Notes to Accounts of Morganite Crucible (India) Ltd.

Mar 31, 2018

1. RECENT ACCOUNTING PRONOUNCEMENTS

Standards issued but not yet effective

4.1 New Accounting Standards yet to be adopted

Ministry of Corporate Affairs ("MCA") through Companies (Indian Accounting Standards) Amendment Rules, 2018 has notified the following new Accounting Standards (''Ind AS'') and amendments to Ind ASs which the Company has not applied as they are effective for annual periods beginning on or after April 1, 2018:

Ind AS 115 - Revenue from Contracts with Customers

Ind AS 115 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Ind AS 115 will supersede the current revenue recognition standard Ind AS 18 Revenue, Ind AS 11 Construction Contracts when it becomes effective.

The core principle of Ind AS 115 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. Specifically, the standard introduces a 5-step approach to revenue recognition:

- Step 1: Identify the contract(s) with a customer

- Step 2: Identify the performance obligation in contract

- Step 3: Determine the transaction price

- Step 4: Allocate the transaction price to the performance obligations in the contract

- Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation

Under Ind AS 115, an entity recognizes revenue when (or as) a performance obligation is satisfied, i.e. when ''control'' of the goods or services underlying the particular performance obligation is transferred to the customer

The Company has completed an initial assessment of the potential impact of the adoption of Ind AS 115 on accounting policies followed in its financial statements. The quantitative impact of adoption of Ind AS 115 on the financial statements in the period

of initial application is not reasonably estimable as at present. However as per the management assessment the impact is not expected to be significant.

Transition

The Company plans to apply Ind AS 115 using the cumulative effect method , with the effect of initially applying this standard recognized at the date of initial application (i.e. 1 April 2018) in retained earnings. As a result, the Company will not present relevant individual line items appearing under comparative period presentation.

Ind AS 21 - The effect of changes in Foreign Exchanges rates

The amendment has been incorporated in Ind AS 21 as Appendix B which clarifies on the accounting of transactions that include the receipt or payment of advance consideration in a foreign currency. The appendix is applicable for accounting periods beginning on or after 1 April 2018. The appendix explains that the date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the non-monetary prepayment asset or deferred income liability. If there are multiple payments or receipts in advance, a date of transaction is established for each payment or receipt. The Company is evaluating the impact of this amendment on its financial statements.

(a) Rights, preferences and restrictions attached to equity shares

The Company has only one class of equity shares having a par value of '' 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

The shareholders at the Annual General Meeting held on 09 August 2017 approved dividend of Rs, 8 per equity share for year ended 31 March 2017 which was subsequently paid during the quarter ended 30 September 2017. The amount was recognized as distributions to equity shareholders during the nine month period ended 31 December 2017 and the total appropriation was Rs, 269.60 lakhs including corporate dividend tax of Rs, 45.60 lakhs.

On 24 May 2018, the Board of Directors have proposed a final dividend of Rs, 16 per equity share for the financial year ended 31 March 2018. The proposal is subject to the approval of shareholders at the Annual General Meeting. If approved, the dividend would result in a cash outflow of Rs, 540.10 lakhs inclusive of dividend distribution tax of Rs, 92.10 lakhs.

In the event of liquidation of the Company, the holders of 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.

The information has been given in respect of such vendors to the extent they could be identified as micro and small enterprises as per the MSMED Act on the basis of information available with the Company

2. Segment reporting

a) Business Segments:

The Company recognizes its sale of crucibles activity as its only primary business segment since its operations predominantly consist of manufacture and sale of crucibles to its customers. The ''Chief Operating Decision Maker'' monitors the operating results of the Company''s business as single segment. Accordingly in context of Ind AS "Operating Segments" the principle business of the Company constitute a single reportable segment. Accordingly, income from sale of crucibles comprises the primary basis of segmental information set out in these financial statements.

b) Geographical segments:

The geographical information analyses the Company''s revenues and assets by the Company''s country of domicile (i.e. India) and outside India presenting geographical information, segment revenue has been on the geographic location of customers and segment assets which have been based on the geographical location of the assets.

* The non-current assets in the above table excludes financial assets, deferred tax assets and post-employment benefits assets.

3. RELATED PARTY DISCLOSURES A. Names of related parties

a. Parties (where controls exists)

Morgan Advanced Materials Plc - Ultimate Holding Company

b. Investing Associates

Morganite Crucible Limited (holds 38.50% of issues, subscribed and paid up capital)

Morgan Terreassen BV (holds 36.50% of issues, subscribed and paid up capital)

c. Other related parties with whom transactions have taken place during the year

i Fellow subsidiary companies Morganite Crucible Inc.

Mkgs. Morgan Karbon Grafit

Morgan Molten Metal System (Suzhou) Company Limited

Morgan Molten Metal System GMBH Morganite Brasil Ltda.

Grupo Industrial Morgan, S.A. De C.

Morganite Carbon Kabushiki Kaisha Dalian Morgan Refractories Ltd Morgan Am&T Hong Kong Co., Ltd.

Morgan Advanced Materials Furnace Indust Morgan Advanced Materials (Taiwan) Co.

Murgappa Morgan Thermal Ceramics Limited, Chennai Thermal Ceramics Limited, Uk Molten Ceramics Asia Pte. Ltd.

Morgan Ceramics Middle East FZE Furnace Industries

Morgan Advanced Materials India Private Limited

ii Key Management Personnel Mr. Aniruddha Karve - Managing Director (upto 31 March 2018)

Late Mr. Hitesh Saiwal - Managing Director (upto 30 April 2015)

Mr. Atithi Majumdar - Chief Financial Officer

Mr. Rupesh Khokle - Company Secretary

Mr. Mukund Bhogale -Non-Executive Independent Director **

Mr. Subhash Kolakpar -Non-Executive Independent Director** Ms. Maithilee Tambolkar -Non-Executive Independent Director**

C. Risk Management Framework

The Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s risk management framework. The board of directors has established the risk management committee, which is responsible for developing and monitoring the Company''s risk management policies. The committee reports regularly to the board of directors on its activities. The Company''s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate limits and controls and to monitor risks and adherence to limits. The Company, through its training and established procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

The nature of the Company''s business exposes it to a range of financial risks. These risks include:

(i) credit risk;

(ii) liquidity risk; and

(iii) market risk.

(i) Credit risk:

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to '' 1,696.51 lakhs and '' 1,841.52 lakhs as of 31 March 2018 and 31 March 2017, respectively. Trade receivables are typically unsecured and are derived from revenue earned from customers located in India and outside India. The management has established accounts receivable policy under which customer accounts are regularly monitored. The Company has a dedicated sales team which is responsible for collecting dues from the customer within stipulated period. The management reviews status of critical accounts on a regular basis.

On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss of trade receivables.

a) Expected credit loss assessment for trade receivables as at 31 March 2018, 31 March 2017 and 1 April 2016 :

The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. Expected loss rates are based on average computed default rate based on historical analysis of trade receivables.

The following table provides information about the exposure to credit risk and expected credit loss for trade receivables -

(ii) Liquidity risk:

The Company''s principal sources of liquidity are cash and cash equivalents and cash flow that is generated from operations. The Company has no outstanding bank borrowings. The Company believes that the current working capital is sufficient to meet its current obligatory requirements. Accordingly, no liquidity risk is perceived.

As on 31 March 2018, the Company had a working capital of Rs, 5,838.33 lakhs (as on 31 March 2017 Rs, 4731.79 lakhs, as on 1 April 2016 Rs, 3,359.60 lakhs) including cash and cash equivalents and other bank balance of Rs, 4,038.39 lakhs (as on 31 March 2017 Rs, 4,586.21 lakhs; as on 1 April 2016 Rs, 2,859.95 lakhs). The working capital of the Company for this

(iii) Market risk

"Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices- such as foreign exchange rates, interest rates and equity prices - will affect the Company''s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

Market risk comprises of:

a. Interest rate risk

b. Foreign currency risk

Financial instruments affected by market risk include other financial assets, trade receivables and trade payables.

a. 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. Since the Company does not have any financial instrument with variable interest rates, it is not exposed to interest rate risk.

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 (when revenue or expense is denominated in a foreign currency). The foreign currency to which the Company is majorly exposed to are US Dollars and GBP

The Company has entered into derivative contracts to hedge its risk associated with foreign currency fluctuations. However, none of these contracts can be co-related on one to one basis against the underlying exposure. The forward sell contracts which are outstanding as at end of the year is as follows:

4. Scheme of amalgamation with Diamond Crucible Company Limited -

As on 31 March 2017, the company held 51% equity shares of ''Diamond Crucible Company Limited'' (DCCL) and during the year on 30 June 17, the company acquired the balance stake (49%) in DCCL from Terrassen Holdings Limited for cash consideration amounting to Rs, 1,675 lakhs to make it a wholly owned subsidiary.

On 10 August 2017, the Board of Directors of the Company approved a scheme of amalgamation ("the Scheme") for amalgamation of ''Diamond Crucible Company Limited ''into the Company. The Scheme has been approved by the National Company Law Tribunal (NCLT), Mumbai Bench on 22 February 2018.

Appointed date for the scheme is 1 October 2017. Under the Scheme, the Company has accounted for the amalgamation of DCCL on the pooling of interest method as stated in Appendix C of Indian Accounting Standard (IND AS 103) Business Combination. Accordingly all the assets and liabilities of DCCL are acquired at book values and the identity of reserves of DCCL are preserved in the books of the Company post amalgamation.

As per the requirements of IND AS 103, being a common control business combination, financial information in the financial statements in respect of prior periods have been restated as if the business combination had occurred from the beginning of the preceding period in the financial statements i.e 1 April 2016.

(i) Summary of assets and liabilities acquired as a result of the scheme is as given below -

1 The value of the investments of Rs. 2,171.99 lakhs in the equity shares of DCCL held by the Company shall stand cancelled in the books of the Company, without further act or deed. Accordingly carrying value of investments cancelled is debited to opening retained earnings.

ii The Company undertakes to have all legal or other proceedings initiated by or against DCCL transferred in its name respectively and to have the same continued, prosecuted and enforced by or against it to the same extent as would or might have been continued and enforced by or against DCCL, to the exclusion of it.

iii As per Appendix C, Business Combinations of Entities under Common Control of Ind AS 103, Business Combinations, in case of common control business combinations, the assets and liabilities of the combining entities are reflected at their carrying amounts. As per the ITFG 9, carrying value of assets and liabilities of the transferor entity (''DCCL'') as considered in the consolidated financials of the Company prior to amalgamation is considered for accounting of common control business combination.

5. First time adoption of Ind AS

As stated in Note 2(a), Pursuant to the scheme of merger approved by NCLT by its Order dated 22 February 2018, Diamond Crucible Company Limited (100% subsidiary) was merged with the Company with effect from 1 October 2017. As per the requirements of Appendix C of Ind AS 103, being a common control business combination, financial information presented in the financial statements in respect of prior periods have been restated as if the business combination had occurred from the beginning of the preceding period in the financial statements i.e 1 April 2016.

These are the Company''s first financial statements prepared in accordance with Ind AS. For the year ended 31 March 2017, the Company had prepared its financial statements in accordance with Companies (Accounting Standards) Rules, 2006, notified under Section 133 of the Act and other relevant provisions of the Act (''Previous GAAP'').

The accounting policies set out in Note 3 have been applied in preparing these financial statements for the year ended 31 March

2018 including comparative information for the year ended 31 March 2017 and the opening Ind AS Balance Sheet on the date of transition i.e. 1 April 2016.

In preparing its Ind AS Balance Sheet as at 1 April 2016 and in presenting the comparative information for the year ended 31 March 2017, the Company has adjusted amounts reported previously in financial statements prepared in accordance with previous GAAP. This note explains the principal adjustments made by the Company in restating its financial statements prepared in accordance with previous GAAP, and how transition from previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows.

Optional exemptions availed and mandatory exceptions

In preparing these financial statements, the Company has applied the below mentioned optional exemptions and mandatory exceptions.

A Optional exemptions availed 1 Business Combinations:

As per Ind AS 101, at the date of transition, an entity may not elect to restate business combinations that occurred before the date of transition. If the entity restates any business combinations that occurred before the date of transition, then it restates all the later business combinations, and also applies Ind AS 110, Consolidated Financial Statements, from that same date.

The Company has opted not to restate business combinations that occurred before the date of transition.

6 Property, plant and equipment, Intangible assets and investment properties:

As per Ind AS 101, an entity may elect to:

(i) measure an item of property, plant and equipment at the date of transition at its fair value and may use that fair value as its deemed cost at that date

* The previous GAAP figures have been reclassified to conform to Ind AS presentation requirements for the purpose of this note.

# Refer Note 37 for details of merger. Effect of merger also includes intercompany eliminations.

** Effect of Ind AS adjustments is after giving effect to the scheme of amalgamation as stated in Note 37.

c Explanatory notes to the Balance Sheet and Statement of Profit and Loss Reconciliation i Excise duty

Under previous GAAP, revenue from sale of goods was presented net of the excise duty on sales. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. Excise duty is presented in the Statement of Profit and Loss as an expense. This has resulted in an increase in the revenue from operations and expenses for the year ended 31 March 2017 by '' 571.51 lakhs. The total comprehensive income for the year ended and equity as on 31 March 2017 has remained unchanged.

ii Remeasurement of defined benefit plans

In the financial statements prepared under Previous GAAP, measurement of defined benefit plans (gratuity), arising primarily due to change in actuarial assumptions was recognized as employee benefits expense in the Statement of Profit and Loss. Under Ind AS, such remeasurement benefits relating to defined benefit plans is recognized in other comprehensive income (OCI) as per the requirements of Ind AS 19- Employee benefits. Consequently, the related tax effect of the same has also been recognized in OCI.

For the year ended 31 March, 2017, remeasurement of gratuity liability resulted in a net loss of '' 23.09 lakhs which has now been removed from employee benefits expense in the Statement of Profit and Loss and recognized separately in Other Comprehensive Income. This has resulted in decrease in Employee benefits expense by '' 23.09 lakhs and loss in Other Comprehensive income by '' 23.09 lakhs for the year ended 31 March, 2017. Consequently, tax effect of the same amounting to '' 7.99 lakhs is also recognized separately in Other Comprehensive Income.

iii Provisions

In accordance with Ind AS 10, Events after the Reporting Period, provision for proposed final dividend and tax on dividend has been derecognized by the Company, as dividend was declared by the company and approved by shareholders in the annual general meeting which was after the end of the reporting period. The impact arising from the change is summarized below:

7. Employee benefits

Defined contributions plans

The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund, Labour Welfare Fund and Superannuation Scheme , which are the defined contribution plans. The Company has no obligations other than to make the specified contributions. The contributions are charged to the Statement of Profit and Loss as they accrue. The amount recognized as an expense towards defined contribution plans for the year for provident fund and superannuation scheme aggregated to INR 85.87 Lakhs (31 March 2017: INR 76.95 Lakhs).

Defined benefit plans

Gratuity

The Company operates post-employment defined benefit plans that provide gratuity benefit. The gratuity plan entitles an employee, who has rendered at least five years of continuous service, to receive 15 days salary for each year of completed service at the time of retirement / exit. The scheme is funded by plan assets.

Although, the analysis does not take account of full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions shown.

8. Managerial Remuneration

During an earlier year, the Company had paid managerial remuneration to Late Hitesh Saiwal- Managing Director amounting to Rs, 102.07 lakhs which was in excess of the limits specified in section 197 read with Schedule V of the Act by Rs, 73.01 lakhs. The Company had made an application to the Central Government for waiver of such excess remuneration paid. During the year ended 31 March 2018, the Central Government has rejected the said application by its Order dated 11 August 2017. Further, based on the management''s evaluation of the response received from legal heirs of Late Hitesh Saiwal to the notice sent for recovery of such excess remuneration, the Company has filed the application with the Central Government to reconsider its aforesaid Order.

9. Transfer Pricing

The Company has developed a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under section 92-92F of the Income Tax Act, 1961. The management is of the opinion that its international transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

During the previous year the Company has applied for Advance Pricing Agreement (APA) before the Central Board of Direct Tax (CBDT) and Government of India for International Inter-company related party transactions with associated Enterprises (AE). The APA is an arrangement between the taxpayer and the tax authority covering future transactions, with a view to avoid the potential transfer pricing disputes in a cooperative manner. Once APA agreement is completed, the Company will have certainty with respect to tax outcome of international transactions, by agreeing in advance the arm''s length pricing, or pricing methodology which is to be applied. Under APA specific rollback provisions enable to attain certainty in transfer prices of international transactions for up to 9 years (including 4 years rollback provisions) in total. The company has applied for Advanced Pricing Agreement (APA) in FY 2015-16, the period covered under rollback is from FY 2012-13 to FY 2015-16 and five year down the line i.e. from FY 2016-17 to 2020-21. Besides this the APA has a persuasive value on all open Transfer pricing litigations of past years. During the year, the Company received questionnaire from the CBDT and the Company has replied to the questionnaire.

The Domestic Transfer Pricing Regulations as prescribed under section 92BA of the Income Tax Act, 1961 was introduced from April 1, 2012. The Company has been consistently transacting with related parties on an Arm''s Length basis in accordance with Group Transfer Pricing Policy. The Company is of the opinion that there will be no significant changes to Arm''s length price under determination in order to comply with the requirement of section 92BA of Income Tax Act. Hence, there will no material impact on the financial statements.

10. The previous year''s figures were audited by a firm other than B S R & Associates LLP

11. Figures for the previous year have been regrouped / rearranged wherever necessary to confirm with the current year''s classification.

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Mar 31, 2016

1. Managerial Remuneration

During the year Mr. Hitesh Saiwal resigned as Managing Director with effect from 30 April 2015. The Company has paid an additional remuneration of Rs. 7,214,160 to him, which has been approved by a special resolution in the General Meeting dated 22 September 2015. If the limits prescribed under section 197 read with Schedule V of the Act are pro-rated for one month, then the total remuneration paid to him of Rs. 10,207,067 (which includes superannuation fund, gratuity and leave encashment aggregating Rs. 2,206,504) is more than the prorated permissible limit by Rs. 7,300,563. The Company has made an application to the Central Government for excess remuneration paid and pending approval has treated the excess remuneration paid as a recoverable.

2. Operating lease as lessee

The Company has entered into leases for cars for a period of 3 years. Total lease payments for non-cancellable leases recognized in the books for the year is Rs. 640,800 (2015 : Rs. 574,095)

3. Dues to Micro and Small Enterprises

Under Micro, Small, and Medium Enterprises Development Act, 2006 (MSMED) which came in to force from 2 October, 2006, certain disclosures are required to be made relating to micro and small enterprises. On the basis of the information and records available with the management, the following disclosures are made for the amounts due to the Micro, small and medium enterprises:

4. In accordance with AS-29 (Provisions, Contingent Liabilities and Contingent Assets), the movement in provision for warranty is as follows:

A provision is estimated for expected warranty claims in respect of products sold during the year on the basis of past experience regarding failure trends of products and costs of rectification or replacement. It is expected that most of this cost will be incurred over the next 12 months as per management estimate.

As per provisions of section 135 of Companies Act 2013, the Company was required to spend Rs. 2,556,520 (2015: Rs 2,791,425) being 2% of average net profits made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy on the activities specified in Schedule VII of the Act. However, the Company has spent Rs. 434,205 (2015: Nil) towards Corporate Social Responsibility activities. The Company is in process of exploring various options specified in Schedule VII on which it could do its spending of CSR for the benefit of society.

a) Gross amount required to be spent by the Company during the year - Rs. 2,556,520

b) Amount spent during the year on :

5 Transfer Pricing

The Company has developed a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under section 92-92F of the Income Tax Act, 1961. The management is of the opinion that its international transactions are at arm’s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

During the financial year the company has applied for Advance Pricing Agreement (APA) before the Central Board of Direct Tax (CBDT) and Government of India (GOI) for International Inter-company related party transactions with associated Enterprises (AE). The APA is an arrangement between the taxpayer and the tax authority covering future transactions, with a view to avoid the potential transfer pricing disputes in a cooperative manner. Once APA agreement is completed, the company will have certainty with respect to tax outcome of international transactions, by agreeing in advance the arm’s length pricing, or pricing methodology which is to be applied. Under APA specific rollback provisions enable to attain certainty in transfer prices of international transactions for up to 9 years (including 4 years rollback provisions) in total. The company has applied for Advanced Pricing Agreement (APA) in FY 2015-16, the period covered under rollback is from FY 2012-13 to FY 2015-16 and five year down the line i.e. from FY 2016-17 to 2020-21. Besides this the APA has a persuasive value on all open Transfer pricing litigations of past years.

The Domestic Transfer Pricing Regulations as prescribed under section 92BA of the Income Tax Act, 1961 was introduced from April 1, 2012. The Company has been consistently transacting with related parties on an Arm’s Length basis in accordance with Group Transfer Pricing Policy. The Company is of the opinion that there will be no significant changes to Arm’s length price under determination in order to comply with the requirement of section 92BA of Income Tax Act. Hence, there will no material impact on the financial statements.

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Mar 31, 2015

1. Employee benefits – Post employment benefit plans

Effective 1 January 2007, the Company adopted Accounting Standard 15 (revised 2005) on "Employee Benefits".

Defined contributions plans

The Company makes contributions, determined as specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund and Superannuation Scheme, which is a defined contribution plan. The Company has no obligations other than to make the specified contributions. The contributions are charged to the Statement of Profit and Loss as they accrue. The amount as an expense towards contribution to Provident Fund and Superannuation Scheme for the year aggregated to Rs. 5,375,735 (2014: Rs. 4,964,801).

Defined benefit plans Gratuity

The Company operates post employment defined benefit plans that provide gratuity benefit. The gratuity plan entitles an employee, who has rendered at least five years of continuous service, to receive 15 days salary for each year of completed service at the time of retirement / exit. The scheme is funded by plan assets.

a) Gratuity is payable to all eligible employees of the Company on superannuation, death, and permanent disablement, in terms of the provisions of the Payment of Gratuity Act, 1972.

b) The discount rate is based on the prevailing market yields Indian Government securities as at the Balance Sheet date for the estimated term of the obligations.

c) Estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

d) The Company's gratuity fund is managed by Life Insurance Corporation of India. The plan assets under the fund are invested under approved securities.

2. Operating lease as lessee

The Company has entered into leases for cars for a period of 3 years. Total lease payments for non-cancellable leases recognized in the books for the year is Rs. 574,095 (2014 : Rs. 786,421)

3. Unhedged foreign currency exposures

The Company has entered into derivative contracts to hedge its risk associated with foreign currency fluctuations. However, none of these contracts can be co-related on one to one basis against the underlying exposure. As at the year end, the Company has outstanding foreign exchange forward contracts of GBP Nil, EURO Nil and USD Nil (2014: GBP 210,000), (2014: EURO 150,000), (2014: USD Nil) equivalent to Rs Nil (2014: Rs. 33,932,436). The Company has revalued these forward contracts as at the yearend by marking the same to market and recognized a loss of Rs.Nil (2014: Nil) by debiting the statement of profit and loss in compliance with the announcement dated 29 March 2008 made by the Institute of Chartered Accountants of India ('ICAI') regarding accounting for derivatives.

4. In accordance with AS-29 (Provisions, Contingent Liabilities and Contingent Assets), the movement in provision for warranty is as follows:

A provision is estimated for expected warranty claims in respect of products sold during the year on the basis of past experience regarding failure trends of products and costs of rectification or replacement. It is expected that most of this cost will be incurred over the next 12 months as per management estimate.

5. Corporate social responsibility

As per provisions of section 135 of Companies Act 2013, the Company was required to spend Rs. 2,791,425 (2014: Rs Nil) being 2% of average net profits made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy on the activities specified in Schedule VII of the Act. However, the Company has spent Rs Nil (2014: Nil) towards Corporate Social Responsibility activities. The Company is in process of exploring various options specified in Schedule VII on which it could do its spending of CSR for the benefit of society.

6. Transfer Pricing The Company has developed a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under section 92-92F of the Income Tax Act, 1961. The management is of the opinion that its international transactions are at arm's length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

The Domestic Transfer Pricing Regulations as prescribed under section 92BA of the Income Tax Act, 1961 was introduced from April 1, 2012. The Company has been consistently transacting with related parties on an Arm's Length basis in accordance with Group Transfer Pricing Policy. The Company is of the opinion that there will be no significant changes to Arm's length price under determination in order to comply with the requirement of section 92BA of Income Tax Act. Hence, there will no material impact on the financial statements.

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Mar 31, 2014

1. Background

Morganite Crucible (India) Limited (''the Company'') was incorporated on 13 January 1986 under the Companies Act, 1956 and its shares are listed on the Bombay Stock Exchange (BSE). The Company is engaged in the business of manufacturing and selling of silicon carbide and clay graphite crucibles, its accessories and die lubes.

2. Rights, preferences and restrictions attached to equity shares The Company has only one class of equity shares having a par value of Rs.10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

The Company has proposed dividend per share of Re. 1 (2013: Re.1) for distribution to equity shareholders.

In the event of liquidation of the Company, the holders of 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. Contingent liabilities and commitments

31 March 2014 31 March 2013

Contingent Liabilities:

a. Bonds in favour of the President 10,000,000 10,000,000 of India endorsed through Deputy Commissioner of Customs for import of goods.

b. Claims by employees towards unfair labour practices under Section 28 read with items 1(a), (b), (c), 2 (b), 3, 4(a), (e) and (f) of Schedule II and items 5, 6, 9 and - - 10 of Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 for which amounts are not ascertainable.

c. Disputed employees'' state insurance demand aggregating Rs.52,498 (2013: 52 498 52 498 Rs.52,498) against which the Company has preferred appeals.

Commitments:

a. Estimated amount of contracts remaining to be executed on capital account and not 558,701 3,791,851 provided for

1 Employee benefits - Post employment benefit plans Effective 1 January 2007, the Company adopted Accounting Standard 15 (revised 2005) on "Employee Benefits".

Defined contributions plans

The Company makes contributions, determined as specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund and Superannuation Scheme, which is a defined contribution plan. The Company has no obligations other than to make the specified contributions. The contributions are charged to the statement of profit and loss as they accrue. The amount as an expense towards contribution to Provident Fund and Superannuation Scheme for the year aggregated to Rs. 4,964,801 (2013: Rs. 4,775,021).

Defined benefit plans

Leave encashment

Amount of Rs. 835,756 (2013: Rs. 2,766,334) is recognised as an expense and included in "Employee costs" in the statement of profit and loss.

Gratuity

The Company operates post employment defined benefit plans that provide gratuity benefit. The gratuity plan entitles an employee, who has rendered at least five years of continuous service, to receive 15 days salary for each year of completed service at the time of retirement / exit. The scheme is funded by plan assets.

a) Gratuity is payable to all eligible employees of the Company on superannuation, death, and permanent disablement, in terms of the provisions of the Payment of Gratuity Act, 1972.

b) The discount rate is based on the prevailing market yields Indian Government securities as at the balance sheet date for the estimated term of the obligations.

c) Estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

d) The Company''s gratuity fund is managed by Life Insurance Corporation of India. The plan assets under the fund are invested under approved securities.

4 Related party disclosures A. Names of related parties

a. Parties (where controls exists) Morgan Advanced Materials Plc ( formerly known as The Morgan Crucible Company Plc UK) - Ultimate Holding Company

b. Investing Associates

Morganite Crucible Limited (holds 38.50% of issues, subscribed and paid up capital)

Morgan Terreassen BV (holds 36.50% of issues, subscribed and paid up capital)

c. Other related parties with whom transactions have taken place during the year

i. Subsidiary company Diamond Crucible Company Limited

ii. Fellow subsidiary companies Morganite Crucible Inc., USA

Morgan Molten Metal System GMBH Germany Morgan Molten Metal System (Suzhou) Co Ltd., China Morgan Karbon Grafit Sanayi Turkey Thermal Ceramics UK

Murugappa Morganite Thermal Ceramics Ltd.

Thermal Ceramics South Africa

d. Key Management Person Mr. Hitesh Saiwal - Managing Director

5 Operating lease as lessee

The Company has entered into leases for cars for a period of 3 years. Total lease payments for non-cancellable leases recognised in the books for the year is Rs. 786,422 (2013 : Rs. 1,299,650)

6 Unhedged foreign currency exposures

The Company has entered into derivative contracts to hedge its risk associated with foreign currency fluctuations. However, none of these contracts can be co-related on one to one basis against the underlying exposure. As at the year end, the Company has outstanding foreign exchange forward contracts of GBP 210,000, EURO 150,000 and USD Nil (2013: GBP Nil), (2013: EURO 900,000), (2013: USD 900,000) equivalent to Rs.33,932,436 (2013: Rs. 111,501,000). The Company has revalued these forward contracts as at the year end by marking the same to market and recognised a loss of Rs.NIL (2013: Nil) by debiting the statement of profit and loss in compliance with the announcement dated 29 March 2008 made by the Institute of Chartered Accountants of India (''ICAI'') regarding accounting for derivatives.

7 Transfer Pricing

The Company has developed a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under section 92-92F of the Income Tax Act, 1961. The management is of the opinion that its international transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

The Domestic Transfer Pricing Regulations as prescribed under section 92BA of the Income Tax Act, 1961 was introduced from April 1, 2012. The Company has been consistently transacting with related parties on an Arm''s Length basis in accordance with Group Transfer Pricing Policy. The Company is of the opinion that there will be no significant changes to Arm''s length price under determination in order to comply with the requirement of section 92BA of Income Tax Act. Hence, there will no material impact on the financial statements.

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Mar 31, 2013

1. Background

Morganite Crucible (India) Limited (''the Company'') was incorporated on 13 January 1986 under the Companies Act, 1956 and its shares are listed on the Bombay Stock Exchange (BSE). The Company is engaged in the business of manufacturing and selling of silicon carbide and clay graphite crucibles, its accessories and die lubes.

2. Employee benefits – Post employment benefit plans

I. Effective 1 January 2007, the Company adopted Accounting Standard 15 (revised 2005) on "Employee Benefits".

II. Defined contributions plans The Company makes contributions, determined as specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund and Superannuation Scheme, which is a defined contribution plan. The Company has no obligations other than to make the specified contributions. The contributions are charged to the statement of profit and loss as they accrue. The amount as an expense towards contribution to Provident Fund and Superannuation Scheme for the year aggregated to Rs. 4,775021 (2012: Rs. 4,922,963).

Leave Encashment

Amount of Rs.2,766,334 (2012: Rs. 2,237,647) is recognised as an expense and included in "Employee costs" in the statement of profit and loss.

Gratuity

The Company operates post employment defined benefit plans that provide gratuity benefit. The gratuity plan entitles an employee, who has rendered at least five years of continuous service, to receive 15 days salary for each year of completed service at the time of retirement / exit. The scheme is funded by plan assets.

3. Segment reporting

The Company recognizes its sale of crucibles activity as its only primary business segment since its operations predominantly consist of manufacture and sale of crucibles to its customers. Accordingly, income from sale of crucibles comprises the primary basis of segmental information set out in these financial statements. Geographical segment will be the secondary segment for the purpose of AS-17 (Segment reporting). All the assets of the Company are located in India except for Trade receivables and advance to suppliers aggregating Rs.87,145,522 (2012: Rs. 104,807,237). The Company caters to the needs of the domestic and foreign market.

4. Related party disclosures

A. Names of related parties

Parties (where controls exists)

The Morgan Crucible Company Plc, U.K - Ultimate Holding Company b. Investing Associates

- Morganite Crucible Limited (holds 38.50% of issues, subscribed and paid up capital)

- Morgan Terreassen BV (holds 36.50% of issues, subscribed and paid up capital) Other related parties with whom transactions have taken place during the year

- Subsidiary company Limited Diamond Crucible Company

- Fellow subsidiary companies Morganite Crucible Inc., USA

Morgan Molten Metal System GMBH Germany Morgan Molten Metal System (Suzhou) Co Ltd., China Morgan Karbon Grafit Sanayi Turkey Thermal Ceramics UK

Murugappa Morganite Thermal Ceramics Ltd. Thermal Ceramics South Africa d. Key Management Person

Mr. Hitesh Saiwal - Managing Director

5. Operating leases as lessee

The Company ha s entered into operating leases for cars for a period of 3 years. Total lease payments for non - cancellable leases recognised in books for the year is Rs.1,299,650 (2012 : Rs.1,447,836).

6. Dues to Micro and Small Enterprises

Under Micro, Small, and medium Enterprises Development Act, 2006 (MSMED) which came in to force from 2 October, 2006, certain disclosures are required to be made relating to micro and small enterprises. On the basis of the information and records available with the management, the following disclosures are made for the amounts due to the Micro, small and medium enterprises:

On the basis of information and records available with the Company, the above disclosures are made in respect of amounts due to the micro, small and medium enterprises, who have registered with the relevant competent authorities. This has been relied upon by the auditors.

7. Unhedged foreign currency exposures

The Company has entered into derivative contracts to hedge its risk associated with foreign currency fluctuations. However, none of these contracts can be co-related on one to one basis against the underlying exposure. As at the year end, the Company has outstanding foreign exchange forward contracts of GBP Nil, EURO 900,000 and USD 900,000 (2012: GBP 725,000), (2012: EURO 825,000), (2012: USD 639,073) equivalent to Rs.111,501,000 (2012: Rs. 148,226,427). The Company has revalued these forward contracts as at the year end by marking the same to market and recognised a loss of Rs.NIL (2012: Rs.4,976,182) by debiting the statement of profit and loss in compliance with the announcement dated 29 March 2008 made by the Institute of Chartered Accountants of India (''ICAI'') regarding accounting for derivatives.

8. Transfer Pricing

The Company''s management is of the opinion that its international transactions are at arm''s length as per the independent accountants report for the year ended 31 March 2012. Further, the Indian Finance Bill, 2012 had sought to bring in certain class of domestic transactions in the ambit of the transfer pricing regulations with effect from 1st April 2012. The management is yet to carry out a detailed domestic / international transfer pricing study/ analysis for the year ending 31 March 2013 in accordance with these regulations and expects to commission and complete the same by the specified due date. Management continues to believe that its international transactions post March 2012 and the specified domestic transactions covered by the new regulations are at arm''s length and that the transfer pricing legislation will not have any impact on these financial statements, particularly on amount of tax expense and that of provision of taxation.

9. Change in Accounting Policy

With effect from 1 April 2012 the Company has changed its accounting policy for valuation of inventories from First in First Out (FIFO) method to Weighted Average Cost (WAC) method. This has resulted in figures for the year ended 31 March 2013, for ''Cost of materials consumed being lower by Rs. 1,256,485, ''Changes in inventories of finished goods, work in progress and stock-in-trade being lower by Rs. 1,157,275 and ''Net Profit for the year'' being higher by Rs.1,630,614. If the FIFO method of valuation of inventories would have been followed, the figures for the year ended 31 March 2013 for ''Cost of materials consumed would have been Rs.328,500,586, ''Changes in inventories of finished goods, work-in-progress and stock-in-trade'' would have been Rs.24,714,611 and ''Net Profit for the year'' would have been Rs.83,890,007.

10. Previous year figures

Previous year''s figure have been regrouped / reclassified as follows:

- Provision for tax aggregating to Rs. 1,753,847 has been reclassified from "Long-term provisions" to "Short-term provision (net of advance tax and tax deducted at source)".

Provision for tax aggregating to Rs. 1,553,663 has been reclassified from "Short-term provisions" to "Long-term loans and advances (net of provisions)".

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Mar 31, 2012

1. Background

Morganite Crucible (India) Limited ('the Company') was incorporated on 13 January 1986. The Company is engaged in the business of manufacturing and selling of silicon carbide and clay graphite crucibles and its accessories.

Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs.10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

The Company has proposed per share dividend of Re.1 (2011: Rs.Nil) for distribution to equity shareholders.

In the event of liquidation of the Company, the holders of 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.

Details of shares held by shareholders holding more than 5% of the aggregate shares in the Company.

The only shareholders holding more than 5 percent shares as on the date of the balance sheet are Morganite Crucible Limited and Morgan Treason BV (as disclosed above), both of which are subsidiaries of The Morgan Crucible Company Plc.

"Management charges for the current year includes charges pertaining to previous year amounting to Rs.15,185,332.

2. Capital commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.9,712,297 (2011: Rs. 4,025,000).

3. Contingent liabilities

i) Bonds aggregating Rs.10,000,000 (2011: Rs.10,000,000) in favor of the President of India endorsed through Deputy Commissioner of Customs for import of goods.

ii) Claims by employees towards unfair labour practices under Section 28 read with items 1(a), (b), (c), 2 (b), 3, 4(a), (e) and (f) of Schedule II and items 5, 6, 9 and 10 of Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 for which amounts are not ascertainable.

iii) Disputed employees' state insurance demand aggregating Rs.52,498 (2011: Rs.52,498) against which the Company has preferred appeals.

4. The Company's operations consist of manufacturing and selling of crucibles and hence the information with regards to sales effected by the Company and the information with regard to opening and closing stock of finished goods as disclosed in the financial statements pertains to crucibles only.

**The value of consumption of raw materials has been arrived at on the basis of opening stock plus purchases less closing stock. The consumption, therefore, includes adjustments for raw materials write-off, shortage / excess, etc.

5. Employee benefits

I. Effective 1 January 2007, the Company adopted Accounting Standard 15 (revised 2005) on "Employee Benefits".

II. Contribution to Provident fund

Amount of Rs.3,167,663 (2011: Rs.2,638,039) is recognized as an expense and included in "Employee costs" in the statement of profit and loss.

Experience adjustment is on account of attrition in the number of employees as compared to the previous year and change in actuarial assumptions.

The estimates of future salary increases, considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors, such as supply and demand and the employment market.

G Percentage of each category of Plan Assets to total Fair Value of Plan Assets as at 31 March 2012.

The Plan Assets are administered by Life Insurance Corporation of India ("LIC") as per Investment Pattern stipulated for Pension and Group Schemes Fund by Insurance and Regulatory Development Authority regulations.

The discount rate is based on the prevailing market yields on Indian government securities as at the balance sheet date for the estimated term of obligation.

6. Segment reporting

The Company recognizes its sale of crucibles activity as its only primary business segment since its operations predominantly consist of manufacture and sale of crucibles to its customers. Accordingly, income from sale of crucibles comprises the primary basis of segmental information set out in these financial statements. Geographical segment will be the secondary segment for the purpose of AS-17 (Segment reporting). All the assets of the Company are located in India except for Trade receivables aggregating Rs.104,807,237 (2011: Rs.68,049,633). The Company caters to the needs of the domestic and foreign market.

7. Related party disclosure

List of related parties

i. Parties (where control exists)

The Morgan Crucible Company Plc., U.K. - Ultimate holding company

ii. Investing associates

- Morganite Crucible Limited (holds 38.50% of issued, subscribed and paid up capital)

- Morgan Treason BV (holds 36.50% of issued, subscribed and paid up capital)

iii. Other related Parties where transactions have taken place during the year

Subsidiary company

- Diamond Crucible Company Limited Fellow subsidiary companies

- Morganite Crucible Inc., USA

- Morgan Molten Metal Systems GMBG Germany

- Morgan Molten Metal System (Suzhou) Co. Ltd., China

- Morgan Karbon Grafit Sanayi AS Turkey

- Thermal Ceramics UK

- Murugappa Morganite Thermal Ceramics Limited

- Morgan Thermal Ceramics - Shanghai

iv. Key Management Personnel

- Mr. Vijay Sabarwal - CEO and Whole time Director (upto 29 January 2011)

- Mr. Ashish Mehrotra - Director sales and marketing

- Mr. Vinod Mhalsekar - Director operations

- Mr.Hitesh Saiwal - Wholetime Director / Country Manager (from 17 May 2010)

8. The Company has entered into operating leases for cars for a period of 3 years. Total lease payments for non-cancellable leases recognised in books for the year is Rs.1,447,836 (2011: Rs.747,799).

9. Dues to Micro, Small and Medium Enterprises

Under Micro, Small, and Medium Enterprises Development Act, 2006 (MSMED) which came in to force from 2 October, 2006, certain disclosures are required to be made relating to Micro, Small and Medium enterprises.

On the basis of the information and records available with the management, the following disclosures are made for the amounts due to the Micro, small and medium enterprises:

10. Receivables and payables denominated in foreign currency

The Company has entered into derivative contracts to hedge its risk associated with foreign currency fluctuations. However, none of these contracts can be co-related on one to one basis against the underlying exposure. As at the year end, the Company has outstanding foreign exchange forward contracts of GBP 725,000, EURO 825,000 and USD 639,073 (2011: GBP 500,000) equivalent to Rs.148,226,427 (2011: Rs.36,075,000). The Company has revalued these forward contracts as at the yearend by marking the same to market and recognized a loss of Rs.4,976,182 (2011: Rs.107,000) by debiting the statement of profit and loss in compliance with the announcement dated 29 March 2008 made by the Institute of Chartered Accountants of India ('ICAI') regarding accounting for derivatives.

11. Transfer Pricing

Transactions with overseas related parties are governed by transfer pricing regulations of the Indian Income tax Act, 1961. The Company's international transactions with associated enterprises are at arm's length as per the independent accountants' report for the year ended 31 March 2011. Management believes that the Company's international transactions with related parties post 31 March 2011 continue to be at arm's length and that the transfer pricing legislation will not have any impact on the financial statements particularly on the amount of the tax expense for the year and the amount of the provision for taxation at the year end.

12. Previous year figures

The financial statements for the year ended 31 March 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Act. Consequent to the notification of Revised Schedule VI under the Act, the financial statements for the year ended 31 March 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of financial statements.

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Mar 31, 2011

1. Background

Morganite Crucible (India) Limited ('the Company') was incorporated on 13 January 1986. The Company is engaged in the business of manufacturing and selling of silicon carbide and clay graphite crucibles and its accessories.

2. Capital commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.4,025,000 (2010: Rs.6,176,056).

3. Contingent liabilities

i) Bank guarantee aggregating Rs. Nil (2010:Rs. 200,000) issued by the bank on behalf of the Company in favour of the Panalpina World Transport Private Limited for purchase of Material from Thermal Ceramic U.K. Limited.

ii) Bonds aggregating Rs.10,000,000 (2010: Rs.10,000,000) in favour of the President of India endorsed through Deputy Commissioner of Customs for import of goods.

iii) A suit has been filed by Mr. Suresh Borade, past employee of the Company, on account of his disputed resignation from the Company. The Honourable Gujarat High Court has ordered to pay Rs.540 per month till the final disposal of appeal pending for reinstatement with back wages. The Company is presently paying the above mentioned Rs.540 per month to the said employee. The amount of liability that may arise in future on account of reinstatement with back wages is not ascertainable.

iv) Claims by employees towards unfair labour practices under Section 28 read with items 1(a), (b), (c), 2 (b), 3, 4(a), (e) and (f) of Schedule II and items 5, 6, 9 and 10 of Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 for which amounts are not ascertainable.

v) Disputed employees' state insurance demand aggregating Rs. 52,498 against which the Company has preferred appeals.

Experience adjustment is on account of attrition in the number of employees as compared to the previous year and change in actuarial assumptions.

The estimates of future salary increases, considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors, such as supply and demand and the employment market.

G. Percentage of each category of Plan Assets to total Fair Value of Plan Assets as at 31 March 2011.

The Plan Assets are administered by Life Insurance Corporation of India (“LIC”) as per Investment Pattern stipulated for Pension and Group Schemes Fund by Insurance and Regulatory Development Authority regulations.

The discount rate is based on the prevailing market yields on Indian government securities as at the balance sheet date for the estimated term of obligation.

4. Segment reporting

Primary segment:

In accordance with the requirements of Accounting Standard 17 – “Segment Reporting”, the Company has determined its business segment as crucibles. Since 100% of the Company's business is from crucibles, there are no other primary reportable segments. Thus the segment revenue, segment result, total carrying amount of segment assets, total carrying amount of segment liabilities, total cost incurred to acquire segments assets, the total amount of charge for depreciation and amortisation during the year are all as reflected in the financial statements for the year ended 31 March 2011 and as on that date.

5. Related party disclosure

List of related parties

i. Parties (where control exists)

The Morgan Crucible Company Plc, U.K. - Ultimate holding company

ii. Investing associates

Morganite Crucible Limited (holds 38.50% of issued, subscribed and paid up capital) Morgan Terreassen BV (holds 36.50% of issued, subscribed and paid up capital)

iii. Other related Parties where transactions have taken place during the year

Subsidiary company

Diamond Crucible Company Limited Fellow subsidiary companies

Morganite Crucible Inc., USA

Morgan Molten Metal Systems GMBG Germany

Morgan Thermic SAS, France

Morgan Molten Metal System (Suzhou) Co. Ltd., China

Morgan Karbon Grafit Sanayi AS Turkey

Thermal Ceramics UK

Morganite Brazil LtdA

Morgan Thermal Ceramics - Shanghai

iv. Key Management Personnel

- Mr. Vijay Sabarwal – CEO and Wholetime director (upto 29 January 2011)

- Mr. Ashish Mehrotra – Director sales and marketing

- Mr. Vinod Mhalsekar – Director operations

- Mr.Hitesh Saiwal – Country head and Wholetime director (from 17 May 2010)

6. Dues to Micro, Small and Medium Enterprises

Under Micro, Small, and Medium Enterprises Development Act, 2006 (MSMED) which came in to force from 2 October, 2006, certain disclosures are required to be made relating to Micro, Small and Medium enterprises.

7. Receivables and payables denominated in foreign currency

The Company has entered into derivative contracts to hedge its risk associated with foreign currency fluctuations. However, none of these contracts can be co-related on one to one basis against the underlying exposure. The Company has outstanding foreign exchange forward contracts of GBP 500,000 equivalent to Rs.36,075,000 as at 31 March 2011. The Company has revalued these forward contracts as at the year end by marking the same to market and recognised a loss of Rs.107,000 by debiting profit and loss account in compliance with the announcement dated 29 March 2008 made by the Institute of Chartered Accountants of India ('ICAI') regarding accounting for derivatives.

8. Transfer Pricing

The Company's management is of the opinion that its international transactions with related parties are at arms length and that the Company is in compliance with the transfer pricing legislation. Based on the above, the Company's management believes that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of the provision for taxation.

9. The Company has availed exemption as applicable to Export Oriented companies, granted by notification no. S.O. 301 (E) dated 8 February 2011 issued by Ministry of Corporate Affairs, Government of India. The Board of Directors have given their consent to avail the said exemption in their meeting held on 30 March 2011. Hence, the disclosures required by paragraphs 3(i)(a), 3(ii)(a), 3(ii)(b) and 3(ii)(d) of Part-II of Schedule VI to the Companies Act, 1956 have not been made.

10. Prior year figures which were audited by a firm of Chartered Accountants other than B S R & Co. have been regrouped / rearranged wherever necessary to conform to current year's presentation.

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Mar 31, 2010

1. Capital commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 6,176,056 (Previous Year Rs. 1,800,000).

2. Contingent liabilities

i) Bank guarantee aggregating Rs. Nil (Previous Year Rs. 10,000) issued by the bank on behalf of the Company in favour of Maharashtra Pollution Control Board for compliance of the Supreme Court Monitoring Committee directions regarding Common Effluent Treatment Plant at Waluj MIDC.

ii) Bank guarantee aggregating Rs. 200,000 (Previous Year Rs. 200,000) issued by the bank on behalf of the Company in favour of the Panalpina World Transport Private Limited for purchase of Material from Thermal Ceramic U.K. Limited.

iii) Bonds aggregating Rs. 10,000,000 (Previous Year Rs. 10,000,000) in favour of the President of India endorsed through Deputy Commissioner of Customs for import of goods.

iv) Disputed income tax demands aggregating Rs. Nil (Previous Year Rs. 431,291) against which the Company has preferred appeals.

v) Claims by employees towards unfair labour practices under Section 28 read with items 1(a), (b), (c), 2 (b), 3, 4(a), (e) and (f) of Schedule II and items 5, 6, 9 and 10 of Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 for which amounts are not ascertainable.

vi) A suit has been filed by a past employee of the Company, on account of his disputed resignation from the Company. The amount of liability that may arise in future on account of reinstatement with back wages is approximately Rs. 880,000.

vii) Disputed employees state insurance demand aggregating Rs. 52,498 against which the Company has preferred appeals.

a) Vide letter No. 4097/SIA/IMO/96 dated October 24, 1996 received from Government of India, Ministry of Industry – Secretariat for Industrial Approvals Entrepreneurial Assistance Unit. In June 2010, the Company has filed an application for submission to the Central Government in the Secretariat for Industrial Assistance to increase the annual licensed capacity from 3,600 M.T. to 5,100 M.T for silicon carbide crucibles for which approval is awaited.

b) Vide letter No. CIL 54(2000) dated August 31, 2000 received from Government of India, Ministry of Commerce & Industry – Department of Industrial Policy & Promotion, Secretariat for Industrial Assistance (PAB – IL Section).

c) Installed capacity is as certified by the Management on which auditors have placed reliance without verification, this being a technical matter.

3. Components and spare parts referred to in paragraph 4D(a) and (c) of part II of Schedule VI to the Companies Act, 1956, are assumed to be those incorporated in the goods purchased and not those used for maintenance of plant and machinery.

G. Percentage of each category of Plan Assets to total Fair Value of Plan Assets as at March 31, 2010.

The Plan Assets are administered by Life Insurance Corporation of India ("LIC") as per Investment Pattern stipulated for Pension and Group Schemes Fund by Insurance and Regulatory Development Authority regulations.

H. Expected gratuity contribution for the next year is aggregating Rs. 588,966 (Previous Year Rs. 612,526). III The liability for leave encashment (Net) as at the year end is Rs. 441,087 (Previous Year Rs. 1,090,027).

4. Segment reporting Primary segment:

In accordance with the requirements of Accounting Standard 17 – "Segment Reporting" issued by the Institute of Chartered Accountants of India, the Company has determined its business segment as crucibles. Since 100% of the Companys business is from crucibles, there are no other primary reportable segments. Thus the segment revenue, segment result, total carrying amount of segment assets, total carrying amount of segment liabilities, total cost incurred to acquire segments assets, the total amount of charge for depreciation and amortisation during the year are all as reflected in the financial statements for the year ended March 31, 2010 and as on that date.

5. Related party disclosure

Related party disclosure as required by Accounting Standard - 18, "Related Party Disclosures" issued by the Institute of Chartered Accountants of India is given below:

i. Shareholders in the company

Morganite Crucible Limited holds 38.50% and Morgan Terreassen BV holds 36.50% equity shares of the Company.

ii. Other related Parties where common control exists and transactions have taken place during the year Subsidiary Company

- Diamond Crucible Company Limited Fellow subsidiary Companies

- Morganite Crucible Inc., USA

- Carl Nolte Sohne GmbH, Germany

- Morgan Thermic SAS, France

- Morgan Molten Metal System (Suzhou) Co. Ltd., China

- Mkgs. Morgan Carbon, Turkey

- Thermal Ceramics South Africa (PTY) Ltd.

- Morganite Brazil LtdA Ultimate Holding Company

- The Morgan Crucible Company Plc, U.K.

iii. Key Management Personnel

- Mr. Vijay Sabarwal (Executive Director)

- Mr. Ashish Mehrotra

- Mr. Basant Agrawal

- Mr. Vinod Mhalsekar (with effect from January 15, 2009)

- Mr. Md. Abdul Nadeem (upto May 31, 2009)

- Mr. O. S. Joshi (upto September 6, 2008)

- Mr. H. K. Bajpayee (upto April 6, 2008)

- Mr. Ghanshyam Rathi (with effect from April 1, 2009)

- Mr. Laxmi Ganesh (with effect from April 1, 2009)

- Mr. Sonalsing Gujar (with effect from April 1, 2009)

6. Sundry Creditors

i) Disclosure has been made as per the definition given in the Micro, Small and Medium Enterprises Development Act, 2006.

The Company has not received any information from the "suppliers" regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures, if any, relating to the amounts as at year end together with interest paid / payable as required under the said Act have not been given.

7. The amount of excise duty disclosed as deduction from turnover is the total excise duty for the year except the excise duty related to the difference between the closing stock and opening stock and excise duty paid but not recovered, which has been disclosed as excise duty expense in "Cost of materials - Increase / (Decrease) in excise duty on finished goods" under Schedule 9 forming part of the Profit and Loss Account.

8. As at the year end the Company -

i) has no loans and advances in the nature of loans to associates.

ii) has no loans and advances in the nature of loans, wherein there is no repayment schedule or repayment is beyond seven years and

iii) has no loans and advances in the nature of loans to firms / companies in which directors are interested.

9. Previous years figures have been regrouped / rearranged wherever necessary to confirm to the current years classification.