Notes to Accounts of Artson Engineering Ltd.

Mar 31, 2019

1) General Information

Artson Engineering Limited (“the Company’’) is a Company limited by shares incorporated under the erstwhile Companies Act, 1956. The Company’s Registered Office is situated at Mumbai. The Company’s shares are listed on the Bombay Stock Exchange (BSE) and the Scrip Code is 522134.

The Company was incorporated in the year 1978 and since inception, the Company has commissioned, on turn-key basis, several fuel storage and handling facility systems. The Company is operating in one segment viz. Supply of fabricated steel structure and site services of mechanical works.

The Company was referred to the BIFR as a sick Company under the provisions of Section 3 (1) (O) of the Sick Industrial Companies (Special Provisions) Act, 1985. The Company’s reference as a sick Company was registered under Case No. 152/ 2004 with the BIFR. Meanwhile, with effect from December 1, 2016, the Ministry of Finance, Government of India notified the SICA Repeal Act, 2003 (“Repeal Act, 2003”) by virtue of which BIFR stood dissolved and all the appeals, references, inquiries and proceedings pending before the BIFR stand abated except for the Schemes already sanctioned. The Management is of the opinion that considering the current financial performance and order booking, the Company does not require to refer the case to the NCLT for approval of the above.

1.1 Applicability of new and revised Ind AS:

- Ind AS 115, Revenue from Contracts with Customers

Effective 01 April 2018, the Company has applied Ind AS 115 which establishes a comprehensive framework for determining whether, how much and when revenue is to be recognized. The Company has adopted Ind AS 115 using the modified retrospective approach. The effect of initially applying this standard is recognized at the date of initial application (i.e. 01 April 2018). The standard is applied only to contracts that are not completed as at the date of initial application and the comparative information in the Financial statements is not restated — i.e. the comparative information continues to be reported under Ind AS 18 and Ind AS 11. The Company had to change its accounting policy and make certain adjustments following the adoption of Ind AS 115. This has been disclosed in Note 31 of the Financial Statements.

- Appendix C, Uncertainty over Income Tax Treatments, to Ind AS 12, ‘Income Taxes’

The appendix explains how to recognise and measure deferred and current income tax assets and liabilities where there is uncertainty over a tax treatment. In particular, it discusses:

- how to determine the appropriate unit of account, and that each uncertain tax treatment should be considered separately or together as a group, depending on which approach better predicts the resolution of the uncertainty;

- that the entity should assume a tax authority will examine the uncertain tax treatments and have full knowledge of all related information, i.e. that detection risk should be ignored;

- that the entity should reflect the effect of the uncertainty in its income tax accounting when it is not probable that the tax authorities will accept the treatment;

- that the impact of the uncertainty should be measured using either the most likely amount or the expected value method, depending on which method better predicts the resolution of the uncertainty; and

- that the judgements and estimates made must be reassessed whenever circumstances have changed or there is new information that affects the judgements.

The Company operates in limited countries and tax jurisdictions and has substantially completed assessing its existing models and processes which it has developed to account for tax uncertainties against the specific guidance in the appendix C to Ind AS 12 to consider the impact on income tax accounting in respect of its material tax jurisdictions. Basis such assessment, the application of this guidance is not expected to have material impact on its financial statements.

- Amendment to Ind AS 12, Income Taxes

The amendments clarify that the income tax consequences of dividends on financial instruments classified as equity should be recognised according to where the past transactions or events that generated distributable profits were recognised. These requirements apply to all income tax consequences of dividends. Previously, it was unclear whether the income tax consequences of dividends should be recognised in profit or loss, or in equity, and the scope of the existing guidance was ambiguous.

These amendments do not have any impact on the financial statements of the Company.

- Ind AS 103, ‘Business Combinations’

The amendments clarify that obtaining control of a business that is a joint operation, is a business combination achieved in stages. The acquirer should re-measure its previously held interest in the joint operation at fair value at the acquisition date.

These amendments will apply to future business combinations of the Company for which acquisition date is on or after 1 April 2019. These amendments do not have any impact on the financial statements of the Company.

- Ind AS 111, ‘Joint Arrangements’

The amendments clarify that the party obtaining joint control of a business that is a joint operation should not remeasure its previously held interest in the joint operation.

These amendments will apply to future transactions of the Company in which it obtains joint control of a business on or after 1 April 2019. These amendments do not have any impact on the financial statements of the Company.

- Ind AS 23, ‘Borrowing Costs’

The amendments clarify that if a specific borrowing remains outstanding after the related qualifying asset is ready for its intended use or sale, it becomes part of general borrowings.

Since the Company does not have qualifying assets, these amendments do not have any impact on the financial statements of the Company.

- Long-term Interests in Associates and Joint Ventures - Amendments to Ind AS 28, ‘Investment in Associates and Joint Ventures’

The amendments clarify the accounting for long-term interests in an associate or joint venture, which in substance form part of the net investment in the associate or joint venture, but to which equity accounting is not applied. Entities must account for such interests under Ind AS 109 ‘Financial Instruments’ before applying the loss allocation and impairment requirements in Ind AS 28.

Since the Company does not have associates or joint ventures, the amendments will not have any impact on its financial statements.

- Prepayment Features with Negative Compensation - Amendments to Ind AS 109, ‘Financial Instruments’

The narrow-scope amendments made to Ind AS 109 enable entities to measure certain prepayable financial assets with negative compensation at amortised cost. These assets, which include some loan and debt securities, would otherwise have to be measured at fair value through profit or loss. To qualify for amortised cost measurement, the negative compensation must be ‘reasonable compensation for early termination of the contract’ and the asset must be held within a ‘held to collect’ business model.

These amendments are not expected to have any impact on the financial statements of the Company.

- Plan Amendment, Curtailment or Settlement — Amendments to Ind AS 19, ‘Employee Benefits’

The amendments to Ind AS 19 clarify the accounting for defined benefit plan amendments, curtailments and settlements. They confirm that entities must:

- calculate the current service cost and net interest for the remainder of the reporting period after a plan amendment, curtailment or settlement by using the updated assumptions from the date of the change;

- any reduction in a surplus should be recognised immediately in profit or loss either as part of past service cost, or as a gain or loss on settlement. In other words, a reduction in a surplus must be recognised in profit or loss even if that surplus was not previously recognised because of the impact of the asset ceiling; and

- separately recognise any changes in the asset ceiling through other comprehensive income.

These amendments will apply to any future plan amendments, curtailments, or settlements of the Company on or after 1 April 2019. The amendment does not have any impact on the Company.

- Ind AS 116, ‘Leases’

Ind AS 116 was notified by Ministry of Corporate Affairs on 30 March 2019 and it is applicable for annual reporting periods beginning on or after 1 April 2019.

Ind AS 116 will affect primarily the accounting by lessees and will result in the recognition of almost all leases on balance sheet. The standard removes the current distinction between operating and finance leases and requires recognition of an asset (the right-of-use the leased item) and a financial liability to pay rentals for virtually all lease contracts. An optional exemption exists for short-term and low-value leases.

The statement of profit and loss will also be affected because the total expense is typically higher in the earlier years of a lease and lower in later years. Additionally, operating expense will be replaced with interest and depreciation, so key metrics like EBITDA will change.

Operating cash flows will be higher as repayments of the lease liability and related interest are classified within financing activities.

The accounting by lessors will not significantly change. Some differences may arise as a result of the new guidance on the definition of a lease. Under Ind AS 116, a contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The Company in the process of reviewing all of its leasing arrangements in light of the new lease accounting rules in Ind AS 116. The standard will affect primarily the accounting for the Company’s operating leases. The Company intends to apply simplified transition approach and will not restate comparative information in the financial statements for the year ending 31 March 2020 to show the impact of adopting Ind AS 116.

The Company is in the process of assessing the detailed impact of Ind AS 116 which will become effective from 01 April 2019.

2.1 Property, plant and equipment pledged as security

Refer to Note 14 for information on property, plant and equipment pledged as security by the Company.

2.2 Self Constructed Asset

Additions to Plant and Equipment include an amount of Rs. 11.54 Lakhs (31^st March 2018 - Rs. 125.02 Lakhs) representing working support structure constructed for machinery at Nashik factory capitalised from the inventory of raw materials.

2.3 Buildings

Buildings are constructed on leasehold land not owned by the Company.

2.4 Contractual Obligations

Refer to Note 44 for disclosure of contractual commitments for the acquisition of property, plant and equipment.

2.5 Capital work-in-progress

Capital work-in-progress comprises of De-dusting machine to be installed at the Nashik factory.

3.1 Expected Credit Loss Allowance on receivables

The Company applies the simplified approach for providing for expected credit losses prescribed by Ind AS 109, which permits the use of the lifetime expected loss provision for all the trade receivables (including unbilled revenue disclosed under other financial assets). The loss allowance provision is determined as follows after incorporating forward looking information.

(i) At the end of each reporting period, the Company reviews every receivable balance and in case an issue is identified with regard to the recovery of the balance, a specific provision is made for the same.

(ii) The Company also computes the Expected Credit Loss Allowance (ECLA) by applying the average percentage of bad debts writeoffs on turnover determined on a historical basis over the past 4 years. Expected Credit Loss Allowance is determined on the closing balance of all receivables (including unbilled revenue disclosed under other financial assets) from external customers at each reporting date.

No Expected Credit loss provision has been created for receivables from the Holding Company since the Company considers the life time credit risk of these financial assets to be very low.

3.2 Expected Credit Loss Allowance on other financial assets

No Expected Credit Loss provision, other than specific provisions, has been created for Cash and Cash equivalents and Other financial assets (other than unbilled revenue), since the Company considers the life time credit risk of these financial assets to be very low.

Note: The Company during the current year entered into a settlement agreement with M/s Aegis Logistics Ltd on January 27, 2019. As per the settlement agreement, the Company received an amount of Rs. 92.73 Lakhs (including Interest of Rs. 20.91 Lakhs) towards its outstanding dues of Rs. 235.10 Lakhs (Non Current Trade receivables of Rs. 116.02 Lakhs and Non Current Security Deposits of Rs. 119.08 Lakhs). Accordingly, the Company has considered an amount of Rs. 71.82 Lakhs as ‘Provision for doubtful debts no longer required written back’ under Other Income and has written off the balance receivable of Rs. 163.28 Lakhs from the Opening Provision.

Note: Effective 01^st April 2018 the Company has applied Ind AS 115 which establishes a comprehensive framework for determining whether how much and when revenue has to be recognised. One of the effects of applying the standard was reclassification of certain costs lying in Contracts-in-progress under Inventories (Note 9) as Unbilled Revenue under Note 6 - Other Financial Assets. As at 01^st April 2018, an amount of Rs. 1,328.75 Lakhs has been reclassified as Unbilled Revenue. Refer Note 31 for the detailed disclosure in this regard.

Significant estimates - Deferred tax assets on unabsorbed business losses and unabsorbed depreciation

The Company has recognised deferred tax assets on unabsorbed business losses and unabsorbed depreciation. The Company has incurred losses in the earlier years and it has started to make profits over the past couple of years. The management has concluded that the deferred tax assets will be recoverable using the estimated future taxable income based on the approved business plans and budgets. The losses can be carried forward for a period of 8 years as per the requirements of the Income Tax Act, 1961 upto the Financial Year 2021-22. After set off of losses, the Company is expected to generate taxable income in the Financial Year 2021-22.

Note (a) - Represents amount paid towards land lease for a period of 95 years which is amortised on straight line basis over the term of the lease. The amortisation expenses is recognised in the Statement of Profit and Loss under Note 27 - “Other Expenses”. For the year ended 31^st March 2019, the charge is Rs. 0.05 Lakh (Previous Year Rs. 0.04 Lakh).

(a) Contracts-in-progress disclosed under Inventories as at 31^st March 2018 included an amount of Rs. 1,221.96 Lakhs incurred on completed/ongoing contracts claimable from and billable to customers, including costs on account of delays/change in scope/design by them, etc., which were at various stages of discussion/negotiations. Effective 01^st April 2018 the Company has applied Ind AS 115 which establishes a comprehensive framework for determining whether how much and when revenue has to be recognised. One of the effects of applying the standard was classification of these costs as Unbilled Revenue under Note 6 - Other Financial Assets.

(b) Contracts-in-progress disclosed under Inventories as at 31^st March 2019 represents costs of construction materials lying at project sites which would be consumed in the next year.

(ii) Terms/rights attached to equity shares

The Company’s issued, subscribed and paid-up capital comprises of equity shares only and no preference shares have been issued. The Company’s paid-up capital comprises only one class, i.e. equity shares having par value of Rs. 1 per share. They entitle the holder to participate in dividends, and to share in the proceeds of winding up of the Company in proportion to the number of and amounts paid on the shares held.

Every holder of equity shares present at a Meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

The liability of the members is limited.

(iii) Restriction on distribution of dividend:

Pursuant to the revised terms of the loan given by the Holding Company, the Company is not permitted to declare any dividend to the equity shareholders without the payment of loan amount to the Holding Company in full.

(iv) No bonus shares have been issued during the last five years.

(v) No shares have been issued for consideration other than cash during the last five years.

⁽vi) No shares have been bought back during the last five years.

(vii) Shares of the Company held by holding Company

(i) Term loan from bank disclosed under Note 18 and Loans repayable on demand from banks disclosed under Note 16 include amounts that have been granted by the banks at a concessional interest rate based on a corporate guarantee provided by the Holding Company. As per the requirements of Ind AS 109, the Company has computed the deemed financial benefit on the borrowings availed at concessional rate and the said benefit has been taken to Other Equity. The financial benefit accounted is being amortised in the Statement of Profit and Loss over the period of the loans. The amount of financial benefit taken to Other Equity as at 31^st March 2019 is Rs. 679.18 Lakhs (31^st March 2018 - Rs. 610.78 Lakhs). Additionally, during the year, the Company has recognised an amount of Rs. 144.43 Lakhs (31^st March 2018 - Rs. 140.56 Lakhs) as guarantee commission charge in the Statement of Profit and Loss under Note 25 - Finance costs.

(i) The amount represents Term Loan of Rs. 1,500 Lakhs availed from IndusInd Bank by first pari passu charge on fixed and current assets of the Company, both present and future. The loan is repayable in single installment at the end of 3 years from the date of first disbursement of the facility i.e. 28^th September 2016 and carries an interest rate of 1 year MCLR plus 0.10% per annum i.e. 10% per annum, currently. Additionally, the term loan from bank is guaranteed unconditionally with irrevocable corporate guarantee from the Holding Company. As the loan amount is repayable within the next 12 months (i.e. by 27^th September, 2019), the same has been regrouped to Other financial liabilities as Current maturities of long term debt under Note 18 as at 31^st March 2019.

(ii) During the year 2016-17, the Company revised the terms of the term loan received from the Holding Company of Rs. 1,930.39 Lakhs and inter- corporate deposit received from the Holding Company of Rs. 2,100 Lakhs. As per the revised terms, the total loan from the Holding Company is repayable in a single installment at the end of 20 years and does not bear any interest. As per the requirements of Ind AS 109, the loan from Holding Company was recorded at its fair value of Rs. 207.10 Lakhs as at 31^st March 2017 and the difference of Rs. 3,823.29 Lakhs between the loan received from the Holding Company of Rs. 4,030.39 lakhs and the fair value of the loan was taken to Other Equity. The loan is secured by mortgage of leasehold land at Nashik. The leasehold land has been disclosed as prepayments under Other Non Current Assets (Note 8). Also refer the table below for the movement in the loan from related party:

(i) Working Capital loans from banks of Rs. 1,471.42 Lakhs (31^st March 2018 Rs. 863.86 Lakhs) are secured by pari passu charge on the inventories, trade receivables and other current assets of the Company. The current interest rates charged by banks range from 9% to 10.30% per annum. Additionally, the working capital loans amounting to Rs. 476.41 Lakhs (31^st March 2018 Rs. 863.86 Lakhs) from banks is guaranteed unconditionally with irrevocable corporate guarantee from the Holding Company.

# As permitted under the transitional provisions in Ind AS 115, the transaction price allocated to (partially) unsatisfied performance obligations as of 31 March 2018 is not disclosed.

Management expects that 100% of the transaction price allocated to the unsatisfied contracts as of 31 March 2019 will be recognised as revenue during the next reporting period.

The sale contracts for sale of goods are for periods of one year or less. As permitted under Ind AS 115, the transaction price allocated to these unsatisfied contracts is not disclosed.

Critical judgements in recognising revenue

The following are the critical estimates while determining the Revenue from construction activities:

Estimated Total Costs — Management determines the Estimated Total Costs for the project, which is used to determine the stage of completion of the contract.

These estimates may depend on the outcome of future events and may need to be reassessed at the end of each reporting period. Refer Note 2.3 for the accounting policy on Revenue from Construction activities.

Note: As gratuity and compensated absences are computed for all the employees on an aggregate basis in the actuarial valuation report, the amounts relating to the Key Managerial Personnel cannot be individually identified.

4. Changes in accounting policies

This note explains the impact of the adoption of Ind AS 115 Revenue from Contracts with Customers on the Company’s financial statements.

Impact on the financial statements

The Company applied Ind AS 115 for the first time by using the modified retrospective method of adoption with the date of initial application of 1^st April 2018. Under this method, the Company recognised the cumulative effect of initially applying Ind AS 115 as an adjustment to the opening balance of retained earnings as at 1^st April 2018. Comparative prior period has not been adjusted.

Entities applying the modified retrospective method can elect to apply the revenue standard only to contracts that are not completed as at the date of initial application (that is, they would ignore the effects of applying the revenue standard to contracts that were completed prior to the date of initial application). By taking that practical expedient the Company applies Ind AS 115 for all the contracts that are not completed on 1^st April 2018.

(i) Change in the Percentage of Completion method under Ind AS 115

The Company as at 1^st April 2018 has changed its Percentage of Completion method under Ind AS 115 to Input Method i.e, Cost incurred vis-a-vis the Budgeted cost for the project. The Company had been determining the Percentage of Completion under the erstwhile Ind AS 115 using Output method i.e., Survey method. The effect of applying this change as at 1^st April 2018 resulted in an increase of Rs. 94.47 lakhs (Net of taxes Rs. 36.41 lakhs) in the opening retained earnings as on April 01, 2018 with corresponding increase in Unbilled Revenue of Rs. 1,106.66 lakhs, decrease in inventories of Rs. 999.81 lakhs, decrease in Provision for Contractual expenses of Rs. 14.86 lakhs and increase in non current trade receivables of Rs. 9.17 lakhs.

5. EMPLOYEE BENEFITS PLANS

5.1 Defined Contribution plan

In respect of defined contribution plans, contributions are made to provident fund for employees at the rate of 12% of basic salary as per regulations. The contributions are made to registered provident fund administered by the Government. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expense recognised during the period towards defined contribution plan is Rs. 33.69 Lakhs (31^st March 2018 - Rs. 27.91 Lakhs).

5.2

The Company provides for gratuity for employees in India as per the payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/ termination is the employee’s last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The gratuity plan is a funded plan and the Company makes contributions to Life Insurance Corporation of India (LIC). The Company does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments.

The current service cost for the year is included in Note 24 - ‘Employee benefit expense’ in the Statement of Profit and Loss

The remeasurement of the net defined liability is included in Other Comprehensive Income.

The weighted average duration of the payment of these cash flows for the year ended 31^st March 2019 is 6.35 years.

Expected contribution to be made to plan assets in the Financial Year 2019-20 is Rs. 1.91 Lakhs (31^st March 2018: Rs. 6.28 lakhs)

5.3 Other long-term employee benefits - Compensated Absences

The Compensated absences cover the Company’s liability for earned leave and sick leave

6. FAIR VALUES

The management assessed that trade receivables, cash and cash equivalents, other bank balances, other financial assets, short term borrowings, trade payables and other financial liabilities approximate their carrying amounts largely due to the short-term maturities or interest bearing nature of these instruments. The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

Set out below, is a comparison by class of the carrying amounts and fair value of the Company’s financial instruments, other than those with carrying amounts that are reasonable approximations of fair values:

(ii) Fair value hierarchy

This section explains the judgments and estimates made in determining the fair values of the financial instruments that are 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. An explanation of each level follows underneath the table.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

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

Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

7. FINANCIAL RISK MANAGEMENT

A. Credit risk

Credit risk is the risk arising from credit exposure to customers, cash and cash equivalents held with banks and current and non-current held-to maturity financial assets.

(i) Credit risk management

The credit risk to the Company arises from two sources:

(a) Customers, who default on their contractual obligations, thus resulting in financial loss to the Company

(b) Non certification by the customers, either in part or in full, the works billed as per the contract,being non claimable cost as per the terms of the contract with the customer

(a) Customers

The Company evaluates the credentials of a customer at a very early stage of the bid. The Company has adopted a policy of 3 tier verification before participating for any bid. The first step of such verification includes verification of customer credentials. The Company, as part of verification of the customer credentials,ensures the compliance with the following criterion,

(i) Customer’s financial health by examining the audited financial statements

(ii) Whether the Customer has achieved the financial closure for the work for which the Company is bidding

(iii) Brand and market reputation of the customer

(iv) Details of other contractors working with the customer

(v) Where the customer is Public Sector Undertaking, sanction and availability of adequate financial resources for the proposed work

The Company makes provision on it’s financial assets, on every reporting period, as per Expected Credit Loss Method. The provision is made separately for each financial assets of each business line. The percentage at which the provision is made, is determined on the basis of historical experience of such provisions,modified to the current and prospective business and customer profile.”

Trade receivables consist of large number of customers, spread across diverse industries and geographical areas. Majority of the customers of the Company comprise of Public Sector Undertakings, with whom the Company does not perceive any default risk, however there would be a credit risk on account of delays in the payments. Additionally the Company has significant revenue contracts with Holding Company, Tata Projects Limited, the credit risk for these transactions has been considered minimal. As regards the customers from private sector, the Company carries out financial evaluation on regular basis and provides for any amount perceived as non realisable, in the books of accounts.

(b) Non certification of works billed

The costs incurred on projects are regularly monitored through the Project budgets. Costs which are incurred beyond the agreed terms and conditions of the contract, would be claimed from the customer, based on the actual works performed. The realisability of such claims is reviewed by the management on a periodic basis and the costs, which are identified as non tenable or costs beyond the collectible amounts would be provided in the books of accounts.

(ii) Provision for Expected Credit Loss

Refer Note 5.1 of the Financial Statements

B. Liquidity risk

The Company being an EPC contractor, has a constant liquidity pressures to meet the project requirements. These requirements are met by a balanced mix of borrowings and project cash flows. Cash flow forecast is made for all projects on monthly basis and the same are tracked for actual performance on daily basis. Shortfall in cash flows are

matched through short term borrowings and other strategic financing means. The daily project requirements are met by allocating the daily aggregated cash flows among the projects. The Company has established practice of prioritising the site level payments and regulatory payments above other payment requirements.

C. Market risk

(i) Foreign currency risk

The Company operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions, Primarily with respect to AED (United Arab Emirates Dirham) and KWD (Kuwaiti Dinar).

Since the Company ‘s net exposure in foreign exchange is not significant, the Company has not opted for derivative financial instruments to mitigate foreign exchange related risk exposures

(a) Foreign currency risk exposure

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:

8. CAPITAL MANAGEMENT

The Company’s business model is working capital centric. The Company manages its working capital needs and long-term capital expenditure, through a balanced mix of capital (including retained earnings) and short-term debt.

The capital structure of the Company comprises of net debt (borrowings reduced by cash and bank balances) and equity.

The Company is not subject to any externally imposed capital requirements.

The Company reviews its capital requirements on an annual basis, in the form of Annual Operating Plan (AOP). The AOP of the Company aggregates the capital required for execution of projects identified and the financing mechanism of such requirements is determined as part of AOP.

(ii) Non-cancellable operating leases

The Company leases various offices under non-cancellable operating leases expiring within one to five years. The leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated.

9. SEGMENT INFORMATION

The Company operates in only one business segment viz. Supply of steel structure and site services for mechanical works. Therefore, segment-wise reporting under Ind AS 108 is not applicable.

Significant clients

Three customers individually accounted for more than 10% of the revenues in the year ended 31^st March 2019 (31^st March 2018: Two clients individually accounted for more than 10% of the revenues).

10. Provision for current tax is not made in lieu of carry forward losses. The Company has been advised that since it continues to have negative net worth for computation of income tax in line with the erstwhile BIFR order dt 20.06.2013,the provision in respect of MAT u/s 115JB of Income Tax Act, 1961 is not applicable and hence the same is not provided.

11. DISCLOSURE IN ACCORDANCE WITH SECTION 22 OF THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006:

According to information available with the Management, on the basis of intimation received from suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act), the Company has the following amounts due to micro and small enterprises under the said Act:

Disclosure under Section of Micro, Small and Medium Enterprises Development Act, 2006

Dues to the Micro and small enterprises have been determined to the extent such parties have been identified on the basis of information collected by the management.

12. The Company was registered with the Board for Industrial and Financial Reconstruction (BIFR) as a sick Company and BIFR, vide its order dated December 18, 2017, had sanctioned the rehabilitation scheme. With effect from 1^st December, 2016 the Ministry of Finance, Government of India notified the SICA Repeal Act, 2003 by virtue of which BIFR stood dissolved and all appeals, references, inquiries and proceedings pending before BIFR stand abated except for the Schemes already sanctioned. Whereas, the Company had an option to refer the case to National Company Law Tribunal (NCLT), the management, considering the current financial performance and order booking, had decided not to pursue the matter with NCLT.

13. Capital expenditure contracted for at the end of the reporting period but not recognised as liabilities is - Rs. 8.60 Lakhs (31^st March 2018 - Rs. 16.78 Lakhs).

14 (a) The Company is in the process of evaluating the impact of the recent Supreme Court Judgment in case of “Vivekananda Vidyamandir And Others Vs The Regional Provident Fund Commissioner (II) West Bengal” and the related circular (Circular No. C-I/1(33)2019/Vivekananda Vidya Mandir/284) dated March 20, 2019 issued by the Employees’ Provident Fund Organisation in relation to non-exclusion of certain allowances from the definition of “basic wages” of the relevant employees for the purposes of determining contribution to provident fund under the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952. In the assessment of the management which is supported by legal advice, the aforesaid matter is not likely to have a significant impact and accordingly, no provision has been made in these Financial Statements.

15. The Company has appointed Mr. Saket Mathur as Manager w.e.f. 1^st January, 2018 in compliance with the provisions of Section 203 of the Companies Act, 2013.

16. Previous year’s figures have been regrouped and restated wherever necessary to make their classification comparable with that of the current year.

---

Mar 31, 2018

1) General Information

Artson Engineering Limited (“the Company’’) is a Company limited by shares incorporated under the erstwhile Companies Act, 1956. The Company’s Registered Office is situated at Mumbai. The Company’s shares are listed on the Bombay Stock Exchange (BSE) and the Scrip Code is 522134.

The Company was incorporated in the year 1978 and since inception, the Company has commissioned, on turn-key basis, several fuel storage and handling facility systems. The Company is operating in one segment viz. Supply of fabricated steel structure and site services of mechanical works.

The Company was referred to the BIFR as a sick Company under the provisions of Section 3 (1) (O) of the Sick Industrial Companies (Special Provisions) Act, 1985. The Company’s reference as a sick Company was registered under Case No. 152/ 2004 with the BIFR. Meanwhile, with effect from December 1, 2016, the Ministry of Finance, Government of India notified the SICA Repeal Act, 2003 (“Repeal Act, 2003”) by virtue of which BIFR stood dissolved and all the appeals, references, inquiries and proceedings pending before the BIFR stand abated except for the Schemes already sanctioned. The Management is of the opinion that considering the current financial performance and order booking, the Company does not require to refer the case to the NCLT for approval of the above.

1.1 Applicability of new and revised Ind AS:

The Company is in the process of assessing the detailed impact of Ind-AS 115 which will become effective from 1^st April, 2018.

The Company intends to adopt the standard using the modified retrospective approach which means that the cumulative impact of the adoption will be recognized in the retained earnings as of April 1, 2018 and that comparatives will not be restated.

2.1 Expected Credit Loss Allowance on other financial assets

No Expected Credit Loss provision, other than specific provisions, has been created for Cash and Cash equivalents and other financial assets (other than unbilled revenue), since the Company considers the life time credit risk of these financial assets to be very low.

Significant estimates - deferred tax assets on unabsorbed business losses and unabsorbed depreciation

The Company has recognized deferred tax assets on unabsorbed business losses and unabsorbed depreciation. The Company has incurred losses in the earlier years and it has started to make profits over the past couple of years. The Company has concluded that the deferred tax assets will be recoverable using the estimated future taxable income based on the approved business plans and budgets. The losses can be carried forward for a period of 8 years as per the requirements of the Income Tax Act, 1961. After set off of losses, the Company is expected to generate taxable income from Financial Year 2020-21 onwards.

Note (a) - Represents amount paid towards land lease for a period of 95 years which is amortized on straight line basis over the term of the lease. The amortization expenses is recognized in the Statement of Profit and Loss under Note 27 - “Other Expenses”. For the year ended 31^st March, 2018, the charge is Rs, 0.04 Lakh (Previous Year Rs, 0.04 Lakh).

Note: Contracts-in-progress disclosed under Inventories as at 31^st March, 2018 includes cost aggregating Rs, 1,221.96 Lakhs (31^st March, 2017 - Rs, 156.62 Lakhs) incurred on completed/ongoing contracts claimable from and billable to customers, including costs on account of delays/change in scope/design by them ,etc., which are at various stages of discussion/negotiations.

(ii) Terms/rights attached to equity shares

The Company’s issued, subscribed and paid-up capital comprises of equity shares only and no preference share have been issued. The Company’s paid-up capital comprises only one class, i.e. equity shares having par value of '' 1 per share. They entitle the holder to participate in dividends, and to share in the proceeds of winding up of the Company in proportion to the number of and amounts paid on the shares held.

The liability of the members is limited.

(iii) Restriction on distribution of dividend:

Pursuant to the revised terms of the loan given by the Holding Company, the Company is not permitted to declare any dividend to the equity shareholders without the payment of loan amount to the Holding Company in full.

(iv) No bonus shares have been issued during the last five years.

(v) No shares have been issued for consideration other than cash during the last five years.

(vi) No shares have been bought back during the last five years.

Notes:

(i) Term loan from bank disclosed under Note 13 and Loans repayable on demand from banks disclosed under Note 15 have been granted by the banks at a concessional interest rate based on a corporate guarantee provided by the Holding Company. As per the requirements of Ind AS 109, the Company has computed the deemed financial benefit on the borrowings availed at concessional rate and the said benefit has been taken to other equity. The financial benefit accounted would be amortized in the Statement of Profit and Loss over the period of the loans. The amount of financial benefit taken to Other Equity as at 31^st March,2018 is Rs, 610.78 Lakhs (31^st March, 2017 - Rs, 553.78 Lakhs). Additionally, during the year, the Company has recognized an amount of Rs, 140.56 Lakhs (31^stMarch 2017 - Rs, 116.37 Lakhs) as guarantee commission charge in the Statement of Profit and Loss under Note 24 - Finance costs.

(ii) During the previous year, the Company revised the terms of the term loan received from the Holding Company of Rs, 1,930.39 Lakhs and inter- corporate deposit received from the Holding Company of Rs, 2,100 Lakhs. As per the revised terms, the total loan from the Holding Company is repayable at the end of 20 years and does not bear any interest. As per the requirements of Ind AS 109, the loan from Holding Company was recorded at its fair value of Rs, 207.10 Lakhs as at 31^st March, 2017 and the difference of Rs, 3,823.29 Lakhs between the loan received from the Holding Company of Rs, 4,030.39 lakhs and the fair value of the loan was taken to other equity.

Notes:

(i) Term Loan of Rs, 1,500 lakhs (31^st March 2017 Rs, 1502.17 Lakhs) taken from a bank is secured by first pari passu charge on fixed and current assets of the Company, both present and future. The loan is repayable in single instalment at the end of 3 years from the date of first disbursement of the facility i.e. 28^th September, 2016 and carries an interest rate of 1 year MCLR plus 0.15% per annum i.e. 9% per annum, currently. Additionally, the term loan from bank is guaranteed unconditionally with irrevocable corporate guarantee from the Holding Company.

(ii) Loan of Rs, 4,030.39 lacs (31^st March 2017 Rs, 4,030.39 Lakhs) (Refer Note 12(b)) taken from the Holding Company is secured by mortgage of leasehold land at Nashik. The leasehold land has been disclosed as prepayments under other non-current assets (Note 8). The loan is repayable in single instalment at the end of 20 years effective from 1^st April 2017 and interest rate is nil. Also refer the table below for the movement in the loan from related party:

3. RELATED PARTY TRANSACTIONS

3.1 Details of related parties

Description of relationship__Names of related parties_

(i) Holding Company Tata Projects Limited

(ii) Key Management Personnel Mr. Vinayak K Deshpande, Chairman

Mr. Nalin M Shah, Independent Director Mr. Michael Bastian, Independent Director Mr. Pralhad Pawar, Director Ms. Leja Hattiangadi, Independent Director

Mr. Nikhil Naniwadekar, Manager (From 2^nd May 2017 to 31^st Dec 2017)

Mr. Saketh Mathur, Manager(From 1^st January 2018)

Mr. Rajesh Mandale, Chief Financial Officer (Upto 6^th May 2017)

Mr. Balaji Sethuraman, Chief Financial Officer (From 11^th July 2017) __Mr. Deepak Tibrewal, Company Secretary_

The weighted average duration of the payment of these cash flows for the year ended 31^st March, 2018 is 6.37 years.

Expected contribution to be made to plan assets in the financial year 2018-19 is Rs, 6.28 Lakhs.(Previous year: Rs, 6.84 lakhs)

2. OTHER LONG-TERM EMPLOYEE BENEFITS - COMPENSATED ABSENCES

The Compensated absences cover the Company’s liability for earned leave and sick leave.

(a) Funded status of obligation towards compensated absences and the charge in the Statement of Profit and Loss

3. FAIR VALUES

The Management assessed that trade receivables, cash and cash equivalents, other bank balances, other financial assets, short term borrowings, trade payables and other financial liabilities approximate their carrying amounts largely due to the short-term maturities or interest bearing nature of these instruments. The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

Set out below, is a comparison by class of the carrying amounts and fair value of the Company’s financial instruments, other than those with carrying amounts that are reasonable approximations of fair values:

(ii) Fair value hierarchy

This section explains the judgments and estimates made in determining the fair values of the financial instruments that are measured at amortized 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. An explanation of each level follows underneath the table.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

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

Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

4. FINANCIAL RISK MANAGEMENT A . CREDIT RISK

Credit risk is the risk arising from credit exposure to customers, cash and cash equivalents held with banks and current and non-current held-to maturity financial assets.

(i) Credit risk management

The credit risk to the Company arises from three sources:

(a) Customers, who default on their contractual obligations, thus resulting in financial loss to the Company

(b) Non certification by the customers, either in part or in full, the works billed as per the contract, being non claimable cost as per the terms of the contract with the customer

(a) Customers

Company evaluates the credentials of a customer at a very early stage of the bid. Company has adopted a policy of 3 tier verification before participating for any bid. The first step of such verification includes verification of customer credentials. The Company, as part of verification of the customer credentials, ensures the compliance with the following criterion,

(i) Customer’s financial health by examining the audited financial statements

(ii) Whether the Customer has achieved the financial closure for the work for which the Company is bidding

(iii) Brand and market reputation of the customer

(iv) Details of other contractors working with the customer

(v) Where the customer is Public Sector Undertaking, sanction and availability of adequate financial resources for the proposed work.

Company makes provision on it’s financial assets, on every reporting period, as per Expected Credit Loss Method. The provision is made separately for each financial assets of each business line. The percentage at which the provision is made, is determined on the basis of historical experience of such provisions, modified to the current and prospective business and customer profile.

Trade receivables consist of large number of customers, spread across diverse industries and geographical areas. Majority of the customers of the Company comprise of Public Sector Undertakings, with whom the Company does not perceive any credit risk. Additionally the Company has significant revenue contracts with Holding Company, Tata Projects Limited, hence the credit risk for these transactions has been considered minimal. As regards the customers from private sector, Company carries out financial evaluation on regular basis and provides for any amount perceived as non-realizable ,in the books of accounts.

(b) Non certification of works billed

The costs incurred on projects are regularly monitored through the Project budgets. Costs which are incurred beyond the agreed terms and conditions of the contract, would be claimed from the customer, based on the actual works performed. The reliability of such claims is reviewed by the Management on a periodic basis and the costs, which are identified as non tenable or costs beyond the collectible amounts would be provided in the books of accounts.

(ii) Provision for Expected Credit Loss

Refer Note 5 of the Financial Statements B . LIQUIDITY RISK

Company being an EPC contractor, has a constant liquidity pressures to meet the project requirements. These requirements are met by a balanced mix of borrowings and project cash flows. Cash flow forecast is made for all projects on monthly basis and the same are tracked for actual performance on daily basis. Shortfall in cash flows are matched through short term borrowings and other strategic financing means. The daily project requirements are met by allocating the daily aggregated cash flows among the projects. Company has established practice of prioritizing the site level payments and regulatory payments above other requirements.

C . MARKET RISK

(i) Foreign currency risk

The Company operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions, Primarly with respect to AED (United Arab Emirates Dirham) and KWD (Kuwait Dinar).

Since the Company’s net exposure in foreign exchange is not significant, the Company has not opted for derivative financial instruments to mitigate foreign exchange related risk exposures.

5. CAPITAL MANAGEMENT

The Company’s business model is working capital centric. The Company manages its working capital needs and long-term capital expenditure, through a balanced mix of capital (including retained earnings) and short-term debt.

The capital structure of the Company comprises of net debt (borrowings reduced by cash and bank balances) and equity.

The Company is not subject to any externally imposed capital requirements.

The Company reviews its capital requirements on an annual basis, in the form of Annual Operating Plan(AOP). The AOP of the Company aggregates the capital required for execution of projects identified and the financing mechanism of such requirements is determined as part of AOP.

(ii) Non-cancellable operating leases

The Company leases various offices under non-cancellable operating leases expiring within one to five years. The leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated.

Significant clients

Two customers individually accounted for more than 10% of the revenues in the year ended 31 March 2018 (31^stMarch, 2017: One client individually accounted for more than 10% of the revenues).

6. Provision for current tax is not made in lieu of carry forward losses. The Company has been advised that since it continues to have negative net worth for computation of income tax in line with the erstwhile BIFR order dt 20.06.2013, the provision in respect of MAT u/s 115JB of Income Tax Act, 1961 is not applicable and hence the same is not provided.

7. DISCLOSURE IN ACCORDANCE WITH SECTION 22 OF THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006:

According to information available with the Management, on the basis of intimation received from suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act), the Company has the following amounts due to micro and small enterprises under the said Act:

Dues to the Micro and small enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management.

8. The Company was registered with the Board for Industrial and Financial Reconstruction (BIFR) as a sick Company and BIFR, vide its order dated December 18, 2007, had sanctioned the rehabilitation scheme. With effect from 1^st December 2016, the Ministry of Finance, Government of India notified the SICA Repeal Act, 2003 by virtue of which BIFR stood dissolved and all appeals, references, inquiries and proceedings pending before BIFR stand abated except for the Schemes already sanctioned. Whereas, the Company had an option to refer the case to National Company Law Tribunal (NCLT), the Management, considering the current financial performance and order booking, had decided not to pursue the matter with NCLT.

9. Capital expenditure contracted for at the end of the reporting period but not recognized as liabilities is - Rs, 16.78 Lakhs (31^st March, 2017 - Rs, 16.87 Lakhs).

10. The Company has appointed Mr. Saket Mathur as Manager w.e.f. 1^st January, 2018 in compliance with the provisions of Section 203 of the Companies Act, 2013.

11. Previous year’s figures have been regrouped and restated wherever necessary to make their classification comparable with that of the current year.

---

Mar 31, 2016

b. Terms/rights attached to equity shares

The Company''s issued, subscribed and paid-up capital comprises of equity shares only and no preference share have been issued. The Company''s paid-up capital comprises only one class, i.e. equity shares having par value of Rs. 1 per share. Each holder of equity share is entitled to one vote per share.

The liability of the members is limited.

The Company''s shares are listed on the Bombay Stock Exchange Limited (BSE).

Restriction on distribution of Dividend:

Pursuant to the Provisions of the Sanctioned Scheme, the Company is not permitted to declare any dividend to the equity shareholders without the prior approval of the BIFR/Monitoring Agency (MA) during the period of rehabilitation.

c. No bonus shares have been issued, no shares have been issued for consideration other than cash and no shares have been bought back during the last five years

e. Reduction in paid-up value of equity shares

Pursuant to the provisions of the Sanctioned Scheme, effective 26^th December 2007 the paid-up value of the equity shares has been reduced from Rs. 10 per share to Rs. 1 per share fully paid-up. On reduction, the paid-up capital of the Company was reduced to '' 92,30,000 comprising of 92,30,000 equity share of Rs. 1 each. On 4^th January 2008, the Company allotted 2,76,90,000 equity share of Rs. 1 each to Tata Projects Limited. Consequent to the allotment of these shares, the Company has become a subsidiary of Tata Projects Limited (shareholding of 75% in the Company''s paid-up capital). The Company''s paid-up capital has thus been increased to Rs. 3,69,20,000 comprising of 3,69,20,000 equity share of Rs. 1 each.

Foot Note :

* Term Loan from the Holding Company in terms of the Sanctioned Scheme of BIFR dated 18^th December 2007 secured against all movable and Immovable property and all title deeds of the property.

Foot Note :

Based on an in-principle approval granted by the Holding Company for extension of dates for moratorium as proposed by the Company, the maturity profile of the loans and their classification into Current and Non-current has been done for the current year.

The rate of interest is 10% p.a. For further details, refer Note 35.

The above Maturity Profile may change subject to approval of modification application made to BIFR as referred in Note 35.

Foot Note :

1. Working Capital loan from Corporation Bank of Rs. 85.98 lakhs (Previous year Rs. (10.54) lakhs) is secured by first charge by way of hypothecation of inventories, books debts and other current assets.

2. Short-term Loan from Tata Capital Financial Services Ltd Rs. 2000 lakhs ( Previous Year Rs. 2000 lakhs) and Working Capital Demand Loan Rs. 200 lakhs ( Previous Year Rs. 100 lakhs) guaranteed unconditionally and irrecovable corporate guarantee from the Holding Company

3. All the Fixed Deposit receipts are lying with the banks towards margin money against Bank guarantees issued by Banks.

4. a. Deferred Tax Liabilities comprise of :

Note: On grounds of prudence, the Company has recognized Deferred Tax Asset only to the extent of the future reversal of Deferred Tax Liability.

b. Provision for Tax is not made in lieu of carry forward losses and provisions u/s 115JB of Income Tax Act . 1961 in respect of MAT are not applicable to a sick company.

5. a. Related Parties and Relationships

Holding Company : Tata Projects Limited

Key Managerial Personnel : Mr Rajesh Mandale, Chief Financial Officer from 2^nd February 2015, Miss Ajuja Bhate, Company Secretary till 3^rd September 2015, Rajeshree Gaikwad Company Secretary from 21^st October 2015 and Mr Pratik Agarwal, Chief Financial Officer from 21^st July 2014 to 12^th December 2014.(Refer Note 49)

b. Related Party Transactions

6. Disclosure in accordance with Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006:

According to information available with the Management and relied upon by the auditors, on the basis of intimation received from suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act), the Company has amounts due to micro and small enterprises under the said Act as follows:

7. The Company is registered with the Board for Industrial and Financial Reconstruction (BIFR) as a sick company and BIFR has vide its order dated 18^th December 2007 sanctioned the rehabilitation scheme (“the Sanctioned Scheme”). While most of the provisions of the Sanctioned Scheme have been implemented, the Company was not able to achieve positive net worth as at 31^st March 2013; accordingly, the Company has filed application on 17^th October 2013 to BIFR seeking an extension and modification of the Sanctioned Scheme. The modification also includes conversion of Loans of Rs. 4418 lakhs (including interest up to 31^st March 2013 and loan of Rs. 300 lakhs taken during the three months period ended 30^th June 2013, but excluding interest of Rs. 94.27 lakhs for the three months period ended 30^th June 2013) of the Holding Company as at 31^st March 2013 into 4% Optionally Convertible Cumulative Redeemable Preference Shares of Rs. 1/-each, which is pending for approval from BIFR. The Honorable Delhi High Court has passed an order on 14^th October 2015 on writ petition file by the Company directing BIFR to keep the hearing on 4^th November 2015 or any such date convenient to BIFR. In response, BIFR has informed the Hon''ble Delhi High Court that the hearing on 4^th November 2015 was not granted as there was no quorum. Subsequent thereto and till the date of this Meeting , no hearings were granted by the BIFR and such there is no progress in the matter. In view of this, and based on written confirmation from the Holding Company, no provision has been made for interest payable to it amounting to Rs. 1,108.64 lakhs for the period 1^st July 2013 to 31^st March 2016 (including Rs. 403.04 lakhs for year ended 31^st March 2016 ). The Management is considering various alternatives for achiving profitability. The Company has achieved positive cash flow during the year ended 31^st March 2016. Based on the current order book position, operating results for the current year and considering the continued support of the Holding Company, barring unforeseen circumstances, the Management is confident about the Company''s ability to continue as a going concern.

8. In the event of Arbitration Award in favour of the Company, any amount so received shall be treated as income of the year of receipt of award. During the year the Company has received an Arbitration Award amounting to Rs. 498 lakhs ( Previous Year NIL) which is included in Other operating revenue Rs. 241.36 lakhs (Previous Year NIL), interest portion as other income Rs. 249.39 lakhs (Previous Year NIL) and service tax expense Rs. 7.25 lakhs (Previous Year NIL).

9. a. In the opinion of the Management, all Current Assets, Loans & Advances are approximately of the same value if realized in the ordinary course of business. Provision for all the known liabilities and doubtful receivables is adequately made.

b. Trade receivables include retention of Rs. 190.77 lakhs (Previous Year Rs. 270.42 lakhs) receivable on completion of projects.

c. Balance outstanding against Trade Receivable and Trade Payable (including debit balances), are subject to reconciliation and confirmation with respective parties. Provision of Rs. NIL (Previous Year Rs. 285.01 lakhs) for doubtful debts is made during the year; resulting in total provision of Rs. 442.83 lakhs as at 31^st March 2016.(Previous Year Rs. 506.38 lakhs )

d. Long-term Loans and Advances include Rs. NIL ( Previous Year Rs. 300.90 lakhs) reimbursement receivable from client. Provision of Rs. NIL ( Previous Year Rs. 300.90 lakhs) has been made during the previous year.

10. The net gain on account of exchange rate difference amounting to Rs. 28.74 lakhs (Previous Year Gain of Rs. 2.84 lakhs) has been accounted in the Statement of Profit and Loss in compliance with AS-11.

11. Quantitative Details:

a. Erection / Construction Activities:

In respect of Erection / Construction activities, the materials procured by the Company are directly delivered to the project sites and charged off in the year of purchase. It is not practicable to furnish the quantitative information in respect of these items due to diversified size and nature of business.

The aggregate value of raw material consumed for erection/construction activities is Rs. 783.93 lakhs (Previous Year Rs. 63.80 lakhs).

12. a. Effective 1^st April 2014 the Company has changed the estimated useful life of group of assets in line with the recommended useful life as per Part C of Schedule II to the Companies Act, 2013. As per para 7 (b) of Notes of Part C of Companies Act, 2013, where the remaining useful life of an asset as on the effective date is nil, the carrying amount of the asset should be recognized in the retained earnings. Such carrying amount as on 1^st April 2015 is NIL ( Previous Year Rs. 16.33 lakhs).

b. During the year the Company has provided additional depreciation on Plant and Machinery as referred in Note No12 c of Rs. 30.98 lakhs on assets (retaining Rs. 1) at the premises of 3rd party under arbitration and not available for verified during the year. This has resulted into profit for the current year being lower by Rs. 30.98 lakhs.

13. The Company has not contributed any amount towards Corpoarte Social Responsibility (CSR) in term of Section 135 in absence of eligible profits.

14. The Company has taken factory premises under cancelable and non-cancelable operating lease. The lease agreement is for two years and option of renewal on expiry of lease period is based on mutual agreement. Rental expenses towards cancelable and non cancelable operating lease charged to Statement of Profit and Loss amount to Rs. 6.00 lakhs (Previous Year Rs. 6.00 lakhs)

15. In line with accepted practice in construction business, certain revisions of costs and billing of previous year which have crystallized during the year have been dealt with during the current year.

16. The Company has filed in October 2013 a Miscellaneous Application (No.536 of 2013)(“MA”) with the Board for Industrial and Financial Reconstruction (“BIFR”) containing various proposals for modifications to the sanctioned Scheme. The said MA is pending with the BIFR. Vide one of the proposals contained in the said MA, the Company has sought exemption from the appointment of Managing Director (MD)/Manager (M)/Whole-time Director (WD). During the course of the proceedings before the BIFR, a legal opinion has also been submitted on the matter. Accordingly, the Company has not appointed any MD/M/WD, which is one of the categories of the Key Managerial Personnel (KMP) under the Companies Act,2013. The Company has appointed qualified KMP in other categories viz. Company Secretary and Chief Financial Officer.

17. Previous year''s figures have been regrouped and restated wherever necessary to make their classification comparable with that of the current year.

---

Mar 31, 2015

1. The Cash Flow Statement has been prepared following the indirect method except in case of Purchase and Sale of investments and Taxes paid which have been considered on the basis of actual movement of cash with necessary adjustments in corresponding Assets and Liabilities.

2. Cash and Cash Equivalents represent Cash and Bank Balances only.

3. Corporate Information

Artson Engineering Limited ("the Company") is a company limited by shares incorporated under the Companies Act, 2013. The Company's Registered Office is situated at Mumbai. The Company's shares are listed on the Bombay Stock Exchange (BSE) and the Scrip Code is 522134.

The Company was incorporated in the year 1978 and since inception, the Company has commissioned, on turn-key basis, several fuel storage and handling facility systems. The Company is in the business of Engineering, Procurement & Construction contract in Oil, Gas & Hydrocarbon (OG&H) Sector and ancillary services, including manufacturing activity.

The Company was referred to the BIFR as a sick company under the provisions of Section 3 (1) (O) of the Sick Industrial Companies (Special Provisions) Act, 1985. The Company's reference as a sick company was registered under Case No. 152/ 2004 with the BIFR. At the hearing held on 27th November 2007, the BIFR sanctioned the Rehabilitation Scheme of the Company and the Order sanctioning the scheme of rehabilitation was received by the Company on 18th December 2007 (Sanctioned Scheme). The Company has made an application on 17th October 2013 for extension of the Rehabilitation Scheme as referred above and pending the final hearing, the Sanctioned Scheme is under implementation.

b. Terms/rights attached to equity shares

The Company's issued, subscribed and paid-up capital comprises of equity shares only and no preference share have been issued. The Company's paid-up capital comprises only one class, i.e. equity shares having par value of Rs. 1 per share. Each holder of equity share is entitled to one vote per share.

The liability of the members is limited.

The Company's shares are listed on the Bombay Stock Exchange Limited (BSE).

Restriction on distribution of Dividend

Pursuant to the Provisions of the Sanctioned Scheme, the Company is not permitted to declare any dividend to the equity shareholders without the prior approval of the BIFR/Monitoring Agency (MA) during the period of rehabilitation.

c. No bonus shares have been issued, no shares have been issued for consideration other than cash and no shares have been bought back during the last five years

e. Reduction in paid-up value of equity shares

Pursuant to the provisions of the Sanctioned Scheme, effective 26th December 2007 the paid-up value of the equity shares has been reduced from Rs. 10 per share to Rs. 1 per share fully paid-up. On reduction, the paid-up capital of the Company was reduced to Rs. 92,30,000 comprising of 92,30,000 equity shares of Rs. 1 each. On 4th January 2008, the Company allotted 2,76,90,000 equity shares of Rs. 1 each to Tata Projects Limited. Consequent to the allotment of these shares, the Company has become a subsidiary of Tata Projects Limited (shareholding of 75% in the Company's paid-up capital). The Company's paid-up capital has thus been increased to Rs. 3,69,20,000 comprising of 3,69,20,000 equity shares of Rs. 1 each.

* Term Loan from the Holding Company in terms of the Sanctioned Scheme of BIFR dated 18th December 2007 secured against the immovable property and all title deeds of the property.

Based on an in-principle approval granted by the Holding Company for extension of dates for moratorium as proposed by the Company, the maturity profile of the loans and their classification into Current and Non-current has been done for the current year.

The rate of interest is 10% p.a. For further details refer note 36.

The above Maturity Profile may change subject to approval of modification application made to BIFR as referred in Note 36.

* 1. Working Capital loan from Corporation Bank of Rs. (10.54) Lakh (Previous year Rs. 2021.45 Lakh) is secured by first charge by way of hypothecation of inventories, books debts and other current assets.

** 2. Term Loan from Tata Capital Financial Services Limited Rs. 20 Crore and Working Capital Demand Loan Rs. 1 Crore guaranteed Unconditionally and irrevocable corporate guarantee from Holding Company.

a. Figure in bracket are of previous year.

b. Deletion to Fixed Assets includes Furniture and Fixture discarded Gross Block Rs. NIL (Previous Year Rs. 23.98 Lakh), Accumulated Depreciation Rs. NIL (Previous Year Rs. 9.18 Lakh) & Net Charged to Statement of Profit and Loss Rs. NIL (Previous Year Rs. 13.14 Lakh).

c. Depreciation for the year 31.03.2015 includes depreciation on assets whose remaining useful life is NIL as on 01.04.2014. Accordingly Rs. 16.33 Lakh has been debited to retained earnings as per Schedule II of the Companies Act, 2013.

* Includes Rs. 24.03 Lakh (Previous Year Rs. 31.38 Lakh) towards Defined Contribution Plan and Rs. 8.65 Lakh (Previous Year Rs. 20.04 Lakh) towards Defined Benefit Plan and Rs. 5.13 Lakh (Previous Year Rs. 11.80 Lakh) for PF administration Charges and Other Fund.

4 Contingent liabilities not provided for:

Sr. Name of Statute Nature of For the No. Dues Year Ended March 2015 (Rs. Lakh)

1 Commercial Tax (Andhra Works 12.21 Pradesh) Contract Tax

2 Commercial Tax (West Works 2.08 Bengal) Contract Tax

3 Commercial Tax (Punjab) Penalty 8.03

4 Sales Tax VAT 101.52

5 Income Tax 136.72

6 Income Tax 535.35

7 Third party claim from 1,143.00 disputes relating to contracts

Nature of Statue For the Year Period Forum Ended March 2014 (Rs. Lakh)

Commercial Tax 12.21 F.Y. 1998-99 Commissioner (Andhra Pradesh) (Appeal)

Commercial Tax F.Y. 1998-99 (West Bengal) 2.08 F.Y. 1999-00 Commissioner F.Y. 2000-01 (Appeal)

Commercial Tax 8.03 F.Y. 2010-11 Joint Director (Punjab) cum Deputy Excise & Taxation Commissioner (Appeal)

Sales Tax - F.Y. 2007-08 Commissioner (Appeal)

Income Tax 136.72 A.Y. 2010-11 CIT (A)

Income Tax A.Y. 2012-13 CIT (A)

Third party claim from 900.00 disputes relating to contracts

5 All the Fixed Deposit receipts are lying with the banks towards margin money against Bank guarantees issued by Banks.

Note: On grounds of prudence, the Company has recognised Deferred Tax Asset only to the extent of the future reversal of Deferred Tax Liability. During the year, there is no reversal of Deferred Tax Liability (Previous Year Rs. 1.20 Lakh).

Provision for tax under the Income Tax Act, 1961 is not made as there are no chargeable profits during the year.

Holding Company : Tata Projects Limited

Key Managerial Personnel : Mr. Rajesh Mandale, Chief Financial Officer from 2nd February 2015, Ms. Anuja Bhate Company Secretary from February 2014 and Mr. Pratik Agrawal, Chief Financial Officer from 21st July 2014 t< 12th December 2014.(See Note 49)

* The Company is following Percentage Completion Method for recognising contract revenue.

* The Company has adopted Completion of Physical Proportion of the Contract Work Method to determine the stage of completion of contracts-in-progress.

6 Disclosure in accordance with Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006:

According to information available with the Management and relied upon by the auditors, on the basis of intimation received from suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act), the Company has amounts due to micro and small enterprises under the MSMED Act as follows:

7 The Company is registered with the Board for Industrial and Financial Reconstruction (BIFR) as a sick company and BIFR has vide its order dated 18th December 2007 sanctioned the rehabilitation scheme ("the Sanctioned Scheme"). While most of the provisions of the Sanctioned Scheme have been implemented, the Company was not able to achieve positive net worth as at 31st March 2013; accordingly, the Company has filed application on 17th October 2013 to BIFR seeking an extension and modification of the Sanctioned Scheme. The modification also includes conversion of Loans of Rs. 4418 Lakh (including interest up to 31st March 2013 and loan of Rs. 300 Lakh taken during the three months period ended 30th June 2013, but excluding interest of Rs. 94.27 Lakh for the three months period ended 30th June 2013) of the Holding Company as at 31st March 2013 into 4% Optionally Convertible Cumulative Redeemable Preference Shares of Rs. 1/-each, which is pending for approval from BIFR. In view of this, and based on written confirmation from the Holding Company, no provision has been made for interest payable to it amounting to Rs. 705.60 Lakh for the period 1st July 2013 to 31st March 2015 (including Rs. 403.04 Lakh for year ended 31st March 2015 ). The Management is considering various alternatives for achieving profitability and positive cash flow. Based on the current order book position, operating results for the current year and considering the continued support of the Holding Company, barring unforeseen circumstances, the Management is confident about the Company's ability to continue as a going concern and the Auditors of the Company have put an "emphasis of matter" paragraph on the aforesaid matter in the Auditor's Report for the year ended 31st March 2015.

8 a. In the opinion of the Management, all Current Assets, Loans & Advances are approximately of the same value if realized in the ordinary course of business. Provision for all the known liabilities and doubtful receivables is adequately made.

b. Trade receivables include retention of Rs. 270.42 Lakh (Previous Year Rs. 146.18 Lakh) receivable on completion of projects.

c. Balance outstanding against Trade Receivable and Trade Payable (including debit balances), are subject to reconciliation and confirmation with respective parties. Provision of Rs. 276.23 Lakh (Previous Year Rs. 43.37 Lakh) for doubtful debts is made during the year; resulting in total provision of Rs. 497.60 Lakh as at 31st March 2015.(Previous Year Rs. 221.37 Lakh).

d. Long term Loans and Advances includes Rs. 300.90 Lakh reimbursement receivable from client. Provision of Rs. 300.90 Lakh (Previous Year Rs. 162.63 Lakh) has been made during the year.

9 The net Gain on account of exchange rate difference amounting to Rs. 2.84 Lakh (Previous Year Loss of Rs. 14.54 Lakh) has been accounted in the Statement of Profit and Loss in compliance with AS-11.

10 Quantitative Details:

a. Erection / Construction Activities:

In respect of Erection / Construction activities, the materials procured by the Company are directly delivered to the project sites and charged off in the year of purchase. It is not practicable to furnish the quantitative information in respect of these items due to diversified size and nature of business.

* Based on the data available with the Company, Investment Pattern for LIC Managed funds is as Central Government Securities - 22.19%, State Government Securities -29.06% others approved securities -0.99%, Debenture & Bonds - 29.92%, Equity Shares - 5.50%, Fixed Deposits - 12.34%.

11 Effective 1st April 2014, the Company has changed the estimated useful life of group of assets in line with the recommended useful life as per Part C of Schedule II to the Companies Act, 2013. As per para 7 (b) of Notes of Part C of Companies Act, 2013, where the remaining useful life of an asset as on the effective date is nil, the carrying amount of the asset should be recognised in the retained earnings. Such carrying amount as on 1st April 2014 for the Company is Rs. 16.33 Lakh.

12 The Company has not contributed any amount towards Corporate Social Responsibility (CSR) in terms of Section 135 as there are no profits attributable to CSR.

13 The Company has taken factory premises under cancelable and non-cancelable operating lease. The lease agreement is for two years and option of renewal on expiry of lease period is based on mutual agreement. Rental expenses towards cancelable and non cancelable operating lease charged to Statement of Profit and Loss amount to Rs. 6.00 Lakh ( Previous Year Rs. 4.00 Lakh).

14 In line with accepted practice in construction business, certain revisions of costs and billing of previous year which have crystallised during the year have been dealt with during the current year.

15 The Company has filed in October 2013 a Miscellaneous Application (No.536 of 2013)("MA") with the Board for Industrial and Financial Reconstruction ("BIFR") containing various proposals for modifications to the Sanctioned Scheme. The said MA is pending with the BIFR. Vide one of the proposals contained in the said MA, the Company has sought exemption from the appointment of Managing Director (MD)/Manager (M)/Whole-time Director (WD). During the course of the proceedings before the BIFR, a legal opinion has also been submitted on the matter. Accordingly, the Company has not appointed any MD/M/WD, which is one of the categories of the Key Managerial Personnel (KMP) under the Companies Act, 2013. The Company has appointed qualified and experienced KMP in other categories viz. Company Secretary and Chief Financial Officer.

16 Previous year's figures have been regrouped and restated wherever necessary to make their classification comparable with that of the current year.

---

Mar 31, 2014

1. Corporate Information

Artson Engineering Limited ("the Company") is a company limited by shares incorporated under the Companies Act, 1956 The Company''s Registered Office is situated at Mumbai. The Company''s shares are listed on the Bombay Stock Exchange (BSE) and the Scrip Code is 522134.

The Company was incorporated in the year 1978 and since inception, the Company has commissioned, on turn-key basis several fuel storage and handling facility systems. The Company operates in only one business segment i.e Engineering and Construction for EPC Projects

The Company was referred to the BIFR as a sick company under the provisions of Section 3 (1) (0) of the Sick Industrial Companies (Special Provisions) Act, 1985. The Company''s reference as a sick company was registered under Case No 152/2004 with the BIFR. At the hearing held on 27th November 2007, the BIFR sanctioned the Rehabilitation Scheme of the Company and the Order sanctioning the scheme of rehabilitation was received by the Company on 18th December 2007 (Sanctioned Scheme). The Company has made an application on 17th October 2013 for extension of the Rehabilitation Scheme as referred above and pending the final hearing, the Sanctioned Scheme is under implementation

2 Contingent liabilities not provided for :

a. Demand from Sales Tax Department (Work Contract Tax) Rs. 22.32 Lakh (Previous Year Rs. 22.32 Lakh) for which appeals are pending

b. Claims against the Company not acknowledged as debts Rs. 900 Lakh (Previous Year Rs. 1534.99 Lakh)

c. Income Tax Department has issued a demand notice for Rs. 136.72 Lakh (Previous Year Rs. 227.26 Lakh) as penalty

3 a. All the Fixed Deposit receipts are lying with the banks towards margin money against Bank guarantees issued by Banks

4 a. Related Parties and Relationships

Holding Company : Tata Projects Limited

Key Managerial Personnel : Mr. P. S. Chopde, Executive Director (Manufacturing) upto 10th April 2013

5 Disclosure in accordance with Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006:

According to information available with the Management and relied upon by the auditors, on the basis of intimation received from suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act), the Company has amounts due to micro and small enterprises under the MSMED Act as follows

6 The Company is registered with the Board for Industrial and Financial Reconstruction (BIFR) as a sick company and BIFR has vide its order dated 18th December 2007 sanctioned the rehabilitation scheme ("the Sanctioned Scheme"). While most of the provisions of the Sanctioned Scheme have been implemented, the Company was not able to achieve positive net worth as at 31st March 2013, accordingly, the Company has filed application on 17th October 2013 to BIFR seeking an extension and modification of the Sanctioned Scheme. The modification also includes conversion of Loans of Rs. 4418 Lakh (including interest up to 31st March 2013 and loan of Rs. 300 Lakh taken during the three months period ended 30th June 2013, but excluding nterest of Rs. 94.27 Lakh for the three months period ended 30th June 2013) of the Holding Company as on 31st March 2013 into 4% Optionally Convertible Cumulative Redeemable Preference Shares of Rs. 1/- each, which is pending for approval from BIFR. In view of this, and based on written confirmation from the Holding Company, no provision has been made for interest payable to it for the nine months ended 31st March 2014 amounting to Rs. 302.56 Lakh (includingRs. 99.38 Lakh for the quarter ended 31st March 2014 ). The Management is considering various alternatives for achieving profitability and positive cash flow. Based on the current order book position, operating results for the current year and considering the continued support of the Holding Company, barring unforeseen circumstances, the Management is confident about the Company''s ability to continue as a going concern and the Auditors of the Company have put an "emphasis of matter"paragraph on the aforesaid matter in the Auditors Report for the year ended 31st March 2014

7 a. In the opinion of the Management, all Current Assets, Loans & Advances are approximately of the same value if realized

in the ordinary course of business. Provision for all the known liabilities and doubtful receivables is adequately made

b. Trade receivables include retention ofRs. 146.18 Lakh (Previous YearRs. 371.05 Lakh) receivable on completion of projects

c. Balance outstanding against Trade Receivable and Trade Payable (including debit balances), are subject to reconciliation and confirmation with respective parties. Provision of Rs. 43.37 Lakh (Previous Year Rs. 78 Lakh) for doubtful debts is made during the year; resulting in total provision of Rs. 221.37 Lakh as on 31st March 2014

d. Long term Loans and Advances includes Rs. 300.90 Lakh reimbursement receivable from client. Provision of Rs. 162.63 Lakh (Previous Year Rs. Nil) has been made during the year

8 Amount due within one year towards Sales Tax Deferment Loan is Rs. 8.04 Lakh (Previous Year Rs. 24.01 Lakh)

9 The net loss on account of exchange rate difference amounting to Rs. 14.54 Lakh (Previous Year Gain of Rs. 9.59 Lakh) has been accounted in the Statement of Profit and Loss in compliance with AS-11 on "Changes in Foreign Exchange Rates"

10 Quantitative Details:

a. Erection / Construction Activities:

In respect of Erection / Construction activities, the materials procured by the Company are directly delivered to the project sites and charged off in the year of purchase. It is not practicable to furnish the quantitative information in respect of these items due to diversified size and nature of business

---

Mar 31, 2013

1. Corporate Information

Artson Engineering Limited (the Company) is a company limited by shares incorporated under the Companies Act, 1956. The Company''s Registered Offce is situated at Mumbai. The Company''s shares are listed on the Bombay Stock Exchange (BSE) and the Script Code is 522134.

The Company was incorporated in the year 1978. Since inception, the Company has commissioned on turn-key basis several fuel storage and handling facility systems. The Company operates in the business segment of Oil, Gas and Hydrocarbon (OG&H) Industry.

The Company was referred to the BIFR as a sick company under the provisions of Section 3 (1) (O) of the Sick Industrial Companies (Special Provisions) Act, 1985. The Company''s reference as a sick company was registered under Case No. 152/2004 with the BIFR. At the hearing held on 27th November 2007, the BIFR sanctioned the Rehabilitation Scheme of the Company and the Order sanctioning the scheme of rehabilitation was received by the Company on 18th December 2007 (Sanctioned Scheme). The Sanctioned Scheme is presently under implementation.

2. Contingent liabilities not provided for:

a. Sales Tax (Works Contract Tax) Rs. 22.31 Lakh (Previous Year Rs. 22.31 Lakh) for which appeals are pending.

b. Claims lodged but not acknowledged by the company Rs.. 1,534.99 Lakh (Previous Year Rs. NIL)

c. Income Tax Department has issued a demand notice for Rs. 227.26 Lakh as penalty for A.Y. 2006-07 and A.Y. 2007-08 and the same is pending before the Appellate Authorities.

d. Capital Commitment of Rs. NIL (Previous Year Rs. 0.41 Lakh) on account of orders foated in market for purchase of Capital Goods.

3. a. All the Fixed Deposit receipts are lying with the banks towards margin money against Bank guarantees issued by Banks.

4. (a) Related Parties and Relationships

Holding Company: Tata Projects Limited

Key Managerial Personnel: Mr. P. S. Chopde, Executive Director (Manufacturing)

Mr. P. V. Varghese, Executive Director (Upto 31st December 2012)

b. The amount of interest paid by the company in terms of section 16 of the Micro, Small and Medium Enterprises Development Act, 2006, along with the amount of the payment made to the supplier beyond the appointed day during each accounting year is Rs. NIL (Previous Year Rs. NIL)

c. The amount of interest due and payable for the period of delay in making payment (where principal has been paid but Interest under MSMED Act 2006 not paid is Rs. NIL (Previous Year Rs. NIL)

d. The amount of interest accrued and remaining unpaid at the end of each accounting year is Rs. NIL (Previous Year Rs. NIL)

e. The amount of further interest remaining due and payable even in the succeeding year, until such date when the interest dues as above are actually paid to the small enterprise, for the purpose of disallowance as a deductible expenditure under Section 23 of Micro, Small and Medium Enterprises Development Act, 2006 is – Rs. NIL (Previous Year Rs. NIL).

The above information is given to the extent available with the Company.

5. The Company is registered with the Board for Industrial & Financial Reconstruction (BIFR) as a sick company and BIFR has, vide its Order dated 18th December 2007, sanctioned the rehabilitation scheme and the same is under implementation. The Company is also in process of making an application to the BIFR seeking an extension of the Sanctioned Scheme of rehabilitation. The Management is considering various alternatives for achieving proftability and positive cash fow. Based on the current order book position and considering continued support of the holding Company, barring unforeseen circumstances, the Management is confdent about the Company''s ability to continue as a going concern. The accounts have accordingly been prepared on a going concern basis.

6. Extra-ordinary Item includes Rs. NIL (Previous Year Rs. 16.68 Lakh) being the fre insurance claim lodged in Financial Year 2010-11.

7. a. Majority of the Company''s Fixed Assets have been independently valued by an independent valuer in the year 2010-11 and considering the same, there is no impairment in the value of assets as on the Balance Sheet date.

b. In the opinion of the Management, all Current Assets, Loans & Advances are approximately of the same value if realized in the ordinary course of business. Provision for all the known liabilities is adequately made.

c. Sundry Debtors include retention of Rs. 371.05 Lakh (Previous Year Rs. 621.36 Lakh) receivable on completion of projects.

d. Balance outstanding against Trade Receivable and Trade Payable (including debit balances), are subject to reconciliation and confrmation with respective parties. Provision of Rs. 78 Lakh (Previous Year Rs. NIL) for doubtful debts is made during the year, resulting in total provision of Rs. 178 Lakh as on 31st March 2013.

8. Amount due within one year towards Sales Tax Deferment Loan is Rs. 24.01 Lakh (Previous Year Rs. 3.36 Lakh).

9. In line with accepted practice in construction business, certain revisions of costs and billing of previous years which have crystallized during the year have been dealt with during the current year.

10. Previous year''s fgures have been regrouped and restated wherever necessary to make their classifcation comparable with that of the current period.

---

Mar 31, 2012

1. Corporate Information:

Artson Engineering Limited (the Company) is a company limited by shares incorporated under the Companies Act, 1956. The Company's Registered Office is situated at Mumbai. The Company's shares are listed on the Bombay Stock Exchange (BSE) and the Script Code is 522134.

The Company was incorporated in the year 1978 and since inception, the Company has commissioned, on turn-key basis, several fuel storage and handling facility systems and emerged as one of the foremost companies in the Country specializing in such systems. The Company's expertise has gradually expanded beyond the Country and has been executing prestigious overseas contracts as well. The Company operates in the business segment of Oil, Gas and Hydrocarbon (OG&H) Industry. The Company was referred to the BIFR as a sick company under the provisions of Section 3 (1) (O) of the Sick Industrial Companies (Special Provisions) Act, 1985. The Company's reference as a sick company was registered under Case No. 152/ 2004 with the BIFR. At the hearing held on 27th November 2007, the BIFR sanctioned the Rehabilitation Scheme of the Company and the Order sanctioning the scheme of rehabilitation was received by the Company on 18th December, 2007 (Sanctioned Scheme). The Sanctioned Scheme is presently under implementation.

2. Contingent liabilities not provided for:

a. (i) Bank Guarantees issued by the Company to its clients Rs 1,367.03 Lakh (Previous Year Rs 1,694.60 Lakh).

(ii) Bank Guarantees issued by Bankers of Tata Projects Limited on behalf of the Company to the Company's clients. Rs 1,916.99 Lakh (Previous Year Rs 2,279.79 Lakh).

b. Sales Tax (Works Contract Tax) Rs 22.31 Lakh (Previous Year Rs 22.31 Lakh) for which appeals are pending.

c. Capital Commitment of Rs 0.41 Lakh (Previous Year Rs Nil) on account of orders floated in market for purchase of Capital Goods.

d. Income Tax of Rs 333.79 Lakh for which Appeals are pending.

c. Provision for Income-tax under normal provision of Income Tax Act, 1961 is not made as there are carry forward losses; MAT u/s 115 JB of Income-Tax Act, 1961 is not applicable as the Company is a Sick Company within the meaning of Section 3 (1) (O) of the Sick Industrial Companies (Special Provisions) Act, 1985.

3. The Company had received an order from BIFR dated 18th December, 2007 and same is under implementation. Accumulated losses have exceeded share capital and reserves. In the current year, there are cash losses. Tata Projects Ltd. being the holding Company has provided substantial financial assistance which is more than the negative net worth of the Company. Present order book position of the Company is good and expected to be executed soon. Therefore with present orders in hand to be executed in F.Y. 2012-13 and further orders expected to materialize, the Management expect to have a better Cash Flow during the F.Y. 2012-13 and years ahead. Therefore, barring unforeseen circumstances, the Management is of the opinion that the concept of going concern is sustainable, and that the plans are afoot to wipe out the negative net worth of the Company.

4. In the event of Arbitration award in favour of the Company, any amount so received is treated as income in the year of receipt of award. During the year Company is not in receipt of any arbitration award.

5. Majority of the Company's Fixed Assets have been independently valued by an independent valuer in the preceding year and considering the same, there is no impairment in the value of assets as on the Balance Sheet date.

6. a. In the opinion of the management all Current Assets, Loans & Advances are approximated of the same value if realized in the ordinary course of business. Provision for all the known liabilities is adequately made.

b. Sundry Debtors include retention of Rs 621.36 Lakh (Previous Year Rs 479.83 Lakh) receivable on completion of projects.

c. Balance outstanding against sundry debtors and sundry creditors (including debit balances), are subject to reconciliation and confirmation with respective parties. The provision of Rs Nil (Previous Year Rs 100 Lakh) is made for doubtful debts. In the opinion of the management the balance amounts are good and recoverable/payable.

7. Amount due within one year towards Sales Tax Deferment Loan is Rs 3.36 Lakh (Previous Year Rs 6.79 Lakh).

8. The Company has lodged an insurance claim in the last Financial Year. The claim was accepted by Insurance Company for Rs 66.03 Lakh and the balance amount of Rs 16.68 Lakh is claimed as an Extraordinary item being Loss by Fire during the year.

9. The net gain on account of exchange rate difference amounting to Rs 43.31 Lakh (Previous Year Loss Rs 7.93 Lakh) has been debited to the Profit and Loss Account in compliance with AS-11 on "The Effect of changes in foreign Exchange Rates".

10. Quantitative Details:

i. Erection/Construction Activities

In respect of Erection/Construction activities, the materials procured by the Company are directly delivered to the project sites and charged off in the year of purchase and included under "Construction/Operating expenses". It is not practicable to furnish the quantitative information in respect of these items due to diversified size and nature of business.

ii. Manufacturing Activities

The commercial operations at Nasik Factory commenced with effect from 10th November 2010. The relevant quantitative details are as follows:

11. In line with accepted practice in construction business, certain revisions of costs and billing of previous years which have crystallized during the year have been dealt with during the current year.

12. Previous year's figures have been regrouped and restated wherever necessary to make their classification comparable with that of the current period.

---

Mar 31, 2011

1. Contingent liabilities not provided for:

a. (i) Bank Guarantees issued by the Company to its clients Rs 16,94,59,684/- (Previous Year Rs 5,69,16,185/-).

(ii) Bank Guarantees issued by Bankers’ of Tata Projects Limited on behalf of the Company to the company’s clients. Rs 22,79,78,706/- (Previous Year Rs 22,79,78,706/-)

(iii) Letter of credit issued by company’s Bankers to one of the supplier Rs NIL/- (Previous Year Rs 20,48,438/-).

b. Sales Tax (Works Contract Tax) Rs 22,31,272/- (Previous Year Rs 47,08,375/-) for which appeals are pending.

2. The Company had received the order dated 18th December 2007 from the Board for Industrial and Financial Reconstruction (BIFR) which is under implementation. The Company had preferred an appeal to the AAIFR with reference to the above order in respect of issues relating to Tax matters i.e. Income Tax & Service Tax, application of SEBI guidelines, exemptions from Clause 49 of the Listing Agreement with the BSE and property/house rent tax by Nashik Municipal Corporation during operation of the Scheme. The Company has received an Order from AAIFR dated 1st January, 2009 specifying waivers of the above mentioned taxes and penalties and accordingly the Company has given the effects. The Company has also received an order dated 3rd December 2009 from the BIFR where by the Company has been granted exemption upto 31st March 2011 from complying with clause 49 of the listing agreement with the BSE. Further the said exemption has been extended upto 31st March 2012 vide BIFR's order dated 1st April 2011.

3. Pursuant to the Order dated 18th December 2007 issued by the Board for Industrial and Financial Reconstruction (BIFR) a scheme of rehabilitation of the Company has been sanctioned (the Sanctioned Scheme). In terms of the Sanctioned Scheme, Tata Projects Limited (TPL) acquired 75% of the paid-up equity capital of the Company and consequently the Company became a subsidiary of TPL. The Sanctioned Scheme, amongst others, also provides for exemption from the provisions of Sections 58A and 372A and other relevant provisions of the Companies Act, 1956 and the regulations made thereunder with respect to TPL providing loans, guarantees and making investments in the equity capital of the Company.

4. a. All the Fixed Deposit receipts are lying with the banks towards margin money against Bank guarantees issued by Banks.

c. Provision for Income tax under normal provision of Income Tax Act 1961 is not made as there are carry forward losses. MAT u/s 115 JB of Income Tax Act 1961 is not applicable as the Company is a sick Company and continues to remain registered with BIFR as a sick Company.

5. Disclosure in accordance with Section 22 of the Micro, Small and Medium Enterprises Act, 2006:

The Company has complied with the requirement of obtaining confirmation from suppliers who have registered themselves under the Micro Small and Medium Enterprises Development Act, 2006 (MSMED Act, 2006).Based on the information available with the Company, the balance due to Micro and Small Enterprises as defined under the MSMED Act, 2006 is Rs 15.08 Lacs, but interest for the delay in payment is not provided as the management is of the opinion that due to contractual terms liability of interest will not arise.

Disclosure in accordance with Section 22 of MSMED Act, 2006:

6. The Company had received an order from BIFR dated 18th December, 2007 and same is being implemented. In spite of accumulated losses being exceeding share capital and reserves, in lieu of the profits in last two years and barring unforeseen circumstances the Management expects to continue as going concern.

7. In the event of Arbitration award in favour of the Company, any amount so received is treated as income in the year of receipt of award. During the year the Company is not in receipt of any arbitration award.

8. a. Majority of Company's Fixed Assets have been independently valued by an independent valuer in the preceding year and the valuation is much higher than the book value resulting in no impairment in the value of assets.

b. Physical verification of Assets were made by an independent agency in previous year at all domestic locations including Nashik unit and based on the report the company had made deletion in Gross Block of Rs NIL (Previous Year - Rs 4,925,712/-) and corresponding depreciation for Rs NIL (Previous Year – Rs 3,813,446/-) with regards to discarded assets as shown in schedule - 4 in Accounts.

9. a. In the opinion of the management all Current Assets, Loans & Advances are approximated of the same value if realized in the ordinary course of business. Provision for all the known liabilities is adequately made.

b. Sundry Debtors include retention of Rs 47,982,950/- (Previous Year Rs 20,672,997/-) receivable on completion of projects.

c. Balance outstanding against sundry debtors and sundry creditors (including debit balances), are subject to reconciliation and confirmation with respective parties. The provision of Rs 10,000,000/- is made for doubtful debts. In the opinion of the management the balance amounts are good and recoverable/payable.

10. No amount is due within one year towards Sales Tax Deferment Loan.

11. For an accidental fire that took place at one of the project sites, the Company has lodged an insurance claim of Rs 8,989,385/- and the same is under process.

12. The net exchange rate difference amounting to Rs (793,524)/- [Previous Year Rs (16,989,937/-)] has been debited to the Profit and Loss a/c in compliance with AS-11 on “The Effect of changes in Foreign Exchange Rates".

13. Quantitative Details:

i. Erection/Construction Activities

In respect of Erection/Construction activities, the materials procured by the Company are directly delivered to the project sites and charged off in the year of purchase and included under "Construction/Operating expenses". It is not practicable to furnish the quantitative information in respect of these items due to diversified size and nature of business.

ii. Manufacturing Activities

The commercial operations at Nashik Factory commenced with effect from 10th November 2010. The relevant quantitative details are as follows:

14. The Company has paid the Gratuity amount of Rs NIL (Previous Year - Rs 3,50,000). Reimbursement from Life Insurance Corporation of India is pending Rs NIL (Previous Year - Rs 350,000).

Leave Encashment has been provided as per actuarial valuation at Rs 15,94,804/-, and excess balance from the earlier year is charged to employee cost.

15. In line with accepted practice in construction business, certain revisions of costs & billing of previous years which have crystallized during the year have been dealt with during the current year.

16. Previous figures have been regrouped and restated wherever necessary to make their classification comparable with that of the current period.

---

Mar 31, 2010

1. Contingent liabilities not provided for:

a. (i) Bank Guarantees issued by the Company to its clients Rs. 56,916,185/- (Previous Year - Rs. 307,500/-).

(ii) Bank Guarantees issued by Bankers of Tata Projects Limited on behalf of the Company to the Companys clients Rs. 227,978,706/- (Previous Year - Rs. 230,778,706/-).

(iii) Letters of credit issued by the Companys Bankers to one of the supplier Rs. 2,048,438/- (Previous Year Rs. NIL).

b. Sales Tax (Works Contract Tax) Rs. 4,708,375/- (Previous Year - Rs. 4,708,375/-) for which appeals are pending.

2. The Company has received the BIFR order dated 18th December, 2007 which is under implementation. The Company had preferred an appeal to the AAIFR with reference to the above order in respect of issues relating to Tax matters i.e. Income Tax & Service Tax, application of SEBI guidelines, exemptions from Clause 49 of the Listing Agreement with the BSE and property/house rent tax by Nashik Municipal Corporation during operation of the Scheme. Company has received an Order from AAIFR dated 1st January, 2009 specifying waivers of the above mentioned taxes and penalties and accordingly the Company has given the effects. The Company has also received an Order dated 3rd December 2009 from the BIFR whereby the Company has been granted exemption upto 31st March 2011 from complying with Clause 49 of the Listing Agreement with the BSE.

3. Disclosure in accordance with Section 22 of the Micro, Small and Medium Enterprises Act, 2006:

The Company has initiated the process of obtaining confirmation from suppliers who have registered themselves under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act, 2006). Based on the information available with the Company, the balance due to Micro and Small Enterprises as defined under the MSMED Act, 2006 is Rs. 42.95 Lakh, but interest for the delay in payment is not provided as the management is of the opinion that due to contractual terms liability of interest will not arise.

4. The Company has received an order from BIFR dated 18th December 2007 and same is under implementation. In spite of accumulated losses being exceeding share capital and reserves, in lieu of the large new orders being received and commenced barring unforeseen circumstances, the Management expects to continue as going concern.

5. In respect of Sundry Debtors in arbitration, Company had written off Debtors amounting to Rs. 13.84 Crore in earlier years. In the event of Arbitration award in favour of the Company, any amount so received is treated as income in the year of receipt of award. During the year the Company has received an arbitration award amounting of Rs. 62.13 Lakh which is included in sales.

6. a. Majority of the Companys Fixed Assets have been independently valued by an independent valuer in the preceding year and the valuation is much higher than the book value resulting in no impairment in the value of assets.

b. Verification was carried out by an independent firm of Chartered Accountants during the year at all major domestic locations including Nashik unit, and based on its report, the Company has made the deletion in Gross Block for Rs. 4,925,712/- and in Depreciation for Rs. 3,813,446/- with regards to discarded assets as shown in Schedule - 4 in the Accounts.

7. a. In the opinion of the management, all Current Assets, Loans & Advances are approximated of the same value, if realized in the ordinary course of business. Provision for all the known liabilities is adequately made.

b. Sundry Debtors include retention of Rs. 20,672,997/- (Previous Year - Rs. 30,712,653/-) receivable on completion of projects.

c. Balance outstanding against sundry debtors and sundry creditors (including debit balances), are subject to reconciliation and confirmation with respective parties. In the opinion of the management, the amounts are recoverable and considered good.

d. Cash and Bank balances includes an amount of Rs. NIL (Previous Year - Rs. 3,637/-) which are in the personal bank account of staff at sites and cash lying with them.

8. The net exchange rate difference amounting to Rs. 16,989,937/- (Previous Year - Rs. 9,410,919/-) has been debited to the Profit and Loss account in compliance with AS-11 on "The Effect of changes in Foreign Exchange Rates".

9. (i) Erection/Construction Activities

In respect of Erection/Construction activities, the materials procured by the Company are directly delivered to the project sites and charged off in the year of purchase and included under "Construction/Operating expenses". It is not practicable to furnish the quantitative information in respect of these items due to diversified size and nature of business.

(ii) Manufacturing Activities

During the year and Previous year, no such activity is carried out in Manufacturing Division.

Note: Total Sales from Erection/Constructions activities including Supply is Rs. 1,319,352,888/- (Previous Year - Rs. 321,305,663/-). Aggregate Purchase is Rs. 420,914,140/- (Previous Year - Rs. 239,298,937/-).

10. (a) Necessary approvals of the Members and the Central Government pursuant to the provisions of the Companies Act, 1956 read with Schedule XIII thereto are being obtained for payment of reimbursement of medical expenses of Rs. 175,709/- incurred by Mr. P. S. Chopde, Executive Director-Manufacturing.

(b) The Company has filed an application pursuant to the provisions of the Companies Act, 1956 read with Schedule XIII thereto, with the Central Government seeking its approval for payment of excess remuneration to the extent of Rs. 492,000/- in respect of payment of remuneration referred to in 19(H) above.

11. The Company has paid the Gratuity amount of Rs. 3.50 Lakh to one of the employees, the claim settlement is Pending with Life Insurance Corporation of India.

Leave Encashment has been provided as per actuarial valuation at Rs. 382,330/-, and excess balance from the earlier year is charged to employee cost.

12. In line with accepted practice in construction business, certain revisions of costs & billing of previous years which have crystallized during the year have been dealt with during the current year.

13. Previous years figures have been regrouped and restated wherever necessary to make their classification comparable with that of the current period.