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Notes to Accounts of Terruzzi Fercalx India Ltd.

Dec 31, 2013

1. 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 dividend, if any, proposed by the Board of Directors is subject to approval of the shareholders in ensuing Annual General Meeting. During the year ended 31st December 2013, the Company has not declared any dividend (year ended 31st December 2012 : Nil)

In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts, if any. The distribution will be in proportion to the number of equity shares held by the shareholders.

2. Exceptional item comprises of claim paid to an ex-employee as per settlement agreement dated 25st April 2013 of Rs. 4,678,293 and reimbursement of legal cost of Rs. 2,190,491.

3. CONTINGENT LIABILITIES (TO THE EXTENT NOT PROVIDED FOR)

As at As at 31/12/2013 31/12/2012 (Rs.) (Rs.)

a) Claims against Company not acknowledged as debts - 8,660,591

b) Guarantees given by banker to various customers for performance and other 11,047,472 11,672,642 contingencies for which the Company has given counter guarantee to the bank.

Description of contingent liabilities:

Sr. No. Contingent liability Brief description

1. Claims not acknowledged as debt Arbitration application filed against the Company by one of its ex- employee.

2. Guarantees given by the bank As a part of its operation, the Company has given bank guarantees to its customers. Guarantees generally represent irrevocable assurances that the Company will make payment in the event the Company fails to fulfill its performance or financial obligations.

4. The Company is required to comply with the transfer pricing regulations under Section 92-92F of The Income Tax-Act, 1961. The management is of the opinion that its international transactions are at arms length and that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

5. In respect of import transaction of the Company, Terruzzi Fercalx S.p.A., the holding company had made payment to the supplier aggregating to USD 727,637 (as at 31/12/2013 Rs. 45,026,202) after the Company has received Reserve Bank of India (RBI) approval.

The same is disclosed under "Other Current Liability" as "Due to Holding company". As the Company could not remit the funds to its holding company within the time allowed by RBI, the Company has sought extension of time for remittance from RBI and received such extension from time to time. Latest extension was received vide RBI letter dated 22 November 2012 for a period of two months from the date of receipt of the letter by the Company. However, the Company could not remit the funds to its holding company till date. The Company is in the process of taking necessary action for settlement of the transactions.

6. The balances in respect of certain receivables, payables and loans and advances are subject to confirmation, reconciliation and consequent adjustments, if any. The management does not expect any material difference affecting the financial statements on such reconciliation / adjustments.

7. Previous year''s figures have been regrouped/ reclassified wherever necessary to confirm to the current year''s classification.


Dec 31, 2012

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 dividend, if any, proposed by the Board of Directors is subject to approval of the shareholders in ensuing Annual General Meeting. During the year ended 31 December 2012, the Company has not declared any dividend (year ended 31 December 2011 : Nil)

In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts, if any. The distribution will be in proportion to the number of equity shares held by the shareholders.

b) The Company has not issued any bonus shares during the five years preceding the balance sheet date.

Note: The Company has not received any information from its suppliers regarding their registration under the ''Micro, Small and Medium Enterprises Development Act, 2006''. Hence, interest if any payable as required under the Act has not been provided and the information required to be given in accordance with Section 22 of the said Act, is not ascertainable and hence, not disclosed.

Notes:

1) Secondary segments are identified by the management as per the requirements of Accounting Standard (AS) - 17 ''Segment Reporting'' taking into account the organisation structure as well as the differing risks and returns.

2) The segment revenue and assets include revenue and assets, which are identifiable with each segment and amount allocated to the segments on a reasonable basis.

3) Figures in brackets are corresponding figures for the previous year.

1 LEASES

The Company has taken office premises and residential flats under operating lease that are renewable on a periodic basis at the option of both the lessor and lessee. The period of lease ranges from 11 months to 36 months and are cancelable in nature. The amount of minimum lease payments with respect to the above lease recognized in the statement of profit and loss for the year is Rs. Nil (previous year: Rs. 583,450).

2 The Company is required to comply with the transfer pricing regulations under Section 92-92F of The Income Tax-Act, 1961. The management is of the opinion that its international transactions are at arms length and that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

3 There was no impairment loss on fixed assets on the basis of review carried out by the management in accordance with Accounting Standard (AS) -28 ''Impairment of Assets''.

4 The balances in respect of certain receivables, payables and loans and advances are subject to confirmation, reconciliation and consequent adjustments, if any. The management does not expect any material difference affecting the financial statements on such reconciliation / adjustments.

5 Previous year''s figures have been regrouped / reclassified wherever necessary to confirm to the current year''s classification which is as per revised Schedule VI to the Companies Act, 1956.


Dec 31, 2010

1) In respect of the stock of work-in-progress cost is estimated by the management. In view of the nature of activity of the Company, it is not considered feasible / practical by the management to compute cost of work-in-progress using FIFO or weighted average basis. The basis of computing cost used is, to that extent, a deviation from that prescribed by the Accounting Standard (AS)-2 Valuation of Inventories. The impact on profit for the period, if any, due to above deviations is not ascertainable.

2) The Company had revalued certain fixed assets as on 15/10/1989 based on the report of an approved valuer. The plant and machinery had been revalued at replacement value and other assets had been revalued at fair market value. The resultant net increase in the book value of the said assets amounting to Rs. 6,012,488 was credited to Revaluation Reserve.

An amount equivalent to depreciation on the amount of net increase in the value of fixed assets is transferred from revaluation reserve to profit and loss account.

3) Contingent liabilities not provided for and commitments as at period/year-end are as follows:

As at As at 31/12/2010 31/03/2010 RS. RS.

a) Claims against Company not acknowledged as debts. Nil 626,091

b) Guarantees given by banker to various customers for performance and other contingencies for which the Company has given counter guarantee to the bank 16,960,264 23,715,993

Description of contingent liabilities :

Sr. No. Contingent liability Brief description

1. Claims not acknowledged as debt Notice / legal proceedings against the Company by its suppliers for claims which are not accepted by the Company. The management does not expect the outcome of these to have a material adverse effect on the Companys financial condition.

2. Guarantees given by the bank As a part of its operation, the Company has given bank guarantee to its customers. Guarantee generally represents irrevocable assurances that the Company will make payment in the event the Company fails to fulfill its performance or financial obligations.

5) Quantitative Information (As certified by the Management):

1) Licenced capacity : Not applicable

2) Installed capacity : Not applicable

Notes:

1) Secondary segments are identified are as per the requirements of Accounting Standard (AS)-17 Segment Reporting taking into account the organisation structure as well as the differing risks and returns.

2) The segment revenue and assets include revenue and assets, which are identifiable with each segment and amount allocated to the segments as a reasonable basis.

4) Figures in brackets represent previous year amount.

5) Related party disclosures:

I) Related party relationship:

Holding Company Terruzzi Fercalx SPA.

Notes:

1) The related party relationships have been determined by the management on the basis of the requirements of the Accounting Standard (AS) -18 "Related Party Disclosures" and the same have been relied upon by the Auditors.

2) The relationships, as mentioned above, pertain to those related parties with whom transactions have taken place during the period, except where control exists.

6) There was no impairment loss on fixed assets on the basis of review carried out by the management in accordance with Accounting Standard AS -28 "Impairment of Assets".

7) The balances in respect of certain debtors, creditors and loans and advances are subject to confirmation reconciliation and consequent adjustments, if any.

8) Previous years figures have been rearranged or regrouped wherever necessary to confirm with the figures of current period. Current period figures are for nine months and as such not comparable with previous year figures.


Mar 31, 2010

1) In respect of the stock of work-in-progress cost is estimated by the management. In view of the nature of activity of the Company, it is not considered feasible / practical by the management to compute cost of work-in-progress using FIFO or weighted average basis. The basis of computing cost used, is to that extent a deviation from that prescribed by the Accounting Standard (AS)-2 Valuation of Inventories. The impact on profit for the year if any due to above deviations is not ascertainable.

2) The Company had revalued certain fixed assets as on 15/10/1989 based on the report of an approved valuer. The plant and machinery had been revalued at replacement value and other assets had been revalued at fair market value. The resultant net increase in the book value of the said assets amounting to Rs. 6,012,488 was credited to "Revaluation Reserve.

An amount equivalent to depreciation on the amount of net increase in the value of fixed assets is transferred from revaluation reserve to profit and loss account.

3) Contingent liabilities not provided for and commitments as at year-end are as follows:

As at As at 31-03-2010 31-03-2009 Rs. Rs.

a) Claims against Company not acknowledged as debts. 626,091 825,401

b) Guarantees given by banker to various customers for performance and other contingencies for which the Company has given counter guarantee to the bank 23,715,993 21,513,063

c) Service tax liability towards export / import of services. Nil Amount not ascertained



Description of contingent liabilities :

Sr No Contingent liability and Brief description

1. Claims not acknowledged as debt



Notice / legal proceedings against the Company by its suppliers for claims which are not accepted by the Company. The management does not expect the outcome of these to have a material adverse effect on the Companys financial condition.

2. Guarantees given by the bank

As a part of its operation, the Company has given bank guarantee to its customers. Guarantee generally represents irrevocable assurances that the Company will make payment in the event the Company fails to fulfill its performance or financial obligations.

3. Other items for which the Company is contingently liable

This includes liability in respect of service tax.

5) Quantitative Information (As certified by the Management):

1) Licenced capacity : Not applicable

2) Installed capacity : Not applicable

3) Materials and Components: Opening stock, purchases, turnover and closing stock :

4) The Company has not received any information from its suppliers regarding their registration under the Micro, Small and Medium Enterprises Development Act, 2006. Hence interest if any payable as required under the Act has not been provided and the information required to be disclosed is not ascertainable and hence not disclosed.

5) Defined Benefit Plans - As per Actuarial Valuations as on 31 March 2010 and recognized in the financial statements in respect of Employee Benefit Schemes:

Notes:

1) Secondary segments identified are as per the requirements of Accounting Standard (AS)-17 Segment Reporting taking into account the organisation structure as well as the differing risks and returns.

2) The segment revenue and assets include revenue and assets, which are identifiable with each segment and amount allocated to the segments as a reasonable basis.

3) Figures in brackets represent previous year amount.

The amount of minimum lease payments with respect to the above lease recognized in the profit and loss account for the year is Rs. 152,000 (March 31, 2009 Rs. Nil).

6) There was no impairment loss on fixed assets on the basis of review carried out by the management in accordance with Accounting Standard AS -28 "Impairment of Assets".

7) The Company is yet to appoint a Company Secretary as required under section 383A of the Companies Act, 1956, as such, the accounts have not been signed by a Company Secretary.

8) The balances in account of certain debtors, creditors and loans and advances are subject to confirmation reconciliation and consequent adjustments.

9) Previous years figures have been rearranged or regrouped wherever necessary, and figures in brackets indicate the corresponding figures for previous year.

 
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