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Notes to Accounts of Voith Paper Fabrics India Ltd.

Mar 31, 2015

1. Corporate information

Voith Paper Fabrics India Limited (''the Company'') is a subsidiary of VP Auslandsbeteiligungen GmbH which holds 74.04% paid up equity share capital of the Company. The Company is mainly in the business of manufacturing and selling of paper machine clothing for pulp, paper and board industry.

2. Basis of preparation

The financial statements have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP) under the historical cost convention on an accrual basis in compliance with all material aspect of the Accounting Standard (AS) Notified by the Companies Accounting Standard Rules, 2006 (as amended), and the relevant provisions of the Companies Act, 1956 read with General Circular 8/2014 dated April 4, 2014, issued by the Ministry of Corporate Affairs to the extent applicable. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle, and other criteria set out in the Revised Schedule VI to the Companies Act, 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as up to twelve months for the purpose of current/non-current classification of assets and liabilities.

3. Terms / rights attached to equity shares

The Company has only one class of shares referred to as 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 propsed by the Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting.

During the period ended March 31,2015, the amount of per share dividend recognized as distributions to equity shareholoders was Rs. 3 (Previous year Rs. 3)

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 share- holders.

4. Provision for contingencies represents the following:-

(a) Potential tax liability estimated through various notices issued by sales tax department towards differential amount of sale tax applicable on products sold - Rs. 3,476,802 (Previous year : Rs. 3,476,802)

(b) Demand from excise department towards interest on cenvat credit wrongly availed - Rs. Nil (Previous year : Rs. 469,000)

(c) Estimated contingencies in respect of Local area development tax, applicability of which is not certain to the Company - Rs. 4,439,556 (Previous year : Rs. 4,439,556)

(d) Provision for 1% additional duty on import - Rs. 40,256 (Previous year - Rs. 40,256)

In all these cases, based on legal advice/opinion obtained or base its own assessment, management considers probable that economic outflows will occur.

5. Gratuity and other post-employment benefit plans

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days of last drawn salary for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The Company has also agreed to pay Rs 25,000 at retirement to all the workers (Other Retirement Benefit). These benefits are un-funded. The following tables summarize the components of net benefit expense recognized in the statement of Profit and Loss and the funded status and amounts recognized in the Balance Sheet for the respective plans.

Statement of profit and loss

6. Segment Reporting

(a) Primary Segment

The company is engaged in the business of manufacturing and selling of paper machine clothing for pulp, paper and board industry. The entire operation is governed by the same set of risk and returns and hence, the same has been considered as representing a single primary segment.

7. Related party disclosures

a. List of related parties :

Names of Related Parties where control exists irrespective of whether transactions have occurred or not:

(A) Holding Company VP Auslandsbeteiligungen GmbH (formerly VPT Auslandsbeteiligungen GmbH)

(B) Ultimate Holding Voith Paper Holding GmbH & Co. KG Company (Holds 100% Equity of VP Auslandsbeteiligungen GmbH)

Names of Related Parties with whom transactions have occurred during the period

(A) Fellow subsidiaries Syn Strand Inc. Voith Paper Fabrics Stubbins Limited Voith IT Solution GmbH Voith Paper Fabrics Asia Pacific Sdn Bhd Voith Paper Fabrics Ipoh Sdn. Bhd. Voith Paper Fabrics GmbH & Co. KG Voith Paper Holding (VPT) Heidenheim Voith Paper Fabrics (China) Co. Ltd. Voith Paper Technology (India) Private Limited Voith Hydro Private Limited Voith Paper Fabrics & Roll Systems GmbH Voith GmbH, Heidenheim Voith Paper Fabrics SAS Voith Turbo Private Limited Voith Paper GmbH & Co. KG Voith Paper Rolls GmbH & Co KG Voith Paper Fabrics GmbH, Frankenmarkt Voith Paper GmbH Voith Paper Fabrics Hogsjo AB

(B)Key Management Personnel R. Krishna Kumar, Managing Director (w.e.f. 01-08-2014)

8. Contingent liabilities

Particulars As at As at March 31,2015 September 30, 2013 Rs. Rs.

a) Claim against the Company not a - 1,605,000 cknowledged as debts*

b) Income tax demand** 2,665,270 19,527,915

c) Bank guarantees given 6,063,748 5,345,289 by the Company

d) Tax liability in respect of C-Forms pending to be collected 30,632,980 29,180,465

*The claims against the Company comprises of:-

(a) Rs. Nil (Previous year - Rs. 1,605,000) in respect of order from Excise department for penalty of Cenvat wrongly taken and reversed later on. The Company had filed an appeal with the Custom, Excise and Service Tax Appellate Tribunal against the said order whereby the stay was granted. During the current period, the matter has been decided in company''s favour.

** Income tax demand consists of:-

(b) Rs. Nil (Previous year - Rs. 10,169,127) as the amount of demand raised by the assessing officer for assessment year 2010-11 on account of disallowance pertaining to technical know-how fees/royalty. The Company had filed an appeal with the Commissioner (Appeals) - Income Tax against the said order. During the current period, the company has received a order dated 18th December, 2014 from CIT(Appeals) in which the issue has been allowed in company''s favour.

(c) Rs. 949,670 (Previous year - Rs 6,302,822) as the amount of demand raised by the assessing officer for assessment year 2009-10 on account of certain disallowances. The Company had filed an appeal with the Commissioner (Appeals) - Income Tax against the said order; During the current period, the company has received two orders dated 16th December, 2014 from CIT(Appeals) in which out of the 4 grounds 3 grounds have been allowed in company''s favour.

(d) Rs. 1,715,600 (Previous year - Rs. 3,055,966) as the amount of demand raised by the assessing officer for assessment year 2008-09 on account of certain disallowances. The Company had filed an appeal with the Commissioner (Appeals) - Income Tax against said order. During the current period, the appeal has been decided partly in company''s favour by CIT(Appeals).

In all of the above cases, the management is confident of a favorable outcome from higher appellate authority.

9. Previous year figures have been regrouped/rearranged wherever necessary to confirm to the classification adopted for the current year.

10. The financial year of the company has been extended to March 31,2015 in order to comply with the provisions of the Companies Act, 2013. Hence, the amounts of current period 18 months (from October 1, 2013 to March 31, 2015) and previous period 12 months (from October 1,2012 to September 30, 2013) are not comparable.


Sep 30, 2013

1. Corporate information

Voith Paper Fabrics India Limited (''the Company'') is a subsidiary of VP Auslandsbeteiligungen GmbH which holds 74.04% paid up equity share capital of the Company. The Company is mainly in the business of manufacturing and selling of paper machine clothing for pulp, paper and board industry.

2. Basis of preparation

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention. The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

3. Gratuity and other post-employment benefit plans

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days of last drawn salary for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The Company has also agreed to pay Rs 25,000 at retirement to all the workers (Other Retirement Benefit). These benefits are un-funded.

The following tables summarize the components of net benefit expense recognized in the statement of Profit and Loss and the funded status and amounts recognized in the Balance Sheet for the respective plans.

4. Related party disclosures

a. List of related parties :

Names of Related Parties where control exists irrespective of whether transactions have occurred or not:

(A) Holding Company VP Auslandsbeteiligungen GmbH (formerly VPT

Auslandsbeteiligungen GmbH)

(B) Ultimate Holding Company Voith Paper Holding GmbH & Co. KG

(Holds 100% Equity of VP Auslandsbeteiligungen GmbH)

Names of Related Parties with whom transactions have occurred during the year

(A) Fellow subsidiaries Syn Strand Inc.

Voith Paper Fabrics Stubbins Limited

Voith IT Solution GmbH

Voith Paper Fabrics GmbH

Voith Paper Fabrics Asia Pacific Sdn Bhd

Voith Paper Fabrics Ipoh Sdn. Bhd.

Voith Paper Fabrics GmbH & Co. KG

Voith Paper Holding (VPT) Heidenheim

Voith Paper Fabrics (China) Co. Ltd.

Voith Paper Technology (India) Private Limited

Voith Hydro Pvt. Ltd.

Voith Paper Fabrcis & Roll Systems GmbH

Voith GmbH, Heidenheim

Voith Paper Fabrics SAS

Voith Turbo Private Limited

5. Capital and other commitments

At September 30, 2013, the Company has capital commitments of Rs. 73,091,493 (Previous year Rs 23,952,685) net of advances.

6. Contingent liabilities



Particulars As at As at September 30, 2013 September 30, 2012 Rupees Rupees

(a) Claim against the Company not acknowledged as debts* 1,605,000 2,837,344

(b) Income tax demand** 19,527,915 9,358,788

(c) Bank guarantees given by the Company 5,345,289 6,708,479



*The claims against the Company comprises of:-

(a) Rs. 1,605,000 (Previous year - Rs. 1,605,000) in respect of order from Excise department for penalty of Cenvat wrongly taken and reversed later on. The Company had filed an appeal with the Custom, Excise and Service Tax Appellate Tribunal against the said order whereby the stay was granted. The management is hopeful of matter being settled in its favor.

(b) Rs. Nil (Previous year - Rs. 1,232,344 ) in respect of duty deposited with custom authorities on account of purchase from related parties.

** Income tax demand consists of:-

(c) Rs. 10,169,127 as the amount of demand raised by the assessing officer for assessment year 2010-11 on account of disallowance pertaining to technical know-how fees/royalty. The Company has filed an appeal with the Commissioner (Appeals) - Income Tax against the said order;

(d) Rs. 6,302,822 as the amount of demand raised by the assessing officer for assessment year 2009-10 on account of certain disallowances. The Company has filed an appeal with the Commissioner (Appeals) - Income Tax against the said order;

(e) Rs. 3,055,966 as the amount of demand raised by the assessing officer for assessment year 2008-09 on account of certain disallowances. The Company has filed an appeal with the Commissioner (Appeals) - Income Tax against said order.

In all of the above cases, the management is confident of a favorable outcome.

7. During the year, the Company has recorded sales commission expense of Rs.2,439,263 in the profit and loss account. The agreements relating to this transaction expired in the month of December 2012. The necessary approval of Central Government confirming renewal of agreements for a period of five years effective from 1st January, 2013, with the selling agents, is yet to be received by the company. The management is of the view that it shall be able to obtain the approval shortly and no significant adjustments are expected from this.

8. Previous year figures have been regrouped/rearranged wherever necessary to confirm to the classification adopted for the current year.


Sep 30, 2012

1. Corporate information

Voith Paper Fabrics India Limited ('the Company') is a subsidiary of VP Auslandsbeteiligungen GmbH which holds 74.04% paid up equity share capital of the Company. The Company is mainly in the business of manufacturing and selling of paper machine clothing for pulp, paper and board industry.

2. Basis of preparation

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year, except for the change in accounting policy explained below.

a. Terms / rights attached to equity shares

The Company has only one class of shares referred to as 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 approval of the shareholders in the ensuing Annual General Meeting.

During the year ended September 30, 2012, the amount of per share dividend recognized as distributions to equity shareholoders was Rs. 3 (Previous year Rs. 3)

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.

# Provision for warranties

A provision is recongnized for expected warranty claims on products sold during the year, based on past experience of level of repairs and returns. It is expected that the most of this cost will be incurred in the next financial year and all will have been incurred within one year of the balance sheet date. Assumption used to calculate the provision for warranties were based on current sales level and current information about returns based on the three year warranty period for all products sold.

Provision for contigencies represents the following:-

(a) Tax claims/potential claims made by sales tax department towards differential amount of sale tax applicable on products sold - Rs. 3,476,802 (Previous year : Rs. 5,045,045)

(b) Demand from excise department towards interest on cenvat credit wrongly availed - Rs. 469,000 (Previous year : Rs. 680,281)

(c) Demand of Local area development tax applicability of which is not certain to the Company - Rs. 4,439,556 (Previous year : Rs. 4,439,556)

(d) Provision for 1% additional duty on import - Rs. 40,256 (Previous year : Rs. Nil)

In all these cases, based on legal advice/opinion obtained or base its own assessment, management considers probable that economic outflows will occur.

# Excise duty on sales amounting to Rs. 62,692,245/- (Previous Year : Rs. 53,115,182/-) has been reduced from sales in statement of profit and loss account and excise duty on decrease in stock amounting to Rs. 1,157,629 (Previous Year : Rs. 66,096) has been considered as income in note 15 of financial statement.

3. Gratuity and other post-employment benefit plans

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days of last drawn salary for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The Company also pays Rs 25,000 at retirement to all the workers (Other Retirement Benefit). These benefits are un-funded.

The following tables summarize the components of net benefit expense recognized in the statement of Profit and Loss and the funded status and amounts recognized in the Balance Sheet for the respective plans.

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.

The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled. There has been significant change in expected rate of return on assets due to change in the market scenario.

4. Segment Reporting

(a) Primary Segment

The company is engaged in the business of manufacturing and selling of paper machine clothing for pulp, paper and board industry. The entire operation is governed by the same set of risk and returns and hence, the same has been considered as representing a single primary segment.

(b) Geographical Segments

The following is the distribution of the company's consolidated sales by geographical market, regardless of where the goods were produced:

All the assets of the Company except receivables are located in India, therefore, separate figures for fixed assets/additions to fixed assets have not been furnished.

5. Related party disclosures

a. List of related parties:

Names of Related Parties where control exists irrespective of whether transactions have occurred or not:

(A) Holding Company VP Auslandsbeteiligungen GmbH (formerly VPT

Auslandsbeteiligungen GmbH)

(B) Ultimate Holding Company Voith Paper Holding GmbH & Co. KG

(Holds 100% Equity of VP Auslandsbeteiligungen GmbH)

Names of Related parties with whom transactions have occurred during the year

(A) Fellow subsidiaries Syn Strand Inc.

Voith Paper Fabrics Stubbins Limited

Voith IT Solution GmbH

Voith Paper Fabrics GmbH

Voith Paper Fabrics Asia Pacific Sdn Bhd

Voith Paper Fabrics Ipoh Sdn. Bhd.

Voith Paper Fabrics GmbH & Co. KG

Voith Paper Holding (VPT) Heidenheim

Voith Paper Fabrics (China) Co. Ltd.

Voith Paper Technology (India) Private Limited

Voith Hydro Pvt. Ltd.

Voith Paper Fabrics & Roll Systems GmbH

Voith GmbH, Heidenheim

6. Capital and other commitments

At September 30, 2012, the Company has capital commitments of Rs. 23,952,685 (Previous year Rs 395,751) net of advances.

7. Contingent liabilities Particulars As at As at September 30, 2012 September 30, 2011 Amount (Rs.) Amount (Rs.)

(a) Claim against the Company not acknowledged as debts* 2,837,344 2,565,715

(b) Income tax demand** 9,358,788 -

(c) Bank guarantees given by the Company 6,708,479 6,697,772

*The claims against the Company comprises of:-

(a) Rs. 1,605,000 (previous year - Rs. 1,605,000) in respect of order from Excise department for penalty of Cenvat wrongly taken and reversed later on. The Company had filed an appeal with the Custom, Excise and Service Tax Appellate Tribunal against the said order whereby the stay was granted. The management is hopeful of matter being settled in its favour.

(b) Rs.1,232,344 (previous year - Rs. 960,715 ) in respect of duty deposited with custom authorities on account of purchase from related parties.

** Income tax demand consists of:-

(c) Rs. 6,302,822 as the amount of demand raised by the assessing officer for assessment year 2009-10 on account of certain disallowances. The Company has filed an appeal with the Commissioner (Appeals) - Income Tax against the said order;

(d) Rs. 3,055,966 as the amount of demand raised by the assessing officer for assessment year 2008-09 on account of certain disallowances. The Company has filed an appeal with the Commissioner (Appeals) - Income Tax against said order.

In both the above cases, the management is confident of a favorable outcome.

8. Previous year figures have been regrouped/ rearranged wherever necessary to confirm to the classification adopted for the current year. Also refer note 2.1(a).


Sep 30, 2010

1. Nature of Operations

Voith Paper Fabrics India Limited (the Company), is a subsidiary of VPT Auslandsbeteiligungen GmbH which holds 74.04% paid up equity share capital of the Company. The Company is mainly in the business of manufacturing and selling of paper machine clothing for pulp, paper and board industry.

2. Segment Information

(a) Primary Segment

The Company is engaged in the business of manufacturing and selling of paper machine clothing for pulp, paper and board industry. The entire operation is governed by the same set of risk and returns and hence, the same has been considered as representing a single primary segment. The said treatment is in accordance with the guiding principles enunciated in the Accounting Standard 17 on Segment Reporting.

(b) Geographical Segments:

The following is the distribution of the Companys consolidated sales by geographical market, regardless of where the goods were produced:

2. Related Party Disclosure

a.Names of related parties where control exists irrespective of whether transactions have occurred or not.

(A) Ultimate Holding Company VPT Auslandsbeteiligungen GmbH (VF Auslandsbeteiligungen GmbH till October 1, 2009) Voith Paper Holding GmbH & Co. KG* ("holds 100% Equity of VPTAuslandsbeteiligungen GmbH)

Names of other related parties with whom transactions have taken place during the year

(B) Fellow Subsidiary Voith Paper Fabrics Ipoh Sdn Bhd (IPOH)

Voith Paper Fabrics Syn Strand (Syn. Strand)

Voith Paper Fabrics Blackburn Ltd (VFBL) **

Voith Paper Fabrics Stubbins Ltd. (Stubbins)

Voith IT Solution GMBH, (VOIS)

Voith Paper Fabrics Frankenmarkt GMBH

Voith Paper Fabrics Asia Pacific Sdn. Bhd. (VFIS)

Voith AG, Heidenheim (VZ)

Voith Paper Fabrics GmbH & Co. KG

Voith Paper Holding GmbH & Co. KG (VPT)

Voith Paper Fabrics (China) Co. Ltd.

Voith Paper Fabrics, SA

Voith Paper Technology (India) Limited

(C) Key Management Personnel Manoj Kumar Kapoor (till March 26, 2009)

3. Details of dues to Micro and Small Enterprises

Pursuant to the amendment of Schedule VI of the Companies Act, 1956, regarding disclosure of amount due to creditors which are Micro and Small Enterprises, the Company has sent request to creditors to confirm on the status and has not received intimation regarding the status from some of suppliers hence disclosures, if any, relating to amounts unpaid as at the year end along with interest paid/payables to them as required under the said act have been given to the extent of information available. The Company generally makes payments to all its suppliers within the agreed credit period (generally less than 45 days) and thus the Management is confident that there will be no liability of interest under the MSMED Act. The disclosure required under Micro Small and Medium Enterprise Development Act, 2006 are as follows:

4. Gratuity and other post-employment benefit plans

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The Company has also agreed to provide certain additional benefits to workers. These benefits are unfunded.

The following tables summarize the components of net benefit expense recognized in the Profit and Loss Account and the funded status and amounts recognized in the Balance Sheet for the respective plans.

5. Contingent Liabilities not provided for

S.No Particulars As at As at September September 30, 2010 30, 2009 (Rs.) (Rs.)

(a) Claims against the Company not acknowledged as debts* 5,265,527 1,675,435

(b) Income Tax Demand - 1,682,980

(c) Bank Guarantees given by the Company 3,860,510 3,808,656

* The claims against the Company comprises of:-

a) Rs. 1,605,000 (previous year- Rs. 1,605,000) in respect of Order from Excise department for penalty of Cenvat wrongly taken and reversed later on. The Company had filed an appeal with the Custom, Excise and Service Tax Appellate Tribunal against the said order whereby the stay was granted.

b) Rs.2,872,952 (previous year- nil) represents the potential claims by Excise Department towards the amount of Local area development tax leviable on entry of goods in the state of Haryana. Since, the law was struck down by the state court and the case is under hearing in Supreme Court and no demands have been raised, the management does not consider this to be payable.

c) Rs.787,575 (previous year - Rs.70,435) towards non-deposition of service tax in respect of commission received without deposition of service tax. The Company has got favourable order by Additional Commissioner, Service Tax, New Delhi. The department has filed application against the said order with Commissioner of Central Excise (Appeals).

**Income tax demand of as at Sept 30,2009 consists of:

a) Rs.525,570 as the the amount of demand raised by the assessing officer in its assessment for assessment year 2005-

06 on account of certain disallowances and the Company had filed an appeal with the Commissioner (Appeals) - Income Tax against the said order; and

b) Rs. 1,157,410 as the amount of demand raised by the assessing officer in this assessment for assessment year 2006-

06 on account of disallowances which is being contested by the Company. Company has received the order of CIT(A) against it and it will file its appeal in the tribunal.

The Company has been advised by its Counsel that it is possible, but not probable, the action will succeed and accordingly no provision for any liability has been made in these financial statements.

7. In accordance with para 10 of Accounting Standard- 9 Revenue Recognition notified under the Companies (Accounting Standard) Rules, 2006 (as amended), excise duty on sales amounting to Rs. 47,050,798 (Previous year Rs.27,176,161) has been reduced from sales in profit & loss account and increase/(decrease) in excise duty on closing stock amounting to Rs. 514,863 (Previous year (Rs.2,694,080)) has been considered as income/expense in Schedule 14 of the financial statements.

8. Previous years figures have been regrouped/ reclassified wherever considered necessary to conform to current years classification.

 
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