Notes to Accounts of Sterling Tools Ltd.

Mar 31, 2018

1. COMPANY INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES

A. Reporting Entity

Sterling Tools Limited (the “Company”) is a company limited by shares is incorporated on 7 June, 1979 and domiciled in India (CIN: L29222DL1979PLC009668). The address of the Company’s registered office is K-40, Connaught Circus, New Delhi-110001. The equity shares of the Company is 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.

B. Basis of preparation

(1) Statement of compliance

These financial statements are prepared on accrual basis of accounting and comply with the Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 and subsequent amendments thereto, the Companies Act, 2013 (to the extent notified and applicable). These are Company’s first Ind AS compliant standalone financial statements and Ind AS 101 ‘First Time Adoption of Indian Accounting Standards’ has been applied.

For all the periods upto and including 31 March 2017, the Company prepared its financial statements in accordance with Generally Accepted Accounting Principles (GAAP) in India, accounting standards specified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014, the relevant provisions of the Act to extent applicable. The Company followed the provisions of Ind AS 101 in preparing its opening Ind AS Balance Sheet as of the date of transition, viz. 1 April 2016. Some of the Company’s Ind AS accounting policies used in the opening Balance Sheet are different from its previous GAAP policies applied as at 31 March 2016, and accordingly the adjustments were made to restate the opening balances as per Ind AS. The resulting adjustments arose from events and transactions before the date of transition to Ind AS. Therefore, as required by Ind AS 101, those adjustments were recognised directly through retained earnings as at 1 April 2016. This is the effect of the general rule of Ind AS 101 which is to apply Ind AS retrospectively.

An explanation of how the transition to Ind AS has affected the reported financial position, financial performance and cash flows of the Company is provided in note 46.

These financial statements of Sterling Tools Limited as at and for the year ended 31 March 2018 (including comparatives) were approved and authorised for issue by Board of Directors on 23 May 2018.

(2) Standards issued but not yet effective

The following Indian accounting standards were issued but these were not yet effective as on 31 March 2018:

Ind AS 115, “Revenue from Contracts with Customers”

Ind AS 115 provides a single, principles based five-step model to be applied to all contracts with customers. The five steps in the model are as follows:

- Identify the contract with the customer

- Identify the performance obligations in the contract

- Determine the transaction price

- Allocate the transaction price to the performance obligations in the contracts

- Recognize revenue when (or as) the entity satisfies a performance obligation.

Guidance is provided on topics such as the point in which revenue is recognized, accounting for variable consideration, costs of fulfilling and obtaining a contract and various related matters. New disclosures about revenue are also introduced Ind AS 115 is effective for fiscal years beginning on or after January 1, 2018.

The management believes that the impact of the above standard is not likely to be material.

(3) Basis of measurement

The financial statements have been prepared on the historical cost basis except for the following items:

The methods used to measure fair values are discussed further in notes to financial statements.

(4) Functional and presentation currency

These financial statements are presented in Indian Rupees (Rs.), which is also the Company’s functional currency. All financial information presented in Indian Rupees has been rounded to the nearest lakh (upto two decimals), except as stated otherwise.

(5) Current and non-current classification

The Company presents assets and liabilities in the balance sheet based on current/non-current classification.

An asset is current when it is:

- Expected to be realised or intended to be sold or consumed in normal operating cycle;

- Held primarily for the purpose of trading;

- Expected to be realised within twelve months after the reporting period; or

- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

Current assets include current portion of non-current financial assets.

All other assets are classified as non-current.

A liability is current when:

- It is expected to be settled in normal operating cycle;

- It is held primarily for the purpose of trading;

- It is due to be settled within twelve months after the reporting period; or

- There is no unconditional right to defer settlement of the liability for at least twelve months after the reporting period.

Current liabilities include current portion of non-current financial liabilities.

All other liabilities are classified as non-current.

Deferred tax assets/liabilities are classified as non-current.

Operating cycle

Operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents.

(6) Measurement of fair values

A number of the Company’s accounting policies and disclosures require the measurement of fair values, for financial assets and liabilities.

The Company has an established control framework with respect to the measurement of fair values. This includes a central valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the board of directors.

The central valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the central valuation team assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should be classified.

Significant valuation issues are reported to the Company’s board of directors.

Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

-Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

-Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)

-Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Company recognises transfer between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Further information about the assumptions made in measuring fair values is included in the following notes:

- Note 44- financial instruments

* Represents deemed cost on the date of transition to Ind AS. Gross block and accumulated depreciation from the previous GAAP have been disclosed for the purpose of better understanding of the original cost of assets.

Notes:

a. Refer note a of Note 19 “Non current financial liabilities- Borrowings” for details regarding property, plant and equipment which are pledged as security for obtaining long-term borrowings.

b. Refer Note 40 for disclosure of contractual commitments for the acquisition of property, plant and equipment.

a. All amounts are short-term. The net carrying value of trade receivables is considered a reasonable approximation of fair value.

b. Amount due from Sterling Fabory India Private Limited- joint venturer company- Rs. 26.78 lakh (31 March 2017- Rs. 2.64 lakh, 1 April 2016- Rs. 4.26 lakh)

b. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs 2 per share (31 March 2017: Rs 2 per share; 1 April 2016: Rs 10 per share). Each holder of equity shares is entitled to one vote per share. The company declares and pays dividend in Indian rupees.

During the year ended 31 March 2018, the amount of per share interim dividend recognised as distributions to equity shareholders is Rs. 10 per share (31 March 2017: Rs 10 per share; 1 April 2016: Rs 15 per share).

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.

d. During the period ended 31 March 2017, the Company has subdivided each equity shares of face value of Rs 10 each into 5 (five) equity shares of Rs 2 each with effect from 10 January 2017 duly approved by the shareholders through Postal Ballot on 20 December 2016.

e. No shares have been issued pursuant to contract without payment being received in cash, allotted as fully paid-up shares by way of bonus issues nor has any bought back of shares happened during the period of five years immediately preceding the reporting date.

a) The term loans are secured by equitable mortgage of certain land and building at Plot No. 4, 5A, 52, 53, 54 & 54A DLF Industrial Estate, Phase-I, Delhi - Mathura Road and factory land and building situated at Prithla Village, Faridabad and hypothecation of plant and machinery and other property, plant and equipment and personal guarantee by some of the directors of the Company

b) The repayment profile of the term loans from banks is as set out below:

Note:

a) The working capital facilities include working capital demand loan, cash credit and buyers/ suppliers credit. The same are secured by hypothecation of all inventories including those in transit, receivables, book debts on pari passu basis, equitable mortgage of land and building situated at Plot No 4, 5A, 52, 53,54 & 54A DLF Industrial Estate, Phase-I, Delhi- Mathura Road and factory land and building situated at Prithla Village, Faridabad and personal guarantee by some of the directors of the Company.

b) The outstanding balance is repayable on demand and the rate of interest ranges between 9 % to 11 % per annum.

7 Employee benefits

i) Defined contribution plans

The Company makes fixed contribution towards provident fund and ESI 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. Similarly, the contribution is made in ESI at a specified percentage of payroll cost.

The Company recognised Rs 193.06 lakh (31 March 2017: Rs 179.78 lakh) for provident fund contributions and Rs 36.19 lakh (31 March 2017: Rs 20.62 lakh) for ESI contribution in the Statement of Profit and Loss and included in “‘‘Employee benefits expenses”” in note 33. The contribution payable to these plans by the Company is at rates specified in the rules of the schemes.

ii) Defined benefit plans Gratuity

Contribution to Gratuity funds- Life Insurance Corporation of India, Group Gratuity Scheme

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The gratuity plan is a funded plan and the Company makes contribution to recognised funds in India. From the period ended 31 March 2017, the unfunded gratuity obligation of directors starting from current financial year is determined based on actuarial valuation using the Projected Unit Credit Method.

The estimates of future salary increases considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market

C) Sensitivity analysis

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below.

The sensitivity analysis above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. This analysis may not be representative of the actual change in the defined benefit obligations as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

D) Risk exposure

i) Changes in discount rate

A decrease in discount yield will increase plan liabilities.

ii) Mortality table

The gratuity plan obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in plan liabilities.

The weighted average duration of the defined benefit plan obligation at the end of the reporting period is 14.01 years (31 March 2017: 14.52 years, 1 April 2016: 10.97 years).

Expected contribution to post-employment benefit plans in the next year is Rs 46.55 lakh (31 March 2017: Rs 27.70 lakh).

The weighted average duration of the defined benefit plan obligation at the end of the reporting period is 1.95 years (31 March 2017: 12.58 years, 1 April 2016: Nil years).

Expected contribution to post-employment benefit plans in the next year is Rs 26.86 lakh (31 March 2017: Rs 7.71 lakh).

iii) Other long-term employee benefit plans

The Company provides for compensated absences to its employees. Since the compensated absences do not fall due wholly within twelve months after the end of the period in which the employees render the related service and are also not expected to be utilised wholly within twelve months after the end of such period, the benefit is classified as a long-term employee benefit. The Company records an obligation for such compensated absences in the period in which the employee renders the services that increase this entitlement. The scheme is unfunded and liability for the same is recognised on the basis of actuarial valuation. A provision of Rs. 15.49 lakh (31 March 2017: Rs. 44.28 lakh) for the year have been made on the basis of actuarial valuation as at the year end and debited to the Statement of Profit and Loss.

8 Operating segments

Segment information is presented in respect of the Company’s key operating segments. The operating segments are based on the Company’s management and internal reporting structure.

The Company’s Board of directors have been identified as the Chief Operating Decision Maker (‘CODM’) as they monitors the results for the purpose of making decisions about resource allocation and performance assessment and responsible for all major decision w.r.t. preparation of budget, planning, expansion, alliance, joint venture, merger and acquisitions, and expansion of new facility.

Accordingly, there is only one reportable segment for the Company which is “”Automotive products””, hence no specific disclosures have been made.”

Entity wide disclosures

A. Information about products and services

The Company is engaged in the manufacturing and marketing of high tensile cold forged fasteners. Company operates in one product line, therefore product wise revenue disclosure is not applicable.

B. Information about geographical area

The major sales of the Company are made to customers which are domiciled in India.

C. Information about major customers

Revenues of Rs 11,857.53 lakh and Rs 6,823.50 lakh (31 March 2017: Rs 9,142.86 lakh and Rs 5,036.52 lakh) are derived from a two external customers.

9 Contingent liabilities, contingent assets and commitments

A. Capital Commitment:

Estimated amount of contracts remaining to be executed on the capital account and not provided for in the account (net of capital advances) Rs. 2,059.46 lakh (Rs. 138.28 lakh as at 31 March 2017, Rs. 493.54 lakh as at 1 April 2016).

The Company in 2014-15 had paid amounts to Senior Town Planner, Faridabad Circle, Faridabad, for the “change in land use” of part of the land situated at its Prithla unit. As per the agreed terms, there will be certain external development charges which are payable on a future date. However, the quantum of such future liability is not quantified in the said letter.

a) Excise demand amounting to Rs 39.90 lakh for the period February 2010 to March 2010 and Rs 53.27 lakh for the period November 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. These demand orders are still in the dispute till final adjudication.

b) Interest amounting to Rs. 48.89 lakh on the demands raised by excise authorities has been calculated by the Company based on the fact mentioned in demand cum show-cause notices pending adjudication.

c) Haryana tax tribunal, Chandigarh passed the order dated 22 February 2017 in favour of the assesse on account of sale of capital good (cars).

d) The office of the Commissioner of Central Excise Audit and Service Tax, Faridabad-I, has dropped the proceedings initiated against the Company for Rs. 222.26 lakh as disclosed under point no. (vii) above, vide order No. 02/16-17/Commr/YG/FBD-I dated 27-04-2016.

C. Contingent assets- Nil

10 Operating lease as lessee

The Company has entered into various agreements of cancellable and non-cancellable operating lease for factory premises, nitrogen plant, transformer and offices rent amounting to Rs. 48.72 lakh (31 March 2017: Rs. 87.90 lakh) has been debited to Statement of Profit and Loss for the year ending 31 March 2018. The future minimum lease payment is as under:

11 Related party disclosures

In accordance with the requirement of Indian Accounting Standard (Ind AS) 24 “Related Party Disclosures”, name of the related party, related party relationship, transactions and outstanding balances including commitments where control exist and with whom transactions have taken place during the reported period are as follows:

III Terms and conditions

All transactions were made on normal commercial terms and conditions. All outstanding balances are unsecured and are repayable in cash.

12 Corporate social responsibility expenses

(a) Gross amount required to be spent by the Company (i.e. 2% of average net profits u/s 198 of Companies Act, 2013 of last three years): Rs. 86.52 lakh

(b) Amount spent during the year ended 31 March 2018:

(a) Gross amount required to be spent by the Company (i.e. 2% of average net profits u/s 198 of Companies Act, 2013 of last three years): Rs. 64.83 lakh

(b) Amount spent during the year ending 31 March 2017:

13 fair value measurements I financial instruments

(a) Financial instruments by category

Except derivative financial instruments which are measured at fair value through profit or loss, all other financial assets and liabilities viz. trade receivables, security deposits, cash and cash equivalents, other bank balances, interest receivable, other receivables, trade payables, employee related liabilities and short-term loans from banks, are measured at amortised cost.

(b) Fair value hierarchy

This section explains the judgments and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the standalone financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

The Company has an established control framework with respect to the measurement of fair values. The finance and accounts team that has overall responsibility for overseeing all significant fair value measurements and reports directly to the board of directors. The team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the team assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should be classified. Significant valuation issues are reported to the Company’s board of directors.

Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). There have been no transfers in either direction for the year ended 31 March 2018 and 31 March 2017. Measurement of fair values

Valuation techniques and significant unobservable inputs Financial instruments measured at fair value

Fair value of financial assets and liabilities measured at amortised cost

The carrying amounts of short-term trade and other receivables, trade payables, cash and cash equivalents and other bank balances are considered to be the same as their fair values, due to their short-term nature.

For other financial liabilities/ assets that are measured at fair value, the carrying amounts are equal to the fair values.

I. Financial risk management

The Company’s principal financial liabilities comprise borrowings, derivatives, trade payables and other payables. The Company’s principal financial assets include trade & other receivables, and cash and shortterm deposits that it derive directly from its operations.

The Company has exposure to the following risks arising from financial instruments:

- credit risk;

- liquidity risk; and

- market risk

This note presents information about the Company’s exposure to each of the above risks, the Company’s objectives, policies and processes for measuring and managing risk.

A. Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations resulting in a financial loss to the Company. Credit risk arises principally from trade receivables, derivative financial instruments, loans and advances, cash and cash equivalents and deposits with banks.

Trade receivables

The Company primarily sells high tensile cold forged fasteners to bulk customers comprising mainly automotive manufacturers operate in India and outside India. The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate. Further details of concentration of revenue are included in Note 39(C).

Cash and cash equivalents and deposits with banks

Cash and cash equivalents of the Company are held with banks which have high external rating. The Company considers that its cash and cash equivalents have low credit risk based on the external credit ratings of the counterparties.

Loans to employees and securities deposits

The Company provides loans to its employees and furnish security deposit to various parties for electricity, communication, etc.. The Company considers that its loans have low credit risk or negligible risk of default as the parties are well established entities and have strong capacity to meet the obligations.

Investments

The Company have invested in unquoted equity instruments of its subsidiary and its joint venture. The management actively monitors the operation of subsidiary and joint venture which affect investments. The Company does not expect the counterparty to fail to meet its obligations, and has not experienced any significant impairment losses in respect of any of the investments.

Provision for expected credit losses

(a) Financial assets for which loss allowance is measured using 12 month expected credit losses

The Company has assets where the counter- parties have sufficient capacity to meet the obligations and where the risk of default is very low. Hence, no impairment loss has been recognised during the reporting periods in respect of these assets.

(b) Financial assets for which loss allowance is measured using life time expected credit losses

The Company has customers with strong capacity to meet the obligations and therefore the risk of default is negligible in respect of outstanding from customers. Further, management believes that the unimpaired amounts that are past due by more than 30 days are still collectible in full. Hence, no impairment loss has been recognised during the reporting periods in respect of trade receivables.

Ageing analysis of trade receivables

The ageing analysis of the trade receivables is as below:

B. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset.

The Company’s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The Company believes that the working capital is sufficient to meet its capital requirements. Accordingly, no liquidity risk is perceived.

As at 31 March 2018, the Company had a working capital of Rs 10,911.25 lakh including cash and cash equivalents of Rs 100.84 lakh. As at 31 March 2017, the Company had a working capital of Rs 4,290.86 lakh including cash and cash equivalents of Rs 228.91 lakh.

C. Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Company’s income. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

The Board of directors is responsible for setting up of policies and procedures to manage market risks of the company. The Company is carrying out imports of certain raw materials and capital goods and exports finished goods which are denominated in the currency other than the functional currency of the Company which exposes it to foreign currency risk. In order to minimise the risk, the Company executes forwards contract w.r.t purchases and sale made in currency other than functional currency, the foreign exchange exposure of the Company is ascertained on the basis of the progress billings and purchase orders issued.

D. Currency risk

The Company is exposed to foreign currency risk on certain transactions that are denominated in a currency other than entity’s functional currency, hence exposure to exchange rate fluctuations arises. The risk is that the functional currency value of cash flows will vary as a result of movements in exchange rates.

The currency profile of financial assets and financial liabilities are as below:

Sensitivity analysis

A strengthening of the Indian Rupee, as indicated below, against foreign currency at 31 March would have increased (decreased) profit or loss (before tax) by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the company considered to be reasonably possible at the end of the reporting period. The analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for previous year, except that the reasonably possible foreign exchange rate variances were different, as indicated below.

E. Interest rate risk

The Company is exposed to interest rate risk arising mainly from non-current and current borrowings with floating interest rates. The Company is exposed to interest rate risk because the cash flows associated with floating rate borrowings will fluctuate with changes in interest rates.

At the reporting date the interest rate profile of the Company’s interest-bearing financial instruments is as follows:

Fair value sensitivity analysis for fixed-rate instruments

The company’s fixed rate instruments are carried at amortised cost. They are therefore not subject to interest rate risk, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

Cash flow sensitivity analysis for variable-rate instruments

A change of 100 basis points in interest rates at the reporting date would have increased (decreased) profit or loss (before tax) by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. The analysis is performed on the same basis for the previous year.

14 Capital management

The Company’s objectives when managing capital are to:

- safeguard its ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders and

- maintain an appropriate capital structure of debt and equity.

The Board of Directors has the primary responsibility to maintain a strong capital base and reduce the cost of capital through prudent management in deployment of funds and sourcing by leveraging opportunities in domestic and international financial markets so as to maintain investors, creditors and markets’ confidence and to sustain future development of the business.

The Company monitors capital, using a medium term view of three to five years, on the basis of a number of financial ratios generally used by industry. The Company is not subject to externally imposed capital requirements.

The Company monitors capital using gearing ratio which is net debt divided by total equity. Net debt comprises of long term and short term borrowings less cash and cash equivalents. Equity includes equity share capital and reserves that are managed as capital. The gearing ratio at the end of the reporting periods was as follows:

15 First time adoption of Ind AS

These are the Company’s first financial statements in accordance with Ind AS. For periods up to and including the year ended 31 March 2017, the Company prepared its financial statements in accordance with previous GAAP, including accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended). The effective date for Company’s Ind AS opening Balance Sheet is 1 April 2016 (the date of transition to Ind AS).

The accounting policies set out in Note 1 have been applied in preparing the financial statements for the year ended 31 March 2018, the comparative information presented in these financial statements for the year ended 31 March 2017 and in the preparation of an opening Ind AS Balance Sheet at 1 April 2016 (the Company’s date of transition). According to Ind AS 101, the first Ind AS financial statements must use recognition and measurement principles that are based on standards and interpretations that are effective at 31 March 2018, the date of first-time preparation of financial statements according to Ind AS. These accounting principles and measurement principles must be applied retrospectively to the date of transition to Ind AS and for all periods presented within the first Ind AS financial statements.

An explanation of how the transition from previous GAAP to Ind AS has affected the Company’s financial position, financial performance and cash flows is set out in the following tables and notes.

In the Ind AS opening Balance Sheet as at 1 April 2016, the carrying amounts of assets and liabilities from the previous GAAP as at 1 April 2016 are generally recognised and measured according to Ind AS in effect as on 31 March 2018. However for certain individual cases, Ind AS 101 provides for optional exemptions and mandatory exceptions to the general principles of retrospective application of Ind AS. The Company has made use of the following exemptions and exceptions in preparing its Ind AS opening Balance Sheet:

Optional exemptions availed

(i) Property, plant and equipment and intangible assets

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets. Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value.

Mandatory exemptions

(i) Estimates

An entity’s estimates in accordance with Ind ASs at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.

Ind AS estimates as at 1 April 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company made estimates for impairment of financial assets based on expected credit loss model in accordance with Ind AS at the date of transition as these were not required under previous GAAP.

(ii) Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification and measurement of financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

Reconciliations between previous GAAP and Ind AS

Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following tables represent the reconciliations from previous GAAP to Ind AS.

Notes to first-time adoption:

a. Property, plant and equipment

The Company import certain machineries under EPCG benefits in the form of waiver of import duties which is subject to an export obligation. Under previous Indian GAAP, the company capitalises imported asset net of the benefit in lieu of custom duty waived off under the EPCG scheme.

Under Ind AS, the duty benefit availed under Export Promotion Capital Goods (EPCG) scheme on purchase of plant and equipment should be recognised as government grant and the value of property, plant and equipment should be increased by the amount of EPCG benefits netted of on the respective asset, with a corresponding credit to deferred income.

The above adjustment resulted into increase in Property, plant and equipment by Rs 1,034.43 lakh with corresponding increase into deferred income of same amount under other non-current liabilities as at 1 April 2016. As at 31 March 2017, property, plant and equipment has increased by Rs. 245.65 lakh with corresponding increase into deferred income of same amount. Further, during the year ended 31 March 2017, depreciation charged off into statement of profit and loss of Rs 130.45 lakh with the corresponding effect of booking EPCG grant income of same amount.

b. Borrowings

Under previous Indian GAAP, transaction costs incurred in connection with borrowings are amortised upfront and charged to statement of profit and loss for the period. Under Ind AS, transaction costs are included in the initial recognition amount of financial liability and charged to statement of profit and loss using the effective interest method.

The above adjustment resulted into increase in retained earning by Rs 11.30 lakh with corresponding decline in borrowing by Rs. 7.01 lakh as at 1 April 2016. During the year ended 31 March 2017, interest expenses of Rs 3.88 lakh has been charged off into statement of profit and loss with a corresponding increase in borrowing by same amount.

c. Gain on fair value of derivatives

Under Indian GAAP, the Company did not recognised fair value gain/loss on forward contracts on yearly basis. Under Ind AS, the Company is required to recognise fair value gain/loss on forward contracts taken by the Company outstanding as at year end.

As a result, during the year ended 1 April 2016, foreign exchange forward contracts assets of Rs 4.05 lakh and liabilities of Rs 27.01 lakh with corresponding decrease in retained earnings by Rs 22.96 lakh. During the year ended 31 March 2017, foreign exchange forward contracts assets of Rs 22.80 lakh with corresponding decline in statement of profit and profit of Rs 45.76 lakh.

d. Deferred taxes

Previous GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind-AS 12: Income Taxes requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind-AS 12 approach has resulted in insignificant amount of deferred tax on new temporary differences and accordingly not recognised.

e. Employee benefits :

Both under Indian GAAP and Ind-AS, the company recognised costs related to its post-employment defined benefit plan on an actuarial basis.

Under Indian GAAP, the entire cost, including actuarial gains and losses are charged to statement of profit and loss. Under Ind-AS, remeasurements (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 recognised in other comprehensive income.

As a result, profit for the year ended 31 March 2017 increased by Rs 14.37 lakh having their tax impact of Rs 4.97 lakh with corresponding decrease in other comprehensive income during the year.

However, there is no impact on total comprehensive income.

f. Lease equalisation reserves

Under previous GAAP, operating lease charges are recognised as an expense in the statement of profit and loss on a straight line basis over the lease term, accordingly lease equalisation reserves is recognised.

However, under Ind AS, lease payments under an operating lease shall be recognised as an expense on a straight line basis over lease term only if the payments to the lessor are not structured to increase in line with expected general inflation to compensate for the lessor’s expected inflationary cost increases. Since, escalation allowed in lease arrangement taken by the Company represents general inflation, lease payments under an operating lease shall not be required to recognise on a straight line basis over lease term.

The effect of the adjustments resulted in reversal in the value of lease equalisation reserves of Rs. 4.97 lakh with corresponding increase in retained earnings on transition date.

During the year ended 31 March 2017, reversal of the value of lease equalisation reserves of Rs 0.98 lakh with corresponding decrease in in rent expenses.

g. Other comprehensive income

Under previous GAAP, the Company has not presented other comprehensive income (OCI) separately. Items that have been reclassified from statement of profit and loss to other comprehensive income includes remeasurement of defined benefit plans. Hence, previous GAAP profit or loss is reconciled to total comprehensive income as per Ind AS.

h. Statement of cash flows

The transition from Indian GAAP to Ind AS has not had a material impact on the statement of cash flows.

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Mar 31, 2017

(b) Terms/rights attached to Equity shares

The Company has only one class of equity shares having a par value of '' 2 per share (March 31, 2016: '' 10 per share). Each holder of Equity shares is entitled to one vote per share. The company declares and pays dividend in Indian rupees ('').

During the year ended March 31, 2017, the amount of per share interim dividend recognized as distributions to equity shareholders is '' 10 (March 31, 2016: '' 15).

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.

(d) During the year, the Company has subdivided each equity share of face value of '' 10 each into 5 (Five) Equity Shares of '' 2 each with effect from January 10, 2017 duly approved by the shareholders through Postal Ballot on December 20, 2016.

a) The term loan(s) are secured by equitable mortgage of certain Land & Building situated at Plot No 4, 5A, 52, 53, 54 & 54A DLF Industrial Estate, Phase-I, Delhi- Mathura Road and factory land & building situated at Prithla village, Faridabad & hypothecation of Plant & Machinery & other fixed assets and personal guarantee by some of the directors of the Company.

b) The term loan(s) carries interest ranging between 10% to 12%.

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, ESI 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. Similarly, the contribution is made in ESI at a specified percentage of payroll cost.

The Company recognized Rs, 17,977,855 (March 31, 2016: Rs, 17,425,668) for provident fund contributions and Rs, 2,062,229 (March 31, 2016: Rs, 2,121,554) 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 unfunded gratuity obligation of Directors starting from current financial year is determined based on actuarial valuation using the Projected Unit Credit Method. The obligation for Leave Encashment is recognized in the same manner as Gratuity.

I Name of the Related Parties and description of relationship:

Subsidiary Company Haryana Ispat Private Limited (w.e.f. November 15, 2016)

Enterprise over which KMP exercise Control Sterling Technologies Private Limited

and/or Significant Influence Sterling Automobiles Private Limited

Sterling Mobikes Private Limietd

Jaycee Automobiles Private Limited

Sterling Fincap Private Limited

Prism Global Creative Products Private Limited

Jaycee Premium Cars Private Limited

Noble Cars Private Limited

Key Management Personnel Mr. M. L. Aggarwal - Chairman

Mr. Anil Aggarwal - Managing Director

Mr. Atul Aggarwal - Whole Time Director & CFO

Ms. Vaishali Singh-Company Secretary

Mr. Anish Aggarwal - Relative of Key Management Personnel

Joint Venture Company Sterling Fabory India Private Limited

NOTE 1. DERIVATIVES

a) Derivative instruments outstanding as at balance sheet date: The following contracts are outstanding to hedge the future receipts & payments in the ordinary course of business. These arrangements are designed to address significant exchange exposures and are reviewed/ renewed by the Management on a revolving basis; as required:

Notes:

i) Figures in brackets relate to year ended March 31, 2016.

ii) Share of Contingent liabilities incurred in relation to interests in joint ventures as at March 31, 2017: Rs, 907,036 (March 31, 2016: Rs, 452,247)

iii) Share of Capital Commitments incurred in relation to interests in joint ventures as at March 31, 2017: Rs, Nil (March 31, 2016: Rs, Nil)

* Figures in bracket represents amount for the year ended March 31, 2016

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 March 31, 2017.

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 proccess of obtaining balance confirmation and account reconciliation is an ongoing process and accordingly the closing balances of certain trade receivables, trade payables and loans and advances are subject to confirmation as at March 31, 2017.

Note 5: The figures are rounded off to nearest rupee.

Note 6: The previous year figures have been regrouped or rearranged wherever considered necessary.

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Mar 31, 2016

(b) Terms/rights attached to Equity shares

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

During the year ended March 31, 2016, the amount of per share interim dividend recognized as distributions to equity shareholders is '' 15 (March 31, 2015: '' 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.

a) The term loan(s) are secured by first equitable mortgage of certain Land & Building & hypothecation of Plant & Machinery & other fixed assets and personal guarantee by some of the directors of the Company.

b) The term loan(s) carries interest ranging between 10% to 12%.

c) The repayment profile of the term loan(s) is as set out below:

b) Excise demand amounting to '' 189,015,254 for the period June 2006 to Dec 2008, '' 106,987,422 for the period January 2009 to October 2010, '' 3,990,394 for the period February 2010 to March 2010 and '' 5,326,546 for the period Nov 2010 to January 2011 under Central Excise Act raised 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 '' 189,015,254 for the period June 2006 to Dec 2008 & '' 106,987,422 for the period January 2009 to October 2010. Corresponding to these stay orders, the tribunal (CESTAT) vide section 35-C (1) of the Central Excise Act, 1944 has adjudicated and passed final Order No. A/52747-52748/2015/Ex [DB] dated 05/08/2015 in favor of the Company and accordingly, the demand of '' 189,015,254 for the period June, 2006 to December, 2008 and '' 106,987,422 for the period January, 2009 to October, 2010 stands withdrawn. However, the demand orders for the period February, 2010 to March, 2010 and November, 2010 and January,2011 are still in the dispute till final adjudication.

c) Interest amounting to '' 36, 78,036 on the demands raised by Excise authorities has been calculated by the Company based on the fact mentioned in demand cum show-cause notices pending adjudication.

d) The office of the Commissioner of Central Excise Audit- II, Delhi has vide order No. CE/Depp/ADT-11/CIR-12/GR-27/APR-438/379/2015-16/2418/dated 09-02-2016 issued a demand cum show cause notice for '' 22,226,095 pursuant to non compliance of rule 6(3) of Convert Credit Rules, 2004 for the period February 2011 to September 2015.

a) The working capital facilities include working capital demand loan, packing credit facilities, cash credit & buyers/ suppliers credit. The same are secured by hypothecation of all inventories including those in transit, receivables, book debts on pari passu basis, equitable mortgage of land and building situated at Plot No 52, 53 & 54 DLF Industrial Estate, Phase-I, Delhi- Mathura Road and personal guarantee by some of the directors of the Company. The outstanding balance is repayable on demand and the rate of interest ranges between 9% to 11% per annum.

a) As per Schedule III of the Companies Act, 2013 and notification number GSR 719 (E) dated November 16,

2007 , the amount due as at the yearend due to Micro, small & medium enterprises as defined in Industries (Development and Regulation) Act, 1951 is as given below :

b) This information has been compiled in respect of parties to the extent they could be identified as Micro, Small-scale and Medium Enterprises on the basis of information available with the Management as at March 31, 2016.

a) Capital Commitment:

i) Estimated amount of contracts remaining to be executed on the capital account and not provided for in the account (Net of Capital Advances) '' 49,353,507 (March 31, 2015: '' 123,856,356).

ii) 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 Prattle unit. As per the agreed terms, there will be certain external development charges which are payable on a future date. 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:-

(i) Defined Contribution Plan

The Company makes contribution towards provident fund, ESI 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. Similarly, the contribution is made in ESI at a specified percentage of payroll cost.

The Company recognized '' 17,425,668 (March 31, 2015: '' 15,224,573) for provident fund contributions and '' 2,121,554 (March 31, 2015: '' 2,729,544) 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: The Estimate of rate of escalation in Salary considered in actuarial valuation, takes into account inflation, seniority, promotion and other relevant factors on long term basis including supply and demand in the Employment market.

Note 1: Assets taken on operating leases

a) The details of Leases in compliance of AS 19 are as under:

i) The Company has taken Factory Premises on non-cancellable operating lease from Haryana I spat Private Limited. Agreement of Lease was renewed on 01.01.2012 and is valid till 31.12.2016. Lease rental (including transfer to lease equalization reserve) amounting to '' 6,630,758 (March 31, 2015: '' 6,630,758) has been debited to Statement of Profit and Loss. Future minimum lease rentals as on 31 March 2016 are as under:

ii) The Company has taken Nitrogen Plant on non-cancellable operating lease from Air Liquid North India Private Limited Lease Agreement is valid till 14.02.2017. Lease rental amounting to '' 240,000 (March 31, 2015: '' 240,000) has been debited to Statement of Profit and Loss. Future minimum lease rentals as on 31 March 2016 are as under:

iii) The Company has taken furnished office space on operating cancelable lease. Lease Agreement was valid till 31.10.2017. Lease rental amounting to '' 90,000 (March 31, 2015: '' 143,340) has been debited to Statement of Profit and Loss.

iv) The Company has taken furnished office space on operating cancelable lease. Lease Agreement is valid till 31.03.2016. Lease rental amounting to '' 72,000 (March 31, 2015: '' 72,000) has been debited to Statement of Profit and Loss.

v) The Company has taken two Tricotect Equipments on non-cancellable operating lease from Atotech India Private Limited. Lease Agreements are valid till 28.02.2018. Lease rental amounting to '' 110,000 (March 31, 2015: '' 60,000) has been debited to Statement of Profit and Loss. Future minimum lease rentals as on 31 March 2016 are as under:

v) The provision for contribution to Gratuity, Leave Encashment on retirement and other defined benefits which are made on actuarial valuation on an overall Company basis are not included in the remuneration to Key Managerial Personnel disclosed above.

NOTE 2. DERIVATIVES

a) Derivative instruments outstanding as at balance sheet date: The following contracts are outstanding to hedge the future receipts & payments in the ordinary course of business. These arrangements are designed to address significant exchange exposures and are reviewed/ renewed by the Management on a revolving basis; as required:

Notes:

i) Figures in brackets relate to year ended March 31, 2015.

ii) Share of Contingent liabilities incurred in relation to interests in joint ventures as at March 31, 2016: '' Nil (March 31, 2015: '' Nil)

iii) Share of Capital Commitments incurred in relation to interests in joint ventures as at March 31, 2016: '' Nil (March 31, 2015: '' Nil)

NOTE 31: CSR Expenditure CSR Expenditure

(a) Gross amount required to be spent by the Company during the year (i.e. 2% of Average Net profits u/s 198 of Companies Act, 2013 of last three years):

(b) Amount spent during the year:

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 March 31, 2016.

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 has been made as specified in Accounting Standard (AS-17) “Segment Reporting”.

Note 5

The process of obtaining balance confirmation and account reconciliation is an ongoing process and accordingly the closing balances of certain trade receivables, trade payables and loans and advances are subject to confirmation as at March 31, 2016.

Note 6

The figures are rounded off to nearest rupee.

Note 7

The previous year figures have been regrouped or rearranged wherever considered necessary.

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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.

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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.

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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.

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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.

---

Mar 31, 2011

A. Estimated amount of contracts remaining to be executed on the capital account and not provided for in the account Rs.924,761 (Previous year Rs. 4,827,913).

b. Contingent Liabilities not provided for:

(Amount in Rs.) As At As At 31st March, 2011 31st March, 2010

Bills Discounted 74,008,336 8,715,781

Disputed Liability under Central Excise Act * 299,863,715 24,459,305

Letter of Credit (Net of Margin) 132,555,964 81,649,792

* Against which the Company has filed the appeal.

The Company has provided a guarantee towards repayment of EMI of car loans taken by the employees from MUL for which deductions are made from the salaries of respective employees. The outstanding loan amount at the year end is Rs1,262,625 /- (Previous Year Rs 22,54,593/-).

This information has been compiled in respect of parties to the extent they could be identified as Micro, Small-scale and Medium Enterprises on the basis of information available.

h. Related Party Disclosure - (Accounting Standard -18)

Name of the Related Parties and description of relationship:

I. Associates Sterling Fincap Pvt Ltd.

(Formerly Precision Wire Products Pvt Ltd )

Haryana Ispat Pvt. Ltd.

Sterling Technologies Pvt Ltd.

Prism Global Creative Products Pvt. Ltd.

Sterling Automobiles Pvt. Ltd.

Sterling Mobike Pvt.Ltd.

(Formerly Supreme MetalForms Pvt. Ltd).

Jaycee Automobiles Pvt. Ltd.

Sterling Metal Fabriks Pvt Ltd.

Anuradha Mittal Benefit Trust

M. L. Aggarwal - HUF

Anil Aggarwal - HUF

Atul Aggarwal - HUF

II. Key Management Personnel Mr. M. L. Aggarwal - Chairman

Mr. Anil Aggarwal - Managing Director

Mr. Atul Aggarwal - Whole Time Director

III Joint Venture Company Sterling Fabory India Pvt. Ltd



c) The Company has taken a godown on cancelable operating lease. Lease Agreement is valid up to 31.03.2011. Lease rental amounting to Rs.292,800 /- (Previous Year Rs. 292,800/-) has been debited to Profit and Loss Account.

d) The Company has taken furnished office space on operating cancelable lease. Lease Agreement is valid for the further period of 2 years. Lease rental amounting to Rs.192,000 (Previous Year 16,000/-) has been debited to Profit and Loss Account.

e) The Company has taken office space on operating cancelable lease. Lease Agreement is valid for the further period of 1.9 years as on 31.03.2011. Lease rental amounting to Rs.130,000 (Previous Year NIL) has been debited to Profit and Loss Account.

m. Employee Benefits

(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 9,260,602 (Previous Year: Rs. 8,484,144) for provident fund contributions and Rs 3,281,809/- ( Previous year 1,829,433/-) 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 employees 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.

n. As the Accounting Standard 30, 31 & 32 (i) Financial Instruments: Recognitions & Measurement (ii) Financial Instruments: Presentation and (iii) Financial Instrument: Disclosures are recommendatory in nature, the details of required disclosures are as under:

p. 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 31.03.2011.

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

r. Previous year figures have been rearranged, regrouped and recast wherever considered necessary.

s. All financial figures have been rounded off to the nearest rupee.

---

Mar 31, 2010

A. Estimated amount of contracts remaining to be executed on the capital account and not provided for in the account Rs. 4,827,913/- (Previous year Rs. 9,470,764/-)

b. Contingent Liabilities:

(Amount in Rs.)

As At As At

31st March, 2010 31st March, 2009

Bills Discounted 8,715,781 5,205,323

Disputed Liability under Central Excise Act * 24,459,305 24,464,955

Letter of Credit (Net of Margin) 81,649,792 62,437,575

* Against which the Company has filed the appeal.

The Company has provided a guarantee towards repayment of EMI of car loans taken by the employees from MUL for which deductions are made from the salaries of respective employees. The outstanding loan amount at the year end is Rs 22,54,593/- (Previous Year Rs 3,022,023/-).

b. Related Party Disclosure - (Accounting Standard -18)

Name of the Related Parties and description of relationship:

I. Associates

Sterling Fincap Pvt Ltd.

(Formerly PrecisionWire Products Pvt Ltd )

Haryana Ispat Pvt. Ltd.

Sterling Technologies Pvt Ltd.

Prism Global Creative Products Pvt. Ltd.

Sterling Automobiles Pvt. Ltd.

Sterling Mobike Pvt.Ltd.

(Formerly Supreme MetalForms Pvt. Ltd).

Jaycee Automobiles Pvt. Ltd.

Sterling Metal Fabriks Pvt Ltd.

Anuradha Mittal Benefit Trust

M. L. Aggarwal – HUF

Anil Aggarwal – HUF

Atul Aggarwal - HUF

II. Key Management Personnel

Mr. M. L. Aggarwal - Chairman

Mr. Anil Aggarwal – Managing Director

Mr. Atul Aggarwal – Whole Time Director

III Joint Venture

Sterling Fabory India Pvt. Ltd

IV. Leases

The details of Leases in compliance of AS 19 are as under: i) Assets taken on Operating leases:

c) The Company has taken a godown on cancelable operating lease. Lease Agreement is valid for the further period of 1 years. Lease rental amounting to Rs. 292,800/- (Previous Year Rs. 278,400/-) has been debited to Profit and Loss Account.

d) The Company had taken furnished office space on operating cancelable lease. Lease Agreement was valid for the further period of 4 years as on 31.03.2009. This lease agreement has been cancelled w.e.f July 2009. Lease rental amounting to Rs. 69,000/- ( Previous Year Rs.276,000/-) has been debited to Profit and Loss Account.

e) The Company has taken furnished office space on operating cancelable lease. Lease Agreement is valid for the further period of 3 years. Lease rental amounting to Rs. 16,000/- (Previous Year Nil/-) has been debited to Profit and Loss Account.

f) The Company had taken office space on operating lease for the period from July, 2009 to March, 2010. Lease rental amounting to Rs. 44,032/- (Previous Year Nil) has been debited to Profit & Loss Account.

g. Employee Benefits

(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.8,484,144 (Previous Year: Rs. 7,793,431/-) for provident fund contributions and Rs 1,829,433/- ( Previous year 1,670,121/-) 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 employees 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.

h. Disclosures in respect of Joint Venture

During the year the company has entered into an agreement with Borstlap Masters in fasteners group B.V (Fabory) to form a joint venture company in India which will be engaged in the business of sourcing, marketing and supply chain management of high quality standard and non- standards fasteners and providing value added services. As per the terms of agreement a joint venture company “Sterling Fabory India (P) Limited” was incorporated on 6th March 2010. The Preliminary & Pre incorporation and other expenses of Rs. 650,439 incurred has been treated as Share Application Money and is inculded under the Schedule Loans & Advances.

i. 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 31.03.2010.

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

q. Previous year figures have been rearranged, regrouped and recast wherever considered necessary.

r. All financial figures have been rounded off to the nearest rupee.

---

Mar 31, 2009

1. Notes to Account

a. Estimated amount of contracts remaining to be executed on the capital account and not provided for in the account is Rs. 9,470,764/- (Previous year Rs. 31,636,601/-)

b. Contingent liabilities :

(Amount in Rs.)

As At As At 31st March, 2009 31st March, 2008

Bills Discounted 5,205,323 7,226,406

Disputed Liability under Central Excise Act * 24,464,955 15,923,291

Letter of Credit (Net of Margin) 62,437,575 116,383,630

* Against which the Company has filed the appeal.

The Company has provided a guarantee towards repayment of EMI of car loans taken by the employees from MUL for which deductions are made from the salaries of respective employees. The outstanding loan amount at the year end is Rs 3,022,023/- (RY. Rs 4,115,284/-)

h. Related Party Disclosure - (Accounting Standard -18)

Name of the Related Parties and description of relationship:

I. Associates Sterling Fincap Pvt Ltd.

(Formerly Precision Wire Products Pvt Ltd ) Haryana Ispat Pvt. Ltd. Sterling Technologies Pvt Ltd. Prism Global Creative Products Pvt. Ltd. Sterling Automobiles Pvt. Ltd. Supreme Metalforms Pvt. Ltd. Jaycee Automobiles Pvt. Ltd. Sterling Metal Fabriks Pvt Ltd. Anuradha Mittal Benefit Trust M. L. Aggarwal - HUF Anil Aggarwal - HUF Atul Aggarwal - HUF II. Key Management Personnel Mr. M. L. Aggarwal - Chairman

Mr. Anil Aggarwal - Managing Director Mr. Atul Aggarwal - Whole Time Director

c) The Company has taken a godown on cancellable operating lease. Lease Agreement is valid for the further period of2 years. Lease rental amounting to Rs. 278,400/- (Previous Year Rs. 240,000/-) has been debited to Profit and Loss Account.

d) The Company has taken furnished office space on operating cancellable lease. Lease Agreement

is valid for the further period of 4 years. Lease rental amounting to Rs. 276,000/- (Previous Year Rs.262,560/-) has1 been debited to Profit and Loss Account.

m Retirement Benefits

(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. 7,793,431/- (Previous Year: Rs. 7,921,763/-) for provident fund contributions 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 employees 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.

p) 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 31.03.2(309.

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

r) Previous year figures have been rearranged, regrouped and recast wherever considered necessary.

S) All financial figures have bee!n rounded off to the nearest rupee.

---

Mar 31, 2008

A. Estimated amount of contracts remaining to be executed on the capital account and not provided for in the account Rs. 31,636,601 (Previous year Rs. 82,167,529)

b. Contingent liabilities :

As At As At 31st March, 2008 31st March 2007

Bills Discounted 7,226,406 34,605,501

Disputed Liability under Central Excise Act 15,923,291 1,216,717

Letter of Credit (Net of Margin) 116,383,630 73,900,000

* Against which the company has filed the appeal.

c. Pursuant to amendments to schedule VI to Companies Act, 1956 vide notification number GSR 719 (E) dated November 16, 2007, the amount due as of March 31, 2008 due to micro, small & medium enterprises as defined in Industries (Development and Regulation) Act, 1951 is Rs. 12,140,937.36 (Previous year Rs. 54,669 due to Small Scale & Ancillary Industries undertakings). This information has been compiled in respect of parties to the extent they could be identified as Micro, Small-scale and Medium Enterprises on the basis of information available.

d. The company is in the business of manufacture of high tensile fasteners and as such it is the only reportable segment as per the Accounting Standard 17 on Segment Reporting issued by the ICAI. The geographical segment is not relevant as export turnover is not significant in respect to total turnover.

e. Retirement Benefits

During the year, the Company has adopted Accounting Standard 15 (revised 2005) Employee Benefits. Accordingly, the transitional provision aggregating Rs. 19,896 (Net of deferred tax Rs. 5,344) has been shown as an adjustment from revenue reserves. 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. 7,921,763/- (Previous Year: Rs. 6,945,298/-) for provident fund contributions in the profit and loss account. The contribution payable to these plans by the company are at rates specified in the rules of the schemes.

(ii) Defined Benefit Plan

The employees 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.

---

Mar 31, 2007

A. Estimated amount of contracts remaining to be executed on the capital account and not provided for in the accounts Rs. 82,167,529/- (Previous year Rs. 57,614,166/-)

b. Contingent liabilities :

Current year Previous year Rs. Rs.

Bills Discounted 34,605,501 60,929,325 Disputed Excise Duty Liability 1,216,717 against which the company has filed the appeal c. Remuneration to the auditors Audit fee 220,000 220,000 Tax Audit Fee 30,000 30,000 Other Matters 19,500 - Service Tax 32,987 30,600 Out of Pocket expenses 65,224 60,071

c. Remuneration to the Managing Director and Whole-Time Directors

Salary 9,650,000 6,600,000 Medical reimbursement 59,706 33,410 Contribution to Provident Fund 1,188,000 1,188,000

Perquisites:

Residential accommodation 415,350 1,320,000 Other perquisites 246,823 312,642 11,559,879 9,454,052

d. Sundry creditors - Small Scale Undertakings includes Rs. 10,254,471 /- (previous year Rs.3,971,494/-), outstanding for more than 30 days, within the agreed terms (Atop Fasteners, Grip Engineers Pvt. Ltd., Indian Organic Corporation J Engineering Works, MTE Industries Pvt. Ltd., Paras Enterprises, Sarita Chemicals, Shiv Shakti Office Equipment, Skytone Electricals (India) Ltd., Push-up Tools Udyog Pvt. Ltd., Rahul Industries, Real Engineers & Fabricators, Rishi Tools Udyog, Jullundra Engg. Works, Kanika Engg. Works, Naveen Engineering Works, Minku Engg. Works, R K Engg. Company, Salim Engg. Works, S S Industrial Corporation, Standard Fasteners, J S Industries, A T Packaging, Amar Scales, Capital Packaging, Castwell Foundries, Coral Enterprises, Glory Elevators, Premier Products, RNS Containers Pvt. Ltd., Rishi Precision Tools, Sarita Chemicals, Shiv Shakti Office, Indian Organic Corp., Ashoka Enterprises, Chintamani Enterprises, Yash Electroplators, Grip Engineers Pvt., Powercon, ACME Heat Furnaces Pvt. Ltd, Cenlub System, Joneja Bright (P) Ltd., Nirman Industries).

e. The company is in the business of manufacture of high tensile fasteners. Since the company is operating in single line of product and there being no reportable segment, the requirements of Accounting Standard 17 on Segment Reporting are not applicable to the company.

The Provision for deferred tax liability (net) of Rs. 11,313,944/- (Previous year Rs. 9,218,641/-) for the year ended March 31, 2007 has been charged to the Profit and Loss account under the head Provision for Taxes.

f. Expenses / (Income) pertaining to previous year included under different heads: Sales Promotion - Rs 10,756/- and Depreciation - Rs. 128,081/- ; Total : Rs. 138,837 /-(Previous year - (Net : Rs. 3080)).

g. 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 31.03.2007. The balances of debtors, creditors, loans and advances are subject to confirmation.

h. Previous year figures have been rearranged, regrouped and recast wherever considered necessary.

i. All financial figures have been rounded off to the nearest rupee.

---

Mar 31, 2006

A. Estimated amount of contracts remaining to be executed on the capital account and not provided for in the accounts Rs. 57,614,166/- (Previous year Rs. 6,934,300/-)

b. Contingent liability

Contingent liability on account of bills discounted is Rs. 60,929,325/- (Previous year. Rs. 99,291,813/-).

Current year Previous year Rs. Rs.

c. Remuneration to the Auditors

Audit fee 220,000 144,000

Tax Audit Fee 30,000 24,000

Other Matters - -

Service Tax 30,600 17,136

Out of Pocket expenses 60,071 50,661

d. Remuneration to the Managing Director and Whole Time Directors

Salary 6,600,000 4,135,500

Commission on net profit - 3,600,000

Medical reimbursement 33,410 19,625

Contribution to Provident Fund 1,188,000 496,260

Perquisites:

Residential accommodation 1,320,000 292,500

Other perquisites 312,642 267,666

9,454,052 8,811,551

Current year Previous year Rs. Rs.

e. Computation of Net Profit as per Section 349 of Companies Act 1956 for calculation of Commission payable to Managing Directors & Whole-Time Directors.

Profit as per Profit and Loss Account 85,955,189 111,366,279

Add : Depreciation charged to the 36,064,064 30,949,401

Profit and Loss Account Loss on sale of fixed assets debited to 654,502 391,556

Profit and Loss Account Managerial Remuneration 9,454,052 8,811,551

Less: Depreciation Charged to Profit & Loss A/c 36,064,064 30,949,401

Net Profit as per Section 349 of the 96,063,743 120,569,386 Companies Act, 1956

g. Sundry creditors - Small Scale Undertakings includes Rs. 3,971,494/- (previous year Rs.3,383,804/-), outstanding for more than 30 days, within the agreed terms (Atop Fasteners, Trident Packaging Pvt. Ltd., Paras Lamipacks Pvt. Ltd., Nuage Tools Pvt. Ltd., Premier Products, Rohan Industries, Thermotech Ceramics, Sidhant India Pvt. Ltd., Dropco Multilub Systems Pvt. Limited, Pushup Thread Dies Pvt. Ltd., J.S. Industries, Khubros Automotive Industries, Aggarwal Sales Corp., Anand Prayag Udyog, ASB India Pvt. Ltd., Bon Don Products, Indian Organic Corp., Mullowal Industries).

h. The company is in the business of manufacture of high tensile fasteners. Since the company is operating in single line of product and there being no reportable segment, the requirements of Accounting Standard 17 on Segment Reporting are not applicable to the company.

j. Earning per Share - (Accounting Standard -20)

Current Year Previous Year

Profit after Tax (Rs.) 54,326,863 72,990,808

Weighted average equity Shares outstanding (Nos) 68,44,600 68,44,600

Earning per Share - basic/diluted (Rs) 7.94 10.66

l. Expenses/(Income) pertaining to previous year included under different heads : Printing & Stationery - Rs.36,374 ; Repairs - others - Rs.27,000 ; Miscellaneous expenses - Rs. 11,157 ; Consumable stores & tools - Rs. (72,511) and Charity & Donation Rs. (5,100) - Net Rs. (3,080), (Previous year - Nil).

m. 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 31.03.2006. The balances of debtors, creditors, loans and advances are subject to confirmation.

n. Previous year figures have been rearranged, regrouped and recast wherever considered necessary.

o. All financial figures have been rounded off to the nearest rupee.

---

Mar 31, 2004

1. Notes to Accounts

a. Estimated amount of contracts remaining to be executed on the capital account and not provided for in the accounts is Rs. 62,947,537/- (Previous year Rs. 8,174,441/-)

b. Contingent liability :

i) Contingent liability on account of bills discounted is Rs. 60,793,918/-. (Previous year: Rs.28,130,962/-)

ii) Appeal against the demand of Rs. 3,318,784/- from the Income Tax Authorities has been decided by the ITAT. As per the order of ITAT, the demand of Rs. 1,586,310/- has been deleted and Department has filed appeal against the order with the High Court of Delhi. Company has already deposited Rs 1,950,132/- against the balance demand.

c. Sundry creditors-Small Scale Undertakings includes Rs.2,446,379/- (previous year Rs. 1,344,5687), outstanding for more than 30 days, within the agreed terms (Atop Fasteners, Spectro Analytical Labs Pvt. Ltd., Trident Packaging Pvt. Ltd., Maina Engineering Works, Paras Lamipacks Pvt. Ltd., Super Dies Mfg. Co.,Khurbros Automotive Industries, Nuage Tools Pvt. Ltd., Premier Products , Rohan Industries, Thermotech Ceramics, Sidhant India Pvt. Ltd., Dropco Engineers, Pushup Thread Dies Pvt. Ltd.)

The Provision for deferred tax liability (net) of Rs. 12,929,975/- (Previous year Rs. 9,129,513/-) for the year ended March 31, 2004 has been charged to the Profit and Loss account under the head Provision for Taxes.

d. `Other Income' includes the income of Rs. 4,26,100/- which pertain to previous year.

e. Previous year figures have been rearranged, regrouped and recast wherever considered necessary.

f. All financial figures have been rounded off to the nearest rupee.

---

Mar 31, 2003

1. Notes to Accounts

a. Estimated amount of contracts remaining to be executed on the capital account and not provided for in the accounts Rs. 8,174,4417- (Previous year Rs.15,143,131/-)

b. Contingent liability:

i) Contingent liability on account of bills discounted is Rs.28,130,9627- (Previous year : Rs.8,974,522/-)

ii) The company has received a demand for Rs 3,218,7847- from the income tax Authorities in 1996-97 on completion of Block Income Tax Assessment, against which appeal of the Company is pending before I T A T. Company has already deposited Rs 1,950,1327- against the above demand, under protest .

g. Sundry creditors-Small Scale Undertakings includes Rs.13,44,5687- (previous year Rs.9,03,655/-), outstanding for more than 30 days, within the agreed terms ( Atop Fasteners, Spectro Analytical Labs Pvt. Ltd., Trident Packaging Pvt. Ltd., Maina Engineering Works, Paras Lamipacks Pvt. Ltd., Super Dies Mfg. Co.)

The Provision for deferred tax liability (net) of Rs.91,29,513/- (Previous year Rs. 29,19,495) for the year ended March 31, 2003 has been charged to the Profit and Loss account under the head Provision for Taxes.

k. Previous year figures have been rearranged, regrouped and recast wherever considered necessary.

l. All financial figures have been rounded off to the nearest rupee.

---

Mar 31, 2002

Share Capital:

22,80,000 equity shares have been allotted as fully paid up bonus shares by capitalisation of general reserves in financial year 94-95

Secured Loans:

1. Working Capital Limits

Secured by hypothecation of Stock in Trade, Receivables and equitable mortgage of Land and Building.

2. Term Loans

- Secured by hypothecation of Plant & machinery, Movable assets, other fixed assets and guaranteed by Directors.

- Repayable within one year Rs. 12439432/- (Previous year: Rs. 6700200/-)

Other Notes:

a. Estimated amount of contracts remaining to be executed on the capital account and not provided for in the accounts Rs. 1,51,43,131/- (Previous year Rs. 20,06,479/-)

b. Contingent liability:

i) Contingent liability on account of bills discounted is Rs. 89,74,522/- (Previous year: Rs. Nil)

ii) The company has received a demand for Rs 3218784/- from the income tax Authorities in 1996-97 on completion of Block Income Tax Assessment, against which appeal of the Company is pending before I T A T. Company has already deposited Rs 1950132/- against the above demand, under protest.

c. Sundry creditors - Small Scale Undertakings includes Rs. 9,03,655/- (previous year Rs. 20,60,514/-, exceeding Rs. 1 Lacs, each outstanding for more than 30 days, within the agreed terms (Atop Fasteners, Spectro Analytical Labs Pvt. Ltd., Trident Packaging Pvt. Ltd., Mani Engineering Works, Paras Lamipacks Pvt Ltd., Super Dies Mfg. Co.)

d. Previous year figures have been rearranged, regrouped and recast wherever considered necessary.

e. Ail financial figures have been rounded off to the nearest rupee.

---

Mar 31, 2001

SHARE CAPITAL

Of the above, 22,80,000 equity shares have been allotted as fully paid up bonus shares, by capitalisation of general reserves in financial year 1994-95.

SECURED LOANS

1. Working Capital Limits

Secured by hypothecation of Stock in Trade, Receivables and equitable mortgage of Land and Building.

2. Term Loans

Secured by hypothecation of Plant & machinery, Movable assets, other fixed assets and guaranteed by Directors. Repayable within one year Rs. 6700200/- (Previous year : Rs. 6618614/-)

OTHER NOTES

1. Estimated amount of contracts remaining to be executed on the capital account and not provided for in the accounts Rs. 2006479/- (Previous year Rs. 1,02,96,441/-)

2. Contingent liability :

i) Contingent liability on account of bills discounted is Rs. Nil (Previous year: Rs. 586705/-)

ii) The company has received a demand for Rs. 3218784/- from the Income Tax Authorities in 1996-97 on completion of Block Income Tax Assessment, against which appeal of the Company is pending before ITAT.

Company has already deposited Rs. 1850132/- against the above demand, under protest.

3. Sundry creditors-Small Scale Undertakings includes Rs. 2060514/- (previous year Rs. 743831/-, exceeding Rs. 1 Lacs, each outstanding for more than 30 days, within the agreed terms (Atop Fasteners, Spectro Analytical Labs Pvt. Ltd., Trident Packaging Pvt. Ltd., Mani Engineering Works, Paras Lamipacks Pvt Ltd., Super Dies Mfg. Co.)

4. Previous year figures have been rearranged, regrouped and recast wherever considered necessary.

5. All financial figures have been rounded off to the nearest rupee.

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Mar 31, 2000

A. Estimated amount of contracts remaining to be executed on the capital account and not provided for in the accounts Rs. 10296441/- (Previous year Rs. 1,31,47,338/-)

b. Contingent liability:

i) Contingent liability on account of bills discounted is Rs.5,86,705/- (Previous year :Rs.29,99,472/-).

ii) Block Assessment :The Block Income Tax Assessment of the Company was done during the year 1996-97 by Assessing Authority. The total demand raised by the Assessing Officer was Rs.32,18,784/-, which was disputed and contested in appeal.

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Mar 31, 1999

1. Working Capital Limits

Secured by hypothecation of Stock in Trade, Receivables and equitable mortgage of Land and Building.

2 Term Loans

Secured by hypothecation of Plant & machinery, movable assets, other fixed assets and guaranteed by Directors.

Repayable within one year Rs. 8742120/- (Previous year : Rs. 1,03,00,374/-)

a. Estimated amount of contracts remaining to be executed on the capital account and not provided for in the accounts Rs. 13147338/- (Previous year Rs. 26,49,888/-)

b. Contingent liability :

i) Contingent liability on account of bills discounted is Rs. 2999472/- (Previous year : Rs. 29,18,170/-).

ii) Block Assessment : The Block Income Tax Assessment of the Company was done during the year 1996-97 by Assessing Authority. The total demand raised by the Assessing Officer is Rs. 32,18,784/-, which was disputed and contested in appeal. c. Remuneration to the Auditors Current year Previous year Rs. Rs. Audit fee 90000 90000 Tax Audit Fee 10000 10000 For Income Tax matters -- 11000 Fees for other services -- 20000 Out of Pocket expenses 28034 34688

Current year Previous year Rs. Rs. d. Remuneration to the Managing Director and Whole time directors Salary 2400000 2085000 Commission on net profit 300000 300000 Medical reimbursement 28617 32150 Contribution to Provident Fund 288000 231960 Taxable value of perquisites : Residential accommodation 30000 30000 Other perquisites 102528 82958 3149145 2762068

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Mar 31, 1998

No significant notes to accounts.

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Mar 31, 1997

1. Working Capital limits

Secured by hypothecation of stock in Trade, Receivables and equitable mortgage of land and building.

2. Term loans

Secured by hypothecation of Plant & machinery, movable assets, other fixed assets, FDR and guaranteed by Directors.

3. Term loan instalments payable within one year

Rs. 86,58,248/- (Previous year Rs. 87,60,000/-)

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Mar 31, 1996

2. Notes to accounts

a. Estimated amount of contracts remaining to be executed on the capital account and not provided for in the accounts Rs. 97,99,169/- (Previous year Rs. 34,58,760/-)

b. Contingent liabilities

i) Bills/cheques discounted Rs. 58,77,594/- (Previous year : Rs. 22,56,384/-)

ii) Claim not acknowledged as debt by the company : Rs. 18,28,000/- (Previous year : Nil)

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Mar 31, 1995

Contingent Liabilities : A counter guarantee for Rs. 455285/- given to Oriental Bank of Commerce, Faridabad in connection with a guarantee furnished to the Government of India in respect of export obligation of the company.

Estimated amount of contracts remaining to be executed on the capital accounts and not provided for in the accounts Rs. 34,58,760/- (Previous year Rs. 8,14,860/-).

Inventories have been taken, verified and valued by the management and the same have been accepted by the auditors, being a technical matter.

Expansion project

The company is implementing an expansion project, partly financed by a public issue of equity shares made in April, 1995. The capital expenditure incurred on the said project is disclosed as Capital work in progress in Schedule 55. The revenue expenditure incurred on the said project is also disclosed in the same schedule, and would be apportioned to the fixed assets and capitalised, on the completion of the project.

The Chairman & Managing Director, and the two whole time Directors were reappointed for a period of five years with effect from 01.11.1994, in an extra ordinary general meeting held on the said date. The terms of employment of each of the said persons provide for payment of commission at the rate of 1% of the net profits of the financial year, subject to a ceiling of the annual salary, and subject further to the overall ceiling for managerial remuneration as laid down in Section 198 of the Companies Act, 1956. The terms of employment applicable to the period prior to 01.04.1994, did not, however, provide for payment of commission, and further as the company became a public company only on 21.10.1994, the computation of net profits for the year ended 31.03,1994 has not been furnished.

Additional information pursuant to Para 3 & 4 of Part-II of Schedule VI to the Companies Act, 1956, is as under.

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Mar 31, 1994

1. Estimated amount of contracts remaining to be executed on capital account Rs. 8,14,860/- (Previous year Rs. 1,85,000/-).

Contingent Liabilities - NIL (Previous year - NIL)

Inventories have been taken, verified and valued by the management and the same have been accepted by the auditors, being a technical matter.

For and upto the financial year ended 31.03.1993, depreciation was being charged on Written Down Value basis of rates which were different and/or higher than those prescribed in Schedule XIV to the Companies Act, 1956.

During the year ended 31.03.1994, the accounting policy of the Company on depreciation has been reviewed, and it has been decided to change the basis of charging depreciation to Straight Line Method.

Consequent upon the amendment to Schedule XIV to the Companies Act, 1956, vide notification dated 16.12.1993 of the Department of Company Affairs, the useful life of the depreciable assets has also been reviewed, and on the basis of the said review, it has been decided to adopt the rates prescribed in the said Schedule.

The change, in the method and the rates of depreciation, has been carried out as it is considered that the change would result in a more appropriate presentation of the accounts of the Company.

The depreciation charged for the year ended 31.03.1994 has been computed in the said manner. Further the aggregate depreciation charged upto 31.03.1993 has also been re-computed in the manner described above, and as prescribed in the Accounting Standard-VI issued by the Institute of Chartered Accountants of India, the net excess depreciation determined on the basis of the said recomputation, amounting to Rs 84,45,287, has been written back and credited to the Profit and Loss Account for the year ended 31.03.1994.

Additional information pursuant to para 3 & 4 of Part - II of Schedule Vi to the Companies Act, 1956, is as under:

Total working days during the year: 305 days (previous yea: 305 days)

Previous year's figures have been rearranged and recast where ever necessary.

All financial figures have been founded off upto nearest rupee.