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Notes to Accounts of Stovec Industries Ltd.

Dec 31, 2014

1. General Information

The Stovec Industries was incorporated in 1973, in Ahmedabad, Gujarat. The Company is listed on Bombay Stock Exchange and Ahmedabad Stock Exchange. The Company has three major Business segments : Textile Machinery and Consumables, Graphics Consumables and Galvanic. "Textile Machinery and Consumables" segment includes Perforated Rotary Screens, Laquer & Auxiliary Chemicals, Digital Ink, Rotary Screen Printing Machine, Engraving Equipment, Components and Spares. "Graphics Consumables" segment includes Anilox Rollers, Rotamesh screens and RotaPlate. "Galvanic" Segment includes Galvano Consumables.

2. Rights, preferences and restrictions attached to shares

Equity shares: The Company has one class of equity shares having a par value of Rs. 10 per share. Each shareholder is eligible for one vote per share held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amount, in proportion to their shareholding.

3. a) Contingent Liabilities not provided for in respect of :

Particulars As at As at December 31, December 31, 2014 2013 (Rs.) (Rs.)

Claims against the Company not acknowledged as debts - 975,100

Disputed claims made by workers for re-instatement 903,680 937,515

Disputed Sales Tax liability including penalty - 16,349,472

Disputed income tax liability including interest 10,907,214 11,470,831

Disputed excise and service tax liability including penalty 4,611,245 4,611,245

Guarantees given by the Company 5,819,664 1,878,525

Total 22,241,803 36,222,688

b) Capital Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for as at December 31, 2014 is Rs. 147,578 (Previous Year Rs. 2,063,920).

4. The tax year for the Company being the year ending March 31, the provision for taxation for the year is arrived at on the basis of year ending on December 31, the ultimate tax liability of which will be determined on the basis of the taxable income for the year April 1, 2014 to March 31, 2015.

5. Previous year figures have been reclassified to conform to this year''s classification.


Dec 31, 2013

1) a) Contingent Liabilities not provided for in respect of :

Particulars As at As at December 31, December 31, 2013 2012 (Rs.) (Rs.)

Bills Discounted (Since realised) - 6,715,925

Claims against the Company not acknowledged as debts 975,100 975,100

Disputed claims made by workers for re-instatement 937,515 2,357,544

Disputed Sales Tax liability including penalty 16,349,472 16,349,472

Disputed income tax liability including interest 11,470,831 11,563,330

Disputed excise and service tax liability including penalty 4,611,245 5,056,022

Guarantees given by the Company 1,878,525 2,579,480

Total 36,222,688 45,596,873

b) Capital Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for X 2,063,920 (Previous Year X 3,085,342).

II. Fellow Subsidiaries where common control exists and transactions have taken place:

i) SPG Prints Printing Systems Wuxi Co Ltd.

(Formerly known as Stork Textile Systems Wuxi Co Ltd.)

ii) SPG Prints Austria GMBH (Formerly known as Stork Print Austria GMBH)

iii) Veco B.V. (Formerly known as Stork Veco B.V.)

iv) SPG Prints Brasil Ltda. (Formerly known as Stork Print Brasil Ltda.)

III. Key Management Personnel:

Mr. Ashish Kaul Managing Director(Upto February 28, 2013)

Mr. Girish M Deshpande Wholetime Director(From March 1, 2013 to September 30,2013)

Mr. Shailesh Wani Managing Director(w.e.f. October 1, 2013)

2) Provision for Warranty and Contingency

A provision is recognised for expected warranty claims on products sold during the last one year, based on past experience of level of repairs and returns. It is expected that this cost will be incurred by end of next financial year. Assumptions used to calculate the provision for warranties were based on sales level and information available about returns.

Provision for contingencies represents estimate made for probable liabilities arising out of pending disputes / litigations with various tax authorities. The timing of the outflow with regard to the said matter depends on the exhaustion of remedies available to the Company under relevant laws and hence the company is not able to reasonably ascertain the timing of the outflow.

3) The tax year for the Company being the year ending March 31, the provision for taxation for the year is arrived at on the basis of year ending on December 31, the ultimate tax liability of which will be determined on the basis of the taxable income for the year April 1, 2013 to March 31, 2014.

4) Previous year figures have been reclassified to conform to this year''s classification.


Dec 31, 2012

A) Rights, preferences and restrictions attached to shares

Equity shares: The Company has one class of equity shares having a par value of Rs. 10 per share. Each shareholder is eligible for one vote per share held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amount, in proportion to their shareholding.

1) A. The Company has classified the various benefits provided to employees'' as under:-

I. Defined Contribution Plans

a. Provident Fund

b. State Defined Contribution Plans

1. Employers'' Contribution to Employee''s State Insurance.

2. Employers'' Contribution to Employee''s Pension Scheme 1995.

b) Capital Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 3,085,342 (Previous Year Rs. 684,576).

2) Earnings per share

Earning per share is calculated by dividing the profit attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year. The numbers used in calculating basic and diluted earnings are stated below:

3) Related party disclosure:

Related party disclosure as required by AS-18,"Related Party Disclosure", is given below:

I. Parties where control exists:

II. Fellow Subsidiaries where common control exists and transactions have taken place:

Stork Textile Systems Wuxi Co Ltd.

Stork Print Brasil Ltda.

Stork Print Austria GMBH

Stork Digital Imaging B.V.

Stork Veco B.V.

III. Key Management Personnel:

Mr. Ashish Kaul Managing Director

4) Provision for Warranty and Others

A provision is recognised for expected warranty claims on products sold during the last one year, based on past experience of level of repairs and returns. It is expected that this cost will be incurred by end of next financial year. Assumptions used to calculate the provision for warranties were based on sales level and information available about returns.

Note: Figures in brackets represent figures for the previous year.

The foreign currency outstanding has been translated at the rates of exchange prevailing on the Balance Sheet date in accordance with Accounting Standard 11 - ''The Effects of Changes in Foreign Exchange Rates (Revised 2003)''.

5) The tax year for the Company being the year ending March 31, the provision for taxation for the year is arrived at on the basis of year ending on December 31, the ultimate tax liability of which will be determined on the basis of the taxable income for the year April 1, 2012 to March 31, 2013.

6) The financial statements for the year ended December 31, 2011 had been prepared as per the then applicable, pre - revised Schedule VI to The Act. Consequent to the notification of the Revised Schedule VI under the Act, the financial statement for the year ended December 31, 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year''s figures have also been reclassified to confirm to the current year''s classification. The adoption of the Revised Schedule VI for previous year figures does not impact the recognition and measurement principles followed for preparation of financial statements.


Dec 31, 2009

1. CONTINGENT LIABILITIES

Contingent liabilities are determined /disclosed on the basis of available information and auditors have relied upon the same.

Contingent liabilities not provided for in respect of: -

a. Claims against the Company not acknowledged as debts Rs. 9,049,264/- (Previous year Rs. 10,297,714/-).

b. Disputed claims made by workers for re-instatement estimated at Rs. 6,682,662/- (Previous year Rs. 6,683,960/-)

c." Disputed Sales Tax liability including of interest and penalty aggregating to Rs. 17,933,222/- (Previous year Nil). The company has issued Bank Guarantee of Rs. 24,480,000/- favouring sales tax department against disputed liability (Previous year Rs. Nil).

d. Disputed income tax liability (net of provision) Rs. 6,690,488/- (Previous year Rs. Nil)

e. Bonds executed by the Company in favour of Central Excise/Custom authorities for clearance of imported raw materials and components at concessional rate of import duty Rs. 8,457,500/- (Previous year Rs. 8,457,500/-). The corresponding obligation is fulfilled and the bond is submitted for cancellation in earlier years, however the clearance from excise / custom authorities is awaited since long.

2. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advance paid) Rs.9,329,541/- (Previous year Rs. 2,487,300/-).

3. Disclosure in movement of Provisions as required by AS - 29 "Provisions, Contingent Liabilities and Contingent Assets"

Particulars Warranty Others Total

Opening Balance 3,885,738 5,829,991 9,715,729 (1,500,484) (4,890,492) (6,390,946)

Additional Provision made (* including Rs. 67,080 *3,552,470 11,347,124 14,899,594 regrouped from Other items) (2,708,998) (1,542,398) (4,251,396)

Amount utilized / Provision written back 1,602,552 *67,080 1,669,632 (323,714) (602,899) (926,613)

Closing Balance 5,835,656 17,110,035 22,945,691 (3,885,738) (5,829,991) (9,715,729)

Note: Previous year figures are given in bracket

The above warranty amount utilised excludes Rs. 218,196/- (Previous year Rs. 7,248,116/-) directly debited to Raw Material Consumption account representing additional / unusual warranty claims received in excess of normal provision.

Notes:

Warranty

Represents estimate made for probable liabilities for product warranty provided to the customers. The timing for outflow does not coincide with customers complaints and hence the company is not able to reasonably ascertain the timing of the outflow.

Others

Represents estimates made for probable liabilities / claims arising out of transactions. The timing of the outflow is dependent on conclusion of negotiation which is in progress in respect of the claims received. Further information required by AS - 29 "Provision, Contingent liabilities and Contingent Assets" is not disclosed since the same can be prejudicial to the interest of the company.

4. Effective from 1st October 2009, based on the review of useful life of New Generation Technical Know- How, management has determined that the original estimate of useful life of these assets requires a revision. Accordingly the useful life was revised to two years as against five years estimated in earlier years. The unamortised depreciation is charged over the remaining useful life of these assets. Consequently depreciation is higher by Rs. 6,034,635/- (Previous year Nil) for the year ended 31st December, 2009 and net block of new generation technical know how is lower by the corresponding amount.

5. The profit on sale of land and building of Rs. Nil (Previous year Rs. 47,613,807/-) represents sale of surplus commercial land and building of the Industrial Machinery Division for a net sale consideration of Rs. Nil (Previous year Rs. 51,750,000/-).

6. Provision no longer required written back includes :

(a) Rs. 6,250,000 (Previous year Nil) representing provision made in earlier year in relation to the transaction of sale of land and building of Industrial Machinery Division. No further cost in relation to the transaction is likely to be incurred.

(b) Rs. 21,735,268 (Previous year Nil) representing write-back of old outstanding credit balances against which the company has not received any claim and are time barred as per Limitation Act.

7. Depreciation includes additional depreciation of Rs. 2,527,850/- (Previous year Rs. 3,012,241/-) in respect of assets costing more than Rs.5,000/- and upto EURO 5,000 which are depreciated pro- rata over the period of 12 months.

8. During the current year the company has migrated to new ERP package and regrouped certain items of Work-in-process and Finished Goods to raw material. As a result Increased/Decreased in stock is higher by Rs. 9,812,254/- (Previous year Nil) and consumption is lower by equivalent amount. There is no impact on profit for the year due to above regrouping.

9. Details of future lease rental receivable/obligation payable is as under-

a. As Lessee:

- Leased Assets: Godown premises

b. As Lessor:

- Leased Assets: Land and Factory premises

This information as required to be disclosed in pursuance of the said act has been determined to the extent such parties have been identified on the basis of information given by the suppliers to the company.

10. Raw Material consumed include tools, jigs, fixtures etc. consumed of Rs. 151,356/- (Previous year Rs. 316,927/-)

11. Computation for provision for taxes is on the basis of income computed under the Income Tax Act, 1961. The tax year for the company is 1st April 2009 to 31st March, 2010. The ultimate liability for which shall be determined on the basis of figures for the period 1st April 2009 to 31st March, 2010.

12. Segmental information for the year ended 31st December 2009

a) Information of Segments:

The Company has disclosed Business Segment as primary segment and Geographical segment as secondary segment. Segments have been identified taking into account the nature of the products, geographical locations, the differing risk and returns, the organisation structure and internal reporting system.

Segmental Revenue, Segmental Results, Segmental Assets and Segmental Liabilities include the respective amounts identifiable to each of the segments as also amounts allocated on a reasonable basis.

b) Unallocated items:

The net expenses, which are not attributable to the Business Segment, are shown as unallocated corporate cost. Assets and Liabilities that cannot be allocated between the segments are shown as a part of unallocated corporate assets and liabilities respectively.

13. RELATED PARTY DISCLOSURES

Related party disclosures, as required by AS-18, Related Party Disclosures, are given below:

1 RELATIONSHIPS:

I Parties where control exists Stork Prints B.V. Holding Company (Formerly known as Stork Screens B.V.)

Stork Prints Group B.V. Holding Company of Stork Prints B.V.

II Other related parties with whom transactions have taken place during the year

a) Fellow subsidiaries

Stork Print Pakistan Pvt Ltd. Stork Textile Systems Wuxi Co Ltd. Stork Print Brasil Ltda. Stork Prints (Indonesia) P.T. Stork MBK GMBH Stork Print Austria GMBH Stork Prints America INC Stork Digital Imaging B.V. Stork Veco B.V.

b) Other related parties

Pramol Traders Holding Private Limited (ceased to be a director w.e.f. 4th July 2008) Inspiron Engineering Private Limited (ceased to be a director w.e.f. 4th July 2008) Tyabji Dayabhai (ceased to be a related party w.e.f. 5th June 2008)

c) Directors of the Company

Mr. Ashish Kaul (Managing Director) Mr. Dirk W Joustra Mr. Aschwin Hollander Mr. Joost Willem Pieter Smits Mr. Khurshed M. Thanawalla Mr. Marco Philippus A Wadia Mr. Girish C. Sharedalal d) Relatives of the Directors Mr. Ardeshir Ruttonji Wadia Ms. Ingrid M Wadia Mrs. Pragnya Girish Sharedalal

14. Disclosure in respect of Derivative Instruments as at year end.

a. Foreign Currency exposure that are hedge by Derivative Instrument: NIL

15. There is no amount due and outstanding to be credited to Investor Education and Protection Fund.

16. Previous year figures have been rearranged, regrouped and restated wherever necessary.

 
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