Notes to Accounts of Veto Switchgears & Cables Ltd.

Mar 31, 2018

Note 1: Corporate Information

Veto Switchgears and Cables Limited (the Company) is a listed public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The Compay has its manufacturing unit at Haridwar. The Company is engaged in manufacturing of wires & cables, electrical accessories & also deals in LED lighting, CFL & Fans.

NOTE 2.1 : FIRST TIME ADOPTION OF IND AS

These are Company’s first financial statements prepared in accordance with Ind AS.

The accounting policies set out in Note 2.1 have been applied in preparing the financial statements for the year ended March 31, 2018, the comparative information presented in these financial statements for the year ended March 31, 2017 and in the preparation of an opening Ind AS balance sheet as at April 1, 2016 (The Company’s date of transition). In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with accounting standards notified under Companies(Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP).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 :

A) Exemptions and exceptions availed

1) Ind-AS optional exemptions :

Ind AS 101 allows first time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:

a) Deemed cost

Ind AS 101 permits a first time adopter to elect to fair value of its property, plant and equipment as recognised in financial statements as at the date of transition to Ind AS, measured as per previous GAAP and use that as its deemed cost as at the date of transition or apply principles of Ind AS retrospectively. Ind AS 101 also permits the 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. This exemption can be also used for intangible assets covered by Ind-AS 38.

b) For financial instruments, wherein fair market values are not available (viz. interest free and below market rate security deposits or loans) the Company has elected to adopt fair value recognition prospectively to transactions entered after the date of transition.

2) Ind AS mandatory exceptions :

a) Estimates

An entity estimates in accordance with Ind AS 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 at April 1, 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP

b) Derecognition of financial assets and financial liabilities

Ind AS 101 requires a first time adopter to apply the derecognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. Accordingly,the Company has applied the derecognition requirement for financial assets and financial liabilities in Ind AS 109 prospectively for transactions occurring on or after date of transition to Ind AS.

c) Classification of financial assets and liabilities

Ind AS 101 requires an entity to assess classification and measurement of financial assets on the basis of facts and circumstances that exist on the date of transition to Ind AS. Accordingly, the Company has applied the above requirement prospectively.Ind AS 101 requires an entity to assess classification of financial assets on the basis of facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortised cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable. Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that exist on the date of transition. Measurement of financial assets accounted at amortised cost has been done retrospectively except where the same is impracticable.

d) Impairment of financial assets

Ind AS 101 requires an entity to assess and determine the impairment allowance on financial assets as per Ind AS 109 using the reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments which were initially recognised and compare that to the credit risk at the date of transition to Ind AS. The Company has applied this exception prospectively.

B) Transition to Ind AS - Reconciliations

The following reconciliations provide a quantification of the effect of significant differences arising from the transition from previous GAAP to Ind AS in accordance with Ind AS 101:

I. Reconciliation of Balance sheet as at April 1, 2016 and March 31, 2017

II. Reconciliation of Total Comprehensive Income for the year ended March 31, 2017

III. Reconciliation of Total Comprehensive Income for the year ended March 31, 2017 between previous GAAP and IND ASIV Reconciliation of Equity as at April 1, 2016 and March 31, 2017 between previous GAAP and IND AS

The presentation requirements under Previous GAAP differs from Ind AS and hence Previous GAAP information has been regrouped for ease of reconciliation with Ind AS. The Regrouped Previous GAAP information is derived from the Financial Statements of the Company prepared in accordance with Previous GAAP

Footnotes to the reconciliation of equity as at April 1, 2016 & March 31, 2017 and Statement of profit and loss for the year ended March 31, 2017

1) Security Deposit

Under the previous GAAP interest free lease security deposits (that are refundable in cash on completion of the lease term) are recorded at their transaction value. Under Ind AS, all financial assets are required to be initially recognised at fair value. Accordingly, the Company has fair valued these security deposits under Ind AS. Difference between the fair value and transaction value of the security deposits has been recognised as prepaid rent.

2) Defined benefit liabilities

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 the 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 immediately in the balance sheet with a corresponding debit or credit to other equity through OCI.

3) Trade Receivables

Under Indian GAAP, the Company has created provision for impairment of receivables which consists only in respect of specific amount for probable losses. Under Ind AS, impairment allowance has been determined based on Expected Credit Loss (ECL) model.

4) Deferred Tax (Including MAT Credit)

Indian 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 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. This has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP In addition, the various transitional adjustments lead to temporary differences. According to the accounting policies, the Company has to account for such differences.Deferred tax adjustments are recognised in correlation to the underlying transaction either in other equity or a separate component of equity.

Leasehold land is a non-depreciable asset, Management is expecting that its carrying value will be recovered through sale and the indexation benefit at the time of disposal will be available, accordingly deferred tax asset on the difference between carrying value and indexed value has been created.

5) Proposed Dividend

Under the previous GAAP, proposed dividend including corporate dividend tax (CDT), are recognised as liability in the period to which they relate, irrespective of when they are declared. Under Ind AS, proposed dividend is recognised as liability in the period in which it is declared by the Company, usually when approved by the shareholders in a general meeting, or paid.

6) Other Comprehensive Income

Under Indian GAAP the company has not presented other comprehensive income (OCI) separately. Hence, it has reconciled Indian GAAP profit or loss to profit or profit or loss as per Ind AS. Further, Indian GAAP profit or loss is reconciled to total comprehensive income as per Ind AS.

7) Statement of Cash Flows

The Ind AS adjustments are either non cash adjustments or are regrouping among the cash flow from operating, investing and financing activities. Consequently, Ind AS adoption has no impact on the net cash flow for the year ended 31st March, 2017 as compared with the previous GAAP

b. Terms/rights attached to equity shares:

i) The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity share is entitled to one vote per share.

ii) The Company declare and pays dividend in Indian Rupees. Each equity shareholder has the same right of dividend.

iii) In the event of liquidation of the Company, the holder 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.

iv) The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

e) Shares reserved for issue under Stock Option

7,91,955 (March 31, 2017: 8,16,355) (April 01, 2016: NIL) equity shares are reserved for the issue under Employees Stock Option Plan (ESOP) of the Company.

f) Issue of Share Warrants

During the year, the Company had made a preferential issue of 45,00,000 Convertible Warrants of Rs. 10 each at a premium of Rs 160 per warrant and in accordance with SEBI guidelines the company has received 25 % upfront money amounting to Rs.19,12,50,000. The warrants can be exercised at anytime within a period of 18 months.

g) Increase in Authorized Capital

The Company has Increase in Authorised Share Capital from Rs. 20,00,00,000/- divided in to 2,00,00,000 equity share of Rs. 10/- each to Rs. 25,00,00,000/- divided in to 2,50,00,000 equity share of Rs. 10/- each. Vide resolution passed in Extraordinary General Meeting held on 31st May, 2017.

Description of nature and purpose of reserve Securities Premium Reserve

Securities Premium Reserve is used to record the premium on issue of shares. The reserve is utilised in accordance with the provisions of the Act.

Employee Stock Options Outstanding Account

The fair value of the equity-settled share based payment transactions with employees is recognised in Statement of Profit and Loss with corresponding credit to Employee Stock Options Outstanding Account.

Retained Earnings

Retained Earnings represents surplus/accumulated earnings of the Company and are available for distribution to shareholders.

Foreign Currency Translation Reserves

Foreign Currency Translation Reserves represents the exchange difference recognised on the long term loan and advances given to it wholly owned foreign subsidary.

(Gain / (loss) on fair value of defined benefit plans)

The Company has recognised remeasurement gains/ (loss) on defined benefit plans in OCI. These changes are accumulated within the OCI reserve within other equity. The Group transfers amounts from this reserve to retained earnings when the relevant obligations are derecognised.

Money Received against Share Warrants

Money received on share warrants represents amount received on preferential issue of 45,00,000 Convertible Warrants of Rs. 10 each at a premium of Rs 160 per warrant and in accordance with SEBI guidelines the company has received 25 % upfront money amounting to Rs.19,12,50,000. The warrants can be exercised at anytime within a period of 18 months.

Note:

a) Term loan amounting to Rs. 4,98,94,703 (March 31, 2017: Rs. 7,17,01,976) (April 01, 2016: Rs. 7,63,75,935) from Indian Overseas Bank carries interest of Base Rate 2% p.a. The loan is repayable in 20 Quarterly instalments along with interest starting from June, 2016. The loan is primarily secured by way of equitable mortgage of land and building of Corporate office under construction and collateral security of factory land and building of the Company, land and building of M/s. vimal Power Cables Private Limited, hypothecation of fixed assets (excluding land and building and vehicles) of the Company, personal guarantee of two director and two promoters and corporate guarantee of Vimal Power cables Private Limited and Veto Electropowers (India) Private Limited (formerly Holding Company).

b) Hire Purchase Loans amounting to Rs. 52,78,773 (PY Rs. 37,46,536) from various banks and financial institutions are secured by hypothecation of respective vehicle financed. The loans carries interest @ 8.50% to 11% p.a. The loan is repayable in 36 to 60 equal monthly instalments.

c) Cash credit facility amounting to Rs. 32,14,23,158 (March 31, 2017: Rs. 23,35,59,607) (April 01, 2016: Rs. 34,01,43,272) from Indian overseas bank carries interest rate of base rate 1.75% p.a. The loan is secured by way of 1st charge on entire current assets of the Company and collateral security of factory land and building of the Company, land and building of M/s. Vimal Power Cables Private Limited, hypothecation of fixed assets (excluding land and building and vehicles) of the Company, personal guarantee of two director and two promoters and corporate guarantee of Vimal Power cables Private Limited and Veto Electropowers (India) Private Limited (Formerly Holding Company).

The Company has amounts due to micro and small suppliers registered under the Micro, Small and Medium Enterprises Development Act 2006 (MSMED Act), as at 31 March 2018.

The disclosure pursuant to the said Act is as under:

Note: This information, as required to be disclosed under the MSMED Act, has been determined to the extent such parties have been identified on the basis of information available with the Company.Interest paid or payable by the Company on the aforesaid principal amount has been waived by the concerned suppliers.

Provision for warranties

A provision is recognised for expected warranty claims on products sold during the years, based on past experience of the level of repairs and returns. Assumptions used to calculate the provisions for warranties were based on current sales levels and current information available about returns based warranty period for all products sold. The table below gives information about movement in warranty provisions.

Note 3 : Earnings per share (EPS)

The amount considered in ascertaining the Company’s earnings per share constitutes the net loss after tax. The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the period. The number of shares used in computing diluted earnings per share comprises the weighted average number of shares considered for deriving basic earnings per share and also the weighted average number of shares which could have been issued on conversion of all dilutive potential shares.

Note 4 : Investment in subsidiaries, associates and joint ventures

(a) These financial statement are separate financial statements prepared in accordance with Ind AS-27 “Separate Financial Statements”.

(b) The Company’s investments in direct subsidiaries are as under :

Note 5 : Disclosure relating to employee benefits as per Ind AS 19 ‘Employee Benefits’

A Defined benefit obligations - Gratuity

The gratuity plan is governed by the Payment of Gratuity Act, 1972 under which an employee who has completed five years of service is entitled to specific benefits. The level of benefits provided depends on the member’s length of service and salary at retirement age.

The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.The obligation for leave encashment is recognised in the same manner as gratuity.

Note 6 : Segment reporting as required under Indian Accounting Standard 108, “Operating Segments”

Identification of Segments:

The chief operational decision maker monitors the operating results of its Business segment separately for the purpose of making decision about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements, Operating segment have been identified on the basis of nature of products and other quantitative criteria specified in the Ind AS 108.

Operating Segments

(a) Wire and Cables (b) Lighting & Fittings (c) Accessories & Others

Segment revenue and results:

The expenses and income which are not directly attributable to any business segment are shown as unallocable expenditure (net of allocable income).

Segment assets and Liabilities:

Segment assets include all operating assets used by the operating segment and mainly consist of inventory.Common assets and liabilities which can not be allocated to any of the business segment are shown as unallocable assets / liabilities.

(a) Summary of segment Information as at and for the year ended 31st March,2018 and 31st March,2017 is as follows:

Note 7 : Related party disclosures as required under Indian Accounting Standard 18, “Related party disclosures” are given below:

a) Names of related parties and nature of relationship (to the extent of transactions entered into during the year except for control relationships where all parties are disclosed)

b) Transactions carried out with related parties referred to above, in ordinary course of business and balances outstanding:

Note 8 : Disclosure with regards to section 186 of the Companies Act, 2013

a) For interest expense refer note no. 36

b) During the year, the Company has granted Unsecured loan to its Subsidiary Companies for General Corporate Purposes. Details as stated below :

Note 9 : Disclosure with regards to regulation 34 of the SEBI (Listing Obligation and Disclosure Requirements) Regulation 2015

Amount of Loans & Advances in nature of loans outstanding from subsidiaries as at 31st March, 2018 :

Note 10 : Expenditure on Corporate Social Responsibility Activities

As per provisions of section 135 of the Companies Act, 2013, the Company has to incur at least 2% of average net profits of the preceding three financial years towards Corporate Social Responsibility (“CSR”). Accordingly, a CSR committee has been formed for carrying out CSR activities as per the Schedule VII of the Companies Act,2013.

Details of CSR Expenditure:

a) Gross amount required to be spent by the Company during the year.

Note 11 : Share Base Payment

Veto Switchgears and Cables Limited Employees stock option plan (‘ESOP’) 2015

The Board of Directors of the Company in their meeting held on 23rd July, 2015 and the shareholders of the Company in their general meeting held on 26th August, 2015 have approved the ESOP 2015 (‘the Scheme’), which covers the employees of the Company and the its subsidiaries, if any, but excludes promoters and directors directly or indirectly holding 10% of the issued and subscribed shares of the Company. The Scheme is administered and supervised by the Compensation Committee of the Company. Each option shall entitle the holder of option to one equity share on vesting of the option as per the terms and conditions of the scheme.

During the period upto March 31, 2018, the Company has granted options on the following dates:

The Options shall vest in 1 year from the date of Grant. The exercise period shall be 3 years after vesting period. As per the scheme, the exercise price is determined by the Compensation Committee. The fair value of the option is determined at the Market Price based on latest available closing price on a recognised stock exchange on the date immediately prior to the grant date expected forfeiture rate is assumed to be 1%.

The Company has not disclosed the fair values for financial instruments for loans (non current), other non current financial assets, trade receivables, cash and cash equivalents and bank balances other than cash and cash equivalents,Borrowings (current and non current),Trade payables, other current financial liabilities because their carrying amounts are reasonably approximation of fair value.

(ii) Fair value hierarchy

Fair value hierarchy explains the judgement and estimates made in determining the fair values of the financial instruments that are -

a) recognised and measured at fair value

b) measured at amortised cost and for which fair values are disclosed in the 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.

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2 - Inputs other than quoted prices included within 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 assets or liabilities that are not based on observable market data (unobservable inputs)

Assets and Liabilities that are disclosed at Amortised Cost for which Fair values are disclosed are classified as Level 3.

If one or more of the significant inputs is not based on observable market data, the respective assets and liabilities are considered under Level 3.

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.

Note 12: Fair Value Measurement

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.

Note 13 : Financial risk management objectives and policies

i. Risk management framework

The Company’s board of directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Company manages market risk through a treasury department, which evaluates and exercises independent control over the entire process of market risk management. The treasury department recommends risk management objectives and policies, which are approved by Board of Directors. The activities of this department include management of cash resources, borrowing strategies, and ensuring compliance with market risk limits and policies.

The Company’s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment.

The audit committee oversees how management monitors compliance with the Company’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.

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, and arises principally from the Company’s trade and other receivables, cash and cash equivalents and other bank balances. To manage this, the Company periodically assesses financial reliability of customers, taking into account the financial condition, current economic trends and analysis of historical bad debts and ageing of accounts receivable. The maximum exposure to credit risk in case of all the financial instruments covered below is restricted to their respective carrying amount.

(i) Trade and other receivables from customers

Credit risk in respect of trade and other receivables is managed through credit approvals, establishing credit limits and monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.

The Company measures the expected credit loss of trade receivables based on historical trend, industry practices and the business environment in which the entity operates. The Company uses a provision matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account available external and internal credit risk factors such as credit ratings from credit rating agencies, financial condition, ageing of accounts receivable and the Company’s historical experience for customers.

ii) Credit risk on cash and cash equivalents is limited as the Company generally invest in deposits with banks and financial institutions with high credit ratings.

b) Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. The Company’s objective is to at all times maintain optimum levels of liquidity to meet its cash and liquidity requirements. The Company closely monitors its liquidity position and deploys a robust cash management system. It maintains adequate source of financing through the use of short term bank deposits and cash credit facility. Processes and policies related to such risks are overseen by senior management. Management monitors the Company’s liquidity position through rolling forecasts on the basis of expected cash flows. The Company assessed the concentration of risk with respect to its debt and concluded it to be low.

Maturity profile of financial liabilities

The table below provides the details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments.

c) Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise three types of risk: currency rate risk, interest rate risk and other price risks, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings and investments in securities.

i. Currency risk

The Company is exposed to currency risk on account of its operating and financing activities. The functional currency of the Company is Indian Rupee. Our exposure are mainly denominated in U.S. dollars and Arab Emirates Dirham. The Company’s business model incorporates assumptions on currency risks and ensures any exposure is covered through the normal business operations. This intent has been achieved in all years presented. The Company has put in place a Financial Risk Management Policy to identify the most effective and efficient ways of managing the currency risks.

Sensitivity analysis

A reasonably possible strengthening / (weakening) of the Indian Rupee against US dollars and AED at 31st March would have affected the measurement of financial instruments denominated in US dollars and affected profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases. In cases where the related foreign exchange fluctuation is capitalised to fixed assets or recognised directly in reserves, the impact indicated below may affect the Company’s income statement over the remaining life of the related fixed assets or the remaining tenure of the borrowing respectively.

ii) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk through the impact of rate changes on interest-bearing liabilities and assets. The Company manages its interest rate risk by monitoring the movements in the market interest rates closely.

Exposure to interest rate risk

Company’s interest rate risk arises primarily from borrowings. The interest rate profile of the Company’s interest-bearing financial instruments is as follows.

Cash flow sensitivity analysis for variable-rate instruments

The sensitivity analysis below have been determined based on the exposure to interest rates for financial instruments at the end of the reporting year and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates

iii) Other price risk

The Company is not exposed to the other price risk.

Note 14 : Capital Management

The Company aims to manage its capital efficiently so as to safeguard its ability to continue as a going concern and to optimise returns to its shareholders. Management monitors the return on capital as well as the debt equity ratio and make necessary adjustments in the capital structure for the development of the business. The capital structure of the Company is based on management’s judgement of the appropriate balance of key elements in order to meet its strategic and day - to - day needs. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares.

Note 15 : Consequent to the introduction of Goods and Service Tax (GST) with effect from July 1, 2017, Central Excise Duty, Value Added Tax (VAT),etc. have been replaced by GST. In accordance with AS-9 “Revenue Recognisation” and Schedule III of Companies Act 2013, GST is not Included in Revenue from operations from 1st July 2017 onwards. However, for the period April 2017 to June 2017 and Earlier Comparative Periods, excise duty is included in the revenue form operations hence not comparable.

Note 16 : The board of directors has proposed the final dividend of Re. 2/- per equity share, subject to the approval of shareholders of the Company.

Note 17 : Figures of the previous year have been regrouped, reclassified and/or rearranged wherever necessary. In terms of our report of even date

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Mar 31, 2016

b) Terms I rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity share Is entitled to one vote per share.

In the event of liquidation of the Company, the holder 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) Term loan amounting to Rs. 7,63,75,935 (PY Rs. 6,06,65,892) from Indian Overseas Bank carries interest of Base Rate 1.75% p.a. The loan is repayable in 20 Quarterly Installments along with Interest starting from June, 2016. The loan Is primarily secured by way of equitable mortgage of land and building of Corporate office under construction and collateral security of factory land and building of the Company, land and building of M/s. vimal Power Cables Private Limited, hypothecation of fixed assets (excluding land and building and vehicles) of the Company, personal guarantee of two director and two promoters and corporate guarantee of Vimal Power cables Private Limited and Holding Company.

b) Term loan amounting to Rs. Nil (PY Rs. 5,60,175) from Indian Oversease Bank carries interest rate of Base Rate 2.50 % p.a. The loan Is repayable in 60 Monthly installments along with interest starting from January, 2011. The loan is secured by way of equitable mortgage of factory building and hypothecation of plant & machinery and personal guarantee of four directors.

c) Hire Purchase Loans amounting to Rs. 61,33,208 (PY Rs. 42,05,654) from various banks and financial institutions are secured by hypothecation of respective vehicle financed. The loans carries interest @ 8.50% to 11 % p.a. The loan is repayable in 36 to 60 equal monthly installments starting from the respective date of finance.

In pursuance of Accounting Standard- 29 (AS 29) ''Provisions, Contingent Liabilities and Assets’, the provision required have been incorporated in the books of accounts in the following manner

A provision is recognized for expected warranty claims on products sold during the years, based on past experience of the level of repairs and returns. Assumptions used to calculate the provisions for warranties were based on current sales levels and current information available about returns based warranty period for all products sold. The table below gives information about movement in warranty provisions.

Additional information pursuant to secured short term borrowing :

Cash credit facility amounting to Rs. 34,01,43,272 (PY Rs. 28,34,53,311) from Indian oversease bank carries interest rate of Base rate 2% p.a. The loan is sercured by way of 1 st charge on entire current assets of the Company and collateral security of factory land and building of the Company, land and building of M/s. vimal Power Cables Private Limited, hypothecation of fixed assets (excluding land and building and vehicles) of the Company, personal guarantee of two director and two promoters and corporate guarantee of Vimal Power cables Private Limited and Holding Company.

Note 1 :ln the opinion of the Board the Current Assets, Loans & Advances are realizable in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet. The provision for all known liabilities is adequate and not in excess of amount reasonably necessary.

Note 2: Segmental Reporting :

The Company is mainly engaged in the business of manufacturing and trading of Wires, Cables & Electrical Accessories and there is no other reportable business segment as per Accounting Standard (AS-17) specified under section 133 of the Companies Act, 2013 read with Rule 7 of the (Companies Accounts) Rules, 2014.

Note 3 :During the year the Company has received Rs. 11,19,23,304 towards full and final settlement for fire insurance claim lodged with the Insurance Company during the financial year 2014-15. The short receipt of Rs. 4,21,02,609 net of claim receivable and claims payable to lessor, has been reflected as an exceptional item.

Note 4: Related Party Disclosure:-

As required under Accounting Standard 18 “Related Party Disclosure'''' (AS-18), following are the details of transactions during the year with the related parties of the Company as defined in AS 18:

Note 5: Disclosure with regards to regulation 34 of the SEBI (Listing Obligation and Disclosure Requirements) Regulation 2015

Note 6: Corporate Social Responsibility

During the year the Company has incurred expenditure towards CSR activities and has spent rs. 19,34,630 (as stated below) as against Rs.19,11,137 as required by section 135 read with Schedule VII of the Companies Act, 2013

Note 7: Information pursuant to para 5(viii) of the General Instructions to the Statement of Profit and Loss

Note 8 :Previous year''s figure''s have been re-grouped, re-arranged & re-classified, wherever considered necessary, to confirm the current period figures.

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Mar 31, 2015

Note 1 : In the opinion of the Board the Current Assets, Loans & Advances are realisable in the ordinary course of business atleast equal to the amount at which they are stated in the Balance Sheet. The provision for all known liabilities is adequate and not in excess of amount reasonably necessary.

Note 2 : Depreciation

Effective from 1 st April, 2014 the Company has charged depreciation on its assets based on their useful life as stipulated under Schedule II of the Companies Act, 2013. Due to this, the depreciation for the year ended on 31st March, 2015 is lower by Rs 74.96 Lacs as compared to the depreciation computed under the provisions of the Companies Act, 1956. Further based on the transitional provisions in Note 7(b) of Schedule II, Rs. 2.77 Lacs (Net of Deferred Tax Rs. 1.88 Lakhs) is adjusted against opening balance of Retained Earnings

Note 3 : Contingent Liabilities

Particulars Year Ended Year Ended 31st March, 31st March, 2015 2014

a) Guarantees and L.C. given

Gaurantee given by bank on behalf of the Company 121.72 12.50

b) Disputed Liabilities

Tax matters in dispute under appeal 2.02

c) Estimated amount of contracts remaining to be executed on Capital Account (Net of Advance) 171.39 -

Total 295.12 12.50

Note 4 : Segmental Reporting

The Company is mainly engaged in the business of manufacturing and trading of Wires, Cables & Electrical Accessories and there is no other reportable business segment as per Accounting Standard (AS-17) "Segment Reporting"

Note 5 : Related Party Disclosure:-

As required under Accounting Standard 18 "Related Party Disclosure" (AS-18), following are the details of transactions during the year with the related parties of the Company as defined in AS 18 :

a. List of related parties Key Management Personnel

Mohan Das Gurnani (Upto 27/08/2014) Chairman

Vishnu Kumar Gurnani (Upto 19/05/2014) Managing Director

Akshay Gurnani (From 27/08/2014) Managing Director

Dinesh Gurnani Whole Time Director & CFO

Jyoti Gurnani Director

Ms. Diya Singh (Upto 14/11/2014) Company Secretary

Ms. Chavi Rawat (From 01/11/2014) Company Secretary

ii) Relative of Directors

Kishore Kumar Gurnani

Pushpa Gurnani

Jyoti Gurnani

iii) Holding Company

Veto Electropower (India) Private Limited

iv) Subsidiary Companies Veto Electricals Private Limited

v) Enterprises owned or significantly influenced by Key Management Personnel and / or their Relatives with whom the Company has entered into transaction

Vimal Power Cables Private Limited

Veto Electro Power (India) Private Limited

Veto Electric Components Private Limited

Pinkcity Buildhome Private Limited

Pink Square Infra Developers Private Limited

Gurnani Infra Developer Private Limited

Tulsi Palace Resort Private Limited

Kripa Rea! Mart Private Limited

Pink square Real Estate Private Limited

Veto Electric Private Limited

Vankon Switchgears & Cables Private Limited

Veto Powers

Anjali Packaging

Gurnani Industries

Yashodevi Raichand Gurnani Trust

Note 6 : The Company had raised an amount of Rs. 2500.50 Lacs through an IPO of equity shares during the financial year 2012- 13, by way of 50.01 lacs Equity Shares of Rs 10/- at a premium of Rs 40/- per share. The said proceeds has been fully utilised during the current year in terms of the offer document for the purpose of modernisation of existing production facilities , working capital requirements, brand building and meeting IPO expenses.

Note 7 : A major fire had occurred at one of the rental warehouse of the Company on May 19, 2014. Stock of finished goods / stock in trade amounting Rs. 1652.01 lacs was destroyed in the fire. Further in respect to damages to the leasehold premises and improvement there at, the Company has made provision for the reinstatement value of Rs. 207.23 lacs which was destroyed in the fire. The Company has also incurred Rs. 9.79 Lacs towards various expenses related to the fire. The Company has lodged a claim for insurance for the above losses amounting to Rs.1669.03 Lacs net of salvage value of Rs. 200 lacs.

Note 8 : Corporate Social Responsibility

During the year, the Company has started various initiative towards CSR and spent Rs. 13.86/- lacs (as stated below) as against Rs. 15.73/- lacs as required by section 135 read with Schedule VII of the Companies Act 2013.

Note 9 : Post Balance Sheet Event

The equity shares of the Company are listed on SME Platform of NSE i.e. EMERGE. However w.e.f. April 29, 2015 the equity shares of the Company has been migrated from NSE SME Platform to Main Board of NSE.

Note 10 : Previous year's figure's have been re-grouped, re-arranged & re-classified, wherever considered necessary, to confirm the current period figures.

Note 11 : Figures less than Rs. 500/- have been shown at actuals wherever statutory required to be disclosed since figures have been rounded off to the nearest thousands.

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Mar 31, 2014

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 share is entitled to one vote per share.

In the event of liquidation of the Company, the holder 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.

Additional information pursuant to long term borrowings:

a) Rs. 14.70 lacs (PY Rs. 23.79 lacs) term loan from Indian Oversease Bank carries interest @ Base rate 2.50% p.a. The loan is repayable in 60 Monthly instalments along with interest starting from January, 2011. The loan is secured by way of equitable mortgage of factory building and hypothecation of plant & machinery and personal guarantee of four directors.

b) Rs. 604.06 lacs (PY Rs. Nil) term loan from Indian Overseas Bank carries interest @ Base rate 2.75% p.a.. The loan is repayable in 20 Quaterly instalments along with interest starting from June, 2015. The loan is secured by way of equitable mortgage of land and building and personal guarantee of four directors.

c) Rs 47.95 lacs (PY Rs. 65.92 lacs) hire purchase loans carries interest @ between 9% to 11% p.a. The loans are repayable in 36 to 60 equal monthly instalments starting from the respective date of finance. The loan are secured by hypothecation of vehicles financed.

In pursuance of Accounting Standard- 29 (AS 29) ''Provisions, Contingent Liabilities and Assets'',the provision required have been incorporated in the books of accounts in the following manner

A provision is recognised for expected warranty claims on products sold during the year, based on past experience of the level of repairs and returns. It is expected that significant portion of these costs will be incurred in the next financial year and all will have been incurred within two years after the reporting date. Assumptions used to calculate the provisions for warranties were based on current sales levels and current information available about returns based warranty period for all products sold. The table below gives information about movement in warranty provisions.

* Earning per share (EPS) is calculated after adjusting for 16.66 lacs bonus shares issued, with retrospective effect as provided in Accounting Standard (AS-20) - Earning Per Share prescribed by the Companies (Accounting Standard) Rules 2006.

Note 2 : In the opinion of the Board the Current Assets, Loans & Advances are realisable in the ordinary course of business atleast equal to the amount at which they are stated in the Balance Sheet. The provision for all known liabilities is adequate and not in excess of amount reasonably necessary.

Note 3 : Contingent Liabilities

Year Ended Year Ended Particulars 31st March, 2014 31st March, 2013

Gaurantee given by bank on behalf of the Company 12.50 12.50

Estimated amount of contracts remaining to be executed on Capital Account (Net of Advance)- - 43.98

Total 12.50 56.48

Note 4: Segmental Reporting :

The Company is mainly engaged in the business of manufacturing and trading of Wires, Cables & Electrical Accessories and there is no other reportable business segment as per Accounting Standard (AS-17).

Note 5 : Related Party Disclosure:-

As required under Accounting Standard 18 "Related Party Disclosure" (AS-18), following are the details of transactions during the year with the related parties of the Company as defined in AS 18 :

a.List of related parties

Name of the Party i) Directors

Vishnu Kumar Gurnani Dinesh Gurnani

ii) Relative of Directors

Ragini Gurnani Kishore Kumar Gurnani Pushpa Gurnani Jyoti Gurnani

iii) Holding Company

Veto Electropower (India) Private Limited

iv) Subsidiary Companies

Veto Electricals Private Limited

v) Enterprises owned or significantly influenced by Key Management Personnel and / or their Relatives

Poonam Industries

Veto Powers

Anjali Packaging

Jai Enterprises

Vimal Power Cables Private Limited

Pinkcity Buildhome Private Limited

Gurnani Industries

Yashodevi Raichand Gurnani Trust

Gurnani Infra Developer Private Limited

Veto Electric Components Private Limited

Pink Square Infra Developers Private Limited

Vankon Switchgears and Cables Limited

Note 6 :

The Company has raised an amount of Rs. 2500.50 Lacs through a public issue of equity shares in the previous year Out of the said proceeds and in terms of the offer document an amount of Rs 2305.85 lacs has been deployed partly in modernisation of existing production facilities, working capital requirements brand building and meeting IPO expenses. The balance of Rs 194.65 lacs have been temporarily invested invested deposits with banks.

Note 7 : Post Balance Sheet Event

There was a major fire at one of the Warehouse of the Company located in Jaipur on May 19,2014 causing extensive damage to Stock and Building. These assets were fully insured and claim has been duly lodged by the Company. The estimated loss by the Company is approximately Rs. 2200.00 lacs.

Note 8

Previous year''s figure''s have been re-grouped, re-arranged & re-classified, wherever considered necessary, to confirm the current period figures.

Note 9

Figures less than Rs. 500/- have been shown at actuals wherever statutory required to be disclosed since figures have been rounded off to the nearest thousands.

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Mar 31, 2013

Note 1 : In the opinion of the Board the Current Assets, Loans & Advances are realisable in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet. The provision for all known liabilities is adequate and not in excess of amount reasonably necessary.

Note 2 : Some of the Trade Receivables, Trade Payables, Loans and advances and other current and non current are subject to confirmation and reconciliation. Consequential adjustment thereof, if any, will be given effect into the books of accounts in the year of such adjustment.

Note 3 : Contingent Liabilities

Year Ended 31st Year Ended Particulars March, 2013 31st March, 2012

Guarantee given by bank on behalf of the Company 12.50 4.50

Estimated amount of contracts remaining to be executed on CapitalAccount (Net of Advance) 39.23 5.25

Total 51.731 9.75

Note 4 : Segmental Reporting :

The Company is mainly engaged in the business of manufacturing and trading of Wires, Cables & Electrical Accessories and there is no other reportable business segment as per Accounting Standard (AS-17) issued by The Institute of Chartered Accountants of India.

Note 5: Related Party Disclosure:-

As required under Accounting Standard 18 "Related Party Disclosure" (AS-18), following are the details of transactions during the year with the related parties of the Company as defined in AS 18 :

a.List of related parties

Name of the Party i) Directors

Vishnu Kumar Gurnani

Dinesh Gurnani

Mohan Das Gurnani (from 22/08/2012)

Narayan Das Gurnani (upto 04/08/2012)

ii) Relative of Directors

Babulal Guranani

Ragini Gurnani

Kishore Kumar Gurnani

Pushpa Gurnani

Jyoti Gurnani

iii) Holding Company

Veto Electropower (India) Private Limited

iv) Subsidiary Companies

Veto Electricals Private Limited

Vankon Switchgears and Cables Private Limited (upto 19.10.2012)

Veto Lightings Private Limited (upto 19.10.2012)

v) Enterprises owned or significantly influenced by Key Management Personnel and / or their Relatives

Poonam Industries

Veto Powers

Anjali Packaging

Jai Enterprises

Vimal Power Cables Private Limited

Veto Lightings Private Limited (from

Pinkcity Buildhome Private Limited

Gurnani Industries

Yashodevi Raichand Gurnani Trust

Gurnani Infra Developer Private Limited

Note 6:

i) During the year, in order to comply with the Accounting Standard (AS) 15 (Revised 2005) "Employee Benefits" as notified by the Companies (Accounting Standard) Rules 2006, the method of accounting of Gratuity has been changed from cash basis to accrual basis of accounting. Gratuity has been provided on the basis of actuarial valuation. Due to change in this accounting policy, the profit before tax for the year is lower by Rs. 19.90 lacs having consequential effect on the Reserves and Surplus and Current Assets. As per the Guidance on Implementing Accounting Standard (AS) 15, Employee Benefits (Revised 2005), issued by the Accounting Standard Board of the Institute of Chatered Accountants of India, the liability upto the previous year i.e. 31st March, 2012 amounting to Rs. 24.48 lacs has been reflected as a Prior Period Items.

ii) The Company has also changed the method of accounting for provision of warranty from cash basis to accrual basis of accounting in order to comply with Accounting Standard (AS) 29 " Provisions, Contingent Liabilities and Contingent Assets" as notified by the Companies (Accounting Standard) Rule 2006. Due to change in this accounting policy, the profit before tax for the period is lower by Rs. 1.94 lacs having consequential effect on the Reserves and Surplus and Long term provisions.

Note 7:

The Company has been converted into a Public Limited Company and accordingly the name of the Company has been changed to Veto Switchgears & Cables Limited from Veto Switchgears & Cables Private Limited and fresh certificate of incorporation dated 3rd August, 2012 has been received from Registrar of Company, Maharashtra.

Note 8 : The Company has raised an amount of Rs. 2500.50 Lacs through an IPO of equity shares during the year by way of 50.01 lacs Equity Shares of Rs 10/- at a premium of Rs 40/- per share. Out of the said proceeds and in terms of the offer document an amount of Rs 1889.54 lacs has been deployed partly in modernisation of existing production facilities , working capital requirements, brand building and meeting IPO expenses. The balance of Rs 610.96 lacs have been temporarily invested in fixed deposits with banks.

Note 9 : Previous year''s figure''s have been re-grouped, re-arranged & re-classified, wherever considered necessary, to confirm the current period figures.

Note 10 : Figures less than Rs. 500/- have been shown at actuals wherever statutory required to be disclosed since figures have been rounded off to the nearest thousands.