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Notes to Accounts of Hindustan Composites Ltd.

Mar 31, 2017

1 Contingent Liabilities not provided for in respect of :

- Disputed Sales Tax matters as at 31st March 2017 for Rs. 6.98 lacs (net of provisions of Rs. 10.56 lacs); as at 31st March

2016 for Rs. 11.10 lacs (net of provisions of Rs. 6.45 lacs) and as at 1st April, 2015 for Rs. 13.47 lacs (net of provision of Rs. 6.45 lacs).

- Disputed Income Tax matters as at 31st March 2017 for Rs. Nil, as at 31st March 2016 for Rs. 98.36 lacs and as at 1st April 2015 for Rs. 10.54 lacs).

- Disputed labour matter related to ex-workmen - amount unascertainable.

2 Commitments:

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advance, unsecured considered good), as at 31st March 2017 for Rs.3,034.50 lacs (net of advance of Rs. 2,994.58 lacs), as at 31st March 2016 for Rs. 2,967.11 lacs (net of advance of Rs. 3,053.40 lacs) and as at 1st April 2015 for Rs. 2,646.99 lacs (net of advance of Rs. 637.18 lacs).

(b) In respect of investments made with private equity fund, the Company is further committed to invest as at 31st March 2017 for Rs. 2,556.37 as at 31st March 2016 for Rs. 3,043.88 and as at 1st April 2015 for Rs. 3,641.00.

3 Secured Loans:

(a) Interest Rate on Working capital loans as at 31st March 2017 is Base Rate plus 2.50% per annum, as at 31st March 2016 is Base Rate plus 2.50% per annum and as at 1st April 2015 is Base Rate plus 2.50% per annum, limit utilized as at 31st March 2017 for Rs. 359.58 lacs as at 31st March 2016 for Rs.420.42 lacs and as at 1st April 2015 for Rs. 348.95 lacs are secured by hypothecation of inventory and trade receivables of Company and charge on immovable properties of Bhandara unit.

(b) Non fund based limit utilized as at 31st March 2017 for Rs. 238.78 lacs are secured by lien over Investment (Bonds) of Rs. 800 lacs and as at 31st March 2016 non fund based limit utilized for Rs. 321.18 lacs were secured by lien over Investment (Bonds) of Rs. 500 lacs and as at 1st April 2015 non fund based limit utilized for Rs. 138.45 lacs were secured by lien over Investment (Mutual Fund Units - FMP) of Rs. 200 lacs.

(c) Vehicle loans (repayable within three years) are secured by way of hypothecation and carry Interest in the range of 9.00 % to 10.75 %(for the Year Ended 31st March 2016 9.61 % to 10.75%).

Unsecured Loans:

Interest free Sales tax Loans is repayable within 5 years.

Identification of Segments:

The chief operational decision maker monitors the operating results of its Business Segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements.

Segment revenue and results

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

Segment assets and liabilities

Segment assets include all operating assets used by the operating segment and mainly consist of property plant and equipment, trade receivables, cash and cash equivalents, Investments and inventories. Segment liabilities primarily include trade payables and other liabilities. Common assets and liabilities which cannot be allocated to any of the segments are shown as a part of un-allocable assets / liabilities.

4 Employee Benefits

(a) Defined contribution plan

The Company has certain defined contribution plans. Contributions are made to provident fund in India for employees at the rate of 12 % of basic salary as per regulations. The contributions are made to registered provident fund administered by Government. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expenses recognized during the year towards defined contribution plan is Rs.97.54 lacs (31st March,2016 Rs. 93.48 lacs).

(b) Defined benefit plan

In accordance with the Payment of Gratuity Act, 1972, the Company provides for gratuity for employees who are in continuous services for a period of 5 years are eligible for gratuity. The amount of gratuity payable on termination/retirement is employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The gratuity is a funded plan and the Company make contributions to recognized funds in India.

The sensitivity analysis above have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period and may not be representative of the actual change. It is based on a change in the key assumption while holding all other assumptions constant. When calculating the sensitivity to the assumption, the same method used to calculate the liability recognized in the balance sheet has been applied. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared with the previous period.

The weighted average duration of the defined benefit obligation is 8.56 years (2016: 9.70 years, 2015: 9.10 years).

Risk exposure:

Through its defined benefit plans, Company is exposed to a number of risks, the most significant of which are detailed below:

Investment risk: The present value of the defined benefit plan liability is calculated using discount rate determined by reference to market yields at the end of reporting period on government bond yields.

Interest risk:- A decrease in the bond interest will increase in plan liability; however, this will be partially offset by an increase in the return on the plan''s debt investments.

Longevity risk: The present value of the defined benefit plan liability is calculated by reference to best estimate of the mortality of plan participants both during and at the end of employment. An increase in the life expectancy of the plan participants will increase the plan liability.

Salary risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such an increase in salary of the plan participants will increase the plan liability.

5 First-time adoption of Ind AS

The Company has adopted Indian Accounting Standards (Ind AS) as notified by the Ministry of Corporate Affairs with effect from 1st April, 2016, with a transition date of 1st April, 2015. The adoption of Ind AS has been carried out in accordance with Ind AS 101, First-time Adoption of Indian Accounting Standards. Ind AS 101 requires that all Ind AS standards and interpretations that are issued and effective for the first Ind AS financial statements for the year ended 31st March, 2017, be applied retrospectively and consistently for all financial years presented. However, in preparing these Ind AS financial statements, the Company has availed of certain exemptions and exceptions in accordance with Ind AS 101, as explained below. The resulting difference between the carrying values of the assets and liabilities in the financial statements as at the transition date under Ind AS and Previous GAAP have been recognized directly in equity (retained earnings or another appropriate category of equity).

Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.

A. Optional Exemptions

(i) Deemed Cost

The Company has elected to continue with the carrying value of all of its plant and equipment and intangible assets recognized as of 1st April, 2015 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.

(ii) Designation of previously recognized financial instruments

The Company has classified the financial assets in accordance with Ind AS 109 on the basis of facts and circumstances that exist at the date of transition to Ind AS.

(iii) De-recognition of financial assets and financial liabilities

The Company has applied the de-recognition requirements of financial assets and financial liabilities prospectively for transactions occurring on or after 1st April, 2015 (the transition date).

B. Mandatory Exceptions

(a) Estimates

An entity’s estimates in accordance with Ind ASs at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies).

Ind AS estimates as at 1st April 2015 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company make estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:

- Investment in equity instruments carried at FVPL or FVOCI;

- Impairment of financial assets based on expected credit loss model.

(b) Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification and measurement of financial assets (investment in debt instruments) on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

C. Transition to Ind AS - Reconciliations

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

(i) Reconciliation of Balance sheet as at April 1, 2015 (Transition Date)

(ii) A. Reconciliation of Balance sheet as at March 31, 2016

B. Reconciliation of Statement of total Comprehensive Income for the year ended March 31, 2016

(iii) A. Reconciliation of Equity as at April 1, 2015 and March 31, 2016

B. Reconciliation of Income Statement March 31, 2016

(iv) Adjustments to Statement of Cash Flows

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

6 First-time adoption of Ind AS (Continue...) Notes to first time adoption: A Fair valuation of Financial Assets - Investments

In previous GAAP, current investments were measured at lower of cost or fair value and long term investments were measured at cost less diminution in value. Under Ind AS, the Company has valued financial assets - Investments at cost or at fair value i.e. either through Profit and loss or Other Comprehensive Income. Impact of fair value changes as on the date of transition, is recognized in opening reserves/ separate component of other equity and changes thereafter are recognized in Statement of Profit and Loss or Other Comprehensive Income, as the case may be.

B Fair valuation of Financial Assets - Interest free loan to employee welfare trust

Under the previous GAAP, interest free loan to employee welfare trust are recorded at their transaction value. Under IND AS, all financial assets are required to be recognized at fair value. Accordingly, the Company has fair valued the interest free loan given to employee welfare trust.

C Defined benefit liabilities:

Under IND AS, re-measurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognized in other comprehensive income instead of profit and loss in previous GAAP.

D Excise Duty

Under previous GAAP, revenue from sale of goods was presented net of excise duty whereas under IND AS the revenue from sale of goods is presented inclusive of excise duty. The excise duty is presented on the face of the Statement of Profit and Loss as part of expenses.

E Proposed Dividend

Under previous GAAP, dividends proposed by the board of directors after balance sheet date but before the approval of the financial statements were considered as adjusting events. However under IND AS, such dividends are recognized when the same is approved by the shareholders in the general meeting. Accordingly the liability for proposed dividend recognized as on transition date has been reversed with corresponding adjustment to opening retained earnings and dividend in the subsequent period has been recognized in the year of approval in the general meeting.

F Discounts and Incentives

Under previous GAAP, the Company accounted for revenue net of trade discounts, sales taxes and excise duties. Under Ind AS, the Company will recognize revenue at fair value of consideration received or receivable. Any sales incentive, cash discounts or rebates in any form given to customers will be considered as reductions from revenue.

G Deferred tax

Under previous GAAP, deferred tax was accounted using the income statement approach, on the timing differences between the taxable profit and accounting profits for the period. Under IND AS, deferred tax is recognized following balance sheet approach on the temporary differences between the carrying amount of asset or liability in the balance sheet and its tax base.

7 Financial instruments

The details of significant accounting policies, including criteria for recognition, the basis of measurement and the basis on which income and expenditure are recognized, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note A (k) for accounting policy.

8 Risk Management

Financial risk management objective and policies

The Company’s financial risk management is an integral part of how to plan and execute its business strategies. The Company’s financial risk management policy is set by the Managing Board of the Company. The risk management policies aims to mitigate the following risk arising from the financial instruments: (a) Market risk; (b) Liquidity risk and (c) Credit risk.

A. Financial risk factors

The Company''s principal financial liabilities comprise borrowings, deposits and trade and other payables. The purpose of these financial liabilities is to finance the Company’s operations and to provide to support its operations. The Company’s principal financial assets include Investments, loans, trade and other receivables, and cash and cash equivalents that derive directly from its operations.

The Company is exposed to the following risk arising from the financial instruments: (a) Market risk; (b) Liquidity risk and (c) Credit risk.

(a) Liquidity risk

The risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Liquidity risk management implies maintain sufficient cash including availability of funding through an adequate amount of committed credit facilities to meet the obligations as and when due.

The Company manages its liquidity risk by ensuring as far as possible that it will have sufficient liquidity to meet its short term and long term liabilities as and when due. Anticipated future cash flows ,undrawan committed credit facilities are expected to be sufficient to meet the liquidity requirements of the Company.

(i) Financing arrangements

The Company has access to the following undrawn borrowing facilities as at the end of the reporting period:

(b) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk includes investment, deposits, foreign currency receivables and payables. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, equity prices and other market changes that affect market risk sensitive instruments. The Company''s treasury team manages the Market risk, which evaluates and exercises independent control over the entire process of market risk management.

(i) Foreign currency risk

Foreign currency risk can only arise on financial instruments that are denominated in a currency other than the functional currency in which they are measured. The Company''s functional and presentation currency is INR. The Company does have transactions in currency other than fictional currency i.e. in US Dollar (USD) for purchase of raw materia from overseas supplier. However, those are not very significant considering the nature and size of the operations of the Company .

The company''s exposure to the foreign currency risk is not significant considering the nature and size of the operations.

(ii) Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of the financial instruments will fluctuate because of changes in market interest rates. The Company''s Long term borrowings have fixed rate of interest and carried at amortized costs and short term borrowings have variable rate of interest. The Company also has significant investments in Bonds i.e. Government securities; Debentures; Preference shares and Debt funds. These investments are subject to the Market risk - Interest rate risk.

Hence, the Company is not significantly exposed to the interest rate risk as working capital facility are, as per contractual terms, primarily of short term in nature.

Exposure to Interest rate risk - Financial assets - Investments in Government Bonds, Bonds, Debentures, Debt funds and Preference Shares

Market price risk for government bonds, debentures, preference shares and other bonds is movement in the interest rate and impct thereof on the yield. The Company''s major part of investments is in Bonds/Debentures, which exposes Company to a price risk and consequently impact on the profitability and value of instruments.

Sensitivity

The table below summarizes the impact of increase/decrease in the interest rate over the value of bonds/debentures. The analysis is based on the assumption that the Interest rate has increased by 100 bps or decrease by 100bps with all other variables held constant.

(iii) Investment Price Risk

The Company’s exposure to price risk arises from investments held by the Company and classified in the balance sheet either at fair value through OCI or at fair value through profit and loss. To manage its price risk arising from its investments , the Company diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Company in accordance with the guidelines provided by the Board of directors of the Company.

Investments in Equity Instruments and Equity mutual funds (including investment through Private Equity funds)

The Company''s quoted equity instruments are subject to the market price risk arising from the fluctuation in the market price of those instruments. This risk arises from instruments which are classified as Fair value through P&L or Fair value through OCI. The Company''s investment in equity instruments mainly consists of Investments in certain of its gorup companies wherein the price fluctuations, based on the historical trends, are not very significant.

Sensitivity

The table below summarizes the impact of Increase/decrease of the BSE index on the Company''s equity and Gain/Loss for the period. The analysis is based on the assumption that the index has increased by 5% or decrease by 5 % with ll other variables held constant and that all the Company''s equity instruments moved in line with the index.

(c) Credit risk

Credit risk arises from the possibility that the counter party may not be able to settle their obligations as agreed. To manage this, the Company periodically assess financial reliability of counter party, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of accounts receivable. The Company considers the probability of default upon initial recognition of assets and whether there has been a significant increase in credit risks on an ongoing basis throughout each reporting period.

To assess whether there is a significant change increase in credit risk the Company compares the risks of default occurring on the assets as at the reporting date with the risk of default as at the date of initial recognition. It considers the reasonable and supportive forward looking information such as:

(i) Actual or expected significant adverse changes in business.

(ii) Actual or expected significant changes in the operating results of the counterparty.

(iii) Financial or economic conditions that are expected to cause a significant change to the counterparty''s ability to meet its obligations

(iv) Significant increase in credit risk on other financial instruments of same counterparty.

Commodity Risk

The Company is exposed to the risk of price flections of raw materials proactively managed through forward booking, inventory management and proactive vendor development practices.

45 Risk Management

(a) Capital risk management

The Company’s objectives when managing capital are to :

- safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and

- maintain an optimal capital structure to reduce the cost of capital

The Company sets the amount of capital required on the basis of annual business and long-term operating plans which includes capital and other strategic investments. The Company’s intention is to maintain a stable and strong capital structure with a focus on total equity so as to maintain investor, creditors and market confidence and to sustain future development and growth of its business.

The Company monitors capital using a gearing ratio being a ratio of net debt as a percentage of total capital.

(I) Net debt represents total borrowings (non-current and current) as reduced by cash and cash equivalents.

(ii) Equity comprises of all components including other comprehensive income.

Subsequent events - Dividend not recognized at the end of reporting period:

In addition to the above dividends, since year end the directors have recommended the payment of a final dividend of INR 0.50 per fully paid equity share (31st March, 2016 - INR 1). This proposed dividend is subject to the approval of shareholders in the ensuing annual general meeting.

The Shareholders of the Company through postal ballot process, the result of which has been declared on 13th May, 2017 has approved:-

(a) Sub-division of face value of equity shares of Rs.10/- each into two equity shares of Rs.5/- each; and

(b) Issue of one equity bonus share of Rs.5/- each for every two equity shares of Rs.5/- each held on record date.

The Record date for Sub-division and issue of bonus shares has been fixed on 26th May, 2017. After considering Subdivision and issue of bonus shares as aforesaid, the equity share capital of the Company will increase to Rs.7,38,45,000 divided into 1,47,69,000 equity shares of Rs.5/- each. The Board of directors of the Company has recommended the payment of dividend on equity shares of Rs.5/- each @Rs. 0.50/- per share for the year ended 31st March, 2017 on its enhanced equity share capital after bonus issue, subject to approval of shareholders at the ensuing 53rd Annual General Meeting.

9Related Party Disclosure are given below:

(i) Group Companies/ Joint Venture and Enterprises where KMP''s / Relative of KMP''s have significant influence with whom transactions have been entered during the year in the ordinary course of the business:

Rasoi Ltd.

J L Morison India Ltd.

Pallawi Resources Ltd.

Pallawi Trading & Mfg. Co. Ltd.

Look Link Finance Ltd.

Noble Trading Co. Ltd.

Lotus Udyog Ltd.

Surdas Trading & Mfg. Co. Ltd.

Leaders Healthcare Ltd.

Goodpoint Advisory Services and Investments Ltd.

Axon Trading & Mfg. Co. Ltd.

Silver Trading & Services Ltd.

Rasoi Express Pvt. Ltd.

Compo Advics (India) Pvt. Ltd. (Joint Venture)

Manoj Mody Foundation Mody Welfare T rust

(ii) Key Management Personnel (KMP):

Whole Time Directors

Mr. Raghu Mody, Executive Chairman Mr. P. K. Choudhary, Managing Director Chief Financial Officer (CFO)

Mr. Sunil Jindal, Chief Financial Officer Company Secretary

Mr. Amit Goenka, V.P. Finance & Company Secretary

(iii) Relatives of Key Managerial Personnel / Directors:

Mrs. Shashi Mody (Daughter-in-law of Mr. Raghu Mody, Executive Chairman)

Mr. Varunn Mody, (Husband of Smt. Sakshi Mody, Non Executive Director)

(iv) Non Executive Directors

Mr. Ashok B Vadiya, Independent Director

Mr. Kuldeep Singh Digamber Brar, Independent Director

Mr. Keith Marshall Robinson, Independent Director

Mr. Deepak Sethi, Independent Director

Mrs. Shakshi Mody, Non Executive Director

10 Previous years’ figures have been regrouped/reclassified whenever necessary to conform to current years’ classification. Figures in brackets pertain to previous year.


Mar 31, 2016

1. Rights attached to equity shares:

The Company has only one class of equity shares having a par value of Rs. 10 each. Each holder of equity shares is entitled to one vote per share. In the event of liquidation, the equity shareholders are entitled to receive the remaining assets of the Company after payments to secured and unsecured creditors, in proportion to their shareholding.

2. For a period of 5 years immediately preceding the balance sheet date, the company has not:

a) allotted shares for consideration other than cash

b) issued any bonus shares

c) bought back any shares issued

A Leasehold Land for Rs. 200,290 is valid till 31/01/2079 and for Rs . 242r 863 is valid till 30/04/2081.

@ Buildings includes three flats, the titles of which are evidenced by fully paid shares in respective Co-o operative Housing Societies.

$ Deductions include Gross Block & Net Block of Rs. 18,356,256 & Rs. 17,541,370 , respectively (Previous Year Rs. 988,241 & Rs. 49,412) being unserviceable assets discarded during the year.

# Motor Vehicles include Rs. 7,71,217 (previous Year Rs 2,967,428) being assets acquired on hire purchase basis.

3. (a) The Company''s pending litigations comprise mainly claims related to property disputes, proceedings pending with Tax and other Authorities. The Company has reviewed all its pending litigations and proceedings and has made adequate provisions, wherever required and disclosed the contingent liabilities, wherever applicable, in its financial statements. The Company does not reasonably expect the outcome of these proceedings to have a material impact on its financial statements.(Also Refer Note 27(b)).

(b) Contingent Liabilities not provided for in respect of :

- Disputed Sales Tax matters Rs.1,110,626 (net of provisions of Rs.645,000); Previous Year Rs. 1,347,738 (net of provisions of Rs. 645,000).

- Disputed Income Tax matters Rs. 9,836,909 (Previous Year Rs.1,054,323).

- Disputed labour matter related to ex-workmen - amount unascertainable.

- Disputed Claims Rs. Nil (net of provisions of Rs.19,473,286) Previous Year Rs. 32,868,420 (net of provision of Rs. 13,088,090).

4.. Commitments:

(a) Estimated amount of contracts remaining to be executed and not provided for (net of advance, unsecured considered good), on capital account are Rs.296,711,766 (net of advance of Rs. 305,340,299);Previous Year Rs. 264,699,369 (net of advance of Rs. 63,718,332)

(b) In respect of long term investment made with private equity fund, the Company is further committed to invest Rs. 304,388,000 (Previous Year Rs. 364,100,000)

5.. Secured Loans:

(a) Interest Rate on Working capital loans is Base Rate plus 2.50% per annum (Previous Year Base Rate plus 2.50% per annum) and limit utilized Rs. 42,042,755 (Previous Year Rs.34,895,055) are secured by hypothecation of stocks and debtors and charge on immovable properties of Bhandara unit.

(b) Non fund based limit utilized Rs. 32,118,912 are secured by lien over Investment (Bonds) of Rs. 50,000,000 and (Previous Year non fund based limit utilized Rs. 13,845,437 were secured by lien over Investment (Mutual Fund Units -FMP) of Rs. 20,000,000).

(c) Vehicle loans (repayable within one year) are secured by way of hypothecation of vehicles purchased their against and carry Interest in the range of 9.61 % to 10.75 (Previous Year 9.80 % to 10.75%).

Unsecured Loans:

Interest free Sales tax Loans is repayable within 10 years.

6.. (a) In the opinion of the Board, assets other than fixed assets and non-current investment have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet. The provision for depreciation and other known liabilities is adequate and not in excess of what is required.

(b) The accounts of Trade receivable and payable and Loans and Advances are subject to formal confirmations / reconciliation and adjustments, if any. The management does not expect any material difference affecting the current year''s financial statements due to the same.

Note : The information has been given in respect of such vendors to the extent they could be identified as "Micro and Small enterprises” on the basis of information available with Company.

7.. Retirement Benefit

A) Defined Benefit Plans

The following tablet sets out the funded states of the gratuity plan and unfunded status of Leave Encashment and the amount recognized in the Company''s financial statements as at 31st March 2016

8.. Related Party Disclosure are given below:

(i) Group Companies/Joint Venture and Enterprises where KMP''s / Relative of KMP''s have significant influence with whom transactions have been entered during the year in the ordinary course of the business:

Rasoi Ltd.

J L Morison India Ltd.

Pallawi Resources Ltd.

Pallawi Trading & Mfg. Co. Ltd.

Look Link Finance Ltd.

Noble Trading Co. Ltd.

Lotus Udyog Ltd.

Surdas Trading & Mfg. Co. Ltd.

Goodpoint Advisory Services and Investments Ltd.

Axon Trading & Mfg. Co. Ltd.

Silver Trading & Services Ltd.

Rasoi Express Pvt. Ltd.

Compo Advics (India) Pvt. Ltd. (Joint Venture)

Manoj Mody Foundation Mody Welfare Trust

(ii) Key Management Personnel (KMP):

Mr. Raghu Mody Executive Chairman

Mr. Varunn Mody Executive Director - Treasury & Strategy Mr. P K. Choudhary Managing Director Mr. Amit Goenka, VP Finance & Company Secretary Mr. Sunil Jindal, Chief Financial Officer

(iii) Relatives of Key Managerial Personnel :

Mrs. Shashi Mody (Mother of Mr. Varunn Mody Executive Director)

i) No amount pertaining to related parties has been provided for as doubtful debts. Also no amount has been written off/back

ii) The related parties are as identified by the Company and relied upon by the Auditors.

9.. Previous years'' figures have been regrouped/reclassified whenever necessary to conform to current years'' classification. Figures in brackets pertain to previous year.

Ceased to be Director of the Company due to resignation w.e.f. closing hours of 31st March, 2016.

Appointed as an Additional (Independent) Director w.e.f. 23rdApril, 2015.

Appointed as a Member and Chairman of the Committee w.e.f. 10th August, 2015.


Mar 31, 2015

1. Rights attached to equity shares:

The Company has only one class of equity shares having a par value of Rs. 10 each. Each holder of equity shares is entitled to one vote per share. In the event of liquidation, the equity shareholders are entitled to receive the remaining assets of the Company after payments to secured and unsecured creditors, in proportion to their shareholding. Company has not issued any aggregate No. and class of share as fully paid-up pursuant to contract(s) whitout payment being received in cash, bonus shares for the period of 5 years immediately preceding the Balance Sheet date.

2.(a) The Company's pending litigations comprise mainly claims related to property disputes, proceedings pending with Tax and other Authorities. The Company has reviewed all its pending litigations and proceedings and has made adequate provisions, wherever required and disclosed the contingent liabilities, wherever applicable, in its financial statements. The Company does not reasonably expect the outcome of these proceedings to have a material impact on its financial statements.(Also Refer Note 26(b)).

(b) Contingent Liabilities not provided for in respect of :

* Disputed Sales Tax matters Rs.1,347,738 (net of provisions of Rs. 6,45,000); Previous Year Rs. 648,875 (net of provisions of Rs. 6,45,000).

* Disputed Income Tax matters Rs.10,54,323 (Previous Year Rs.10,35,491).

* Disputed labour matter related to ex-workmen - amount unascertainable.

* Disputed Claims Rs.32,868,420 (net of provisions of Rs. 13,088,090) Previous Year Rs. 13,498,734 (net of provision of Rs. 6,457,776).

3. Commitments:

(a) Estimated amount of contracts remaining to be executed and not provided for (net of advance, unsecured considered good), on capital account are Rs.264,699,369 (net of advance of Rs. 63,718,332);Previous Year Rs.17,681,198 (net of advance of Rs. 19,135,683)

(b) In respect of long term investment made with private equity fund, the Company is further committed to invest Rs. 364,100,000 (Previous Year Rs.240,300,000)

4. Secured Loans:

(a) Interest Rate on Working capital loans is Base Rate plus 2.75% per annum (Previous Year Base Rate plus 2.75% per annum) and limit utilised Rs. 34,895,055 (Previous Year Rs.13,845,437) are secured by hypothecation of stocks and debtors and charge on immovable properties of Bhandara unit.

(b) Non fund based limit utilised Rs. 13,845,437 (Previous Year Rs. 24,444,291) are secured by lien over fixed maturity plan (FMP) valued of Rs. 20,000,000 (Previous Year Rs. 40,000,000).

(c) Vehicle loans (repayable over a period of 1 to 4 years) are secured by way of hypothecation of vehicles purchase their against and carry Interest in the range of 9.80 % to 10.75% (Previous Year 9.80 % to 10.75%).

Unsecured Loans:

Interest free Sales tax Loans is repayable within 12 years.

5. (a) In the opinion of the Board, assets other than fixed assets and non-current investment have a value on realization in the

ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet. The provision for depreciation and other known liabilities is adequate and not in excess of what is required.

(b) The accounts of Trade receivable and payable and Loans and Advances are subject to formal confirmations / reconciliation and adjustments, if any. The management does not expect any material difference affecting the current year's financial statements due to the same.

6. Provision for current tax includes Rs. 4,00,000 (Rs. 5,30,000) in respect of wealth tax.

7. Disclosures as required by Accounting Standard-18,on"Related Party Disclosure" are given below:

(i) Group Companies/Associates / Joint Venture with whom transactions have been entered during the year in the ordinary course of the business:

Rasoi Ltd.

J L Morison (India) Ltd.

Pallawi Resources Ltd..

Pallawi Trading & Mfg. Co. Ltd.

Look Link Finance Ltd.

Noble Trading Co. Ltd.

Lotus Udyog Ltd.

Surdas Trading & Mfg. Co. Ltd.

Goodpoint Advisory Services and Investments Ltd.

Axon Trading & Mfg. Co. Ltd.

Silver Trading & Services Ltd.

Rasoi Express Pvt. Ltd.

Compo Advics (India) Pvt. Ltd. (Joint Venture)

(ii) Key Management Personnel (KMP):

Mr. Raghu Mody, Executive Chairman Mr. Varunn Mody, Executive Director Mr. P. K. Choudhary, Managing Director

(iii) Relatives of Key Managerial Personnel :

Mrs. Sumitra Devi Mody (Wife of Mr. Raghu Mody, Executive Chairman) Mrs. Shashi Mody (Mother of Mr. Varunn Mody, Executive Director) Mrs. Sakshi Mody (Wife of Mr. Varunn Mody, Executive Director)

8. Pursuant to enactment of the Companies Act, 2013 (the Act), the Company has , effective 1st April, 2014, reviewed and revised the estimated useful life of certain fixed assets, in accordance with the Schedule II of the Act. Accordingly, the Company has given impact of Rs. 4,101,094 (net of deferred tax of Rs. 1,393,962) on account of assets whose useful life already exhausted on 1st April, 2014 to Statement of Profit & Loss. If the Company had continued with the previously assessed useful lives, charge for depreciation for the year would have been higher by Rs. 9,565,192.

9. Previous years' figures have been regrouped/reclassified whenever necessary to conform to current years' classification. Figures in brackets pertain to previous year.


Mar 31, 2014

1. Contingent Liabilities not provided for in respect of :

(a) Certain Sales Tax matters, mainly on account of pending concession forms (excluding interest) Rs. 648,875 (Previous Year Rs. 1,584,766)

(b) Disputed Income Tax matters Rs. 10,35,491/- (Previous Year Rs. 452,259)

(c) Disputed labour matter related to ex-workmen amount unascertainable.

(d) Disputed Claims Rs.13,961,019 (Previous Year Rs. Nil).

2. Commitments:

(a) Estimated amount of contract remaining to be executed and not provided for (net of advance, unsecured considered good), on capital account are Rs.17,681,198/- (net of advance of Rs..19,135,683);Previous Year Rs. 1,663,541 (net of advance of Rs. 10,726,459)

(b) In respect of long term investment made with private equity fund, the Company is further committed to invest Rs. 2403 lacs (Rs. 1041 lacs)

3. Secured Loans:

(a) Interest Rate on Working capital loans is Base Rate plus 2.75% per annum (Previous Year Base Rate plus 2.75% per annum) and non fund based limit utilised Rs. 58,816,947 (Previous Year Rs. 42,862,700) are secured by hypothecation of stocks and debtors and charge on immovable properties of Bhandara unit.

(b) Vehicle loans (repayable over a period of 1 to 4 years) are secured by way of hypothecation of vehicles purchase their against and carry Interest in the range of 9.80 % to 10.75% (Previous Year 9.80 % to 10.75%).

Unsecured Loans:

Interest free Sales tax Loans is repayable within 12 years.

4. (a) In the opinion of the Board, assets other than fxed assets and non-current investment have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet. The provision for depreciation and other known liabilities is adequate and not in excess of what is required.

(b) The accounts of Trade receivable and payable and Loans and Advances are subject to formal confirmations / reconciliation and adjustments, if any. The management does not expect any material difference affecting the current year''s financial statements due to the same.

5. Provision for current tax includes Rs. 5,30,000/- (Rs. 2,00,000/-) in respect of wealth tax.

6. Research and Development Expenditure

7. Disclosures as required by Accounting Standard-18,on"Related Party Disclosure" are given below:

(i) Associates / Joint Venture with whom transactions have been entered during the year in the ordinary course of the business:

Rasoi Ltd.

J L Morison (India) Ltd.

Pallawi Resources Ltd.

Pallawi Trading & Mfg. Co. Ltd.

Look Link Finance Ltd.

Noble Trading Co. Ltd.

Lotus Udyog Ltd.

Surdas Trading & Mfg. Co. Ltd.

Goodpoint Advisory Services and Investments Ltd.

Axon Trading & Mfg. Co. Ltd.

Silver Trading & Services Ltd.

Rasoi Express Pvt. Ltd.

Compo Advics (India) Pvt. Ltd. (Joint Venture)

(ii) Key Management Personnel:

Mr. Raghu Mody, Executive Chairman

Mr. Varunn Mody , Executive Director

Mr. P. K. Choudhary, Managing Director

Mr. Ramchandra Rao, Joint Managing Director (upto 1st July, 2013)

(iii) Relatives of Key Managerial Personnel :

Mrs. Sumitra Devi Mody (Wife of Mr Raghu Mody, Executive Chairman)

Mrs. Shashi Mody (Mother of Mr. Varunn Mody, Executive Director)

8. Previous year''s figures have been regrouped/reclassified whenever necessary to conform to current year''s classification. Figures in brackets pertain to previous years.


Mar 31, 2013

1. Contingent Liabilities not provided for in respect of :

(a) Certain Sales Tax matters, mainly on account of pending concession forms (excluding interest) Rs.1,584,766 (Rs. 1,641,654)

(b) Disputed Income Tax matters Rs.452,259 (Rs.400,113)

(c) Disputed labour matter related to ex-workmen amount unascertainable.

2. Commitments:

(a) Estimated amount of contract remaining to be executed and not provided for (net of advance, unsecured considered good), on capital account are Rs. 1,663,541 (net of advance Rs.10,726,459 ); Previous Year Rs. 2,361,610 (net of advance Rs. 38,383,390).

(b) In respect of long term investment made with private equity fund, the Company is further committed to invest Rs. 1041 lacs (Rs.890 lacs).

3. Secured Loans:

(a) Working capital loans (Interest @ base rate plus 2.75% per annum) and non fund based limit utilised Rs. 42,862,700 (Rs. 48,529,216) are secured by hypothecation of stocks and debtors and charge on immovable properties of Bhandara unit.

(b) Vehicle loans (repayable over a period of 1 to 4 years) are secured by way of hypothecation of vehicles purchase their against and carry Interest in the range of 9.80 % to 10.75%.

Unsecured Loans:

Interest free Sales tax Loans is repayable within 12 years.

4. (a) In the opinion of the Board, assets other than fixed assets and non-current investment have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet. The provision for depreciation and other known liabilities is adequate and not in excess of what is required.

(b) The accounts of Trade receivable and payable and Loans and Advances are subject to formal confirmations / reconciliation and adjustments, if any. The management does not expect any material difference affecting the current year''s financial statements due to the same.

5. The amount of exchange difference (net) credited to profit and loss account is Rs. 1,648,712 (Rs.1,427,385).

6. Provision for current tax includes Rs.2,00,000 (Rs.2,00,000) in respect of wealth tax.

7. Research and Development Expenditure

8. Disclosures as required by Accounting Standard-18,on"Related Party Disclosure" are given below:

(i) Associates with whom transactions have been entered during the year in the ordinary course of the business: Rasoi Ltd.

J. L. Morison (India) Ltd.

Pallawi Resources Ltd..

Pallawi Trading & Mfg. Co. Ltd.

Look Link Finance Ltd.

Noble Trading Co. Ltd.

Lotus Udyog Ltd.

Surdas Trading & Mfg. Co. Ltd.

Goodpoint Advisory Services and Investments Ltd.

Axon Trading & Mfg. Co. Ltd.

Silver Trading & Services Ltd.

Rasoi Express Pvt. Ltd.

(ii) Key Management Personnel:

Mr. Raghu Mody, Chairman

Mr. Varunn Mody, Executive Director

Mr. P. K. Choudhary, Managing Director

Mr. Ramchandra Rao, Joint Managing Director (w.e.f. 16th May, 2012)

(iii) Relatives of Key Managerial Personnel :

Mrs. Sumitra Devi Mody (Wife of Mr Raghu Mody, Chairman)

Mrs. Shashi Mody (Mother of Mr. Varunn Mody, Executive Director)

Mrs. Sakshi Mody (Wife of Mr. Varunn Mody, Executive Director)

9. The company is in process of making necessary applications to the Central Government for seeking waiver from excess managerial remuneration paid over and above the limit prescribed in Schedule XIII of Companies Act, 1956 amounting to Rs. 4,894,040.

10. Previous years'' figures have been regrouped/reclassified whenever necessary to conform to current years'' classification. Figures in brackets pertain to previous year.


Mar 31, 2012

1. Contingent Liabilities not provided for in respect of:

(a) Certain Sales Tax matters, mainly on account of pending concession forms (excluding interest) Rs.16,41,654 (Rs. 902,199)

(b) Disputed Income Tax matters Rs.400,113 (Rs.982,094)

(c) Disputed labour matter related to ex-workmen amount unascertainable.

2. Commitments:

(a) Estimated amount of contract remaining to be executed and not provided for (net of advance, unsecured considered good), on capital account are Rs. 2,361,610 (net of advance Rs. 38,383,390);Previous Year Rs. 11,699,390 (net of advance Rs. 187,805,100).

(b) In respect of long term investment made with private equity fund the Company is further committed to invest Rs.890 lacs (Rs.705 lacs)

3. Secured Loans:

(a) Working capital loans (Interest @ Base Rate plus 2.5% per annum) and non fund based limit utilised Rs. 48,529,216, (Rs. 33,794,937) are secured by hypothecation of stocks and debtors and charge on immovable properties of Bhandara unit.

(b) Vehicle loans (repayable over a period of 1 to 4 years) are secured by way of hypothecation of vehicles purchase are carriage Interest in the range of 9.80 % to 10.75%.

Unsecured Loans:

Interest free Sales tax Loans is repayable within 12 years.

4. (a) In the opinion of the Board, assets other than fixed assets and non-current investment have a valu on realization in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet.

(b) The accounts of Trade receivable and payable and Loans and Advances are subject to formal confirmations / reconciliation and adjustments, if any. The management does not expect any material difference affecting the current year's financial statements due to the same.

5. The amount of exchange difference (net) credited to profit and loss account is Rs. 1,427,385/- (Rs.756,162/-)

6. Segment Reporting:

Primary Business Segment: Comprises Purchase / Trading of Composites Product and Investment activities . These segments are the basis for management control and hence form the basis for reporting.

Secondary Business Segments: The Company operations are mainly based with in India accordingly there is no secondary segment.

7. Disclosures as required by Accounting Standard-18,on"Related Party Disclosure" are given below:

(i) Associates with whom transactions have been entered during the year in the ordinary course of the business: Rasoi Ltd.

J L Morison India Ltd.

Pallawi Resourcess ltd.

Paliawi Trading & Mfg. Co. Ltd.

Looklink Finance Ltd.

Noble Trading Co. Ltd.

Lotus Udyog Ltd.

Surdas Trading & Mfg. Co. Ltd.

Goodpoint Advisory Services and Investments Ltd.

Axon Trading & Mfg. Co. Ltd.

Silver Trading & Services Ltd.

(ii) Key Management Personnel:

Mr. R.N. Mody, Chairman

Mr. Varunn Mody, Executive Director

Mr. P. K. Choudhary, Managing Director

Mr. V.D. Ingle, Executive Director (Manufacturing)

Up to 25/05/2011

Mr. Vinay Sarin ,Executive Director (Marketing)

Up to 25/05/2011

(iii) Relatives of Key Managerial Personnel:

Mrs. Sumitra Devi Mody (Wife of Mr R.N .Mody, Chairman)

Mrs. Sakshi Mody

(Wife of Mr. Varunn Mody, Executive Director)

8. Previous years' figures have been regrouped/reclassified whenever necessary to conform to current years' classification. Figures in brackets pertain to previous year.


Mar 31, 2011

1. Contingent Liabilities not provided for in respect of:

(a) Certain Sales tax matters, mainly on account of pending concessional forms (excluding interest): Rs. 902,199 (Rs.1,237,750).

(b) Disputed Income Tax matters: Rs. 982,094 (Rs. 598,443 )

(c) Disputed demand of arrear wages related to ex-workmen amount unascertainable.

2. Estimated amount of contracts remaining to be executed and not provided for [Net of advances, unsecured, considered good], on capital account are Rs. 17,414,569 [(Net of advance Rs. 47,372,409), (Previous Year Rs. 65,845,278 ( Net of advances Rs. 2,34,03,812)]

3. Secured Loans:

a) Working Capital Loans and non fund based limit utilized amount Rs.33,794,937 ( Previous year Rs. 37 784,164 ) are secured by hypothecation of stocks & debtors and charge on immovable properties of Bhandara Unit.

b) Vehicle Loans are secured by way of hypothecation of motor vehicles purchased there against.

c) Rupee Term loan is secured by lien over Investment in 625 Bonds of 6.85% 22 JN 1411FCL of aggregate value Rs.63,594,358.

4. a) In the opinion of the Board, current assets, loans and advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated.

b) The accounts of Sundry Debtors, Sundry Creditors and Loans and advances are, subject to confirmations/reconciliation and adjustments, if any. The management does not expect any material difference affecting the current year's financial statements.

5. The amount of exchange difference (net) credited to the Profit and Loss Account is Rs.7,56,162 (Previous year Rs. 1,063,135).

6. During the year the company has reinstated the value of a residential premises at its original cost, which was revalued in an earlier year. It does not have any impact on the profit for the year.

7. a) During the year the Company has bought-back 577,000 Equity Shares for a total consideration of Rs. 316,050,861 . Consequently a sum of Rs.5,770,000 being an aggregate face value of bought back shares has been transferred to Capital Redemption Reserve from the General Reserve and the premium of Rs. 310,280,861 on buy back of shares has been adjusted against Securities Premium and General Reserve. Expenditure of Rs. 1,296,689 for such buy back has been disclosed as an exceptional item.

b) During the year, the company has sold entire fixed assetsof its Jalna Unit and resulted profit of Rs. 261 lacs has been shown as an exceptional item.

8. b) Provision for current tax includes Rs. 160,000 (Rs. 15,000) in respect of wealth Tax.

c) Provision for current tax is net of MAT credit for the year of Rs. NIL (Rs. 64,49,466)

9. Capacity/Production of Finished Goods:

Notes:

1. Licensed Capacity: De licensed

2. The installed capacities have been certified by the management and relied upon by the Auditors without verification, this being a technical matter.

* Including production for inter-unit use.

** Consequent to sale of Jalna unit in March.2011, the installed capcity have been shown as Nil/reduced.

10. Disclosures as required by Accounting Standard -18, on "Related Party Disclosure" are given below: List of Related Parties:(with whom the Company has entered into transaction during the year in the ordinary course of business.)

(i) Associates

Rasoi Ltd., JL Morison India Ltd., Pallawi ResourcessLtd., Rasoi Finance Ltd., Noble Trading Co. Ltd.

(ii) Key Management Personnel

Mr. R.N. Mody .Chairman

Mr. Varunn Mody, Director

Mr. P. K. Choudhary, Managing Director.

(iii) Relatives of Key Managerial Persons

Mrs. Sumitra Devi Mody (Wife of Mr R.N .Mody, Chairman)

11. In respect of properties taken/given by the Company, the lease agreements are mutually renewable /cancelable.

12. Figures of the previous year have been regrouped/rearranged/re-classified, wherever necessary to confirm to current year's presentation.

13. Figures in brackets pertains to the financial statements for the year ended 31 st March 2010. Signatures to Schedules 1 to 19 which form an integral part of the financial statements.


Mar 31, 2010

1. Contingent Liabilities not provided for in respect of:

(a) Certain Sales tax matters, mainly on account of pending concessional forms (excluding interest): Rs.1,237,750 (Rs. 1,387,750).

(b) Disputed Income Tax matters:Rs.4,032,148 (Rs.2,889,059).

2. Estimated amount of contracts remaining to be executed and not provided for [Net of advances, unsecured, considered good, on capital account of Rs.4,324,875(Rs.Nil)]Rs. 11,334,028 (Rs .Nil) and on investment account Rs. 19,078,937 (Rs.Nil) Rs. 54,511,250 (Nil)

3. Loan from Banks:

a) Working Capital Loans and non fund based limit utilized amount Rs. 37,784,164 ( Previous year Rs. 27,624,077) are secured by hypothecation of stocks & debtors and charge on immovable properties of Bhandara Unit.

b) Housing Term Loans are secured against equitable mortgage of Two residential flat and an office premises situated at Mumbai.

c) Vehicle Loans are secured by way of hypothecation of motor vehicles purchased there against.

d) Temporary overdraft is secured by lien on fixed deposit with bank.

4. a) In the opinion of the Board, current assets, loans and advances have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated.

b) The accounts of Sundry Debtors, Sundry Creditors and Loans and advances are, subject to confirmations/reconciliation and adjustments, if any. The management does not expect any material difference affecting the current years financial statements.

5. The amount of exchange difference (net) credited to the Profit and Loss Account is Rs.1,039,607 (Previous year credited Rs.1,063,135).

(c) The remuneration paid to Executive Director- Marketing and Executive Director Manufacturing for the period from 9 th August, 2009 to 31st March, 2010 aggregating to Rs. 8,65,548 each respectively is subject to the approval of the shareholders in the forthcoming Annual General Meeting.

Notes:

1. Licensed Capacity: Delicensed

2. The installed capacities have been certified by the management and relied upon by the Auditors without verification, this being a technical matter.

* Including production for inter-unit use.

Note: The information has been given in respect of such vendors to the extent they could be identified as "Micro and Small enterprises" on the basis of information available with Company.

6. Segment reporting:

The Company is in the business of manufacturing Fibre based composite materials used for Automotive, Rail and Industrial applications and all its products fall in the same segment as nature of the products, production process, methods used for distribution, the regulatory environment and the resulting risks and rewards associated with these business lines are not materially different and is, consequently, not subject to business segment reporting.

7. Disclosures as required by Accounting Standard -18, on "Related Party Disclosure" are given below:

List of Related Parties:(with whom the Company has entered into transaction during the year in the ordinary course of business.)

(i) Associates

- Rasoi Ltd., JLMorison(lndia)Ltd., Rasoi Express Pvt. Ltd., Pallawi Resources Ltd., Rasoi Finance Ltd.

(ii) Key Management Personnel

- Mr. Raghu Mody, Chairman

- Mr. Varunn Mody, Director

- Mr. P. K. Choudhary, Managing Director.

- Mr. V.D. Ingle, Executive Director (Manufacturing)

- Mr. Vinay Sarin, Executive Director (Marketing.)

(iii) Relatives of Key Managerial Persons

- Mrs. Sumitra Devi Mody (Wife of Mr Raghu Mody, Chairman) The details of Transactions are:

Notes:

i) No amount pertaining to related parties has been provided for as doubtful debts. Also, no amount has been written off/back.

ii) Details relating to investments in the above related parties have been disclosed in Schedule 6:- Investments.

iii) The related parties are as identified by the Company and relied upon by the Auditors.

8. In respect of properties taken/given by the Company, the lease agreements are mutually renewable /cancelable.

9. Figures of the previous year have been regrouped/rearranged/re- classified, wherever necessary to conform to current years presentation.

10. Figures in brackets pertains to the financial statements for the year ended 31s1 March 2009.

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