Notes to Accounts of APM Industries Ltd.

Mar 31, 2018

1. Financial risk management and policies 43.1 Capital Management

(a) Risk Management

The Company aim to manages its capital efficiently so as to safeguard its ability to continue as a going concern and to optimize returns to our shareholders.

The capital structure of the Company is based on management''s judgment of the appropriate balance of key elements in order to meet its strategic and day-to-day needs. We consider the amount of capital in proportion to risk and manage the capital structure in light of changes in economic conditions and the risk characteristics of the underlying assets. 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.

The Company''s policy is to maintain a stable and strong capital structure with a focus on total equity so as to maintain investor, creditors and market confidence and to sustain future development and growth of its business. The Company will take appropriate steps in order to maintain, or if necessary adjust, its capital structure.

The gearing ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings less cash and cash equivalents. Total capital is calculated as equity as shown in the balance sheet plus all other reserves attributable to equity shareholders of the Company.__

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants.

2. Financial-Risk-Management

The Company''s principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance and support the Company operations. The Company''s principal financial assets comprise investments, cash and bank balance, trade and other receivables.

The Company is exposed to various financial risks such as market risk, credit risk and liquidity risk. The financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives.

a) Market Risk

Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and loans and borrowings.

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 recommend risk management objectives and policies, which are approved by Senior Management and the Audit Committee. The activities of this department include management of cash resources, borrowing strategies and ensuring compliance with market risk limits and policies.

(i) 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.

(ii) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to import of store and spare and other materials. The Company''s foreign currency risks are identified, measured and managed at periodic intervals in accordance with the Company''s policies.

b) Credit Risk:

Credit risk is the risk that counterparty will default on its contractual obligations resulting in financial loss to the company. The Company has adopted a policy of only dealing with creditworthy customers.

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 financial condition, ageing of accounts receivable and the Company''s historical experience for customers.

As at March 31, 2018, the company did not consider there to be any significant concentration of credit risk, which had not been adequately provided for. The carrying amount of the financial assets recorded in the financial statements, grossed up for any allowances for losses, represents the maximum exposure to credit risk.

c) 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. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of credit facilities to meet obligations when due. The Company''s treasury team is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company liquidity position through rolling forecasts on the basis of expected cash flows.

The table below summarizes the maturity profile of the Company''s financial liabilities based on contractual undiscounted payments:

The fair value of the financial assets are included at amounts at which the instruments could be exchanged in a current transaction between willing parties other than in a forced or liquidation sale.

The following methods and assumptions were used to estimate the fair value:

(a) Fair value of cash and short term deposits, trade and other short term receivables, trade payables, other current liabilities, approximate their carrying amounts largely due to the short-term maturities of these instruments.

(b) Financial instruments with fixed and variable interest rates are evaluated by the Company based on parameters such as interest rates and individual credit worthiness of the counterparty. Based on this evaluation, allowances are taken to account for the expected losses of these receivables.

3. Segment Reporting

The Company has identified a second reportable segment of Finance and Investment during the current year as the same is added in the main object w.e.f. August 22, 2017. Accordingly, there are two reportable segment of Yarn Manufacturing and Finance and Investment. The Chief Operating Decision Maker reviews the operating results of these two segment. Segment data for the new reportable segment for the previous financial year ended March 31, 2017 presented for comparative purpose only. In the prior periods, such segment revenue was included under “Other Income”.

a) Business segment:

The Company has considered “Manufacturing” and “Finance and Investment” as business segment for disclosure in the context of Indian Accounting Standard 108 “Operating Segment”.

b) Geographical Segment:

During the period under report, the Company has engaged in its business primarily within India. The conditions prevailing in India being uniform, no separate geographical disclosure is considered necessary.

4. The Board of Directors of the Company vide resolution dated January 11, 2018, approved the Scheme of Arrangement (“Scheme”) under section 230-232 read with section 66 of the Companies Act, 2013 (“Act”) between APM Industries Limited (“Demerged Company”) and APM Finvest Limited (“Resulting Company”), a wholly owned subsidiary of the Demerged Company, and their respective shareholders and creditors. The Company had filed the Scheme with the BSE for approval on February 22, 2018 for Observation/No Objection letter which is still awaited. However, the Scheme is subject to approval of BSE Limited, the Securities and Exchange Board of India, Shareholders and Creditors of both the Companies and such other statutory authorities as may be required and sanction thereof by the Hon''ble National Company Law Tribunal, New Delhi Bench. The Appointed date being April 1, 2018 (or such other date as may be decided by the Board of both the companies with consent or as per the direction by the Tribunal), the proposed transaction will not have any effect in the current performance and state of affairs of the Company for the financial year ended March 31, 2018.

5. All amounts in the financial statements and notes have been rounded off to the nearest lakhs as per requirement of Schedule III except per share data and as otherwise stated. Figures in brackets represent corresponding previous year figures.

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Mar 31, 2015

1. Rights to the Share Holders

The Company has only one class of equity shares having a face value of Rs. 2 per share and each holder of equity shares is entitled to one vote per share. All equity Share holders are having right to get dividend in proportion to paid up value of the each equity share, as and when declared.

2. Nature of Security

a. Following Term Loans are secured by joint mortgage by deposit of title deeds of the Company's immovable properties situated at Bhiwadi and charge on all immovable and movable assets, both present and future subject to prior charge created on specified movable assets in favour of Company's bankers ranking pari-passu for working capital facilities:

Loan From Terms of Repayment

i.Industrial Development Bank of India (Rs. 560 Lacs)

Term Loans from Banks amounting to Rs 2,91,15,630/- Repayable in 32 from quarterly instalments October 2011 along (March 31, 2014 Rs. 3,49,15,630) with interest at the rate of 13.25% p.a.

ii. Punjab National Bank (Rs. 163 Lacs)

Term Loans from Banks amounting to Repayable in 20 quarterly Rs. 96,30,803/- instalments from June 2014 (March 31, 2014 Rs. 1,29,36,510) along with interest at the rate of 12.00% p.a.

iii. State Bank of Bikaner & Jaipur (Rs. 1710 Lacs)

Term Loans from Banks amounting to Rs. 2,96,10,274/- Repayable in 32 quarterly (March 31, 2014 Rs. 5,33,69,740) instalments from July 2008 along with interest at the rate of 12.85% p.a.

iv. State Bank of Bikaner & Jaipur (Rs. 230 Lacs)

Term Loans from Banks amounting to Rs. 33,46,764/- Repayable in 32 quarterly (March 31, 2014 Rs. 66,65,068) instalments from May 2009 along with interest at the rate of 13.60% p.a.

b. Vehicle loans from Banks amounting to Rs 21,24,938/- Repayable in 36 equalised (March 31, 2014 Rs. 34,72,519/-) monthly instalments are secured by hypothecation/ Lien of the respective vehicles.

3. Secured long term loans aggregating to Rs 7,17,03,471/- (March 31, 2014 Rs. 107,886,948/-) are guaranteed by the chairman and Managing Director.

4. The Long Term borrowing shown above is net of Rs. 3,76,17,666/- (Mar 31, 2014 Rs.38,411,798) current maturities, which is shown under note no. 7

5. Working capital loans are secured by hypothecation of inventories, book debts, receivables and other movable assets and also by second charge on Company's immovable properties situated at Bhiwadi ranking pari-passu between the Banks/ Financial Institutions and guaranteed by Chairman & Managing Director of the Company.

6. There are no amounts due for payment to The Investor Education and protection Fund as at the year end.

7. Related party disclosures

Information regarding Related Party Transactions as Accounting Standards AS-18 "Related Party Disclosures" notified by Companies (Accounting Standards) Rules, 2006, (as amended).

List of related parties

A. Companies under common control Sr. No. Name of the Company

1. Orient Abrasives Limited

2. Orient Refractories Limited

3. Perfectpac Limited

4. Rajgarhia Leasing & Financial Services (P) Limited

5. Arvind Syntex Pvt Ltd

B. Key Management Personnel and their relatives

Sr. No. Name of the Person Relationship

1. R. K. Rajgarhia Chairman and Managing Director

2. H. R. Sharma Executive Director

3. S. G. Rajgarhia Director

4. Ajay Rajgarhia Key Management Person

5. Aditi Rajgarhia Grand Daughter of CMD

6. Prabha Rajgarhia Wife of CMD

D. No amount pertaining to related parties which have been provided for as doubtful debts or written off in respect of related parties.

E. Related party relationship is as identified by the Company and relied upon by the Auditors.

8. Profit/Loss on the sale of raw material is adjusted in the raw material consumed account. However, the amount of profit/loss is not material.

9. Figures of previous year have been regrouped or rearranged wherever found necessary and the same are appearing in brackets.

10. Note 1 to 36 form an integral part of the accounts and have duly been authenticated.

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Mar 31, 2014

1.1 Nature of Security

a. Following Term Loans are secured by joint mortgage by deposit of title deeds of the Company''s immovable properties situated at Bhiwadi and charge on all immovable and movable assets,both present and future subject to prior charge created on specified movable assets in favour of Company''s bankers ranking pari-passu for working capital facilities:

2. Contingent liabilities and commitments (to the extent not provided for)

a. Claims against the Company not acknowledged as debts:-_

Particulars Year ended March 31, 2014 March 31, 2013 Rupees Rupees

Excise Duty [Payment made Rs . NIL (Previous years 486,2400 0 888,970

Sales Tax 3,754,178 3,754,178

Bank Guarantee (Net of Margin Rs. NIL (Previous Year 661,000) NIL 1,024,000

b. Other Commitments

Estimated amount of contracts remaining to be executed on capital account [Net of advances Rs. 6,656,402/- Previous Year Rs. 5,761,058/-] not provided for Rs. 33,582,964/- (Previous Year Rs. 38,356,018/-).

3. There are no Micro, Small and Medium Enterprises to whom the company owes dues, which are outstanding for more than 45 days as at March 31, 2014. This information required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006, has been determined to the extent such parties have been identified on the basis of information available with the Company.

4. Related party disclosures

Information regarding Related Party Transactions as Accounting Standards AS-18 "Related Party Disclosures" notified by Companies (Accounting Standards) Rules,2006,(as amended).

List of related parties

A. Companies under common control

Sr. No. Name of the Company

1. Orient Abrasives Limited

2. Orient Refractories Limited

3. Perfectpac Limited

4. Rajgarhia Leasing & Financial Services (P) Limited

B. Key Management Personnel and their relatives

Sr. No. Name of the Person Relationship

1. R. K. Rajgarhia Chairman and Managing Director

2. H. R. Sharma Executive Director

3. S. G. Rajgarhia Director

4. Ajay Rajgarhia Key Management Person

5. Aditi Rajgarhia Grand Daughter of CMD

6. Prabha Rajgarhia Wife of CMD

5. Profit/Loss on the sale of raw material is adjusted in the raw material consumed account. However, the amount of profit/loss is not material.

6. Figures of previous year have been regrouped or rearranged wherever found necessary and the same are appearing in brackets.

7. Note 1 to 35 form an integral part of the accounts and have duly been authenticated.

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Mar 31, 2013

1.1 Nature of Security

a. Following Term Loans are secured by joint mortgage by deposit of title deeds of the Company''s immovable properties situated at Bhiwadi and charge on all immovable and movable assets, both present and future subject to prior charge created on specified movable assets in favour of Company''s bankers ranking pari-passu for working capital facilities:

1.2 Secured long term loans aggregating Rs. 165,976,759 (March 31, 2012 Rs. 221,403,961) are guaranteed by the Chairman and Managing Director.

1.3 The Long Term borrowing shown above is net of Rs. 56,685,077 (March 31, 2012 Rs. 57,613,182) current maturities, which is shown under Note no. 8

2.1 Note :

Working capital loans are secured by hypothecation of inventories, book debts, receivables and other movable assets and also by second charge on Company''s immovable properties situated at Bhiwadi ranking pari-passu between the Banks/ Financial Institutions and guaranteed by Chairman & Managing Director of the Company.

3.1 There are no amounts due for payment to The Investor Education and protection Fund under section 205C of the Companies Act,1956 as at the year end.

4. Contingent liabilities and commitments (to the extent not provided for)

a. Claims against the Company not acknowledged as debts:-

Particulars Year ended_ March 31,2013 March 31,2012 (Rs.) (Rs.)

Excise Duty (Payment made Rs. 486,240 (Previous year Rs.486,240)) 888.970 1,208,934

Sales Tax 3,754,178 2,550,809

Bank Guarantee (Net of Margin Rs. 661,000 (Previous Year Nil)) 1,024,000

b. Other Commitments

Estimated amount of contracts remaining to be executed on capital account [Net of advances Rs. 5,761,058/- Previous Year Rs. 5,911,690/-] not provided for Rs. 38,356,018/- (Rs. 35,738,215/-).

5. There are no Micro, Small and Medium Enterprises to whom the company owes dues, which are outstanding for more than 45 days as at March 31, 2013. This information required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006, has been determined to the extent such parties have been identified on the basis of information available with the Company.

6. Related party disclosures

Information regarding Related Party Transactions as per Accounting Standards AS-18 "Related Party Disclosures" notified by Companies

(Accounting Standards) Rules,2006, (as amended).

List of related parties

A. Companies under common control

S. No. Name of the Company

1 Orient Abrasives Limited

2 Orient Refractories Limited

3 Perfectpac Limited

4 Rajgarhia Leasing and Financial Services Private Limited

5 Axis Cottex Private Limited

6 AJR Fiscal Private Limited

7. Profit/Loss on the sale of raw material is adjusted in the raw material consumed account. However, the amount of profit/loss is not material.

8. Figures of previous year have been regrouped or rearranged wherever found necessary and the same are appearing in brackets.

9. Note 1 to 35 forms an integral part of the accounts and have duly been authenticated.

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Mar 31, 2012

1.1 Nature of Security

a. Following Term Loans are secured by joint mortgage by deposit of title deeds of the Company's immovable properties situated at Bhiwadi and charge on all immovable and movable assets, both present and future, except book debts subject to prior charge created on specified movable assets in favour of Company's bankers ranking pari-passu for working capital facilities.:

1.2 Secured long term loans aggregating to Rs. 221,403,961/- (March 31,2011 Rs. 272,614,203/-) are guaranteed by the chairman and Managing Director.

2.1 Note :

Working capital loans are secured by hypothecation of inventories, book debts, receivables and other movable assets and also by second charge on Company's immovable properties situated at Bhiwadi ranking pari-passu between the Banks/ Financial Institutions and guaranteed by Chairman & Managing Director of the Company.

3.1 There are no amounts due for payment to The Investor Education and protection Fund under section 205C of the Companies Act,1956 as at the year end.

4. Contingent liabilities and commitments (to the extent not provided for)

a. Claims against the Company not acknowledged as debts;

Particulars Year ended

March 31, 2012 March 31, 2011

Rupees Rupees

Excise-Duty(Payment made Rs. 486,240{Previous year Rs. 486,240}) 1,208,934 806,204

Sales Tax 2,550,809 6,842,285

b. Other Commitments

Estimated amount of contracts remaining to be executed on capital account [Net of advances Rs.5,911,690/-Previous Year Rs.13,008,324/-] not provided for Rs.35,738,215/- (Rs. 35,714,530/-).

5. There are no Micro, Small and Medium Enterprises to whom the company owes dues, which are outstanding for more than 45 days as at March 31, 2012. This information required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006, has been determined to the extent such parties have been identified on the basis of information available with the Company.

6. Related party disclosures

Information regarding Related Party Transactions as per Accounting Standard AS-18 "Related Party Disclosures" notified by Companies (Accounting Standards) Rules, 2006, (as amended).

7 List of related parties

A. Companies under common control

S. No. Name of the Company

1 Orient Abrasives Limited

2 Orient Refractoriness Limited

3 Perfecta Limited

4 Rajgarhia Leasing and Financial Services Private Limited

5 Faridabad Paper Mills Limited

6 Axis Cottex Private Limited

7 AJR Fiscal Private Limited

B. Key Management Personnel and their relatives

S. No. Name of the Company Relationship

1 R K Rajgarhia Chairman and Managing Director

2 H R Sharma Executive Director

3 S G Rajgarhia Director

4 Ajay Rajgarhia Key Management Person

5 Aditi Rajgarhia Grand Daughter of CMD

6 R K Rajgarhia & Sons HUF

C. Related Party Transactions

D. No amount pertaining to related parties which have been provided for as doubtful debts written off in respect of related parties

E. Related party relationship is as identified by the Company and relied upon by the Auditors

F. Disclosure of material transaction with related party

8. Profit/Loss on the sale of raw material is adjusted in the raw material consumed account. However, the amount of profit/loss is not material.

9. Figures of previous year have been regrouped or rearranged wherever found necessary and the same are appearing in brackets.

10. Schedules 1 to 35 form an integral part of the accounts and have duly been authenticated.

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Mar 31, 2011

1. Contingent liabilities not provided for:

Particulars Year ended March 31, 2011 March 31, 2010 Rupees Rupees

Unexpired letters of credit [Net of margins Rs. 5,083,116 (Previous year Rs. 5,848,506] 23,851,982 35,651,494

Bills discounted 74,172,947 50,757,185

Service Tax NIL 7,725

Excise Duty (Payment made Rs. 486,240 (Previous year Rs. 486,240)) 806,204 806,204

Sales Tax 6,842,285 6,842,285

2. Estimated amount of contracts remaining to be executed on capital account [Net of advances Rs. 10,475,746/- Previous Year Rs. 5,778,458/-] not provided for Rs. 35,714,530/- (Rs. 41,953,885/-).

3. There are no Micro, Small and Medium Enterprises to whom the company owes dues, which are outstanding for more than 45 days as at March 31, 2011. This information required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006, has been determined to the extent such parties have been identified on the basis of information available with the Company.

4. Related party disclosures

a) The following are the related Parties of the Company

Companies under common control Orient Abrasives Limited with whom transactions have taken Perfectpac Limited place during the year: Rajgarhia Leasing and Financial Services Private Limited

AJR Fiscal Private Limited

Faridabad Paper Mills Limited

Companies under common control Axis Cortex Private Limited with whom no transactions have Ess Vee Fiscal Private Limited taken place during the year

Key management personnel & their relatives: R. K. Rajgarhia, Chairman and Managing Director

H. R. Sharma, Executive Director

S.G. Rajgarhia

Ajay Rajgarhia

Prabha Rajgarhia

Aditi Rajgarhia

R K Rajgarhia & Sons (HUF)

5. Employee Benefit :

Effective from April 01, 2007, the company adopted the revised accounting standard 15 "Employee Benefits" (AS - 15) issued by the Institute of Chartered Accountants of India.

6. Profit/Loss on the sale of raw material is adjusted in the raw material consumed account. However, the amount of profit/loss is not material.

7. At the Extra Ordinary Meeting held on January 18, 2011, the shareholders approved the split of face value of share of Rs. 10/- each into face value of share of Rs. 21- each. The new share certificates were issued to the members whose named appeared on record date i.e. January 28, 2011.

8. Figures of previous year have been regrouped or rearranged wherever found necessary and the same are appearing in brackets.

9. Schedules 1 to 18 form an integral part of the accounts and have duly been authenticated.

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Mar 31, 2010

1 Contingent liabilities not provided for:-

Year ended Particulars March 31, March 31,

2010 2009 Rupees Rupees

Unexpired letters of credit [Net of margins Rs.5,848,506 (Previous yearRs. 5,584,540)] 35,651,494 10,415,460

Bills discounted 50,757,185 14,589,381

Service Tax 7,725 Nil

Excise Duty 806,204 806,204

Sales Tax 6,842,285 Nil

2. Estimated amount of contracts remaining to be executed on capital account [Net of advances Rs.5,778,458 (Previous Year Rs.5,506,554] not provided for Rs.41,953,885. (Rs. 55,423,885).

3. There are no Micro, Small and Medium Enterprises to whom the company owes dues, which are outstanding for more than 45 days as at March 31, 2010. This information required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006, has been determined to the extent such parties have been identified on the basis of information available with the Company.

4. Related party disclosures

a) The following are the related parties of the company Companies under common control Orient Abrasives Limited with whom transactions have taken Perfectpac Limited place during the year: Rajgarhia Leasing &- Financial Services Private Limited.

AJR Fiscal Private Limited Faridabad Paper Mills Limited

Companies under Common control Axis Cottex Private Limited with whom no transactions have taken Essvee Fiscal Private Limited place during the year:

Key Management Personnel & R.K.Rajgarhia,Chairman and Managing Director their relatives H.R.Sharma,Executive Director S.G. Rajgarhia Ajay Rajgarhia Prabha Rajgarhia Aditi Rajgarhia R.k.rajgarhia & sons (HOP)

b) Related Party Transactions

No amount pertaining to related parties which have been provided for as doubtful debts or written off in respect of related parties Related party relationship is as identified by the Company and relied upon by the Auditors.

5. Profit / Loss on the sale of raw material is adjusted in the raw material consumed account. However, the amount of the profit / loss is not material.

6. Figures of previous year have been regrouped of rearranged wherever found necessary and the same are appearing in brackets.