Notes to Accounts of IFGL Refractories Ltd.

Mar 31, 2019

Notes to the Standalone Financial Statements

36. INFORMATION GIVEN IN ACCORDANCE WITH THE REQUIREMENTS OF IND AS 108 ON SEGMENT REPORTING

In terms of Ind AS 108 ''Segment Reporting'' prescribed under Section 133 of the Companies Act, 2013, segment information is presented in the Consolidated Financial Statements of the Company. Given below is the information relating to Geographical market of the Company.

	For the year ended 31st March 2019	For the year ended 31st March 2018
Revenue from Operations
Within India	21,205.43	18,483.12
Outside India	26,707.29	26,242.55
Total	47,912.72	44,725.67

	As at 31st March 2019	As at 31st March 2018
Non-Current Assets excluding Financial Instruments and Deferred Tax Assets
Within India	34,644.94	36,068.00
Outside India	-	-
Total	34,644.94	36,068.00
Purchase of Tangible and Intangible Assets	2,453.99	1,125.42

37. AMALGAMATION WITH ERSTWHILE IFGL REFRACTORIES LIMITED (ERSTWHILE HOLDING COMPANY)

Hon''ble National Company Law Tribunal, Kolkata Bench (Tribunal) by passing an Order on 3rd August 2017 under Sections 230 and 232 of the Companies Act, 2013 sanctioned a Scheme of Amalgamation (Scheme) for merger of erstwhile IFGL Refractories Limited (IFGL) with the Company on and from 1st April 2016, being the Appointed Date. Scheme became effective from 5th August 2017 following filing of Order of Hon''ble Tribunal with the Ministry of Corporate Affairs (Registrar of Companies) by the Company and IFGL on that date. The Scheme was accordingly given effect to in the previous year''s Financial Statements.

In accordance with the provisions of aforesaid Scheme :

a. The amalgamation was accounted under the ''Purchase Method'' as prescribed by Accounting Standard 14 - Accounting for Amalgamations under the previous GAAP.

b. The excess of the value of Equity Shares issued by the Company over the book value of assets and liabilities taken over by the Company and cancellation of Equity Shares held by erstwhile IFGL Refractories Limited in the Company, amounting to Rs. 26,699.46 was recorded as goodwill arising on amalgamation.

c. In accordance with the Scheme, the goodwill recorded on amalgamation is being amortised and the Company has estimated its useful life of 10 years. Accordingly, amortisation for the year amounting to Rs. 2,669.95 has been recognised in the Standalone Statement of Profit and Loss.

38. OPERATING LEASE COMMITMENTS

The Company entered into non-cancelable operating lease agreements in connection with certain office spaces. Tenure of lease is for a period of 5 years. Terms of the lease include operating terms of renewal, re-imbursement of maintenance charges, increase in future maintenance charges, etc. The future minimum lease commitments of the Company are as follows :

As at As at 31st March 2019 31st March 2018
Within 1 Year	36.73	36.73
More than 1 Year upto 5 Years	110.19	146.92
Total	146.92	183.65

Lease rentals recognised in Note 30 under the heading "Rent" of the Standalone Statement of Profit and Loss amounts to Rs. 36.73 (31st March 2018 : Rs. 36.73)

39. INCOME TAX EXPENSE

This note provides an analysis of the Company''s Income Tax Expense, shows amounts that are recognised directly in Equity and how the Tax Expenses is affected by non-assessable and non-deductible items. It also explains significant estimates made in relation to tax positions.

	For the year ended 31st March 2019	For the year ended 31st March 2018
a) Income Tax Expense
Current Tax on Profits for the year	714.27	763.56
Excess provision of Tax relating to earlier years written back	-	(13.89)
Total Current Tax Expense	714.27	749.67
b) Deferred Tax
(Increase) in Deferred Tax Assets	(426.77)	(714.71)
Increase in Deferred Tax Liabilities	371.50	1,100.39
Total Deferred Tax Expense	(55.27)	385.68
Income Tax Expense (a b)	659.00	1,135.35
Current Tax Expense recognised in Profit or Loss
Current Tax on Profits for the year	714.27	763.56
Excess provision of Tax relating to earlier years written back	-	(13.89)
Total Current Tax Expense (A)	714.27	749.67
Deferred Tax Expense recognised in Profit or Loss
Deferred Taxes	(55.27)	385.68
I Total Deferred Tax Expense recognised in Profit or Loss (B)	(55.27)	385.68
Deferred Tax Expense recognised in Other Comprehensive Income
Deferred Taxes	(19.54)	17.02
Total Deferred Tax Expense recognised in Other Comprehensive Income (C)	(19.54)	17.02
Total Deferred Tax for the year (B C)	(74.81)	402.70
Total Income Tax Expense recognised in Profit or Loss (A B)	659.00	1,135.35
Total Income Tax Expense (A B C)	639.46	1,152.37

Reconciliation of Tax Expense and the accounting profit multiplied by India''s Tax Rate :

	For the year ended 31st March 2019	For the year ended 31st March 2018
Profit before Tax	3,255.34	3,393.31
Tax at the Indian Tax Rate of 34.944% (2017 - 2018 : 34.608%)	1,137.55	1,174.36
Effect of items not deductible/exempt from tax/items on which different tax rates are applicable	(787.25)	(260.47)
Effect of permanent difference on account of Ind AS adjustments	47.90	17.30
Benefit of Unabsorbed Depreciation	241.26	221.18
Income Tax Expense	639.46	1,152.37

Signature to Notes ''1'' to ''39''	For and on behalf of the Board of Directors
	Kamal Sarda	S K Bajoria	P Bajoria
	Director and Chief Executive Officer	Chairman	Managing Director
	(DIN: 03151258)	(DIN: 00084004)	(DIN : 00084031)
		Rajesh Agarwal	Sikander Yadav
Kolkata		Company Secretary	Chief Financial Officer
11th May 2019		(FCS : 2825)

---

Mar 31, 2018

1. GENERAL INFORMATION

IFGL Refractories Limited (formerly known as IFGL Exports Limited) (the “Company”) is a Public Limited Company and was incorporated under the Companies Act, 1956. With effect from 1st April 2016, erstwhile IFGL Refractories Limited has merged with the Company pursuant to a Scheme of Amalgamation approved by the National Company Law Tribunal, Kolkata (as detailed at Note 38). The Company is primarily engaged in the manufacturing, trading and selling of Refractory items used in Steel plants. The Company also provides services in relation to refractory goods. Manufacturing facilities of the Company are located in Kandla Special Economic Zone (SEZ), Gujarat and Kalunga Industrial Estate near Rourkela, Odisha. The Company has operating Subsidiaries in Asia (China), in Europe (Germany and United Kingdom) and in North America (USA). The Company caters to both domestic and international markets. The shares of the Company are listed on the National Stock Exchange of India Limited (NSE) and BSE Limited (BSE).

2. USE OF ESTIMATES AND JUDGEMENTS :

The preparation of Financial Statements in conformity with Generally Accepted Accounting Principles requires management to make estimates and assumptions that affect the reported amounts of Assets and Liabilities and disclosure of Contingent Liabilities at the date of the Financial Statements and the results of operations during the reporting period end. Although these estimates are based upon management’s best knowledge of current events and actions, actual results could differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Judgements in applying Accounting Policies

The judgements, apart from those involving estimations (see note below), that the Company has made in the process of applying its accounting policies and that have a significant effect on the amounts recognised in these Financial Statements pertain to useful life of Intangible Assets acquired in merger. Refer notes to the Financial Statements.

Key sources of estimation uncertainty

The following are the key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of Assets and Liabilities within the next financial year.

1.1 Useful lives of Property, Plant and Equipment and Intangible Assets

As described in the significant accounting policies, the Company reviews the estimated useful lives of Property, Plant and Equipment and Intangible Assets at the end of each reporting period.

2.2 Fair Value measurements and valuation processes

Some of the Company’s assets and liabilities are measured at fair value for financial reporting purposes. Fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows :

- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

- Level 3 inputs are unobservable inputs for the asset or liability. The Company engages third party valuers, where required, to perform the valuation. Information about the valuation techniques and inputs used in determining the fair value of various assets and liabilities are disclosed in the notes to the Financial Statements.

2.3 Actuarial Valuation

The determination of Company’s Liability towards Defined Benefit Obligation to employees is made through independent Actuarial Valuation including determination of amounts to be recognised in the Statement of Profit and Loss and in Other Comprehensive Income. Such valuation depend upon assumptions determined after taking into account inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market. Information about such valuation is provided in notes to the Financial Statements.

2.4 Claims, Provisions and Contingent Liabilities

The Company has ongoing litigations with various regulatory authorities and third parties. Where an outflow of funds is believed to be probable and a reliable estimate of the outcome of the dispute can be made based on management’s assessment of specific circumstances of each dispute and relevant external advice, management provides for its best estimate of the liability. Such accruals are by nature complex and can take number of years to resolve and can involve estimation uncertainty. Information about such litigations is provided in notes to the Financial Statements.

2.5 Provision against obsolete and slow moving Inventories

The Company reviews the condition of its Inventories and makes provision against obsolete and slow moving Inventory items which are identified as no longer suitable for sale or use. Company estimates the net realisable value for such Inventories based primarily on the latest invoice prices and current market conditions. The Company carries out an Inventory review at each Balance Sheet date and makes provision against obsolete and slow moving items. The Company reassesses the estimation on each Balance Sheet date.

2.6 Impairment of Financial Assets

The Company assesses impairment based on Expected Credit Losses (ECL) model on Trade Receivables.

The Company uses a provision matrix to determine impairment loss allowance on the portfolio of Trade Receivables.

The provision matrix is based on its histroically observed default rates over the expected life of the Trade Receivable and is adjusted for forward looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward looking estimates are analysed.

3.1 Share issued pursuant to the Scheme of Amalgamation

Pursuant to the Scheme of Amalgamation as detailed in Note 38, the Company had issued and allotted 34,610,472 Equity Shares of Rs. 10/- each fully paid and 1,487,160 Equity Shares of the Company of Rs. 10/- each fully paid held by erstwhile IFGL Refractories Limited got cancelled on 18th September 2017.

3.2 Terms/Rights attached to Equity Shares

The Company has only one class of Equity Shares having face value of Rs. 10/- each. Each holder of such shares is entitled to 1 vote per share. In the event of liquidation of the Company, the Equity Shareholders will be entitled to receive the remaining Assets of the Company, after distribution of all preferential amounts, in proportion to their Shareholding. The Company in their General Meeting may declare Dividends, but no Dividend shall exceed the amount recommended by the Board of Directors of the Company.

Pursuant to Order dated 13th March 2018 of the Hon’ble National Company Law Tribunal, Kolkata Bench, which became effective on 15th March 2018 consequent to filing of the Order with Ministry of Corporate Affairs (Registrar of Companies), the shares of the Company held by Bajoria Holdings Private Limited (BHPL) has got transferred to and/or vested in Bajoria Financial Services Private Limited (BFSPL).

Notes :

a) Securities Premium is used to record the premium on issue of shares. The same is utilised in accordance with the provisions of Section 52 of the Companies Act, 2013.

b) Retained Earnings represents the Profits that the Company has earned till date, less any Dividends or other distributions to the Shareholders.

c) During the year ended 31st March 2018, the Company’s Shareholders have declared Dividend of Rs. 2/- per share which resulted in an outflow of Rs. 867.53 including Dividend Distribution Tax of Rs. 146.74 and accordingly has been accounted in the year of declaration by the Shareholders.

The Board of Directors of the Company have proposed a Dividend of Rs. 2/- per share for financial year ended 31st March 2018 which would result in an outflow of Rs. 868.95 including Dividend Distribution Tax of Rs. 148.16. Pending approval of the Shareholders, the same has not been recognised in these Financial Statements.

4.1 Nature of Security and Terms of Repayment of Secured Borrowings :

i) Term Loans from Exim Bank were secured by a first charge over entire moveable and immoveable Property, Plant and Equipment of the SEZ unit located in Kandla, both present and future and second charge on the entire Current Assets including Receivables, both present and future of the said unit.

ii) Both Rupee Loan and Foreign Currency Loan were repayable in quarterly equal installments of Rs. 115.88 and USD 0.62 lacs (including current maturities) at interest rate of 9.70% per annum for rupee loan and Libor 4.50% per annum for Foreign Currency Loan.

iii) Term Loans from DBS Bank Limited are repayable in quarterly equal instalments of Rs. 62.50 each at an interest rate of 9.40% p.a. These are secured by a first charge over entire moveable and immoveable Property, Pant and Equipment, both present and future and second charge on the entire Current Assets including Receivables, both present and future of SEZ unit of the Company located in Kandla.

iv) Vehicle Loan from ICICI Bank Limited are secured by hypothecation of respective Vehicles. They are repayable over 1 year and interest rate of 9.94% - 9.95%.

5.1 The Loans from State Bank of India and DBS Bank Limited (Working Capital Facility 1) are secured by hypothecation of Stocks of Raw Materials, Stock-in-Process, Finished Goods, Consumables, Spares, Stores, Receivables and other Current Assets on pari passu basis and by a second charge over all Property, Plant and Equipment of the Company, situated at Sectors ‘A’ and ‘B’ of Kalunga Industrial Estate, near Rourkela, on pari passu basis.

19.2 The Loans from ICICI Bank Limited and DBS Bank Limited (Working Capital Facility 2) are secured by first pari passu charge on Current Assets and Receivables and second and subservient charge on moveable properties of SEZ unit located at Kandla of the Company.

19.3 The Loan from Yes Bank Limited is secured by first pari passu charge on Current Assets and second pari passu charge over entire movable Fixed Assets of Company.

6.1 Represents Dividends unclaimed and payable to the Shareholders of the Company. There are no amounts due for payment to the Investor Education and Protection Fund as at the year end.

7.1 The Company has recognised in the Statement of Profit and Loss for the year ended 31st March 2018 an amount of Rs. 256.25 (31st March 2017 : Rs. 326.08) as expenses under Defined Contribution Plans.

7.2 Provident Fund (Funded)

Provident Fund contributions in respect of employees up to August 2017 of erstwhile IFGL Refractories Limited are made to a Trustee managed exempted Fund and interest paid to members thereof is not lower than that declared annually by the Central Government. Shortfall, if any, is made good by the Company. Membership to said Fund has been closed on and from 1st September 2017, subject to necessary approvals and/or permissions. Provident Fund in respect of remaining employees are made to statutory Provident Fund established by the Central Government. Based on the final guidance for measurement of Provident Fund liabilities of the Trustee managed fund issued by the Actuarial Society of India, the Company’s liability at the year end of Rs. NIL (31st March 2017 : Rs. NIL) has been actuarially determined by an independent actuary and provided for.

7.3 Gratuity (Funded)

The Company provides Gratuity benefit to its employees. Employees of erstwhile IFGL Refractories Limited are provided Gratuity benefits through a Trustee managed Fund, membership whereof has been closed on and from 1st September 2017 and awaiting merger with that of similar Fund of the Company, subject to necessary approvals and permissions. Gratuity entitlement of the employees is as per provisions of the Payment of Gratuity Act, 1972. However, in case of employees joining before 1st April 2003 of erstwhile IFGL Refractories Limited, they are entitled to Gratuity as per scheme framed by that Company or as per the Payment of Gratuity Act, 1972, whichever is higher. Liabilities with regard to the Gratuity Plan are determined by Actuarial Valuation as set out in Note 2.14 (v) above, based on which the Company makes contribution to the fund using Projected Unit Credit Method. Most recently, Actuarial Valuation of the Funds was carried out as at 31st March 2018.

7.4 Superannuation (Funded)

Certain employees joined before 31st March 2004 of erstwhile IFGL Refractories Limited are members of a Trustee managed Superannuation Fund. Said Fund provides for Superannuation benefit on retirement/death/incapacitation/termination and was amended from the Defined Benefit to Defined Contribution Plan effective 1st April 2004. Defined benefits were frozen on 31st March 2004. Necessary formalities and approvals have been complied with and obtained. Also refer Notes 2.14 (iii) and (v) for accounting policy relating to Superannuation.

7.5 Compensated Absence (Unfunded)

The Company provides for encashment of Accumulated Leave Benefit for eligible employees (i.e. workmen) at the time of retirement, death, incapacitation or termination of employment, subject to a maximum of one hundred and twenty days based on the last drawn Salary. Liabilities are determined by Actuarial Valuation as set out in Note 2.14 (vi) above using Projected Unit Credit Method.

g) Other Disclosures :

The basis used to determine overall Expected Return on Assets and the major categories of Plan Assets are as follows :

The major portion of the Assets is invested in Units of Insurers and Government Bonds. Based on the asset allocation and prevailing yield rates on these asset classes, the Long-Term estimate of the Expected Rate of Return on the Fund have been arrived at. Assumed Rate of Return on Assets is expected to vary from year to year reflecting the returns on matching Government Bonds.

The estimate of future Salary increases takes into account Inflation, Seniority, Promotion and other relevant factors.

The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur and changes in some of the assumptions may be correlated. When calculating the sensitivity of the Defined Benefit Obligation to significant actuarial assumptions, the same method (Present Value of the Defined Benefit Obligation calculated with the Projected Unit Credit Method at the end of the reporting period) has been applied while calculating the Defined Benefit Liability recognised in the Balance Sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period. Risk Exposure :

Through its Defined Benefit Plans, the Company is exposed to a number of risks, the most significant of which are detailed below :

a. Investment Risk : The Defined Benefit Plans are funded Government Securities and units of Insurers. The Company does not have any liberty to manage the funds provided to Insurance Companies.

b. Interest Risk : A decrease in the interest rate on Plan Assets will increase the Plan Liability.

c. Life Expectancy : The Present Value of the Defined Benefit Plan Liability is calculated by reference to the best estimate of the mortality of plan participants both during and at the end of the employment. An increase in the life expectancy of the plan participants will increase the Plan Liability.

d. Salary Growth Risk : The Present Value of the Defined Benefit Plan Liability is calculated by reference to the future salaries of plan participants. An increase will increase the Plan Liability.

Defined Benefit Liability and Employer Contributions

Expected contributions to post employment benefit plans for the year ending 31st March 2019 : Nil

The Weighted Average duration of the Defined Benefit Obligation (Gratuity) is 10 years (31st March 2017 - 6 years, 1st April 2016 - 13 years). The expected maturity analysis of undiscounted Gratuity is as follows :

8.1 As per Secti on 135 of the Companies Act, 2013, a Company, meeting the applicability threshold, needs to spend atleast 2% of its Average Net Profit for the immediately preceeding 3 financial years on Corporate Social Responsibility (CSR) activities. The areas for CSR activities are promotion of education, promotion of health care including preventive health care, promotion of sanitation, promotion of sports and other charitable contributions. A CSR committee has been formed by the Company as per the Act. The funds were paid to IFGL Refractories Welfare Trust, which is a Trust registered u/s 12A of the Income Tax Act, 1961.

a) Gross amount required to be spent by the Company during the year is Rs. 12.20 (31.03.2017 : Rs. 7).

b) Amount spent during the year on

9. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES :

9.1 Capital Management

The Company aims at maintaining a strong capital base maximizing Shareholders’ wealth safeguarding business continuity and augments its internal generations with a judicious use of borrowing facilities to fund spikes in working capital that arise from “me to “me as well as requirements to finance business growth.

9.2 Categories of Financial Instruments

Set out below, is a comparison by class of the carrying amounts and fair value of the Company’s Financial Instruments :

The Management assessed that Cash and Cash Equivalents, Trade Receivables, Trade Payables, other Financial Assets and other Financial Liabilities approximate their carrying amounts largely due to the Short-Term maturities of these instruments.

The fair value of Loans from Banks, Trade Payables and other Financial Liabilities, as well as other Non-current Financial Liabilities is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities. In addition to being sensitive to a reasonably possible change in the forecast cash flows or the discount rate, the fair value of the equity instruments is also sensitive to a reasonably possible change in the growth rates. Management regularly assesses a range of reasonably possible alternatives for those significant unobservable inputs and determines their impact on the total fair value.

The fair values of the Company’s interest bearing borrowings and loans are determined by using DCF method using discount rate that reflects the issuer’s borrowing rate as at the end of the reporting period. The own non-performance risk as at 31st March 2018 was assessed to be insignificant. The discount for lack of marketability represents the amounts that the Company has determined that market participants would take into account when pricing the investments

9.3 Financial Risk Management Objectives

The Company’s activities expose it to a variety of Financial Risks including Market Risk, Credit Risk and Liquidity Risk. The Company continues to focus on a system based approach to Business Risk management. The Company’s Financial Risk management process seeks to enable the early identification, evaluation and effective management of key risks facing the business. Backed by strong Internal Control Systems, the Current Risk management system rests on policies and procedures issued by appropriate authorities; process of regular reviews/audits to set appropriate risk limits and controls, monitoring of such risks and compliance confirmation for the same.

a) Market Risk

The Company’s Financial Instruments are exposed to market changes. The Company is exposed to the following significant Market Risk :

Foreign Currency Risk Interest Rate Risk Other Price Risk

Market Risk exposures are measured using sensitivity analysis. There has been no change to the Company’s exposure to Market Risks or the manner in which these risks are being managed and measured.

Fair Value Hierarchy

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Level 1 to Level 3, as described below :

Quoted Prices in an active market (Level 1) : This level of hierarchy includes Financial Assets that are measured by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities. This category consists of Investment in quoted Equity Shares and Mutual Fund Investments.

Valuation Techniques with observable inputs (Level 2) : This level of hierarchy includes Financial Assets and Liabilities, measured using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). This level of hierarchy does not include any instrument.

Valuation Techniques with significant unobservable inputs (Level 3) : This level of hierarchy includes Financial Assets and Liabilities measured using inputs that are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

i. Foreign Currency Risk

The Company undertakes transactions denominated in foreign currency which results in exchange rate fluctuations. Such exchange rate risk primarily arises from transactions made in foreign exchange and reinstatement risks arising from recognised assets and liabilities, which are not in the Company’s functional currency (Indian Rupees). A significant portion of these transactions are in US Dollar, Euro etc. The carrying amount of foreign currency denominated financial assets and liabilities including derivative contracts are as follows :

Derivatives not designated as hedging instruments

The Company uses foreign exchange forward contracts to manage some of its transaction exposures. The foreign exchange forward contracts are not designated as cash flow hedges and are entered into for periods consistent with foreign currency exposure of the underlying transactions.

The Company enters into foreign exchange forward contracts with the intention to reduce the foreign exchange risk of expected sales and purchases, these contracts are not designated in hedge relationships and are measured at fair value through profit or loss.

ii. Interest Rate Risk

Interest Rate Risk refers to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The objectives of the Company’s Interest Rate Risk management processes are to lessen the impact of adverse interest rate movements on its earnings and cash flows and to minimise counter party risks.

The Company is exposed to interest rate volatilities primarily with respect to its term borrowings from Banks as well as Financial Institutions, export packing credit facilities, cash credit facilities. Such volatilities primarily arise due to changes in money supply within the economy and/or liquidity in banking system due to asset/liability mismatch, poor quality assets etc. of banks. The Company manages such risk by operating with banks having superior credit rating in the market as well as Financial Institutions.

Note : If the rate is decreased by 50 bps profit will increase by an equal amount.

Interest rate sensitivity has been calculated assuming the borrowings outstanding at the reporting date have been outstanding for the entire reporting period. Further, the calculations for the unhedged floating rate borrowing have been done on the notional value of the foreign currency (excluding the revaluation).

iii. Price Risk

The Company invests its surplus funds primarily in debt mutual funds measured at Fair Value through Profit or Loss. Aggregate value of such Investments as at 31st March 2018 is Rs. 1,270.38 (31st March 2017 : Rs. 1,189.78; 31st March 2016 : Rs. NIL). Investments in the Mutual Fund schemes are measured at fair value. Accordingly, these do not pose any significant Price Risk.

b) Liquidity Risk

Liquidity Risk is the risk that the Company may encounter difficulty in meeting its obligations. The Company mitigates its liquidity risks by ensuring timely collections of its trade receivables, close monitoring of its credit cycle and ensuring optimal movements of its inventories. The table below provides details regarding the remaining contractual maturities of significant financial liabilities at the reporting date.

The Company manages this risk by utilising unused credit lines and portfolio diversion. The Company has investment policy for deployment of surplus liquidity, which allows investment in debt securities and mutual fund schemes.

Credit Risk

Credit Risk is the risk that counter party will not meet its obligations leading to a financial loss. The Company has its policies to limit its exposure to Credit Risk arising from outstanding receivables. Management regularly assess the credit quality of its customer’s basis which, the terms of payment are decided. Credit limits are set for each customer which are reviewed on periodic intervals.

The movement of the expected loss provision made by the Company are as under :

Pursuant to Order dated 13th March 2018 of the Hon’ble National Company Law Tribunal, Kolkata Bench which became effective on 15th March 2018 consequent to filing of the Order with Ministry Corporate Affairs (Registrar of Companies), the Shares of the Company held by Bajoria Holdings Private Limited (BHPL) has got transferred to and/or vested in Bajoria Financial Services Private Limited (BFSPL).

10. FIRST TIME ADOPTION

Ind AS 101 (First time Adoption of Indian Accounting Standards) provides a suitable starting point for accounting in accordance with Ind AS and is required to be mandatorily followed by first time adopters. The Company has prepared the opening Balance Sheet as per Ind AS as of 1st April 2016 (the transition date) by :

a. recognising all assets and liabilities whose recognition is required by Ind AS,

b. not recognising items of assets or liabilities which are not permitted by Ind AS,

c. reclassifying items from previous Generally Accepted Accounting Principles (GAAP) to Ind AS as required under Ind AS and

d. applying Ind AS in measurement of recognised assets and liabilities.

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

a. Property, Plant and Equipment including Capital Work-in-Progress and Intangible Assets were carried in the Statement of Financial Position prepared under Previous GAAP as at 31st March 2016. The Company has elected to regard such carrying amount as deemed cost at the date of transition i.e. 1st April 2016.

b. Ind AS 103 Business Combinations has not been applied in respect of mergers which are considered businesses for Ind AS that occurred before 1st April 2016. Use of this exemption means that the previous GAAP carrying amounts of assets and liabilities, which are required to be recognised under Ind AS, is their deemed cost at the date of the acquisition. After the date of the acquisition, measurement is in accordance with Ind AS. Assets and Liabilities that do not qualify for recognition under Ind AS are excluded from the opening Ind AS Statement of Financial Position. The Company did not recognise or exclude any previously recognised amounts as a result of Ind AS recognition requirements.

Estimates

An entity’s estimate in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with the previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error. Ind AS estimates as at 1st April 2016 are consistent with the estimates as at the same date made in confirmity with previous GAAP.

Classification and measurement of Financial Assets

Ind AS 101 requires an entity to assess classification and measurement of Financial Assets on the basis of the facts and circumstances that exists at the date of transition to Ind AS. Further the standard permits measurement of Financial Assets accounted at amortised cost based on facts and circumstances existing on the date of transition if retrospective application is impracticable.

Accordingly, the Company has determined the classification of Financial Assets on the basis of the facts and circumstances that exists at the date of transition to Ind AS. Measurement of the Financial Assets accounted at amortised cost has been done retrospectively except where the same is impracticable. Ind AS requires an entity to reconcile Equity, Total Comprehensive Income and Cash Flows for prior periods. The following tables represent such reconciliations from previous GAAP to Ind AS.

Under previous GAAP, investment in Subsidiaries were stated at cost and provisions were made to recognise the decline other than temporary. Under Ind AS, the Company has elected to regard such carrying amount as at 31st March 2016 as deemed cost at the date of transi”on.

iii) Under previous GAAP, Current Investments were stated at lower of cost and fair value. Under Ind AS, these Financial Assets have been classified as FVTPL on the date of transition and fair value changes after the date of transition has been recognised in Profit or Loss.

iv) Under previous GAAP, the net mark to market losses on Derivative Financial Instruments, as at the Balance Sheet date, were recognised in Profit or Loss and the net gains, if any, were ignored. Under Ind AS, such Derivative Financial Instruments are to be recognised at fair value and the movement is recognised in Profit or Loss.

v) Under Ind AS, remeasurement gains and losses (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 obligations) are recognised in the Other Comprehensive Income instead of Profit or Loss.

vi) The transition from Indian GAAP to Ind AS has not had a material impact on the Statement of Cash Flows.

11. INFORMATION GIVEN IN ACCORDANCE WITH THE REQUIREMENTS OF IND AS 108 ON SEGMENT REPORTING :

In terms of Ind AS 108 ‘Segment Reporting’ prescribed under Section 133 of the Companies Act 2013, segment information is presented in the Consolidated Financial Statements of the Company. Given below is the information relating to Geographical Market of the Company :

12. AMALGAMATION WITH ERSTWHILE IFGL REFRACTORIES LIMITED (THE ERSTWHILE HOLDING COMPANY)

Hon’ble National Company Law Tribunal, Kolkata Bench (Tribunal) by passing an Order on 3rd August 2017 under Sections 230 and 232 of the Companies Act, 2013 has sanctioned a Scheme of Amalgamation (Scheme) for merger of erstwhile IFGL Refractories Limited (IFGL) with the Company on and from 1st April 2016, being the Appointed Date. Scheme has become effective from 5th August 2017 following filing of Order of Hon’ble Tribunal with the Ministry of Corporate Affairs (Registrar of Companies) by the Company and IFGL on that date. The Scheme has accordingly been given effect to in these Financial Statements.

In accordance with the provisions of aforesaid Scheme :

a. The Share swap ratio was 1:1 i.e. for 1 Equity Share held in erstwhile IFGL Refractories Limited on the record date, the Company has issued and alloted 1 Equity Share of the face value of Rs. 10/- each fully paid up.

b. The Amalgamation has been accounted under the ‘Purchase Method’ as prescribed by Accounting Standard 14 - Accounting for Amalgamations under the previous GAAP. The accounting treatment has been given as under :

i) The assets and liabilities of the erstwhile IFGL Refractories Limited as at 1st April 2016 have been incorporated at the fair values in the Financial Statements of the Company.

ii) All inter corporate balances and obligations (including investments held by the erstwhile IFGL Refractories Limited in the Company, advances, outstanding balances or other obligations) between the Company and the erstwhile IFGL Refractories Limited stands cancelled.

c. The excess of the value of Equity Shares issued by the Company over the book value of assets and liabilities taken over by the Company and cancellation of Equity Shares held by the erstwhile IFGL Refractories Limited in the Company, amounting to Rs. 26,699.46 has been recorded as goodwill arising on amalgamation.

d. Pursuant to approved share swap ratio, the Company has issued and alloted on 18th September 2017, 34,610,472 Equity Shares of Rs. 10/- each (with a premium of Rs. 120 per share) to the Shareholders of erstwhile IFGL Refractories Limited. Equity Shares of the Company has been listed on both BSE Limited and National Stock Exchange of India Limited.

e. In accordance with the Scheme, the goodwill recorded on amalgamation has been amortised and the Company has estimated its useful life of 10 years. Accordingly, amortisation for the year amounting to Rs. 2,669.95 has been recognised in the Statement of Profit and Loss.

f. Trading in Equity Shares of the Company both on BSE Limited and National Stock Exchange of India Limited has commenced with effect from 14th November 2017.

g. Name of the Company changed to IFGL Refractories Limited with effect from 25th October 2017.

h. Registered Office of the Company shifted to the state of Odisha on and from 24th November 2017.

13. OPERATING LEASE COMMITMENTS

The Company entered into non-cancelable operating lease agreements in connection with certain office spaces.

Tenure of lease is for a period of 5 years. Terms of the lease include operating terms of renewal, re-imbursement of maintenance charges, increase in future maintenance charges, etc. The future minimum lease commitments of the Company are as follows :

Lease rentals recognised in Note 30 under the heading “Rent” of the Statement of Profit and Loss amounting to Rs. 36.73 (31st March 2017 : Rs. 31.41)

14. INCOME TAX EXPENSE

This note provides an analysis of the Company’s Income Tax Expense, shows amounts that are recognised directly in Equity and how the Tax Expenses is affected by non-assessable and non-deductible items. It also explains significant estimates made in relation to tax positions.

15. PREVIOUS YEAR FIGURES

Previous Year’s figures have been re-grouped/re-classified wherever necessary to conform with the current year’s classification.

---

Mar 31, 2017

1. GENERAL INFORMATION

IFGL Exports Limited (the “Company”) is a Public Limited Company and was incorporated under the Companies Act, 1956. With effect from 1st April 2016, IFGL Refractories Limited has merged with the Company pursuant to a Scheme of Amalgamation approved by the National Company Law Tribunal, Kolkata (as detailed at Note 42). The Company is primarily engaged in the manufacturing, trading and selling of Refractory items used in Steel plants. Manufacturing facilities of the Company are located in Kandla Special Economic Zone (SEZ), Gujarat and Kalunga Industrial Estate near Rourkela, Odisha. The Company has operating Subsidiaries in Asia (China), in Europe (Germany and United Kingdom) and in North America (USA). The Company caters to both domestic and international markets.

2.1 Terms/Rights attached to Equity Shares

The Company has only one class of Equity Shares having a face value of Rs.10/- each. Each holder of Equity Shares is entitled to one vote per share. In the event of liquidation of the Company, the Equity Shareholders will be entitled to receive remaining Assets of the Company, after distribution of all preferential amounts, in proportion to their Shareholding. The Company in the General Meeting may declare Dividends, but no Dividend shall exceed the amount recommended by the Board.

2.2 Pursuant to the approval of the Shareholders in the Extra Ordinary General Meeting held on 2nd August 2016 :

i) The Authorised Share Capital of the Company has increased from Rs.25,000,000 to Rs.30,000,000 divided into 3,000,000 Equity Shares of Rs.10/- each. It will increase further to Rs.430,000,000 on account of amalgamation of IFGL Refractories Limited with the Company as detailed in Note 42.

ii) The Company, on 6th August 2016, issued and allotted 756,000 Ordinary Shares of Rs.10/- each, as fully paid up Bonus Shares in the proportion of 3.5 Bonus Shares of Rs.10/- each for every existing 10 (ten) Equity Shares of Rs.10/- each.

2.3 Share Capital Suspense

Pursuant to the Scheme of Amalgamation as detailed in Note 42, the Company shall be issuing and alloffing 33,123,312 Equity Shares of Rs.10/- each fully paid ignoring Equity Shares of the Company held by IFGL Refractories Limited. Pending allotment, corresponding amount has been kept under Share Capital Suspense and shall be transferred to Equity Share Capital of the Company on allotment of Shares. The record date fixed for the purpose is 15th September 2017.

3.1 Nature of Security and Terms of Repayment of Secured Borrowings :

i) Term Loans from Exim Bank is secured by a first charge over entire moveable and immoveable Fixed Assets of the SEZ unit located in Kandla, both present and future and second charge on the entire Current Assets including Receivables, both present and future of the said unit.

ii) Both Rupee Loan and Foreign Currency Loan are repayable in quarterly equal installments of Rs.115.88 lacs and USD 0.62 lacs (including current maturities) at interest rate of 9.70% per annum for rupee loan and Libor 4.50% per annum for Foreign Currency Loan.

iii) Term Loans from DBS Bank Limited is secured by a first charge over entire moveable and immoveable Fixed Assets, both present and future and second charge on the entire Current Assets including Receivables, both present and future of SEZ unit located in Kandla of the Company.

iv) Vehicle Loan from ICICI Bank Limited are secured by hypothecation of respective Vehicles. They are repayable over 1-2 years and interest rate of 9.94% - 9.95%.

4.1 Deferred Tax Assets on Unabsorbed Depreciation has been recognised based on virtual certainity that sufficient profits shall be available in future against which such assets shall be adjusted in future.

5.1 The Loans from State Bank of India and DBS Bank Limited (Loan 1) is secured by hypothecation of Stocks of Raw Materials, Stock in Process, Finished Goods, Consumables, Spares, Stores, Receivables and other Current Assets on pari passu basis and by a second charge over all Fixed Assets of the Company, situated at Sectors ‘A’ and ‘B’ of Kalunga Industrial Estate, near Rourkela, on pari passu basis.

5.2 The Loans from ICICI Bank Limited and DBS Bank Limited (Loan 2) are secured by First Pari passu charge on Current Assets and Receivables and second and subservient charge on moveable properties of SEZ unit located at Kandla of the Company.

6.1 Dues to the Micro Enterprises and Small Enterprises

Information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company. The disclosures relating to Micro and Small Enterprises as at 31st March 2017 are as under :

7.1 Represents Dividends unclaimed and payable to the Shareholders of IFGL Refractories Limited. There are no amounts due for payment to the Investor Education and Protection Fund as at the year end.

8.1 Acquired under a lease of 99 years with a renewal option.

8.2 Title Deeds is in the name of IFGL Refractories Limited which has merged with the Company (Refer Note 42)

9.1 Technical Know-how represents Technical Drawings, Designs etc. relating to manufacture of the Company’s products and acquired pursuant to various agreements conferring the right to usage only.

10.1 The Company has recognised in the Statement of Profit and Loss for the year ended 31st March 2017 an amount of Rs.326.08 (31.03.2016 : Rs.16.57) as expenses under Defined Contribution Plans.

10.2 Provident Fund (Funded)

Provident Fund contributions in respect of Employees of erstwhile IFGL Refractories Limited are made to an exempted Trust and it has the liability to Fund any shortfall on the yield of the Trust’s investments over the administered interest rates on an annual basis. These administered interest rates are determined annually predominantly considering the social rather than economic factors. The contribution by the employer and employee together with the interest accumulated thereon are payable to the Employees at the time of their separation from the Company or retirement, whichever is earlier. The benefits vests immediately on rendering of the services by the Employee. Based on the final guidance for measurement of Provident Fund liabilities issued by the Actuarial Society of India, the Company’s liability at the year end of ‘ NIL (31.03.2016 : ‘ NIL) has been actuarially determined by an independent actuary and provided for.

10.3 Gratuity (Funded)

The Company provides for Gratuity, a Defined Benefit Retirement Plan covering eligible Employees. The Gratuity Trust Fund makes payments to vested Employees on Retirement, Death, Incapacitation or Termination of Employment. For Employees joining after 1st April 2003, the amount is based on the respective Employee’s eligible Salary (Half Month’s Salary) depending on the tenure of the service subject to a maximum amount as per The Payment of Gratuity Act, 1972. For employees joining before 1st April 2003 in erstwhile IFGL Refractories Limited, the amount is calculated similarly as per the Payment of Gratuity Act, 1972 or the Company’s Scheme, whichever is higher. Vesting occurs on completion of five years of service. Liabilities with regard to the Gratuity plan are determined by Actuarial Valuation as set out in Note 2.11 (vi) above, based on which the Company makes contribution to the Fund using Projected Unit Credit Method. The most recent Actuarial Valuation of the Fund was carried out as at 31st March 2017.

10.4 Superannuation (Funded)

In keeping with the Superannuation Scheme (applicable to Employees joined before 31st March 2004 of the erstwhile IFGL Refractories Limited), Employees are entitled to Superannuation Benefit on Retirement/Death/Incapacitation/Termination. Superannuation Scheme was amended from Defined Benefit Plan to Defined Contribution Plan effective 1st April 2004 and the benefits under the Defined Benefit Plan were frozen as on 31st March 2004. Necessary formalities/approvals have been complied with/obtained. Also refer Notes 2.11 (iv) and (vi) for accounting policy relating to Superannuation.

10.5 Compensated Absence (Unfunded)

The Company provides for accumulated Leave Benefit for eligible Employees (i.e. Workmen) at the time of Retirement, Death, Incapacitation or Termination of Employment, subject to a maximum of one hundred and twenty days based on the last drawn Salary. Liabilities are determined by Actuarial Valuation as set out in Note 2.11 (vii) above using Projected Unit Credit Method.

11.1 As per Section 135 of the Companies Act, 2013, a Company, meeting the applicability threshold, needs to spend atleast 2% of its Average Net Profit for the immediately preceding 3 financial years on Corporate Social Responsibility (CSR) activities. The areas for CSR activities are promotion of education, promotion of health care including preventive health care, promotion of sanitation, promotion of sports and other charitable contributions. A CSR committee has been formed by the Company as per the Act. The funds were primarily allocated to a Trust and utilised throughout the year on these activities which are specified in Schedule VII of the Companies Act, 2013.

a) Gross amount required to be spent by the Company during the year is Rs.7.00

12. OPERATING LEASE COMMITMENTS

The Company entered into Non-Cancelable Operating Lease Agreements in connection with certain Office Spaces. Tenure of Lease is for a period of 5 years. Terms of the Lease include Operating terms of Renewal, Re-imbursement of Maintenance Charges, Increase in Future Maintenance Charges, etc. The Future Minimum Lease Commitments of the Company are as follows :

13. DISCLOSURE ON SPECIFIED BANK NOTES (SBNs)

During the year, the Company had specified bank notes or other denomination note as defined in the MCA notification G.S.R 308 (E) dated 31st March 2017 on the details of Specified Bank Notes (SBN) held and transacted during the period from 8th November 2016 to 30th December 2016, the denomination wise SBN’s and others notes as per the Notifications is given below :

* For the purpose of this clause, the term ‘Specified Bank Notes’ shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E) dated the 8th November 2016.

14. AMALGAMATION WITH IFGL REFRACTORIES LIMITED (THE ERSTWHILE HOLDING COMPANY)

Hon’ble National Company Law Tribunal, Kolkata Bench (Tribunal) by passing an Order on 3rd August 2017 under Sections 230 and 232 of the Companies Act, 2013 has sanctioned a Scheme for Amalgamation (Scheme) for merger of IFGL Refractories Limited (IFGL) with the Company on and from 1st April 2016 being the appoined date. Scheme has become effective from 5th August 2017 following filing of Order of Hon’ble Tribunal with the Ministry of Corporate Affairs (Registrar of Companies) by the Company and IFGL on that date. The Scheme has accordingly been given effect to in these Financial Statements.

In accordance with the provisions of aforesaid Scheme :

a. The Share swap ratio is 1:1 i.e. for 1 Equity Share held in IFGL Refractories Limited on the record date, the Company will issue and allot 1 Equity Share of the face value of Rs.10/- each fully paid up.

b. The Amalgamation has been accounted under the ‘Purchase Method’ as prescribed by Accounting Standard 14 - Accounting for Amalgamations. The accounting treatment has been given as under :

i) The assets and liabilities of the erstwhile IFGL Refractories Limited as at 1st April 2016 have been incorporated at the fair values in the Financial Statements of the Company.

ii) All inter corporate balances and obligations (including investments held by the erstwhile IFGL Refractories Limited in the Company, advances, outstanding balances or other obligations) between the Company and the erstwhile IFGL Refractories Limited stands cancelled.

c. The excess of the value of Equity Shares issued by the Company over the book value of assets and liabilities taken over by the Company and cancellation of Equity Shares held by the erstwhile IFGL Refractories Limited in the Company, amounting to Rs.26,699.46 lacs has been recorded as goodwill arising on amalgamation.

d. As the Equity Shares have not been allotted till 31st March 2017, the same has been disclosed under the Share Capital Suspense till the date of allotment of such shares to the Shareholders of the erstwhile IFGL Refractories Limited.

e. Pursuant to approved Share swap ratio, the Company shall be issuing 34,610,472 Equity Shares of Rs.10/- each (with a premium of Rs.120 per share) to the Shareholders of IFGL Refractories Limited on the record date being 15th September 2017. Equity Shares of the Company will be listed both on BSE Limited and National Stock Exchange of India Limited. Pending allotment, an amount of Rs.331,233,120 (ignoring Equity Shares of the Company already held by IFGL Refractories Limited) has been included in the Share Capital Suspense Account as at 31st March 2017.

f. In accordance with the Scheme, the goodwill recorded on amalgamation has been amortised and the Company has estimated its useful life of 10 years. Accordingly, amortisation for the year amounting to Rs.2,669.95 lacs has been recognised in the Statement of Profit and Loss.

15. PREVIOUS YEAR FIGURES

Previous Year’s figures have been re-grouped/re-classified wherever necessary to conform with the current year’s classification. As indicated in Note 42, during the current year ended 31st March 2017, IFGL Refractories Limited has merged with the Company pursuant to the Scheme of Amalgamation approved by the NCLT, Kolkata with an appointed date of 1st April 2016. Therefore, the current year figures are strictly not comparable with that of the previous year.

16. PROPOSED DIVIDEND ON EQUITY SHARES

The Directors of the Company have recommended the payment of Final Dividend of Rs.2/- per fully paid Equity Shares. This Proposed Dividend is subject to the approval of the Shareholders in the ensuing Annual General Meeting. The Equity Shares under Share Suspense Account shall also be entitled to such Dividend.