segment Reporting:
The Company's main business is manufacturing and selling pipes. In
addition, the Company is also manufacturing & selling Cement and
producing Pig Iron and LAM Coke for captive use, which does not qualify
as a reportable segment as per Accounting Standard -17 on segment
reporting issued by the Institute of Chartered Accountants of India.
Accordingly, in the opinion of the management Pipes is the only
reportable segment.
7. Disclosure of Related parties/Related party Transactions:
Name of the Related Parties with whom transactions were carried out
during the year and description of relationship:
a) Associate Company:
M/s. Electrosteel Castings Limited
b) Key Management personnel & their relatives (KMp):
Shri Mayank Kejriwal, Managing Director
c) Enterprise where KMp have significant influence or control:
Lanco Infratech Limited and Lanco Hills Technology Park Private
Limited*
8. As stipulated in AS-28, the Company assessed potential generation
of economic benefits from its business units and is of the view that
assets employed in continuing business are capable of generating
adequate returns over their useful lives in the usual course of
business, there is no indication to the contrary and accordingly, the
management is of the view that no impairment provision is called for in
these accounts.
9. The Company has operating lease arrangement for office
accommodation etc. with tenure extending upto 2 years. Expenditure
incurred on account of rent during the year amounting to Rs. 47.93
Lakhs (Previous year Rs. 41.68 Lakhs) is recognized in the Statement of
Profit and Loss Accountant.
10. Disclosure of loans and advances as per the requirement of Clause
32 of the listing agreement with the Stock Exchanges in India.
i) The Company does not have any subsidiary and has not given any loans
and advances in the nature of loans to its associates.
ii) Interest free loans as per general rules of the Company have been
given to its employees. Aggregate amount of such advances and loans
outstanding at the year end is Rs. 12.00 Lakhs (Previous year Rs. 22.77
Lakhs).
11. Previous year figures
Till the year ended 31st March, 2011 the company was using pre-revised
Schedule VI to the companies Act 1956, for preparation and presentation
of its 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, accordingly previous year's figures have
been re-grouped / re-arranged wherever necessary.
Mar 31, 2011
1. contingent Liabilities not provided for
2010-11 2009-10
(rs. in Lakhs) (Rs. in Lakhs)
a) Guarantees given by banks on
behalf of the Company 1,774.03 1,269.29
b) Bills discounted with banks 5689.14 Nil
c) Outstanding Letter of Credits 369.72 Nil
d) Various demands raised, which in the
opinion of the management are not tenable
and are pending with various forums /
authorities:
i) Sales Tax 1,278.24 826.28
ii) Excise, Custom Duty & Service Tax 387.22 103.50
iii) Income Tax 59.76 59.76
2. In the opinion of the Management, Current Assets and Loans &
Advances have the value at which these are stated in the Balance Sheet,
if, realized in the ordinary course of business, unless otherwise
stated and adequate provisions for all known liabilities have been made
and are not in excess of the amount reasonably required.
3. Balances of Sundry Debtors/Creditors are subject to confrmation and
reconciliation, if any.
4. Segment reporting:
The Companys main business is manufacturing and selling pipes. In
addition, the Company is also manufacturing & selling Cement and
producing Pig Iron and LAM Coke for captive use, which does not qualify
as a reportable segment as per Accounting Standard Ã17 on segment
reporting issued by the Institute of Chartered Accountants of India.
Accordingly, in the opinion of the management Pipes is the only
reportable segment.
5. Disclosure of related parties/related party transactions:
Name of the Related Parties with whom transactions were carried out
during the year and description of relationship:
a) Associate Company:
M/s Electrosteel Castings Limited
b) Key Management Personnel & their relatives (KMP): Shri Mayank
Kejriwal, Managing Director
c) Enterprise where KMP have Significant infuence or control:
Lanco Infratech Limited and Lanco Hills Technology Park Private
Limited*
6. As stipulated in AS-28, the Company assessed potential generation
of economic Benefits from its business units and is of the view that
assets employed in continuing business are capable of generating
adequate returns over their useful lives in the usual course of
business, there is no indication to the contrary and accordingly, the
management is of the view that no impairment provision is called for in
these accounts.
7. Fixed deposits with scheduled banks include fxed deposit of Rs.
164.02 Lakhs (Previous Year Rs. 201.43 Lakhs) lodged with Government
Departments and Customers.
8. The Company has certain operating lease arrangements for offce
accommodation etc. with tenure extending upto 2 years. Expenditure
incurred on account of rent during the year amounting to Rs. 41.68
lakhs (Previous year Rs. 35.05 lakhs) is recognized in the Proft and
Loss Account.
9. Disclosure of loans and advances as per the requirement of Clause
32 of the listing agreement with the Stock Exchanges in India.
i) The Company does not have any subsidiary and has not given any loans
and advances in the nature of loans to its associates.
ii) Interest free loans as per general rules of the
Company have been given to its employees. Aggregate amount of
such advances and loans outstanding at the year end is Rs. 22.77 lakhs
(Previous year Rs. 20.36 lakhs).
10. Previous Years Figures have been re-grouped / re-arranged wherever
necessary.
Mar 31, 2010
1. Contingent Liabilities not provided for
2009-10 2008-09
(Rs. in Lakhs) (Rs. in Lakhs)
a) Guarantees given by banks on
behalf of the Company 1,269.29 1,214.16
b) Bills discounted with banks - 591.58
c) Various demands raised, which
in the opinion of the management are
not tenable and are pending with
various forums / authorities:
i) Sales Tax 826.28 713.41
ii) Excise Custom Duty & Service Tax 103.50 4,313.00
iii) Income Tax 59.76 3.07
2. In the opinion of the Management, Current Assets and Loans &
Advances have the value at which these are stated in the Balance Sheet,
if, realized in the ordinary course of business, unless otherwise
stated and adequate provisions for all known liabilities have been made
and are not in excess of the amount reasonably required.
3. Balances of Sundry Debtors / Creditors are subject to confirmation
and reconciliation, if any.
4. Segment Reporting
The Companys main business is manufacturing and selling pipes. In
addition, the Company is also manufacturing & selling cement, Producing
power & LAM Coke for captive use, which does not qualify as a
reportable segment as per Accounting Standard -17 on segment reporting
issued by the Institute of Chartered Accountants of India. Accordingly,
in the opinion of the management, Pipes is the only reportable segment.
5. Disclosure of Related Parties / Related Party Transactions
Name of the Related Parties with whom transactions were carried out
during the year and description of relationship:
a) Associate Company:
M/s Electrosteel Castings Limited
b) Key Management Personnel & their relatives (KMP): Shri Mayank
Kejriwal, Managing Director
c) Enterprise where KMP / relatives of KMP have significant influence
or control Lanco Hills Technology Park Private Limited+
6. As stipulated in AS-28, the Company assessed potential generation
of economic benefits from its business units and is of the view that
assets employed in continuing business are capable of generating
adequate returns over their useful lives in the usual course of
business, there is no indication to the contrary and accordingly, the
management is of the view that no impairment provision is called for in
these accounts.
7. Fixed deposits with scheduled banks are lodged with Government
Departments, Customers and Banks.
8. Disclosure of loans and advances as per the requirement of Clause
32 of the listing agreement with the Stock Exchanges in India.
i) The Company does not have any subsidiary and it has not given any
loans and advances in the nature of loans to its associates.
ii) Interest free loans as per general rules of the Company have been
given to its employees. Aggregate amount of such advances and loans
outstanding at the year end is Rs. 20.36 lakhs (Previous year Rs. 36.66
lakhs)
9. Previous Years Figures have been re-grouped / re-arranged wherever
necessary.