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Notes to Accounts of Sterling Tools Ltd.

Mar 31, 2015

1. Sterling Tools Limited (the company) is a public limited company incorporated in the year 1979 under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange and National Stock Exchange in India. The Company is engaged in the manufacturing and marketing of high tensile cold forged fasteners. It is one of the progressive Original Equipment Manufacturer (OEM) suppliers in India with a client base that spans automotive companies in India, Europe and USA.

2. Terms/rights attached to Equity shares

The company has only one class of equity shares having a par value of Rs.10 per share. Each holder of Equity shares is entitled to one vote per share. The company declares and pays interim dividend in Indian rupees.

During the year ended March 31,2015, the amount of per share dividend recognized as distributions to equity shareholders is Rs.5 (March 31,2014: Rs.5).

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.

3. CONTINGENT LIABILITIES (Amount in Rs.)

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

S.No. Particulars

i) Disputed Liability under 305,319,675 348,815,314 Central Excise Act*

ii) Interest on disputed liability 132,201,696 112,355,917 under Central Excise Act**

iiI) Letter of Credit 209,814,723 5,586,649

iv) Bank Guarantee 1,535,902 1,535,902

V) Guarantee towards repayment of - 77,539 EMI of car loans taken by the employees from MUL

Vi) EPCG-Duty in relation to Export 34 477 000 - Obligation (Amount of export sales obligation Rs.284,185,317)

Disputed Liability for AY 2009-10 98,594 - vii) under Haryana Value Added Tax Act, 2003 on account Sale of Capital Good (Cars). The same is pending before The Hon'ble Haryana Tax Tribunal at Chandigarh.

Disputed Liability for A.Y 2012-13 46,736 - under Income tax Act,1961 on viii) account of disallowance u/s 14A of Income tax Act, 1961. The same is pending before CIT (Appeals), VIII, New Delhi

Rectification filed u/s 154 for 9,532,772 - assessment year 2012-13 for ix) rectification of asseessment order dt. 15.03.2015 u/s 143(3) of Income Tax Act,1961.

* Excise demand amounting to Rs.189,015,254 for the period June 2006 to Dec 2008,'106,987,422 for the period January 2009 to October 2010, Rs.3,990,394 for the period February 2010 to March 2010, Rs.5,326,546 for the period Nov 2010 to January 2011 under Central Excise Act arised due to dispute regarding assessable value with reference to MRP against which appeals were filed before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi. Based on the appeals the department has granted the Stay order(No. SO/677-678/2012-EX (DB)) dated 23 April 2012 against the demand of Rs.189,015,254 for the period June 2006 to Dec 2008, Rs.106,987,422 for the period January 2009 to October 2010 and Stay Order (No. 53711-53714/2014- EX (DB)) dated 11 November 2014 of Rs.4,658,470 against the demand of Rs.3,990,394 for the period February 2010-March 2010 and Rs.5,326,546 for the period November 2010-January 2011.

Based on the decisions of the Appellate Authorities and the interpretations of other relevant provisions, the company has been legally advised that the demands raised under the above said Acts are likely to be either deleted or substantially reduced and accordingly no provision has been made.

**Interest amounting to Rs.132,201,696 on the demands raised by Excise authorities has been calculated by the Company based on the fact mentioned in demand cum show-cause notices.

4. Capital Commitment:

a) Estimated amount of contracts remaining to be executed on the capital account and not provided for in the account Rs.123,856,356(March 31,2014: Rs.73,505,104).

b) The Company in previous year had paid amounts to Senior Town Planner, Faridabad Circle, Faridabad, for the "change in land use" of its part of the land situated at its Prithla unit. As per the agreed terms, there will be certain external development charges which are payable at future period. However, the quantum of such future liability is not quantified in the said letter.

a) Employee Benefits

The Company has classified the various benefits provided to employees as under:-

5. Defined Contribution Plan

The Company makes contribution towards provident fund to a defined contribution retirement benefit plan for qualifying employees. The provident fund plan is operated by the Regional Provident Fund Commissioner and the Company is required to contribute a specified percentage of payroll cost to the retirement benefit schemes to fund the benefits.

The Company recognized Rs.15,224,573/- (March 31, 2014: Rs.12,809,791/-) for provident fund contributions and Rs.2,729,544 /- (March 31,2014: Rs.3,021,359 /-) for ESI contribution in the statement of profit and loss . The contribution payable to these plans by the Company is at rates specified in the rules of the schemes.

6. Defined Benefit Plan

The employee's gratuity fund scheme managed by Life Insurance Corporation of India is a defined benefit plan. The present value of obligation is determine 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 obligations. The obligation for leave encashment is recognized in the same manner as gratuity.

7. Name of the Related Parties and description of relationship:

Significant influence of KMP's

Haryana Ispat Pvt. Ltd. Sterling Technologies Pvt Ltd. Sterling Automobiles Pvt. Ltd. Sterling Mobikes Pvt.Ltd. Jaycee AutomobilesPvt. Ltd.

Key Management Personnel

Mr. M. L. Aggarwal - Chairman Mr. Anil Aggarwal - Managing Director Mr. Atl Aggarwal - Whole Time Director & CFO Ms. Vaishali Singh-Company Secretary Mr. Anish Aggarwal - Relative of Key Management Personnel

8. As per Note No.7 of Part "C" of the Schedule II to the Companies Act, 2013 the carrying amount of the assets as at April 1,2014 has been depreciated as follows:

a) Carrying value of asset has been depreciated over the remaining useful life of assets and recognized in the Statement of Profit & Loss.

b) In case where the remaining useful life of an asset is nil the carrying amount of the assets after retaining the residual value has been recognized in the opening balance of retained earnings.

The Company has wef 1st April 2014, computed depreciation in accordance with the useful life of the Fixed Assets as per schedule II of the Companies Act,2013. Consequently Depreciation charged for the year is higher by Rs.12,614,054 and carrying value of the assets amounting to Rs.4,833,077 (Net of Deferred Tax Rs.2,488,657) after retaining the residual value,whose remaining useful life is nil has been adjusted from the opening balance of Retained Earnings.

9. In view of the management, the current assets, loans and advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the balance sheet as at 31.03.2015

10. Since the Company's business activity falls within a single primary business segment and also there is no significant reportable geographical segment, hence no disclosure have been made as specified in Accounting Standard (AS-17) "Segment Reporting"

11. The closing balances of debtors, creditors and loans and advances are subject to confirmation.

12. The figures are rounded off to nearest rupees.

14. Previous year figures have been regrouped/ rearranged wherever considered necessary.


Mar 31, 2014

NOTE 1: CORPORATE INFORMATION

Sterling Tools Limited (the company) is a public limited company incorporated in the year 1979 under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange and National Stock Exchange in India. The Company is engaged in the manufacturing and marketing of high tensile cold forged fasteners. It is one of the progressive Original Equipment Manufacturer (OEM) suppliers in India with a client base that spans automotive companies in India, Europe and USA.

(Amount in Rs.) CONTINGENT LIABILITIES

S. No. Particulars For the year ended For the year ended March 31, 2014 March 31, 2013

i) Disputed Liability under Central Excise Act* (Including interest) 461,171,231 405,293,695

ii) Letter of Credit (Net of Margin) 5,586,649 49,829,637

iii) Bank Guarantee (Net of Margin) 1,535,902 1,934,106

iv) Guarantee towards repayment of EMI of car loans taken by the employees from MUL 77,539 297,847

v) EPCG –Export Obligation - 60,854,594

*Excise demand amounting to Rs. 189,015,254 for the period June 2006 to Dec 2008 ,Rs. 106,987,422 for the period January 2009 to October 2010, Rs. 3,990,394 for the period February 2010 to March 2010, Rs. 5,326,546 for the period Nov 2010 to January 2011 under Central Excise Act arises due to dispute regarding assessable value with reference to MRP against which appeals were filed before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi. Based on the appeals the department has granted the Stay order(No. SO/677- 678/2012-EX (DB)) dated 23 April 2012 against the demand of Rs. 189,015,254 for the period June 2006 to Dec 2008 ,Rs. 106,987,422 for the period January 2009 to October 2010. During the year, one demand order for Rs. 544,764 including penalty for the period October 2004 to November 2004 was received by the company against which appeals were filed before Commissioner(Appeals),custom & central excise ,Delhi-IV, Faridabad. The said demand was raised due to wrong availment of CENVAT credit w.r.t duty paid on certain inputs viz. Bright Bars which itself are non-excisable. Based on the decisions of the Appellate Authorities and the interpretations of other relevant provisions, the company has been legally advised that the demand is likely to be either deleted or substantially reduced and accordingly no provision has been made.

a) Working Capital Facilities include working capital demand loan, packing credit facilities, cash credits & buyers/ suppliers credit for raw material . The same are secured by hypothecation of all inventories including in transit, receivables, book debts, plant and machinery and other fixed assets, equitable mortgage of certain land and building,and personal guarantee by some of the directors of the Company. The oustanding balance is repayable on demand. Cash Credit carries interest ranging from 10% to 11%.

b) Buyers credit for capital goods was secured by first mortgage of certain Land & Building & hypothecation of Plant & Machinery & other fixed assets and personal guarantee by some of the directors of the company.

(a) Employee Benefits

The Company has classified the various benefits provided to employees as under:-

(i) Defined Contribution Plan

The Company makes contribution towards provident fund to a defined contribution retirement benefit plan for qualifying employees. The provident fund plan is operated by the Regional Provident Fund Commissioner and the Company is required to contribute a specified percentage of payroll cost to the retirement benefit schemes to fund the benefits.

The Company recognized Rs. 12,809,791/- (March 31, 2013: Rs. 12,411,691/-) for provident fund contributions and Rs. 3,021,359 /- (March 31, 2013: Rs. 2,880,438/-) for ESI contribution in the statement of profit and loss. The contribution payable to these plans by the Company is at rates specified in the rules of the schemes.

(ii) Defined Benefit Plan

The employee''s gratuity fund scheme managed by Life Insurance Corporation of India is a defined benefit plan. The present value of obligation is determine 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 obligations. The obligation for leave encashment is recognized in the same manner as gratuity.

NOTE 2: RELATED PARTY DISCLOSURES

Name of the Related Parties and description of relationship:

Enterprises over which Key Management Personnel has significant influence

Haryana Ispat Pvt. Ltd. Sterling Technologies Pvt Ltd. Sterling Automobiles Pvt. Ltd. Sterling Mobikes Pvt.Ltd. Jaycee Automobiles Pvt. Ltd.

Key Management Personnel & their relatives

Mr. M. L. Aggarwal - Chairman

Mr. Anil Aggarwal – Managing Director

Mr. Atul Aggarwal – Whole Time Director

Mr. Anish Aggarwal – Relative of Key Management Personnel

Joint Venture Company Sterling Fabory India Pvt. Ltd

i.) Figures in brackets( ) relate to previous year.

ii ) Share of Contingent liabilities incurred in relation to interests in joint ventures as at March 31, 2014: Rs. Nil(March 31, 2013 : Rs. Nil)

iii) Share of Capital Commitments incurred in relation to interests in joint ventures as at March 31, 2014: Rs. Nil(March 31, 2013 : Rs. Nil)

Note 3

In view of the management, the current assets, loans and advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the balance sheet as at 31.03.2014

Note 4

Since the Company''s business activity falls within a single primary business segment and also there is no significant reportable geographical segment, hence no disclosure have been made as specified in Accounting Standard (AS-17) "Segment Reporting"

Note 5

The closing balances of debtors, creditors and loans and advances are subject to confirmation.

Note 6

The figures are rounded off to nearest rupees.

Note 7

Previous year figures have been regrouped/ rearranged wherever considered necessary.


Mar 31, 2013

NOTE 1: CORPORATE INFORMATION

Sterling Tools Limited (the company) is a public limited company incorporated in the year 1979 under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange and National Stock Exchange in India. The Company is engaged in the manufacturing and marketing of high tensile cold forged fasteners. It is one of the progressive Original Equipment Manufacturer (OEM) suppliers in India with a client base that spans automotive companies in India, Europe and USA.

Note 2 In view of the management, the current assets, loans and advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the balance sheet as at 31.03.2013."

Note 3 Since the Company''s business activity falls within a single primary business segment and also there is no significant reportable geographical segment, hence no disclosure have been made as specified in Accounting Standard (AS-17) "Segment Reporting"

Note 4 The closing balances of debtors, creditors and loans and advances are subject to confirmation.

Note 5 Previous year figures have been regrouped/ rearranged wherever considered necessary.


Mar 31, 2012

NOTE 1: CORPORATE INFORMATION

Sterling Tools Limited (the company) is a public limited company incorporated in the year 1979 under the provisions of the Companies Act, 1956. Its shares are listed on two stock exchanges in India. The Company is engaged in the manufacturing and marketing of high tensile cold forged fasteners. It is one of the progressive Original Equipment Manufacturer (OEM) suppliers in India with a client base that spans automotive companies in India, Europe and USA.

(a) Terms/rights attached to Equity shares

The company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of Equity shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.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.

NOTE 2 : LONG TERM BORROWINGS Contd.

a) Term loan are secured by first mortgage of certain Land & Building, Plant & Machinery & other fixed assets and hypothication of Movable Assets, and personal guarantee by some of the directors of the company. The vehicle loans are secured by hypothecation of respective vehicles.

b) Working Capital Term Loan is secured by hypothication of Stock in Trade, Receivables, Mortgage of certain Land and Building, plant and machinery and other fixed assets and personal guarantee by some of the directors of the Company.

a) Working Capital Facilities include working capital demand loan and packing credit facilities. The same are secured by hypothication of stock in trade, receivables, mortgage of certain land and building, plant and machinery and other fixed assets and personal guarantee by some of the directors of the Company. The oustanding balance is repayable on demand and carries interest ranging between 10% to 12.5%.

(a) Employee Benefits

The Company has classified the various benefits provided to employees as under:-

(i) Defined Contribution Plan

The Company makes contribution towards provident fund to a defined contribution retirement benefit plan for qualifying employees. The provident fund plan is operated by the Regional Provident Fund Commissioner and the Company is required to contribute a specified percentage of payroll cost to the retirement benefit schemes to fund the benefits.

The Company recognized Rs 12,348,714/- (March 31, 2011: Rs. 9,260,602/-) for provident fund contributions and Rs 3,558,133 /- (March 31, 2011: 3,281,809/-) for ESI contribution in the profit and loss account. The contribution payable to these plans by the Company is at rates specified in the rules of the schemes.

(ii) Defined Benefit Plan

The employee's gratuity fund scheme managed by Life Insurance Corporation of India is a defined benefit plan. The present value of obligation is determine 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 obligations. The obligation for leave encashment is recognized in the same manner as gratuity.

b) The Company has taken office space on operating cancelable lease. Lease Agreement is valid for the further period of 0.9 years as on March 31,2012. Lease rental amounting to Rs. 120,000 (March 31,2011:120,000) has been debited to Profit and Loss Account.

d) The Company has taken Gas Bullets on non-cancelable operating lease. Lease Agreement is valid for the further period of 4.5 years as on 31 March 2011 however same was terminated during the year with mutual consent of Party. Lease rental amounting to Rs. Nil/- (March 31,2011: Rs. 133,344) has been debited to Profit and Loss Account. .

e) The Company has taken a godown on cancelable operating lease. Lease Agreement is valid up to 31.05.2011. Lease rental amounting to Rs.50,000/- (March 31,2011: Rs. 292,800/-) has been debited to Profit and Loss Account.

f) The Company has taken furnished office space on operating cancelable lease. Lease Agreement is valid for the further period of 1 year as on 31 March 2012. Lease rental amounting to Rs.201,600 (March 31,2011:192,000/-) has been debited to Profit and Loss Account.

(Amount in Rupees)

As At As At

31 March, 2012 31 March, 2011

NOTE 3: CONTINGENT LIABILITIES

S.No. Particulars

I) Bills Discounted 8,549,731.00 74,008,336.00

ii) Disputed Liability under Central Excise Act* 296,338,501.00 299,863,715.00

iii) Letter of Credit (Net of Margin) 77,490,416.00 132,555,964.00

iv) Bank Guarantee (Net of Margin) 3,089,052.00 -

v)Guarantee towards repayment of EMI of car loans taken by the employees from MUL 581,150.00 1,262,625.00

vi) EPCG-Export Obligation 388,178,865.00 153,407,858.00

`Excise demand amounting to Rs. 189,015,254 for the period June 2006 to Dec 2008 and Rs. 106,987,422 for the period January 2009 to October 2010 under Central Excise Act for dispute regarding assessable value with reference to MRP which is pending before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi. However, Company is contesting the Demands, and therefore took an Stay order (No. SO/677-678/2Q12-EX (DB)) dated 23 April 2012 against the appeal and demand of Excise Duty.

Note 4 In view of the management, the current assets, loans and advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the balance sheet as at 31.03.2012.

Note 5 Since the Company's business activity falls within a single primary business segment and also there is no significant reportable geographical segment, hence no disclosure have been made as specified in Accounting Standard (AS-17) "Segment Reporting".

Note 6 The closing balances of debtors, creditors and loans and advances are subject to confirmation.

Note 7 Till the year ended 31 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 31 March, 2012, the revised schedule VI notified under the Companies Act, 1956, has become applicable to the company. The company has reclassified, regrouped or recasted previous year figures to confirm to this year's classification.

 
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