Notes to Accounts of Integra Engineering India Ltd.

Mar 31, 2019

Corporate information

INTEGRA Engineering India Limited (''the Company'') is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956 (CIN: L29199GJ1981PLC028741) having its registered office at Post Box No 55, Chandrapura Village, Taluka Halol, Panchmahal. Its shares are listed on Bombay Stock Exchange in India. The Company is engaged in manufacturing of machineries and components.

1. Recent accounting pronouncements

The Ministry of Corporate Affairs (“MCA") through Companies (Indian Accounting Standards) Amendment Rules, 2019 and Companies (Indian Accounting Standards) Second Amendment Rules, 2019 has notified the new Ind AS and certain amendments to existing Ind ASs. They shall come into force on April 1, 2019 and therefore, the company shall apply the same with effect from that date.

(a) New Indian Accounting Standard (Ind AS 116) "Leases":

Ind AS 116 will replace the existing leases standard, Ind AS 17 “Leases" w.e.f. April 1, 2019. Ind AS 116 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. It introduces a single, on balance sheet lessee accounting model for lessees. A lessee recognises right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. The standard also contains enhanced disclosure requirements for lessees. Ind AS 116 substantially carries forward the lessor accounting requirements as prescribed in Ind AS 17. The effect on the Financial statements on adoption of Ind AS 116 is being evaluated by the Company.

(b) Other Amendments:

Several other Indian Accounting Standards have been amended on various issues with effect from April 1, 2019. The following amendments are relevant to the company:

(i) Ind AS 12 “Income Taxes"- Income tax consequences of dividend and uncertainty over income tax treatments;

(ii) Ind AS 19 “Employee Benefits"- Accounting for plan amendment, curtailment or settlement;

(iii) Ind AS 28 “Investments in Associates and Joint Ventures"-Application of Ind AS 109 “Financial Instruments" to longterm interests in associates and joint ventures to which the equity method is not applied but that in substance form part of the net investment in the associate or joint venture.

(iv) Ind AS 109 “Financial Instruments"- Measurement of prepayment features with negative compensation in case of debt instruments;

None of these amendments are expected to have any material effect on the Company''s financial statements.

Note: The Company has elected to continue with the carrying value of its Property Plant & Equipment (PPE) recognised as of April 1, 2016 (transition date) measured as per the Previous GAAP and used that carrying value as its deemed cost as on the transition date as per Para D7AA of Ind AS 101.

The Company has elected to continue with the carrying value of all its Investment Properties recognized as of April 1, 2016 (transition date) measured as per the Previous GAAP and used that carrying value as its deemed cost as of the transition date.

As at 31 March 2019 and 31 March 2018, the fair values of the properties are Rs. 72,739 (Rs.000) and Rs. 68,782 (Rs.000), respectively. These valuations are based on valuations performed by Govt. Registered valuer.

The Company has no restrictions on the realisability of its investment properties and no contractual obligations to purchase, construct or develop investment properties.

The Company''s Investment Properties consists of land and buildings. The Fair value of land was determined using the market comparable approach based on recent market prices without any significant adjustments being made to the market observable data. The Fair value of Buildings was determined using depreciated Replacement cost method. The valuation model considers various inputs and is dependent on Age, General conditions, normal useful life, replacement cost new, obsolescence. The Fair value measurements is categorized in level 2 or level 3 of Fair value hierarchy as appropriate.

2.1 The Company has elected to continue with the carrying value of its investments in associate, measured as per the Previous GAAP and used that carrying value on the transition date 1st April, 2016 in terms of Para D15(b)(ii) of Ind AS 101.

2.1 The Company assesses impairment loss on dues from its customers on facts and circumstances relevant to each transaction. Usually, Company collects all its receivables within 90 days.

2.3 As at 31 March 2019, the Company had 5 customers (31 March 2018: 5 customers) having outstanding more than 5% of total trade receivables that accounted for approximately 93% (31 March 2018: 93%) of total trade receivables outstanding.

3.1 The Company has classified a Water Jet Machine as asset held for sale as at 31st March 2018 and has measured the asset at lower of carrying amount and the fair value less costs to sell resulting in Impairment Loss of Rs.390 (Rs.000) (P.Y. Rs. 1,116 (Rs.000)). This loss is included in other expenses in Statement of Profit and Loss.

3.2 Right, Preferences and restrictions attached to Shares Equity shares

The Company has only one class of equity shares having a par value of Rs. 1/- per share. Each holder of equity shares is entitled to one vote per share. Any dividend declared by the company shall be paid to each holder of Equity shares in proportion to the number of shares held to total equity shares outstanding as on that date.

In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

3.3 Securities Premium Reserve is used to record the premium on issue of equity shares. The reserve is utilised in accordance with the provision of the Companies Act, 2013.

3.4 Employee Stock Option Reserve Stock Option Reserve is used to recognise the fair value of equity settled share based payment transactions.

3.5 The General Reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the General Reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve is not reclassified subsequently to the Statement of Profit and Loss.

4.1 The Company has been authorised to issue 14,000,000 Cumulative Redeemable Preference Shares (CRPS) of Rs. 10/- each, out of which the Company has issued 12,400,000 4% Cumulative Redeemable Preference Shares of Rs. 10/- each fully paid up.

4.2 The CRPS holders comprising the present issue shall rank pari-passu interse with any preference or priority of one over the other or others of them. The CRPS holder have right to receive dividend @ 4% p.a. in respect of the amount paid-up on the CRPS for a period of 20 years from the date of allotment of CRPS, only out of profits, if any, of the Company. The dividend as and when declared by the Company shall be paid to the shareholder on the record date, which the Board may fix from time to time. If in any year, the Company has not declared any dividend on the CRPS, the right to the dividends shall accumulate and the accumulated dividends will be paid out of the profits, if any, of the subsequent financial year(s) including carry forward profits, if any, of the previous years, before any dividend is paid to the Equity Shareholders. Such right to receive the accumulated dividend, if any, will cease on the expiry of 20 years from the date of allotment.

In the event of liquidation of the Company, the Preference shareholders will be entitled to receive their capital contribution in the Company after the distribution / repayment of all creditors but before distribution to equity shareholders. The distribution to the preference shareholders will be in proportion of the number of shares held by each shareholder. "

4.3 As per requirements of Ind AS 32 "Financial Instrument Presentation", 4% cumulative redeemable preference shares have been classified as financial liabilities .

4.4 Consequent to classification of cumulative redeemable preference shares as borrowings, liability pertaining to undeclared dividend is provided for as Finance cost but it is not declared, distributed or paid and hence, the liability for dividend distribution tax would be accounted only when it accrues on declaration, distribution or payment of dividend.

5.1 Overdraft facility is secured by pledge of Fixed Deposits.

5.1 Payment towards trade payables is made as per the terms and conditions of the contract / purchase orders. The average credit period is 30 - 90 days.

5.2 This information as required to be disclosed under 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. Information in terms of section 22 of Micro, Small and Medium Enterprises Development Act, 2006 are given below:

6. Operating Lease Arrangements

6.1 The Company has applied Appendix C to Ind AS 17 ''Leases'' to office and other assets to evaluate whether these contracts contains a lease or not. Based on evaluation of the terms and conditions of the arrangements, the Company has evaluated such arrangements to be operating leases.

The Company has obtained certain premises for its business operations under operating leases or leaves and license agreements. These are generally cancellable and range between 11 months to 5 years under leave and licenses or longer for other lease and are renewable by mutual consent on mutually agreeable terms. The Company has given refundable interest free security deposits in accordance with the agreed terms.

7. Employee Benefits :

In accordance with the stipulations of the Indian Accounting Standard 19 “Employee Benefits", the disclosures of employee benefits as defined in the Indian Accounting Standard are given below:

7.1 Defined Contribution Plan

The Company makes contribution towards Employee Provident Fund and Super Annuation Fund. The Company is required to contribute specified percentage of payroll cost.

7.2 Defined Benefits Plan

Gratuity

15 days salary for each completed year of service. Vesting period is 5 years and the payment is at actual on superannuation, resignation, termination, disablement or on death. The liability for gratuity as above is recognised on the basis of actuarial valuation. The Company makes contribution to Life Insurance Corporation (LIC) for gratuity benefits according to the Payment of Gratuity Act, 1972.

The Company recognizes the liability towards the gratuity at each Balance Sheet date.

The most recent actuarial valuation of the defined benefit obligation for gratuity was carried out at March 31, 2019 by an actuary. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of benefit entitlement and measures each unit separately to build up the final.

These plans typically expose the Company to actuarial risks such as: Investment risk, Market risk, Legislative risk, Salary risk and Liquidity risk.

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. Sensitivity due to mortality & withdrawals are not material & hence impact of change not calculated.

Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the Balance Sheet.

8. Operating Segment

The Company''s operations fall under single segment namely “Manufacturing of Machineries and Components", taking into account the risks and returns, the organization structure and the internal reporting systems.

Segment revenue from “Manufacturing of Machineries and Components" represents revenue generated from external customers which is attributable to the company''s country of domicile i.e. India and external customers outside India as under:

All assets are located in the company''s country of domicile i.e. India.

Company''s significant revenues (more than 70%) are derived from major 8 entities. The total revenue from such entities amounted to Rs. 4,67,087 (’000) in 2018-19 and Rs. 3,25,590 (’000) in 2017-18.

9 Impairment of Assets

In accordance with the Indian Accounting Standard (Ind AS-36) on “Impairment of Assets" the Company during the year carried out an exercise of identifying the assets that may have been impaired in respect of cash generating unit in accordance with the said Indian Accounting Standard. Based on the exercise, no impairment loss is required as at 31st March 2019.

10 The value of realization of assets other than fixed assets and non current investment in the ordinary course of business will not be less than the value at which they are stated in the Balance Sheet.

11 The balances of trade receivables and trade payables are subject to adjustment if any on reconciliation/settlement.

12 The Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses.

13 Financial instruments Disclosure

13.1 Capital Management

For the purpose of the Company’s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders.

The Company manages its capital so as to safeguard its ability to continue as a going concern and to optimise returns to shareholders. The capital structure of the Company is based on management''s judgement of its strategic and day-to-day needs with a focus on total equity so as to maintain investor, creditors and market confidence.

The management and the Board of Directors monitors the return on capital as well as the level of dividends to shareholders. The Company may take appropriate steps in order to maintain, or if necessary adjust, its capital structure.

13.2 Financial risk management

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

The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks. The senior Management ensures that the Company’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. It is the Company''s policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.

13.2.1 Market Risk

Market risk is the risk or uncertainty arising from possible market price movements and their impact on the future performance of the business. The major components of market risk are price risk, foreign currency risk and interest rate risk.

A. Commodity price risk

The Company is affected by the price volatility of certain commodities. Its operating activities require the ongoing manufacture of machineries and components and therefore require a continuous supply of steel as principal raw material.

The Company’s management has developed and enacted a risk management strategy regarding commodity price risk and its mitigation.

B. Foreign Currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s operating activities.

The aim of the Company''s approach to management of currency risk is to leave the Company with no material residual risk.

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

Sensitivity to risk

A 5% strengthening of the INR against key currencies to which the Company is exposed would have led to approximately an additional Rs. 6 (’000) gain in the Statement of Profit and Loss. A 5% weakening of the INR against these currencies would have led to an equal but opposite effect

C. Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s short term debt obligations with floating interest rates.

The Company invests the surplus fund generated from operations in bank deposits. Considering these bank deposits are short term in nature, there is no significant interest rate risk.

The Company has laid policies and guidelines including tenure of investment made to minimise impact of interest rate risk.

13.2.2 Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counter-party fails to meet its contractual obligations.

The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.

A. Trade Receivable

"Customer credit risk is managed by the Company subject to the Company''s established policy, procedures and control relating to customer credit risk management. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by letters of credit or other forms of credit insurance. "

An impairment analysis is performed at each reporting date on an individual basis. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note no. 12.

B. Financial instruments and cash deposits

Credit risk from balances with banks and financial institutions is managed by the management in accordance with the Company''s policy. The Company''s maximum exposure to credit risk for the components of the Balance Sheet at 31 March 2019 and 31 March 2018 is the carrying amounts as illustrated in Note no. 13.

13.2.3 Liquidity risk

Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The Company''s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans, preference shares and finance leases.

"The Company monitors its risk of a shortage of funds using a liquidity planning tool."

The following table shows the maturity analysis of the Company''s financial liabilities based on contractually agreed undiscounted cash flows as at the Balance Sheet date.

14. Fair Value Measurement

14.1 Fair value of the Company''s financial assets that are measured at fair value on recurring basis.

Some of the Company''s financial assets are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial assets are determined.

14.2 Fair value of financial assets and financial liabilities that are not measured at fair value (but fair value disclosures are required). Management considers that the carrying amounts of financial assets and financial liabilities recognized in the financial statements except as per note 52.1 approximate their fair values.

15. Employee Stock option

At the Annual General Meeting of the Company held on 12th August 2015 members of the Company passed a special resolution for introducing a "Integra Engineering India Employees Stock Option Plan 2015" for the benefit of employees of the Company. The resolution also accorded approval for the Board of Directors, to formulate the Scheme as per broad parameters outlined in the resolution. Pursuant to the Scheme, the Company has granted options to eligible employees of the Company under Plan. Each option entitles for one equity share. The options under this grant will vest to the employees as 20%, 40% and 40% of the total grant at end of third, fourth and fifth year from the date of grant, respectively, with an exercise period of three years for each grant. The vesting conditions include service terms and performance of the employees. These options are exercisable at an exercise price of Rs. 36/-per share (Face Value of Rs. 1 per share).

During the year ended 31st March 2019, the company had charged to statement of Profit and Loss as employee benefit expenses Rs. 846 (’000) (P.Y.Rs.635 (’000)) by creating an Employee stock option reserve which is grouped under the head ’Other Equity’.

16. Disclosure as required by Indian Accounting Standard -115 are given below:-

16.1 The Company derives revenues from sale of goods, scrap and services from its contracts with customers. The revenues have been disclosed in Note No. 30 “Revenue from Operations".

The revenues are further disaggregated in to revenues from domestic as well as export market. Please refer Note No.44 “Operating Segment" for details.

16.2 The remaining performance obligation disclosure provides the aggregate amount of the transaction price yet to be recogized as at the end of the reporting period and an explanation as to when the company expects to recognize these amounts in revenue Applying the practical expedient as given in Ind AS115 the Company has not disclosed the remained performance obligation related discloses for contracts that has an original expected duration of one year or less.

17. Approval of Financial statements:

Standalone financial statements were approved by the Board of Directors on 15th May, 2019.

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Mar 31, 2018

Integra Engineering India Limited

Notes to the Standalone Financial Statements for the year ended 31^st March 2018

Corporate information

INTEGRA Engineering India Limited (‘the Company’) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956 (CIN: L29199GJ1981PLC028741) having its registered office at Post Box No 55, Chandrapura Village, Taluka Halol, Panchmahal. Its shares are listed on Bombay Stock Exchange in India. The Company is engaged in manufacturing of machineries and components.

1. Application of new Indian Accounting Standard

All the Indian Accounting Standards issued and notified by the Ministry of Corporate Affairs under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) till the date the financial statements are authorized, have been considered in preparing these financial statements.

Recent accounting pronouncements

Appendix B to Ind AS 21, Foreign currency transactions and advance consideration: On March 28, 2018, Ministry of Corporate Affairs (“MCA”) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment will come into force from April 1, 2018. This amendment has no effect on the financial statements of the Company.

Ind AS 115- Revenue from Contract with Customers: On March

28, 2018, Ministry of Corporate Affairs (“MCA”) has notified the Ind AS 115, Revenue from Contract with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts with customers. The effect on the Financial statements on adoption of Ind AS 115 is being evaluated by the Company.

2. Significant accounting judgements, estimates and assumptions

Inherent in the application of many of the accounting policies used in preparing the Financial Statements is the need for Management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. Actual outcomes could differ from the estimates and assumptions used.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and future periods are affected.

Key source of judgments, assumptions and estimates in the preparation of the Financial Statements which may cause a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are in respect of useful lives of Property, Plant and Equipment, impairment, employee benefit obligations, provisions, provision for income tax, measurement of deferred tax assets and contingent assets & liabilities.

2.1. Critical judgments in applying accounting policies

The following are the critical judgements, apart from those involving estimations (Refer note 3.2), that the Management have made in the process of applying the Company’s accounting policies and that have the significant effect on the amounts recognized in the Financial Statements.

a. Determination of functional currency

Currency of the primary economic environment in which the Company primarily generates and expends cash (“the functional currency”) is Indian Rupee (‘). Accordingly, the Management has assessed its functional currency to be Indian Rupee (Rs.).

b. Determining whether an arrangement contain leases and classification of leases

The Company enters into service / hiring arrangements for various assets / services. The determination of lease and classification of the service / hiring arrangement as a finance lease or operating lease is based on an assessment of several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lessee’s option to purchase and estimated certainty of exercise of such option, proportion of lease term to the asset’s economic life, proportion of present value of minimum lease payments to fair value of leased asset and extent of specialized nature of the leased asset.

c. Evaluation of indicators for impairment of Property, Plant and Equipment

The evaluation of applicability of indicators of impairment of assets requires assessment of external factors (significant decline in asset’s value, significant changes in the technological, market, economic or legal environment, market interest rates etc.) and internal factors (obsolescence or physical damage of an asset, poor economic performance of the asset etc.) which could result in significant change in recoverable amount of the Property, Plant and Equipment.

2.2. Key sources of estimates and assumptions

Information about estimates and assumptions that have the significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may differ from these estimates.

a. Defined benefit obligation (DBO)

The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

The parameter most subject to change is the discount rate. In determining the appropriate discount rate, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation. The mortality rate is based on publicly available mortality tables for the specific countries. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates for the respective countries.

b. Share based payments

The Company measures the cost of equity-settled transactions with employees using a model to determine the fair value of the liability incurred. Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 51.

c. Taxes

Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised.

Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

The Company has Rs. 4,307 (‘000) (31 March 2017: Rs. 17,191 (‘000), 1 April 2016: Rs. 22,381 (‘000) of tax losses carried forward on which deferred tax asset is created, based on probability that future profits will be available against which the deductible temporary difference can be realized.

The Company has elected to continue with the carrying value of all its Investment Properties recognized as of April 1, 2016 (transition date) measured as per the Previous GAAP and used that carrying value as its deemed cost as of the transition date.

As at 31^st March 2018 , 31^st March 2017 and 1^st April 2016, the fair values of the properties are Rs. 68,782 (‘000), Rs. 66,695 (‘000), and Rs. 63,649 (‘000) respectively. These valuations are based on valuations performed by Govt. Registered valuer.

The Company has no restrictions on the realisability of its investment properties and no contractual obligations to purchase, construct or develop investment properties.

The Company’s Investment Properties consists of land and buildings. The Fair value of land was determined using the market comparable approach based on recent market prices without any significant adjustments being made to the market observable data. The Fair value of Buildings was determined using depreciated Replacement cost method. The valuation model considers various inputs and is dependent on Age, General conditions, normal useful life, replacement cost new, obsolescence. The Fair value measurements is categorized in level 2 or level 3 of Fair value hierarchy as appropriate.

3.1 The Company has elected to continue with the carrying value of its investments in associate, measured as per the Previous GAAP and used that carrying value on the transition date April 1, 2016 in terms of Para D15(b)(ii) of Ind AS 101.

4.1 Accordingly, the Company assesses impairment loss on dues from its customers on facts and circumstances relevant to each transaction. Usually, Company collects all its receivables within 90 days.

4.2 As at 31^st March 2018, the Company had 5 customers (31^st March 2017: 5 customers, 1^st April 2016: 6 customers) having outstanding more than 5% of total trade receivables that accounted for approximately 93% (31^st March 2017: 86%, 1^st April 2016: 78%) of total trade receivables outstanding.

5.1 The Company has classified a Water Jet Machine as asset held for sale as it intends to dispose off the same within a year and has measured the asset at lower of carrying amount and the fair value less costs to sell resulting in Impairment Loss of Rs. 1,116 (‘000). This loss is included in other expenses in Statement of Profit and Loss.

5.2 Right, Preferences and restrictions attached to Shares Equity shares

The Company has only one class of equity shares having a par value of Rs. 1/- per share. Each holder of equity shares is entitled to one vote per share. Any dividend declared by the company shall be paid to each holder of Equity shares in proportion to the number of shares held to total equity shares outstanding as on that date.

In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

6.1 Securities Premium Reserve is used to record the premium on issue of equity shares. The reserve is utilised in accordance with the provision of the Companies Act, 2013.

6.2 Equity Stock Option Reserve is used to recognise the fair value of equity settled share based payment transactions.

6.3 The General Reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the General Reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve is not reclassified subsequently to the Statement of Profit and Loss.

7.1 The Company has been authorised to issue 14,000,000 Cumulative Redeemable Preference Shares (CRPS) of Rs. 10/- each, out of which the Company has issued 12,400,000 4% Cumulative Redeemable Preference Shares of Rs. 10/- each fully paid up.

7.2 The CRPS holders comprising the present issue shall rank pari-passu interse with any preference or priority of one over the other or others of them. The CRPS holder have right to receive dividend @ 4% p.a. in respect of the amount paid-up on the CRPS for a period of 20 years from the date of allotment of CRPS, only out of profits, if any, of the Company. The dividend as and when declared by the Company shall be paid to the shareholder on the record date, which the Board may fix from time to time. If in any year, the Company has not declared any dividend on the CRPS, the right to the dividends shall accumulate and the accumulated dividends will be paid out of the profits, if any, of the subsequent financial year(s) including carry forward profits, if any, of the previous years, before any dividend is paid to the Equity Shareholders. Such right to receive the accumulated dividend, if any, will cease on the expiry of 20 years from the date of allotment.

In the event of liquidation of the Company, the Preference shareholders will be entitled to receive their capital contribution in the Company after the distribution / repayment of all creditors but before distribution to equity shareholders. The distribution to the preference shareholders will be in proportion of the number of shares held by each shareholder.

7.3 As per requirements of Ind AS 32 “Financial Instrument Presentation”, 4% cumulative redeemable preference shares have been classified as financial liabilities.

7.4 Consequent to change in classification of cumulative redeemable preference shares, liability pertaining to undeclared dividend thereon upto transition date amounting to Rs. 56670 (‘000) has been reduced from retained earnings and included under other current liabilities. Presently, this dividend is considered as a provision but not declared, distributed or paid and hence, the liability for dividend distribution tax would be accounted only when it accrues on declaration, distribution or payment of dividend.

8.1 Payment towards trade payables is made as per the terms and conditions of the contract / purchase orders. The average credit period is 30 - 90 days.

8.2 The Company is in the process of identifying the suppliers, if any, covered under the Micro, Small and Medium Enterprise Development Act, 2006. Due to non availability of data, the details required have not been furnished.

9. Operating Lease Arrangements

9.1 The Company has applied Appendix C to Ind AS 17 ‘Leases’ to office and other assets to evaluate whether these contracts contains a lease or not. Based on evaluation of the terms and conditions of the arrangements, the Company has evaluated such arrangements to be operating leases.

The Company has obtained certain premises for its business operations under operating leases or leaves and license agreements. These are generally cancellable and range between 11 months to 5 years under leave and licenses or longer for other lease and are renewable by mutual consent on mutually agreeable terms. The Company has given refundable interest free security deposits in accordance with the agreed terms.

10. Employee Benefits :

In accordance with the stipulations of the Indian Accounting Standard 19 “Employee Benefits”, the disclosures of employee benefits as defined in the Indian Accounting Standard are given below:

10.1 Defined Contribution Plan

The Company makes contribution towards Employee Provident Fund and Super Annuation Fund. The Company is required to contribute specified percentage of payroll cost.

10.2 Defined Benefits Plan Gratuity

15 days salary for each completed year of service. Vesting period is 5 years and the payment is at actual on superannuation, resignation, termination, disablement or on death. The liability for gratuity as above is recognised on the basis of actuarial valuation.

The Company makes contribution to Life Insurance Corporation (LIC) for gratuity benefits according to the Payment of Gratuity Act, 1972.

The Company recognizes the liability towards the gratuity at each Balance Sheet date.

The most recent actuarial valuation of the defined benefit obligation for gratuity was carried out at March 31^st 2018 by an actuary. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Scheme is funded through LIC.

These plans typically expose the Company to actuarial risks such as: Investment risk, Market risk, Legislative risk, Salary risk and Liquidity risk.

10.3 The fair value of plan assets at the end of the reporting period for each category, are as follows: Gratuity and Leave 100% managed by Insurer (LIC)

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. Sensitivity due to mortality & withdrawals are not material & hence impact of change not calculated.

Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the Balance Sheet.

11 Operating Segment

The Company’s operations fall under single segment namely “Manufacturing of Machineries and Components”, taking into account the risks and returns, the organization structure and the internal reporting systems.

Segment revenue from “Manufacturing of Machineries and Components” represents revenue generated from external customers which is attributable to the company’s country of domicile i.e. India and external customers outside India as under:

All assets are located in the company’s country of domicile i.e. India

Company’s significant revenues (more than 60%) are derived from major 8 entities. The total revenue from such entities amounted to Rs. 3,25,590 (‘000) in 2017-18 and Rs. 2,23,728 (‘000) in 2016-17.

12 Disclosure as required by Indian Accounting Standard -24 are given below:-

13 Impairment of Assets

In accordance with the Indian Accounting Standard (Ind AS-36) on “Impairment of Assets” the Company during the year carried out an exercise of identifying the assets that may have been impaired in respect of cash generating unit in accordance with the said Indian Accounting Standard. Based on the exercise, no impairment loss is required as at 31^st March 2018.

14 The value of realization of assets other than fixed assets and non current investment in the ordinary course of business will not be less than the value at which they are stated in the Balance Sheet.

15 The balances of trade receivables and trade payables are subject to adjustment if any on reconciliation/settlement.

16 The Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses.

17 Financial instruments Disclosure

17.1 Capital Management

For the purpose of the Company’s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders.

The Company manages its capital so as to safeguard its ability to continue as a going concern and to optimise returns to shareholders. The capital structure of the Company is based on management’s judgement of its strategic and day-to-day needs with a focus on total equity so as to maintain investor, creditors and market confidence.

The management and the Board of Directors monitors the return on capital as well as the level of dividends to shareholders. The Company may take appropriate steps in order to maintain, or if necessary adjust, its capital structure.

17.2 Financial risk management

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

The Company is exposed to market risk, credit risk and liquidity risk. The Company’s senior management oversees the management of these risks. The senior Management ensures that the Company’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives. It is the Company’s policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.

17.2.1 Market Risk

Market risk is the risk or uncertainty arising from possible market price movements and their impact on the future performance of the business. The major components of market risk are price risk, foreign currency risk and interest rate risk.

A. Commodity price risk

The Company is affected by the price volatility of certain commodities. Its operating activities require the ongoing manufacture of machineries and components and therefore require a continuous supply of steel as principal raw material. The Company’s management has developed and enacted a risk management strategy regarding commodity price risk and its mitigation.

B. Foreign Currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities.

The aim of the Company’s approach to management of currency risk is to leave the Company with no material residual risk. The carrying amount of the Company’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:

Sensitivity to risk

A 5% strenthening of the INR against key currencies to which the Company is exposed would have led to approximately an additional Rs. 15 (‘000) gain in the Statement of Profit and Loss. A 5% weakening of the INR against these currencies would have led to an equal but opposite effect.

C. Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s short term debt obligations with floating interest rates.

The Company invests the surplus fund generated from operations in bank deposits. Considering these bank deposits are short term in nature, there is no significant interest rate risk. The Company has laid policies and guidelines including tenure of investment made to minimise impact of interest rate risk.

17.2.2 Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counter-party fails to meet its contractual obligations.

The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.

A. Trade Receivable

Customer credit risk is managed by the Company subject to the Company’s established policy, procedures and control relating to customer credit risk management. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by letters of credit or other forms of credit insurance.

An impairment analysis is performed at each reporting date on an individual basis. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note no. 12

B. Financial instruments and cash deposits

Credit risk from balances with banks and financial institutions is managed by the management in accordance with the Company’s policy. The Company’s maximum exposure to credit risk for the components of the Balance Sheet at 31^st March 2018 and 31^st March 2017 is the carrying amounts as illustrated in Note no. 13

17.2.3 Liquidity risk

Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans, preference shares and finance leases.

The Company monitors its risk of a shortage of funds using a liquidity planning tool.

The following table shows the maturity analysis of the Company’s financial liabilities based on contractually agreed undiscounted cash flows as at the Balance Sheet date.

18 Fair Value Measurement

18.1 Fair value of the Company’s financial assets that are measured at fair value on recurring basis.

Some of the Company’s financial assets are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial assets are determined.

18.2 Fair value of financial assets and financial liabilities that are not measured at fair value (but fair value disclosures are required). Management considers that the carrying amounts of financial assets and financial liabilities recognized in the financial statements except as per note 50.1 approximate their fair values.

19 Employee Stock option

At the Annual General Meeting of the Company held on 12^st August 2015 members of the Company passed a special resolution for introducing a “Integra Engineering India Employees Stock Option Plan 2015” for the benefit of employees of the Company. The resolution also accorded approval for the Board of Directors, to formulate the Scheme as per broad parameters outlined in the resolution. Pursuant to the Scheme, the Company has granted options to eligible employees of the Company under Plan. Each option entitles for one equity share. The options under this grant will vest to the employees as 20%, 40% and 40% of the total grant at end of third, fourth and fifth year from the date of grant, respectively, with an exercise period of three years for each grant. The vesting conditions include service terms and performance of the employees. These options are exercisable at an exercise price of Rs. 36/-per share (Face Value of Rs. 1 per share).

The fair value of each equity settled option is estimated on the date of grant using the Black-Scholes-Merton model, with the following assumptions:

During the year ended 31^st March 2018, the company had charged to statement of Profit and Loss as employee benefit expenses Rs. 635 (‘000) by creating an Employee stock option reserve which is grouped under the head ‘Other Equity’.

# Previous GAAP figures have been reclassified to conform with Ind AS presentation requirements for the purpose of this note. Explanatory notes to balance sheet reconciliation

19.1.1 Under Previous GAAP, 4% Cumulative Redeemable Preference Shares were recognised as Equity. Under Ind AS, preference shares requiring mandatory redemption by issuer for a fixed or determinable amount, at a fixed or determinable future date, is a financial liability. Consequently, as on the transition date April 1, 2016, Rs. 124,000 (‘000) being face value of such Preference Shares has been reclassified from Equity to Long term borrowings.

19.1.2 Consequent to change in classification of 4% Cumulative Redeemable Preference shares (Refer Note 1 above), liability pertaining to undeclared dividend thereon, since issue, upto transition date amounting to Rs. 56,670 (‘000) has been reduced from retained earnings and included under Other Current Financial Liabilities. Subsequent to such reclassification, dividend for year ending 31^st March 2017 has been charged as finance cost which has resulted into increase in financial liabilities and reduction in Equity by Rs. 4,960 (‘000).

19.1.3: Under the previous GAAP, there was no requirement to disclose Investment property separately and the same was included under Property, Plant & Equipment and measured at cost less accumulated depreciation. Under Ind AS, Investment property is required to be disclosed separately in the balance sheet and depreciation is charged on it. Accordingly, the carrying amount of the investment property as at 1^st April, 2016 of Rs. 1,180 (‘000) and as at 31^stMarch 2017 Rs. 1,097 (‘000) under Previous GAAP has been reclassified to a separate line item on the face of the balance sheet and depreciation provided based on the estimated useful life. There is no impact on total equity and profit.

19.1.4 Under the previous GAAP, government grants received as promoter’s contributions were treated as Capital Reserve forming part of “Shareholders’ Fund” which has been transferred to General reserve amounting to Rs. 7176 (‘000) This has no impact on total equity.

19.1.5 Under the previous GAAP, Profit on reissue of forfeited shares was forming part of “Shareholders’ Fund” which has been transferred to General reserve amounting to Rs. 33 (‘000). This has no impact on total equity.

19.3.1 Accounting of Excise Duty on Sales : Under Previous GAAP, excise duty was netted off against sale of goods. However, under Ind AS, excise duty amounting to Rs. 33,988 (‘000) is included in sale of goods and is separately presented as expense on the face of Statement of Profit and Loss. Thus, sale of goods under Ind AS has increased with a corresponding increase in expenses.

19.3.2 Remeasurements of post employment benefit obligations: Under Ind AS 19 Employee Benefits, remeasurements 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 recognised in other comprehensive income instead of profit or loss. Under the Previous GAAP, these remeasurement were forming part of profit or loss for the year. As the result of this change, profit for the year ended March 31, 2017 increased by Rs. 514 (‘000) There is no impact on total equity and profit.

19.3.3 Finance cost for the year ended 31^st March, 2017 includes provision for dividend amounting to Rs. 4960 (‘000) on 4% Cumulative Redeemable Preference shares that have been classified as Financial Liability as per requirements of Ind AS 32 ‘Financial Instruments-Presentation’.

20. Approval of Financial statements:

Standalone financial statements were approved by the Board of Directors on 3^rd May, 2018.

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Mar 31, 2017

1. Aggregate no. of shares allotted as fully paid up, without payment being received in cash in past 5 years: 14,850,000 equity shares of Rs.1/- each fully paid up, were issued pursuant to the scheme of amalgamation of Integra India Group Company Limited with the Company in Year 2012.

2. Right, Preferences and restrictions attached to Shares

- Equity shares

The Company has only one class of equity shares having a par value of Rs.1/- per share. Each holder of equity shares is entitled to one vote per share. Any dividend declared by the company shall be paid to each holder of Equity shares in proportion to the number of shares held to total equity shares outstanding as on that date.

In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

- Preference shares

The company has only one class of Preference shares having a par value of Rs.10/- per share. These shares are redeemable at any time before 28th October,2024. The Cumulative Redeemable Preference Shareholder ("CRPS") has no right to vote or to receive Notices or to attend at the General Meetings of the Company. If, however, any resolution affecting the rights attached to the CRPS holder is placed before the meeting of Shareholders, such resolution will first be placed before a meeting of Registered CRPS holders for their consideration.

The CRPS holder have right to receive dividend @ 4% p.a. in respect of the amount paid-up on the CRPS for a period of 20 years from the date of allotment of CRPS, only out of profits, if any, of the Company. The dividend as and when declared by the Company shall be paid to the shareholder on the record date, which the Board may fix from time to time. If in any year, the Company has not declared any dividend on the CRPS, the right to the dividends shall accumulate and the accumulated dividends will be paid out of the profits, if any, of the subsequent financial year(s) including carry forward profits, if any, of the previous years, before any dividend is paid to the Equity Shareholders. Such right to receive the accumulated dividend, if any, will cease on the expiry of 20 years from the date of allotment.

The CRPS holders comprising the present issue shall rank pari-passu interest with any preference or priority of one over the other or others of them.

In the event of liquidation of the Company, the Preference shareholders will be entitled to receive their capital contribution in the Company after the distribution / repayment of all creditors but before distribution to equity shareholders. The distribution to the preference shareholders will be in proportion of the number of shares held by each shareholder.

3. LEASE Income

The Company has let out its certain factory premises under operating lease during the year. These lease are cancellable by either party giving a notice of three months. Rent Income is recognized in the Statement of Profit and Loss as "Rent Income" under Note No.19.

Expenses

The company has obtained office premises under operating lease. These are generally cancellable lease. These leases are under operating lease and are renewable by mutual consent on mutually agreeable terms.

Lease payments are recognized in the Statement of Profit and Loss account as "Rent Expenses" under Note No.25.

4. EMPLOYEE BENEFITS

The Company has classified the various benefit provided to employees as under

5. Defined Contribution Plan

The Company makes contribution towards Employee Provident Fund and Super Annuation Fund. The Company is required to contribute specified percentage of payroll cost.

6. Defined Benefits Plan

The Company recognizes the liability towards the gratuity at each balance sheet date.

The most recent actuarial valuation of the defined benefit obligation for gratuity was carried out at March 31, 2017 by an actuary. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of benefit entitlement and measures each unit separately to build up the final obligation.

The following tables sets out the status of the gratuity plan and the amounts recognized in the Company''s financial statements as at March 31, 2017.

7. The value of realization of assets other than fixed assets and non current investment in the ordinary course of business will not be less than the value at which they are stated in the Balance Sheet.

8. The balances of trade receivables and trade payables are subject to adjustment if any on reconciliation/settlement.

9. All values in the Financial Statements are rounded off to the nearest thousands except otherwise stated.

10. Figures of the Previous year have been regrouped/ reclassified wherever necessary.

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Dec 31, 2012

NOTE 1: CORPORATE INFORMATION

INTEGRA Engineering India Limited is a public company domiciled in India and incorporated under the provision of the Companies Act, 1956. Its shares are listed on BSE stock exchange in India. The operations of the company are limited to one segment, namely Manufacturing of Machineries and Components.

a. Reduction in Face Value of Equity Shares

The Hon''ble High Court of Gujarat approved reduction in authorised, issued, subscribed and paid-up share capital from Rs. 10/- per share to Rs. 1/- per share vide order received on 14th May, 2012 w.e.f 1st January, 2011.

b. Right, Preferences and restrictions attached to Shares Equity shares

The Company has only one class of equity shares having a par value ofRs. 1/- (P.Y. Rs. 10/-) per share. Each holder of equity shares is entitled to one vote per share. Any dividend declared by the company shall be paid to each holder of Equity shares in proportion to the number of shares held to total equity shares outstandingas on that date.. In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders. Preference shares

The company has only one class of Preference shares having a par value of Rs. 10/- per share. These shares are redeemable at anytime before 28th October,2024. The Cumulative Redeemable Preference Shareholder ("CRPS") has no right to vote or to receive Notices or to attend at the General Meetings of the Company. If, however, any resolution affecting the rights attached to the CRPS holder is placed before the meeting of Shareholders, such resolution will first be placed before a meeting of Registered CRPS holders for their consideration. The CRPS holder have right to receive dividend @ 4% p.a. in respect of the amount paid -up on the CRPS for a period of 20 years from the date of allotment of CRPS, only out of profits, if any, of the Company. The dividend as and when declared by the Company shall be paid to the shareholder on the record date, which the Board may fix from time to time. If any year, the Company has not declared any dividend on the CRPS, the right to the dividends shall accumulate and the accumulated dividends will be paid out of the profits, if any, of the subsequent financial year (s) including carryforward profits, if any, of the previous years, before any dividend is paid to the Equity Shareholders. Such right to receive the accumulated dividend, if any, will cease on the expiry of 20 years from the date of allotment.

The CRPS holders comprising the present issue shall rank pari -passu interse with any preference or priority of one over the other or others of them.

In the event of liquidation of the Company, the preference shareholders will be entitled to receive their capital contribution in the Company after the distribution / repayment of all creditors but before distribution to equity shareholders. The distribution to the preference shareholders will be in proportion of the number of shares held by each shareholder.

2 Amalgamation

i. The Composite Scheme of Amalgamation of Integra India Group Company Limited with Integra Engineering India Limited and reorganization of share capital of Integra Engineering India Limited was sanctioned by the Hon''ble High Court of Gujarat, Ahmedabad and the certified true copy of the order was received on 14th May, 2012. Certified True Copies of the said Orders were filed with Registrar of Companies, Ahmedabad on 11th June, 2012 (''Effective Date).

ii. In terms of the scheme, the amalgamation took place effective on January 01, 2011 (''The Appointed Date''). The Scheme has accordingly been given effect to in these financial statements which includes assets, liabilities and reserves of Integra India Group Company Limited (Transferor Company) with effect from the appointed date and also Income and Expenditure for the period from January 01,2012 to December 31,2012.

iii. Pursuant to Scheme of Arrangement in the nature of Amalgamation of Integra India Group Company Limited (Transferor Company) with Integra Engineering India Limited (Transferee Company) and Reorganisation of Share Capital of Integra Engineering India Limited, the Transferee Company in its Committee of Director''s Meeting held on 26th July, 2012, issued and allotted 1,93,95,196 Equity Shares of Rs. l/-(Rupee one only) each, fully paid up by reducing the paid up and face value of Rs. 10/- (Rupees ten only )per share to Rs. 1/- per share fully paid up share to eligible shareholders of Integra Engineering India Limited whose names are registered in the Register of Members of the Transferee Company on the Record Date (16th July, 2012).

iv. The Amalgamation has been accounted for under the "pooling of interest" method as prescribed by Accounting Standard 14 (AS 14) "Accounting of Amalgamation".

a) The assets, liabilities and reserve of transferor Company have been taken over at their book values after adjusting financial effect of retrospective change in method of depreciation from written down value method to straight line method.

b) All inter Company balances between the Transferor Company and the Company have been cancelled and there shall be no further obligation /outstanding in this behalf.

c) In accordance with the swap ratio, shares ofRs. 148,500 thousands (148,500,000 shares of Rs. 1 each fully paid) have been allotted to the Shareholders of Transferor Company without any further application made by the shareholders of Transferor Company whose names are registered in the Register of Members of the Transferor Company on the Record Date (16th July, 2012), in the ratio of 27 (Twenty Seven) Equity Shares of the face value of Rs. 1/- (Rupee one only) each of the Transferee Company with rights attached thereto as mentioned in this Scheme for every 2 (two) Equity shares of the face value ofRs. 10/- (Rupees ten only) in the Transferor Company.

d) Pursuant to issue and allotment of Equity Shares issued by the Company to the Shareholders of Transferor Company, the fraction entitlement of shares (equivalent to 166 Shares) issued and allotted to the Corporate Trustees ("the Trustees") appointed by the Company in its Committee of Director''s Meeting held on 26th July, 2012. The Trustees will sell such fractional entitlements in the market at such price or prices and at such time ortimes as the Trustee may in its sole discretion decide and on such sale pay to theTransferee Company the net sale proceeds thereof whereupon the Transferee Company shall, distribute such sale proceeds to the concerned shareholders of the Transferor Company in proportion to their respective fractional entitlements.

3 Estimated amount of contracts remaining to be executed and not provided for (Net of Advances) is Rs. Nil/- (Previous Year Rs. 10,129 thousands).

4 LEASE Income

The Company has let out its certain factory premises under operating lease during the year. These lease are cancellable by either party by giving a notice of one month. Rent Income is recognized in the statement of Profit and Loss as "Rent Income" underthe Note No.20.

Expenses

The company has obtained office premises under operating lease. These are generally not non-cancelable lease. These leases are under operating lease and are renewable by mutual consent on mutually agreeable terms.

Lease payments are recognized in the statement if Profit and Loss account as "Rent Expenses" under Note No.25.

b) Nature of Provisions: Warranties:

Warranty costs are estimated by the management on the basis of technical evaluation and past experience. Provision is made for estimated liability in respect of warranty costs in the year of recognition of revenue.

5 EMPLOYEE BENEFITS

The Company has classified the various benefit provided to employees as under

(i) Defined Contribution Plan

The Company makes contribution towards Employee Provident Fund and Super Annuation Fund. The Company is required to contribute specified percentage of payroll cost.

(ii) Defined Benefits Plan

The Company recognises the liability towards the gratuity at each balance sheet date.

The most recent actuarial valuation of the defined benefit obligation for gratuity was carried out at December 31, 2012 by an actuary. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of benefit entitlement and measures each unit separately to build up the final obligation.

The following tables sets out the status of the gratuity plan and the amounts recognised in the Company''s financial statements as at December 31,2012.

6 As the Company''s business activity falls within a single primary business segment i.e. "manufacturing of Machineries and Components" the disclosure requirements of Accounting Standard 17- Segment Reporting is not applicable.

7 The value of realization of assets other than fixed assets and non current investment in the ordinary course of business will not be less than the value at which they are stated in the Balance Sheet.

8 The Company is in the process of identifying the suppliers, if any, covered under the Micro, Small and Medium Enterprise Development Act, 2006. Due to non availability of data, the details required have not been furnished.

9 The Company has to recover an amount of Rs. 314.75 lacs for the supply of goods to Gorba Integra Systems Private Limited "GISPL" (a joint venture promoted by the Company and another joint venture partner). Due to the failure of the obligations of the other JV Partner, GISPL was unable to fulfill the requirements of its customers, thereby suffering losses and resulting ultimately in its inability to pay the dues owed to the Company.

The Company has therefore initiated appropriate legal and other actions, against the other JV Partner, pursuant to which the Company estimates a recovery by GISPL,of Rs. 280 lacs from the JV Partner, which shall be utilized to repay the Company''s dues. The balance of Rs. 34.75 lacs receivable by the Company from GISPL has been written off during the year under review.

10 As per the opinion of the management, Deferred tax assets ofRs. 131.71 lacs on Carried Forward Business Loss/Unabsorbed depreciation is recognised and carried forward only to the extent that there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

11 The balances of trade receivables and trade payables are subject to adjustment if any on reconciliation/settlement.

12 The financial statements for the year ended 31st December, 2011 had been prepared as per the then applicable, pre- revised Schedule VI to the Companies Act, 1956. Consequent to the notification under the Companies Act,1956, the financial statements for the year ended 31st December, 2012 are prepared under revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year''s classification.

13 Figures for the year ended December 31,2011 are not comparable as such figures are standalone figures of the transferee company before merger was effective.

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Dec 31, 2009

1. Contingent Liabilities in respect of:

Particulars As at As at 31.12.2009 31.12.2008 Rupees Rupees (in 000) (in 000)

A Demand raised by Sales Tax Authorities & disputed by the Company 13,51 13.51

B Demand raised by Income Tax Authorities & disputed by the company 26.20 NIL

C Claims against the Company not acknowledged as debts 9,50 9.40

D Dividend on 4% Cumulative Redeemable Preference Shares 256.70 207.10

The above Contingent liabilities do not include the following, as the same are not ascertainable.

i) Continuity Bonds given to Customs Authorities from time to time and

ii) Pending labour cases.

2. The Accounts have been prepared on a going concern basis.

3. During the year, no Research & Development expenditure have been incurred.

4. The tax year of the Company being March 31,2010, the provision for taxation for the year is the aggregate of the provision made for the three months ended March 31,2009 and the provision based on the figures for the remaining nine months up to December 31,2009 the ultimate tax liability of which will be determined on the basis of the figures for the period April 1,2009 to March 31,2010.

5. Provision has not been made for Obsolete/slow moving / non moving inventory aggregating Rs.4691 (in 000)

6. As per the information available with the Company and as certified by the management, there are no dues outstanding including interest as on 31st December, 2009 to Small and Micro enterprises as defined under Micro, Small and Medium Enterprises Development (MSMED) Act, 2006.

7. During the year the Company has given Voluntary Retirement Scheme to its employees. Expenditure in respect of Voluntary Retirement Scheme is being amortised over a period of five years. Accordingly, an amount of Rs.3074 (in 000) has been expensed during the year and a balance of Rs. 12294 (in 000) has been carried forward and disclosed under Miscellaneous Expenditure as at December 31,2009.

(b) Computation of net loss in accordance with Section 309(5) of the Companies Act, 1956 has not been made in view of the brought forward losses.

(c) Perquisites have been valued as per Income tax rules 1962, where applicable.

8. The Company has provided an amount of Rs.321 (in 000) for excise duty payable on finished manufactured goods but not cleared from the factory in accordance with the Guidance Note on Accounting Treatment for Excise Duty and other professional pronouncements issued by the Institute of Chartered Accountants of India. However, the same has no effect on the profit for the year.

9. GRATUITY

Provision of gratuity liability on actuarial valuation under Projected Unit Credit (PUC) Method has been done on going concern basis, in accordance with revised AS 15.

Since 2006, Gratuity liability has been fully funded with Life Insurance Corporation of India.

10. Segment reporting:

In the opinion of the Company, the Company has only one segment viz., Textile machines, hence no separate disclosure of segment wise information has been made. The surplus capacity is being deployed for the Job work which are not considered permanent identifiable product of the company.

11. Operating Lease:

The Company has given certain factory premises on non-cancellable operating lease. The tenure of these lease agreements ranges from 36 months to 60 months.

12. Taxes on income:

The Company has net deferred tax assets as at 1 st April, 2008 as well as at 31 st March, 2009. Deferred tax assets arising mainly on account of unabsorbed depreciation and carried forward losses under the tax laws have not been considered for recognition as there is no virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Therefore, such deferred tax assets has not been recognized in the accounts of the Company.

13. The previous years figures have been regrouped wherever necessary.

14. Refer Annexure 1 for additional information pursuant to Part IV of Schedule VI to the Companies Act, 1956 of India