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Notes to Accounts of SRF Ltd.

Mar 31, 2017

There have been no breach of covenants mentioned in the loan agreements during the reporting periods.

* Amount deposited Rs, 8.60 Crores (2016 : Rs, 4.57 Crores; 2015 : Rs, 4.47 Crores)

** Amount deposited Rs, 12.39 Crore (2016 : Rs, 0.02 Crore; 2015 Rs, 0.16 Crore)

*** Amount deposited Rs, 0.08 Crore (2016 :Rs, 0.08 Crore; 2015 :Rs, Nil)

**** Amount deposited Rs, 6.48 Crores (2016 Rs, 3.38 Crores; 2015 Rs, 4.32 Crores)

***** In the matter of acquisition of the Tyrecord Division at Malanpur from CEAT Limited the Collector of Stamps, Bhind (Madhya Pradesh) has by his order dated 07.11.2001 assessed the value of the subject matter of the Deed of Conveyance dated 13.06.1996 at Rs, 303.00 Crores and levied a stamp duty of Rs, 23.73 Crores and imposed a penalty of Rs, 5.09 Crores. The said demand was challenged before the Hon’ble High Court of Madhya Pradesh Bench at Gwalior. The Hon’ble High Court of Madhya Pradesh accepted the case of the Company that the subject matter of the Deed of Conveyance dated 13.06.1996 is only the superstructures valued at Rs, 27.76 Crores and not the entire undertaking valued at Rs, 303.00 Crores as claimed by the State. Consequently, the Hon’ble High Court of Madhya Pradesh quashed the order and demands issued by the Collector of Stamps, Bhind (Madhya Pradesh) and allowed the writ petition by an order dated 29th November 2004. Against the said order, the State of Madhya Pradesh preferred a Special Leave Petition before the Hon’ble Supreme Court which the State of Madhya Pradesh has withdrawn to enable it to approach the Hon’ble High Court of Madhya Pradesh at Gwalior in view of the change in law in the State of Madhya Pradesh relating to Letters Patent Appeal.

@ As per Business Transfer Agreement with KAMA Holdings Limited, the liabilities of Rs, 20.64 Crores (2016 : Rs, 20.64 Crores; 2015 : Rs, 20.64 Crores) and Rs, 0.38 Crore (2016 :Rs, 0.38 Crore; 2015 : Rs, 0.38 Crore) respectively towards Excise Duty and Sales tax are covered under Representations and Warranties.

All the above matters are subject to legal proceedings in the ordinary course of business. In the opinion of the management, the legal proceedings, when ultimately concluded, will not have a material effect on the results of the operations or financial position of the Company.

b. The Company had received demand for payment of Central Sales Tax (CST), Value Added Tax (VAT) and Entry Tax aggregating to Rs, 123.11 Crores (2016 :Rs, 121.06 Crores; 2015:Rs, 111.38 Crores) including interest and penalty of Rs, 34.38 Crores (2016 : Rs, 34.38 Crores;2015 : Rs, 34.38 Crores) for the period from 2004 to 2013 in respect of sales from its manufacturing facility in Special Economic Zone (SEZ) in Madhya Pradesh to the Domestic Tariff Area (DTA). The Company had already paid on the same products Rs, 51.37 Crores as Additional Countervailing Duty (ACVD) to the Central Government, based on Company’s view that ACVD was payable as per extant policies and Legislations of the Centre and the State.

The Company had filed writ petitions against all such demands, on which Hon’ble High Court of Madhya Pradesh (“Court”) has granted stay subject to payment of 10 % of the total demand in cash and bank guarantee for the remaining 90% of the total demand. The said deposit of cash as well as bank guarantee has been made by the Company. The Management is of the view which is also confirmed by legal opinion that Company has a good case on merits and is confident of getting relief from the Court and, accordingly, no provision has been created.

c. The Company has been served with show cause notices regarding certain transactions as to why additional customs / excise duty / service tax amounting to Rs, 23.95 Crores (2016 :Rs, 38.87 Crores; 2015 : Rs, 29.11 Crores) should not be levied. The Company has been advised that the contention of the department is not tenable and hence the show cause notice may not be sustainable.

d. Liability on account of bank guarantees of Rs, 120.13 crores (2016: 7.85 crores; 2015: Rs, 5.47 crores)

e. The Company has issued a Counter Indemnity to HSBC Ltd., India for an amount of US$ 40.50 Million (Previous Year US$ 40.50 Million) to secure the Standby Documentary Credit (SBDC) Facility of the same amount issued by the said bank in favour of HSBC Bank (Mauritius) Limited. This SBDC is further secured by a charge by way of an equitable mortgage on the immoveable properties of the Company at Manali, Basis of this SBDC, HSBC Bank (Mauritius) Limited has entered into a loan agreement for a term loan of US$ 40 Million (Previous year US$ 40 Million) with SRF Global BV, the wholly owned subsidiary of the Company.

f. The Company has entered into agreements with banks for assignment of trade receivables without recourse to them for value upto a maximum limit of Rs, 379.79 Crores. The assigned receivables as at the year end is Rs, 185.46 Crores (March 31, 2016 : Rs, 160.35 Crores; April 1, 2015 : 95.24 Crores)

h. The amounts shown above represents the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately or relate to a present obligations that arise from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate cannot be made. The Company engages reputed professional advisors to protect its interests and has been advised that it has strong legal positions against such disputes.

(iii) The Company has other commitments, for purchases / sales orders which are issued after considering requirements per operating cycle for purchase / sale of goods and services, employee benefits including union agreements in normal course of business. The Company does not have any long term contracts including derivative contracts for which there will be any material foreseeable losses.

(iv) The Company has recognized grant in respect of duty paid on procurement of capital goods under EPCG scheme of Central Government which allows refund in the form of freely transferable duty credit scrips of the duty paid upon meeting of export obligation of six times of the duty paid on capital goods procured. The Company expects to meet its export obligations in future years. Export obligation as on March 31, 2017 is Rs, 104.93 crores.

1 RELATED PARTY TRANSACTIONS

2 Description of related parties

Holding Company Key management personnel

KAMA Holdings Limited Mr. Arun Bharat Ram

Mr. Ashish Bharat Ram

Subsidiaries Mr. Kartik Bharat Ram

SRF Overseas Limited# Mr. K. Ravichandra’

SRF Holiday Home Limited Mr. Vinayak Chatterjee

SRF Energy LimitedA Mr. Tejpreet S Chopra

SRF Fluorochemicals LimitedA Mr. L.Laxshman

SRF Fluor Private LimitedA Mr. Vellayan Subbiah

SRF Global BV Mr. Pramod Bhasin

SRF Industries (Thailand) Limited Ms. Meenakshi Gopinath

SRF Industex Belting (Pty) Limited Mr. Pramod Gopaldas Gujarathi**

SRF Flexipak (South Africa) (Pty) Limited

Fellow subsidiaries Enterprises over which KMP have significant

influence

KAMA Realty (Delhi) Limited SRF Foundation

Shri Educare Limited Karm Farms LLP

Shri Educare Maldives Private Limited Srishti Westend Greens Farms LLP

SRF Transnational Holdings Limited SRF Welfare Trust

Post Employment Benefit Plans Trust

SRF Limited Officers Provident Fund Trust SRF Employees Gratuity Trust SRF Officers Gratuity Trust

# Liquidated during the year *upto March 31, 2017 **from April 1, 2017 ALiquidated during FY 2015-16

(i) Superannuation fund

The Company makes contributions to a Trust which in turn contributes to ICICI Prudential Life Insurance Company Limited.

Apart from being covered under the Gratuity Plan described below, the employees of the Company also participate in a defined contribution superannuation plan maintained by the Company. The Company has no further obligations under the plan except making annual contributions based on a specified percentage of each covered employee’s salary. From November 1, 2006, the Company provided an option to the employees to receive the said benefit as cash compensation along with salary in lieu of the superannuation benefit. Thus, no contribution is required to be made for the category of employees who opted to receive the benefit in cash.

(ii) Provident fund administered through Regional Provident Fund Commissioner

All employees are entitled to Provident Fund benefits as per the law. For certain category of employees the Company administers the benefits through a recognized Provident Fund Trust. For other employees contributions are made to the Regional Provident Fund Commissioners as per law. The Government mandates the annual yield to be provided to the employees on their corpus. This plan is considered as a Defined Contribution Plan. For the first category of employees (covered by the Trust), the Company has an obligation to make good the shortfall, if any, between the yield on the investments of the trust and the yield mandated by the Government and these are considered as Defined Benefit Plans accounted for on the basis of an actuarial valuation.

34.2 Defined benefit plans

The Company sponsors funded defined benefit plans for qualifying employees. The defined benefit plans are administered by separate funds which are legally separate from the Company. These plans are:

(a) Gratuity

(b) Provident fund for certain category of employees administered through a recognized provident fund trust

(i) These plans typically expose the company to actuarial risks such as investment risk, interest rate risk, longevity risk and salary risk.

Investment Risk

The probability or likelihood of occurrence of losses relative to the expected return on any particular investment. Salary Risk

The present value of defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in rate of increase in salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan’s liability.

Interest Risk

The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in value of the liability.

Longevity Risk

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

The cost of the defined benefit plans and other long term benefits are determined using actuarial valuations. An actuarial valuations involves making various assumptions that may differ from actual developments in the future. These includes the determination of the discount rate, future salary increases and mortality rate. Due to these complexity involved in the valuation it is highly sensitive to the changes in these assumptions. All assumptions are reviewed at each reporting date. The present value of the defined benefit obligation and the related current service cost and planned service cost were measured using the projected unit cost method.

(viii) Sensitivity Analysis

Significant actuarial assumptions for the determination of the defined obligation are discount rate and expected salary increase. The sensitivity analysis below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of reporting period, while holding all other assumptions constant.

If the discount rate is 50 basis points higher (lower), the defined benefit obligation would decrease by Rs, 2.23 Crores (Increase by Rs, 2.41 Crores) (as at March 31, 2016: decrease by Rs, 1.82 Crores (increase by Rs, 1.96 Crores))

If the expected salary growth increases (decreases) by 50 basis points, the defined benefit obligation would increase by Rs, 2.39 Crores (decrease by Rs, 2.24 Crores) (as at March 31, 2016: increase by Rs, 1.96 Crores (decrease by Rs, 1.84 Crores ))

(i) Long Term Retention Pay

The Company has a Long Term Retention Pay Plan which covers employees selected on the basis of their current band and their long term value to the Company. The incentive is payable in three year blocks subject to achievement of certain performance ratings. The Company also has a scheme for talent retention of certain identified employees under which an incentive is payable over a period of three years. Based on actuarial valuation, the Company has accrued the above mentioned amounts.

3 SEGMENT REPORTING

Based on the guiding principles laid down in Indian Accounting Standard (Ind AS) - 108 “Segment Reporting”, the Managing Director of the Company is the Chief Operating Decision Maker (CODM) and for the purposes of resource allocation and assessment of segment performance the business of the Company is segregated in the segments below:

- Technical Textiles business: includes nylon tyre cord fabric, belting fabric, coated fabric, laminated fabric, polyester tyre cord fabric and industrial yarns and its research and development

- Chemicals and Polymers business: includes refrigerant gases, chloromethane, pharmaceuticals, fluorochemicals & allied products, engineering plastics business and its research and development.

- Packaging Film Business includes polyester films.

Segment revenue, Results and Capital Employed include the respective amounts identifiable to each of the segments. Other unallocable expenditure includes expenses incurred on common services provided to the segments, which are not directly identifiable.

In addition to the significant accounting policies applicable to the business segments as set out in note 1 above, the accounting policies in relation to segment accounting are as under:

a) Segment revenue and expenses

Joint revenue and expenses of segments are allocated amongst them on a reasonable basis. All other segment revenue and expenses are directly attributable to the segments.

b) Segment assets and liabilities

Segment assets include all operating assets used by a segment and consist principally of operating cash, trade receivables, inventories and property, plant and equipment, net of allowances and provisions, which

are reported as direct offsets in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities and do not include deferred income taxes. While most of the assets / liabilities can be directly attributed to individual segments, the carrying amount of certain assets / liabilities pertaining to two or more segments are allocated to the segments on a reasonable basis.

4 OPERATING LEASE

The Company has entered into operating lease agreements for various premises taken for accommodation of Company''s officers / directors, various offices of the Company, lands & certain equipments. These arrangements are both cancellable and non-cancellable in nature and range between two to ninety nine years. The future minimum lease payments under non-cancellable operating leases are as under:

5 FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

6 Capital Management

The Company manages its capital to ensure that it will be able to continue as a going concern and provide reasonable return to the shareholders through maintaining reasonable balance between Debt and equity. The capital structure of the Company consists of net debt (borrowings net of cash and cash equivalents) and total equity of the Company. The Company is not subject to any externally imposed capital requirements. The Company’s management reviews the capital structure of the Company on a periodic basis. As part of review, the management considers the cost of capital and risk associated with each class of capital. The Company also evaluates its gearing measures like Debt Equity Ratio, Debt Service Coverage Ratio, Interest Service Coverage Ratio, Debt to EBIDTA Ratio to arrive at an appropriate level of debt and accordingly evolve its capital structure.

* Investments (Level 1 - Mutual Funds, Level 3 - Unquoted equity instruments)

** Other financial assets (Level 2 - Hedging Instruments)

*** Other Financial Liabilities (Level 2 - Hedging Instruments, Level 3 - Financial Guarantee contracts)

Level 1:

Quoted prices in the active market. This level of hierarchy includes financial assets that are measured by reference to quoted prices in the active market. This category consists of open ended mutual funds.

Level 2:

Valuation techniques with observable inputs. This level of hierarchy includes items measured using inputs other than quoted prices included within Level 1 that are observable for such items, either directly or indirectly. This level of hierarchy consists of over the counter (OTC) derivative contracts.

Level 3:

Valuation techniques with unobservable inputs. This level of hierarchy includes items measured using inputs that are not based on observable market data (unobservable inputs). Fair value determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instruments nor based on available market data. The main item in this category are unquoted equity instruments and financial guarantees contracts.

Sensitivity of Level 3 financial instruments are insignificant

The fair value of the financial instruments are determined at the amount that would be received to sell an asset in an orderly transaction between market participants. The following methods and assumptions were used to estimate the fair values:

Investments in mutual funds: Fair value is determined by reference to quotes from the financial institutions, i.e. net asset value (NAV) for investments in mutual funds declared by mutual fund house.

Derivative contracts: The Company has entered into various foreign currency contracts and interest rate swaps contracts to manage its exposure to fluctuations in foreign exchange rates and interest rate respectively. These financial exposures are managed in accordance with the Company''s risk management policies and procedures. Fair value of derivative financial instruments are determined using valuation techniques based on information derived from observable market data, i.e., mark to market values determined by the Authorized Dealers Banks.

Unquoted equity investments: Fair value is derived on the basis of income approach, in this approach the discounted cash flow method is used to capture the present value of the expected future economic benefits to be derived from the ownership of these investments.

credit risk and liquidity risk. Company policies and guidelines also cover areas such as cash management, investment of excess funds and the raising of short and long-term debt. Compliance with the policies and guidelines is managed by the Corporate Treasury function within the Company. Review of the financial risk is done on a monthly basis by the Managing Director and on a quarterly basis by the Board of Directors. The objective of financial risk management is to contain, where deemed appropriate, exposures on net basis to the various types of financial risks mentioned above in order to limit any negative impact on the Company’s results and financial position.

In accordance with its financial risk policies, the Company manages its market risk exposures by using specific type of financial instruments duly approved by the Board of Directors as and when deemed appropriate. It is the Company’s policy and practice neither to enter into derivative transactions for speculative purpose, nor for any purpose unrelated to the underlying business. The Board of Directors / Managing Director reviews and approves policies for managing each of the above risks.

7 Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, foreign currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk includes loans and borrowings, deposits, investments and derivative financial instruments. The Company enters into the derivative contracts as approved by the Board to manage its exposure to interest rate risk and foreign currency risk.

A. Foreign Currency Risk Management

Foreign currency risk also known as Exchange 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. Foreign currency risk in the Company is attributable to Company’s operating activities and financing activities.

In the operating activities, the Company’s exchange rate risk primarily arises when revenue / costs are generated in a currency that is different from the reporting currency (transaction risk). The Company manages the Net exposure on a rolling 12 month basis and hedges the exposures based on a duly approved policy by the Board. The information is monitored by the Audit committee and the Board of Directors on a quarterly basis. This foreign currency risk exposure of the Company are mainly in U.S. Dollar (USD) and Euro (EUR). The Company’s exposure to foreign currency changes for all other currencies is not material.

Foreign currency sensitivity analysis

The Company is mainly exposed to USD and EUR

The following table details the Company’s sensitivity to a 1% increase and decrease in the '' against the relevant foreign currency. The sensitivity analysis includes only outstanding foreign currency denominated monetary items as tabulated above and adjusts their translation at the period end for 1% change in foreign currency rates. A positive number below indicates an increase in profit before tax or vice-versa.

Foreign exchange derivative contracts

The Company uses derivative financial instruments exclusively for hedging financial risks that arise from its commercial business or financing activities. The Company’s Corporate Treasury team manages its foreign currency risk by hedging transactions that are expected to occur within of 12 to 15 months for hedges of forecasted sales, purchases and capital expenditures. When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure. For hedges of forecast transactions the derivatives cover the period of exposure from the point the cash flows of the transactions are forecasted up to the point of settlement of the resulting receivable or payable that is denominated in the foreign currency. All identified exposures are managed as per the policy duly approved by the Board of Directors.

* Sensitivity on the above derivative contracts in respect of foreign currency exposure is insignificant

B. Interest Rate Risk Management

Interest rate risk arises from movements in interest rates which could have effects on the Company’s net income or financial position. Changes in interest rates may cause variations in interest income and expenses resulting from interest-bearing assets and liabilities. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company''s long-term debt obligations with floating interest rates.

The Company manages its interest rate risk by having a agreed portfolio of fixed and variable rate loans and borrowings. The company enters into interest rate swaps, in which it agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed principal amount outstanding at the time of inception of the swap. Out of the total borrowings, the amount of fixed interest loan is Rs, 481 Crores and floating interest loan is Rs, 808 Crores (March 31, 2016: Fixed interest loan Rs, 734 Crores and Floating interest loan Rs, 758 Crores ; April 1, 2015: Fixed interest loan Rs, 512 Crores and Floating interest loan Rs, 798 Crores)

In case of increase in interest rate by above mentioned percentage, there would be a comparable impact on the profit before tax as mentioned above would be negative.

Interest Rate Swap Contracts

Under interest rate swap (IRS) contracts, the Company agrees to exchange the difference between fixed and floating rate interest amounts calculated on the agreed notional principal amounts. Such contracts enables the Company to mitigate the risk of changing interest rates.

* Sensitivity on the above IRS contracts in respect of interest rate exposure is insignificant Each of the above trades are in the nature of cash flow hedges and therefore hedge effective. The mark to market on these trades is therefore routed through Cash flow Hedge Reserve. The interest rate swap and the interest payments on the loan are paid simultaneously and are charged off to profit and loss.

8 Credit Risk Management

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. 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.

To manage trade receivables, the Company periodically assesses the financial reliability of customers, taking into account the financial conditions, economic trends, analysis of historical bad debts and aging of such receivables.

Credit risk from balances with banks and financial institutions is managed by the Company’s treasury department in accordance with the Company’s policy. Investments of surplus funds are made only with counter parties who meet the parameters specified in Investment Policy of the Company . The investment policy is reviewed by the Company’s Board of Directors on an annual basis and if required, the same may be updated during the year. The investment policy specifies the limits of investment in various categories of products so as the minimize the concentration of risks and therefore mitigate financial loss due to counter party’s potential failure.

Other than financial assets mentioned above, none of the Company’s financial assets are either impaired or past due, and there were no indications that defaults in payment obligations would occur

9 Liquidity Risk Management

Liquidity risk is the risk of non-availability of financial facilities available to the Company to meet its financial obligations. The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of money market instruments, bank overdrafts, bank loans, debentures and other types of facilities. The liquidity management is governed by the Board approved liquidity management policy. Any deviation from the policy has to be approved by the Treasury Management comprising of Managing Director, Chief Financial Officer and Treasury Head. The Company assesses the concentration of risk with respect to refinancing its debt, guarantee given and funding of its capital expenditure needs of the future. The Company manages its liquidity by holding appropriate volumes of liquid assets which are available to its disposal on T 1 basis and by maintaining open credit lines with banks / financial institutions.

* including Current Maturity of noncurrent borrowing ** includes financial guarantee contracts

10 FIRST TIME ADOPTION OF IND AS

These are the Company’s first financial statements prepared in accordance with Ind AS. The Company has prepared the opening balance sheet as per Ind AS as of April 1, 2015 (the transition date) by recognizing all assets and liabilities whose recognition is required by Ind AS, not recognizing items of assets or liabilities which are not permitted by Ind AS, by reclassifying items from previous GAAP to Ind AS as required under Ind AS, and applying Ind AS in measurement of recognized assets and liabilities. However, this principle is subject to the certain mandatory exceptions and certain optional exemptions availed by the Company. Applicable mandatory exceptions and optional exemptions are as under:

A Mandatory Exceptions:

1 Estimates

The estimates as at April 1, 2015 and as at March 31, 2016 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies) apart from the following items where application of Indian GAAP did not require estimation:

(i) Fair Value through other comprehensive Income(FVTOCI) - unquoted equity shares

(ii) Impairment of financial assets based on expected credit loss model

The estimates used by the Company to present these amounts are in accordance with the Ind AS which reflects conditions as at April 1, 2015, the date of transition to Ind AS and as at March 31, 2016.

2 Derecognition of financial assets:

The company has applied the de-recognition requirements in Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS.

3 Classification and measurement of financial instruments:

i. Financial Instruments: (Loan to employees and security deposits paid) :

Financial assets / liabilities like loan to employees and security deposits paid, has been classified and measured at mortised cost on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

ii. Financial Instruments: (Investment in Equity shares other than investment in subsidiaries):

The Company has designated investment in equity shares other than in subsidiaries held as at April 1, 2015 as fair value through Other Comprehensive Income.

iii. Impairment of financial assets: (Trade receivables and other financial assets)

The Company has applied the impairment requirements of Ind AS 109 retrospectively, however as permitted by Ind AS 101, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognized in order to compare it with the credit risk at the transition date.

B Optional Exemptions:

1 Deemed cost for property, plant and equipment and intangible assets

The Company has elected to continue with the carrying value of all of its intangibles assets recognized as on April 1, 2015 measured as per the previous GAAP and use that carrying value as its deemed cost as of transition date. In case of property, plant and equipment, the Company has elected to recognize it on fair value as on April 1, 2015 and use that as its deemed cost as of transition date.

2 Long Term Foreign Currency Monetary Items: (Long term foreign currency borrowings)

The Company has elected to continue policy adopted for accounting for exchange differences arising from translation of long-term foreign currency monetary items as described in Para D13 AA of Ind AS 101. Accordingly, Exchange differences pertaining to long term foreign currency loans obtained or re-financed on or before March 31, 2016 relating to acquisition of depreciable assets are adjusted to the carrying cost of the assets and depreciated over the balance useful life of the assets.

3 Arrangements containing a lease

Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. However, the Company has used Ind AS 101 exemption and assessed all arrangements based on conditions in place as at the date of transition.

4 Investment in subsidiaries:

The Company has elected this exemption and opted to continue with the carrying value of investment in subsidiaries as recognized in its Indian GAAP financials, as deemed cost at the date of transition.

5 Designate of previously recognized financial instrument

The Company has elected this exemption and opted to:

- Designate financial asset at FVTPL as per Ind AS 109 based on facts and circumstances that exist as on transition date;

- Designate an investment in equity shares as FVTOCI, as per Ind AS 109, based on facts and circumstances exist on transition date.

6 Business combinations:

Ind AS 103 Business Combinations has not been applied to acquisitions of subsidiaries, which are considered business under Ind AS that occurred before April 1, 2015. Use of this exemption means that the Indian GAAP carrying amounts of assets and liabilities, that are required to be recognized under Ind AS, is their deemed cost at the date of the acquisition. After the date of the acquisition, measurement is in accordance with respective Ind AS. The Company recognizes all assets acquired and liabilities assumed in a past business combination, except (i) certain financial assets and liabilities that were derecognized and that fall under the de recognition exception, and (ii) assets and liabilities that were not recognized in the acquirer’s consolidated balance sheet under its previous GAAP and that would not qualify for recognition under Ind AS in the individual balance sheet of the acquirer. Assets and liabilities that do not qualify for recognition under Ind AS are excluded from the opening Ind AS balance sheet. The Company did not recognize or exclude any previously recognized amounts as a result of Ind AS recognition requirements. The Company has tested the goodwill for impairment at the transition date based on the conditions as of the transition date.

11 Notes to first time adoption

(a) “The Company has elected to recognize its property, plant and equipment (PPE) on fair value as on April 1, 2015 and use that as its deemed cost as of transition date. As on the transition date such fair value adjustment amounting to Rs, 49.49 Crores is done in retained earnings in the opening balance sheet and corresponding changes in depreciation amounting to Rs, 18.36 Crores in financial year 2015-16 and gain of Rs, 1.61 Crores on disposal of such PPE has been adjusted in the statement of profit and loss.

Spares, other than insurance spares were classified as inventory under existing IGAAP. However under Ind-AS, spare parts are recognized in accordance with this Ind AS when they meet the definition of property, plant and equipment. Such stores and spares amounting to Rs, 33.93 Crores have been capitalized under Ind AS at the transition date. In relation to spares reclassified from stores and spares to Property, plant and equipment as on transition date, there is no consumption under Indian GAAP during FY 15-16. Under Ind AS for the year ended March 31, 2016, the Company has recorded Rs, 1.33 Crores as the depreciation on such spares in statement of profit or loss.

(b) Under previous GAAP, the leasehold land was considered as part of property, plant and equipment and treated as perpetual lease. Accordingly, in FY 2015-16 no amortization was charged. As per Ind AS-17 leasehold land of Rs, 95.50 Crores has now been classified as operating lease and the premium paid on leasehold land is amortized over the period of the lease which amounts to Rs, 1.00 crores in financial year 2015-16. The proportionate unamortized amount of Rs, 5.39 Crores up to the date of transition is adjusted against retained earnings in the opening balance sheet.

(c) Under previous GAAP, transaction costs incurred in connection with borrowings are amortized over the period of borrowings. Ind AS 109 requires transaction costs incurred towards origination of borrowings to be deducted from the carrying amount of borrowings on initial recognition. These costs are recognized in profit or loss over the tenure of the borrowings as part of interest expense using effective interest rate method. Further, as per previous GAAP such unamortized amount was disclosed as prepaid assets which as per Ind AS now are netted off with the related borrowings.

(d) Under previous GAAP in respect of defined benefit plan, actuarial gains and losses were recognized in profit or loss. Under Ind AS, the actuarial gains and losses forming part of re-measurement of the net defined benefit liability / asset is recognized in other comprehensive income. Consequently, the tax effect of the same has also been recognized in other comprehensive income under Ind AS instead of profit or loss. There is no impact on the total equity.

(e) Under previous GAAP, goodwill is amortized. Under Ind AS, goodwill is not amortized but to be tested for impairment. Accordingly, adjustment has been passed for reversal of amortization of Rs, 0.37 Crore booked under Indian GAAP for the year ended March 31, 2016.

(f) Under previous GAAP, deferred payment consideration payable in relation to a business combination was recorded at the contractual value. Under Ind AS such consideration is required to be measured at fair value. Difference between carrying amount of liability and fair value at the transition date is recorded in retained earnings. For the year ended on March 31, 2016, increase in interest cost was charged in the statement of profit and loss.

(g) Under previous GAAP, revenue from sale of goods was presented net of excise duty under revenue from operations. Whereas, under Ind AS, revenue from sale of goods includes excise duty. The corresponding excise duty expense of Rs, 305.55 Crores is presented separately on the face of the statement of profit and loss. The change does not affect total equity as on April 1, 2015 and March 31, 2016 and profit for the year ended March 31, 2016.

(h) Under previous GAAP, cash discount was shown under other expenses. However, under Ind AS, sale of goods is presented net of cash discount of Rs, 7.40 Crores. Thus sale of goods under Ind AS has decreased for the year ended March 31, 2016 with a corresponding decrease in other expenses. The change does not affect total equity as on April 1, 2015 and March 31, 2016 and profit for the year ended March 31, 2016.

(i) Under the previous GAAP, interest free lease security deposits (that are refundable in cash on completion of the lease term) are recorded at their transaction value. Under Ind AS, all financial assets are required to be recognized at fair value. Difference between the fair value and transaction value of the security deposits has been recognized as prepaid rent is amortized over the lease period on straight line basis. Notional interest income on such deposits is recognized over the lease period using effective interest method. There is no impact on retained earnings at the transition date. For the year ended March 31, 2016 the amortization of expense and interest income was taken to statement of profit and loss under the head other expenses and other income respectively.

(j) Under the previous GAAP, the loan given by the Company to its employees were carried at book value. However, under Ind AS, these loans are required to be measured initially at fair value on the date of transition and subsequently at amortized cost. Difference between the fair value and transaction value of such loan to employees has been recognized as prepaid employee benefit expense is amortized over the loan period on straight line basis. Notional interest income on such loans is recognized over the loan period using effective interest method. There is no impact on retained earnings at the transition date. For the year ended March 31, 2016 the amortization of such prepaid personnel expenditure and interest income was taken to statement of profit and loss under the head employee benefit expense and other income respectively.

(k) Under the previous GAAP, investment in mutual funds were classified as current investments based on the intended holding period and readability. Current investments were carried at lower of cost and net realizable value. Under Ind AS, these investments are required to be measured at fair value through profit & loss (FVTPL). The resulting fair value changes of these investments Rs, 1.56 Crores have been recognized in retained earnings as at the date of transition and subsequently Rs, 1.47 Crores in the profit and loss for the year ended March 31, 2016.

(l) Under previous GAAP, financial guarantees were not recognized in the balance sheet. The guarantee commission charged by the Company was recorded as income on accrual basis. Under Ind AS, financial guarantee contracts are accounted as financial liabilities and measured initially at fair value and subsequently as given in note 1.B.20. Accordingly, as at April 1, 2015 a financial liability has been recognized with a corresponding debit to the retained earnings and differential impact for the year ended March 31, 2016 was taken in statement of profit and loss.

(m) Under previous GAAP, there was no concept of other comprehensive income. Under Ind AS, specified items of income, expense, gains, or losses are required to be presented in other comprehensive income.

(n) The transition from Indian GAAP to Ind-AS had no significant impact on cash flows generated by the Company.

(o) Under Ind AS, effective portion of fair value gains and losses of hedging instruments designated in a cash flow hedge relationship is recognized in other comprehensive income and taken to FVTOCI reserve in equity, whereas under previous GAAP there was no such concept of other comprehensive income and all such gains and losses were directly recognized in cash flow hedge reserves in other equity. Consequently, the tax effect of the same has also been recognized in other comprehensive income under FVTOCI reserve.

(p) Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP. In addition, the various transitional adjustments lead to temporary differences. According to the accounting policies, the company has to account for such differences. Deferred tax adjustments are recognized in correlation to the underlying transaction either in retained earnings or a separate component of equity. Such adjustments amounting to Rs, 51.83 Crores as at March 31, 2016 and Rs, 58.12 Crores as at April 1, 2015.

(q) Under previous GAAP, MAT credit forms part of non-current assets which as per the requirements of Ind AS 12 has been shown as a part of deferred tax liabilities (net). (As at March 31, 2016: Rs, 95.43 Crores, As at April 1, 2015: Rs, 76.16 Crores)

(r) Grouping of Mark to Market (MTM) of interest rate swaps designated in hedge relationship through Other Comprehensive Income. (As at March 31, 2016: Rs, 1.70 Crores, As at April 1, 2015: Rs, 1.60 Crores)

(c) The Company has elected to continue policy adopted for accounting for exchange differences arising from translation of long-term foreign currency monetary items as described in Para D13 AA of Ind AS 101. Accordingly, exchange difference gain of Rs, 19.68 Crores arising on all long term monetary items financed or re-financed on or before March 31, 2016 relating to acquisition of depreciable assets are deducted from the cost of such assets/capital work in progress and will be depreciated over the balance useful life of assets. The unamortized portion carried forward as at March 31, 2017 is Rs, 81.53 Crores.

(e) The Company has established a comprehensive system of maintenance of information and documents as required by transfer pricing legislation under section 92D for its international transactions as well as specified domestic transactions. Based on the transfer pricing regulations/policy, the transfer pricing study for the year ended March 31, 2017 is to be conducted on or before due date of the filing of return and the company will further update above information and records based on the same and expects these to be in existence latest by that date. Management believes that all the above transactions are at arm’s length price and the aforesaid legislations will not have impact on the financial statement, particularly on the amount of tax expense and provision for taxation.

(f) During the financial year 2016-17, the Company has incurred Rs, 7.60 Crores (previous Year - Rs, 8.75 Crores), being the amount required to be spent on corporate social responsibility activities under section 135 of the Companies Act 2013.

(g) Details of Specified Bank Notes (SBN) held and transacted during the period from November 8, 2016 to December 30, 2016


Mar 31, 2016

1 : Out of 4,054,376 number of issued equity shares of Rs. 10 each, calls are not made on 442,836 number of shares.

(2) Rights attached to equity shares :

(3) Right to receive dividend as may be approved by the Board / Annual General Meeting.

(4) The equity shares are not repayable except in the case of a buy back, reduction of capital or winding up in terms of the provision of the Companies Act, 2013.

(5) Every member of the Company holding equity shares has a right to attend the General Meeting of the Company and has a right to speak and on a show of hands, has one vote if he is present in person and on a poll shall have the right to vote in proportion to his share of the paid-up capital of the Company.

(6) Terms of redemption of 11% cumulative redeemable preference share of Rs. 100 :

In the year ended 31st March, 2008 the Company had re-negotiated the coupon rate from 9% to 2% with effect from 18th Sept, 2002 to 31st March, 2005 and at 6% from 1st April, 2005 onwards and the repayment terms extended to 12 years repayable @ Rs. 20 per year (face value Rs.100 each) at the end of 8th, 9th, 10th, 11th and 12th year or such earlier years as the Company may deem fit. Till the completion of 12th year, the Company repaid Rs. 950 lakhs and re-negotiated the redemption terms of the Preference Shares . As per the revised terms, balance of Rs 50 lakhs was to be redeemed equally over the period of two years on 18th June, 2015 and 18th June, 2016 with an enhanced coupon rate of 11% p.a. effective 18th June, 2014 till its redemption. As per the revised terms Company repaid Rs 25 Lakh on 18th June 2015 and will redeem balance Rs 25 lakhs on 18th June, 2016. Also pursuant to section 55 of the Companies Act, 2013, the Company has transferred Rs. 25 lakhs from current year profits (Rs. 150 lakhs in previous year) to Capital Redemption Reserve.

Considering the improved financial results the board has decided to accrue current years dividend (18th June 2015 to 31st March 2016 amounting Rs 2.16 lakhs) on 11% cumulative redeemable preference shares and pay arrears on 11% cumulative redeemable preference shares @ 6% for the period from 1st April, 2011 to 17th June, 2014 and @ 11% from 18th June 2014 to 17th June 2015 aggregating Rs. 87.75 lakhs.(Previous year : for the period 1st April, 2007 to 31st March 2011 @ 6% aggregating Rs. 230.56 Lakhs). After considering the effect of dividend, as stated above, arrears of cumulative dividends on the 11% Cumulative Redeemable preference Shares, considering the revised coupon rates is Rs. Nil lakhs (as at 31.03.2015 : Rs. 86.57 lakhs)

7. Additional information to the financial statements :

(a) Contingent liabilities not provided for :

(i) The Company had received an Order dated 6th September, 2004 from the Employees Provident Fund Organization raising a demand of Rs. 161.36 lakhs including interest of Rs. 46.73 lakhs for default in making payment of Employees Provident Fund and allied dues for the period April, 1986 to February, 2003. The Company has been making contributions to the ''SNL Officers Provident Fund Trust'' and ''SNL Employee''s Provident Fund Trust'', being Trusts formed by the Company in earlier years; these Trusts have net assets of Rs. 139.26 lakhs and Rs. 78.79 lakhs respectively as at 31st March, 2015 as reflected in their audited balance sheets. As per the order, the existence of the said Trusts and the act of switching over from Employees trust to the Officers trust on salary exceeding the statutory limit fixed by the Employees Provident Fund and Miscellaneous Act,1952, have been considered volatize of the Act. The authorities had attached one of the Company''s bank accounts and had recovered an amount of Rs. 2.75 lakhs in an earlier year. The Company has contested the above demand and on a writ petition filed by the Company in the High Court of Jharkhand, Ranchi, the High Court has directed the authorities not to take coercive steps till the disposal of the petition. The Company denies all the allegations made against it since the Company had made the necessary applications to grant exemption to the Trusts which was neither granted nor rejected in spite of several reminders from time to time. In view of the facts of the case, the Company does not expect any liability in this regard.

(b) Disclosures under the Micro, Small and Medium Enterprises Development Act, 2006 :

(i) An amount of 3.70 lacs and Rs. Nil was due and outstanding to suppliers as at the end of the accounting year on account of Principal and Interest respectively.

(ii) No interest was paid during the year in terms of section 16 of the Micro, Small and Medium Enterprises Development Act, 2006 and no amount was paid to the supplier beyond the appointed day.

(iii) No amount of interest is due and payable for the period of delay in making payment but without adding the interest specified under the Micro, Small and Medium Enterprises Development Act, 2006

(iv) No interest was accrued and unpaid at the end of the accounting year.

(v) No further interest remaining due and payable even in the succeeding years for the purpose of disallowance of a deductible expenditure under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006

The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company.

(8) Related party disclosures:

(i) Names of related parties and nature of relationship where control exists:

Holding Company : - NRB Bearings Limited

Fellow Subsidiary : - NRB Bearings (Thailand) Limited

Company over which relatives of KMP are able to exercise

significant influence : - NRB Industrial Bearings Limited

Key Management Personnel : - Ms. H. S. Zaveri

- Mr. S. C. Rangani

The estimate of future salary escalations considered, takes into account the inflation, seniority, promotion, increments and other relevant factors.

The major categories of plan assets as a percentage of the fair value of total plan assets are as follows:

9. Funds maintained with LIC 100% 100%

The above information is certified by the actuary.

10. Notes:

. Compensated absences recognized in the statement of profit and loss for the current year, under the employee cost in note 21, is Rs. 13.09 lakhs and for previous year was Rs. 12.27 lakhs.

11. Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.


Mar 31, 2016

1 : Out of 4,054,376 number of issued equity shares of Rs. 10 each, calls are not made on 442,836 number of shares.

(2) Rights attached to equity shares :

(3) Right to receive dividend as may be approved by the Board / Annual General Meeting.

(4) The equity shares are not repayable except in the case of a buy back, reduction of capital or winding up in terms of the provision of the Companies Act, 2013.

(5) Every member of the Company holding equity shares has a right to attend the General Meeting of the Company and has a right to speak and on a show of hands, has one vote if he is present in person and on a poll shall have the right to vote in proportion to his share of the paid-up capital of the Company.

(6) Terms of redemption of 11% cumulative redeemable preference share of Rs. 100 :

In the year ended 31st March, 2008 the Company had re-negotiated the coupon rate from 9% to 2% with effect from 18th Sept, 2002 to 31st March, 2005 and at 6% from 1st April, 2005 onwards and the repayment terms extended to 12 years repayable @ Rs. 20 per year (face value Rs.100 each) at the end of 8th, 9th, 10th, 11th and 12th year or such earlier years as the Company may deem fit. Till the completion of 12th year, the Company repaid Rs. 950 lakhs and re-negotiated the redemption terms of the Preference Shares . As per the revised terms, balance of Rs 50 lakhs was to be redeemed equally over the period of two years on 18th June, 2015 and 18th June, 2016 with an enhanced coupon rate of 11% p.a. effective 18th June, 2014 till its redemption. As per the revised terms Company repaid Rs 25 Lakh on 18th June 2015 and will redeem balance Rs 25 lakhs on 18th June, 2016. Also pursuant to section 55 of the Companies Act, 2013, the Company has transferred Rs. 25 lakhs from current year profits (Rs. 150 lakhs in previous year) to Capital Redemption Reserve.

Considering the improved financial results the board has decided to accrue current years dividend (18th June 2015 to 31st March 2016 amounting Rs 2.16 lakhs) on 11% cumulative redeemable preference shares and pay arrears on 11% cumulative redeemable preference shares @ 6% for the period from 1st April, 2011 to 17th June, 2014 and @ 11% from 18th June 2014 to 17th June 2015 aggregating Rs. 87.75 lakhs.(Previous year : for the period 1st April, 2007 to 31st March 2011 @ 6% aggregating Rs. 230.56 Lakhs). After considering the effect of dividend, as stated above, arrears of cumulative dividends on the 11% Cumulative Redeemable preference Shares, considering the revised coupon rates is Rs. Nil lakhs (as at 31.03.2015 : Rs. 86.57 lakhs)

7. Additional information to the financial statements :

(a) Contingent liabilities not provided for :

(i) The Company had received an Order dated 6th September, 2004 from the Employees Provident Fund Organization raising a demand of Rs. 161.36 lakhs including interest of Rs. 46.73 lakhs for default in making payment of Employees Provident Fund and allied dues for the period April, 1986 to February, 2003. The Company has been making contributions to the ''SNL Officers Provident Fund Trust'' and ''SNL Employee''s Provident Fund Trust'', being Trusts formed by the Company in earlier years; these Trusts have net assets of Rs. 139.26 lakhs and Rs. 78.79 lakhs respectively as at 31st March, 2015 as reflected in their audited balance sheets. As per the order, the existence of the said Trusts and the act of switching over from Employees trust to the Officers trust on salary exceeding the statutory limit fixed by the Employees Provident Fund and Miscellaneous Act,1952, have been considered volatize of the Act. The authorities had attached one of the Company''s bank accounts and had recovered an amount of Rs. 2.75 lakhs in an earlier year. The Company has contested the above demand and on a writ petition filed by the Company in the High Court of Jharkhand, Ranchi, the High Court has directed the authorities not to take coercive steps till the disposal of the petition. The Company denies all the allegations made against it since the Company had made the necessary applications to grant exemption to the Trusts which was neither granted nor rejected in spite of several reminders from time to time. In view of the facts of the case, the Company does not expect any liability in this regard.

(b) Disclosures under the Micro, Small and Medium Enterprises Development Act, 2006 :

(i) An amount of 3.70 lacs and Rs. Nil was due and outstanding to suppliers as at the end of the accounting year on account of Principal and Interest respectively.

(ii) No interest was paid during the year in terms of section 16 of the Micro, Small and Medium Enterprises Development Act, 2006 and no amount was paid to the supplier beyond the appointed day.

(iii) No amount of interest is due and payable for the period of delay in making payment but without adding the interest specified under the Micro, Small and Medium Enterprises Development Act, 2006

(iv) No interest was accrued and unpaid at the end of the accounting year.

(v) No further interest remaining due and payable even in the succeeding years for the purpose of disallowance of a deductible expenditure under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006

The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company.

(8) Related party disclosures:

(i) Names of related parties and nature of relationship where control exists:

Holding Company : - NRB Bearings Limited

Fellow Subsidiary : - NRB Bearings (Thailand) Limited

Company over which relatives of KMP are able to exercise

significant influence : - NRB Industrial Bearings Limited

Key Management Personnel : - Ms. H. S. Zaveri

- Mr. S. C. Rangani

The estimate of future salary escalations considered, takes into account the inflation, seniority, promotion, increments and other relevant factors.

The major categories of plan assets as a percentage of the fair value of total plan assets are as follows:

9. Funds maintained with LIC 100% 100%

The above information is certified by the actuary.

10. Notes:

. Compensated absences recognized in the statement of profit and loss for the current year, under the employee cost in note 21, is Rs. 13.09 lakhs and for previous year was Rs. 12.27 lakhs.

11. Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.


Mar 31, 2015

1) Rights attached to equity shares :

(i) Right to receive dividend as may be approved by the Board / Annual General Meeting.

(ii) The equity shares are not repayable except in the case of a buy back, reduction of capital or winding up in terms of the provision of the Companies Act, 2013.

(iii) Every member of the Company holding equity shares has a right to attend the General Meeting of the Company and has a right to speak and on a show of hands, has one vote if he is present in person and on a poll shall have the right to vote in proportion to his share of the paid-up capital of the Company.

2) Terms of redemption of 11% cumulative redeemable preference share of Rs. 100:

In the year ended 31st March, 2008 the Company had re-negotiated the coupon rate from 9% to 2% with effect from 18th Sept, 2002 to 31st March, 2005 and at 6% from 1st April, 2005 onwards and the repayment terms extended to 12 years repayable @ Rs. 20 per year (face value Rs.100 each) at the end of 8th, 9th, 10th, 11th and 12th year or such earlier years as the Company may deem fit. Till the completion of 12th year, the Company repaid Rs. 950 lakhs and re-negotiated the redemption terms of the Preference Shares . As per the revised terms, balance of Rs 50 lakhs will be redeemed equally over the period of two years on 18th June, 2015 and 18th June, 2016 with an enhanced coupon rate of 11% p.a. effective 18th June, 2014 till its redemption. Also pursuant to section 55 of the Companies Act, 2013, the Company has transferred Rs. 150 lakhs from current year profits (Rs. 200 lakhs in previous year) to Capital Redemption Reserve.

Considering the improved financial results the board has decided to pay dividend in arrears on 11% cumulative redeemable preference shares @ 6% for the period from 1st April, 2007 to 31st March, 2011 aggregating Rs. 230.56 lakhs.(Previous year : for the period 1st April, 2006 to 31st March 2007 @ 6% aggregating Rs. 60.00 Lakhs). After considering the effect of dividend , as stated above, arrears of cumulative dividends on the 11% Cumulative Redeemable preference Shares, considering the revised coupon rates is Rs. 86.57 lakhs (as at 31.03.2014 : Rs. 310.25 lakhs)

3. Additional information to the financial statements:

(a) Contingent liabilities not provided for :

The Company had received an Order dated 6th September, 2004 from the Employees Provident Fund Organisation raising a demand of Rs. 161.36 lakhs including interest of Rs. 46.73 lakhs for default in making payment of Employees Provident Fund and allied dues for the period April, 1986 to February, 2003. The Company has been making contributions to the ''SNL Officers Provident Fund Trust'' and ''SNL Employee''s Provident Fund Trust'', being Trusts formed by the Company in earlier years; these Trusts have net assets of Rs. 122.20 lakhs and Rs. 69.64 lakhs respectively as at 31st March, 2014 as reflected in their audited balance sheets. As per the order, the existence of the said Trusts and the act of switching over from Employees trust to the Officers trust on salary exceeding the statutory limit fixed by the Employees Provident Fund and Miscellaneous Act,1952, have been considered violative of the Act. The authorities had attached one of the Company''s bank accounts and had recovered an amount of Rs. 2.75 lakhs in an earlier year. The Company has contested the above demand and on a writ petition filed by the Company in the High Court of Jharkhand, Ranchi, the High Court has directed the authorities not to take coercive steps till the disposal of the petition. The Company denies all the allegations made against it since the Company had made the necessary applications to grant exemption to the Trusts which was neither granted nor rejected in spite of several reminders from time to time. In view of the facts of the case, the Company does not expect any liability in this regard.

(b) There are no amounts due to the suppliers covered under Micro, Small and Medium Enterprises Development Act, 2006; this information takes into account only those suppliers who have responded to the enquiries made by the Company for this purpose. The auditors have relied on the representation made by the management.

(c) Related party disclosures:

(i) Names of related parties and nature of relationship where control exists:

Holding Company : - NRB Bearings Limited

Fellow Subsidiary : - NRB Bearings (Thailand) Limited

Company over which relatives of KMP are able to exercise

significant influence : - NRB Industrial Bearings Limited

Key Management Personnel : - Ms. H. S. Zaveri

- Mr. S. C. Rangani

4.Notes:

a. The company''s best estimate of contributions expected to be paid to the plan during the annual period beginning after 31st March, 2015 is Rs. 17.12 lakhs and for previous year was Rs. 8.37 lakhs.

b. Compensated absences recognized in the statement of profit and loss for the current year, under the employee cost in note 22, is Rs. 12.27 lakhs and for previous year was Rs. 2.63 lakhs.

5) Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.


Mar 31, 2014

1. Contingent liabilities not provided for

a. Claims against the Company not acknowledged as debts:

As at As at March 31, 2014 March 31, 2013 (Rs.lakhs) (Rs.lakhs)

Excise duty, customs duty and service tax*@ 6182.32 6290.11

Sales Tax and entry tax (refer note ''b'' below)**@ 9615.65 9602.63

Income Tax**** 676.63 778.79

Stamp Duty***** 2881.55 2881.55

Others *** 940.73 576.39

* Amount deposited Rs. 455.85 lakhs (Previous year - Rs. 448.69 lakhs)

** Amount deposited Rs. 16.60 lakhs (Previous Year - Rs. 9.75 lakhs)

*** Amount deposited Rs. 8.00 lakhs (Previous Year – Rs. 8.00 lakhs)

**** Amount deposited Rs. 162.41 lakhs (Previous year – Rs. 501.65 lakhs)

***** In the matter of acquisition of the Tyrecord Division at Malanpur from Ceat Limited the Collector of Stamps, Bhind (Madhya Pradesh) has by his order dated 07.11.2001 assessed the value of the subject matter of the Deed of Conveyance dated 13.06.1996 at Rs. 30300 lakhs and levied a stamp duty of Rs. 2372.50 lakhs and imposed a penalty of Rs. 509.05 lakhs. The said demand was challenged before the High Court of Madhya Pradesh Bench at Gwalior. The High Court accepted the case of the Company that the subject matter of the Deed of Conveyance dated 13.06.1996 is only the superstructures valued at Rs. 2776.18 lakhs and not the entire undertaking valued at Rs. 30300 lakhs as claimed by the State. Consequently, the High Court of Madhya Pradesh quashed the order and demands issued by the Collector of Stamps, Bhind (Madhya Pradesh) and allowed the writ petition by an order dated 29 November 2004. Against the said order, the State of Madhya Pradesh preferred a Special Leave Petition before the Hon''ble Supreme Court which the State of Madhya Pradesh has withdrawn to enable it to approach the Hon''ble High Court of Madhya Pradesh at Gwalior in view of the change in law in the State of Madhya Pradesh relating to Letters Patent Appeal.

@ As per Business Transfer Agreement with KAMA Holdings Limited, the liabilities of Rs. 2064.30 lakhs (Previous Year - Rs. 2064.30 lakhs) and Rs. 38.00 lakhs (Previous Year - Rs. 38.00 lakhs) respectively towards Excise Duty and Sales tax are covered under Representations and Warranties.

All the above matters are subject to legal proceedings in the ordinary course of business. In the opinion of the management, the legal proceedings, when ultimately concluded, will not have a material effect on the results of the operations or financial position of the Company.

b. The Company had received demand notices from the Commercial Tax Department, Government of Madhya Pradesh ("State Government") for payment of Central Sales Tax (CST), Value Added Tax (VAT) and Entry Tax aggregating to Rs. 9491 lakhs (including interest and penalty) for the period from 2007 to 2013 in respect of sales from its manufacturing facility in Special Economic Zone (SEZ) in Madhya Pradesh to the Domestic Tariff Area (DTA).

In terms of the Policy of the Government of Madhya Pradesh and Madhya Pradesh SEZ Act, 2003, the Unit was exempt from local state taxes and levies. The Company has paid Additional Countervailing Duty (ACVD), to counter balance CST/ VAT, aggregating to Rs. 4831 lakhs for the period from 2007 to 2013 on sales from the SEZ to the DTA under the Customs laws pursuant to the Special Economic Zone Act 2005, MP SEZ Act, 2003 and the Policy of Centre and Madhya Pradesh State. The Company had filed a writ petition before the Indore Bench of the Hon''ble High Court of Madhya Pradesh ("Court") against the said demands.

The Company contended that while State is demanding local taxes, the Centre in its reply has stated that ACVD is payable and therefore this amounts to double taxation.

The Court has directed the State Government not to take any coercive steps for recovery of demand.

The matter is sub judice and is listed for further proceedings on 12 May 2014. The Management of the Company, based on the facts of the case and opinion received by the Company from legal experts, is confdent of getting a relief in the matter from the Court and, accordingly, has not made any provision for the said disputed demands.

c. Liability on account of Bank Guarantees Rs. 445.74 lakhs (Previous Year – Rs. 823.82 lakhs)

e. Guarantees given to banks for repayment of financial facilities availed by others – Rs. 250.00 lakhs (Previous Year – Rs. 250.00 lakhs). Outstanding amount as at the year-end is Rs. 99.99 lakhs (Previous Year – Rs. 66.69 lakhs).

f. The Company has been served with show cause notices regarding certain transactions as to why additional customs/excise duty amounting to Rs. 369.15 lakhs (Previous year - Rs. 266.79 lakhs) should not be levied. The Company has been advised that the contention of the department is not tenable and hence the show cause notice may not be sustainable.

2. Capital and other commitments

The estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) amounts to Rs. 5283.16 lakhs (Previous Year - Rs. 16989.76 lakhs).

Further, the Company is to make the following investments:

i) Capital expenditure projects for Packaging Films Business in South Africa and Thailand – Rs. Nil (Previous Year – USD 33.06 million i.e. equivalent to Rs. 17944.97 lakhs).

ii) SRF Holiday Home Limited – Rs. 72.50 lakhs (Previous Year – Rs. 120.00 lakhs)

The Company has other commitments, for purchase/sales orders which are issued after considering requirements per operating cycle for purchase/sale of goods and services, employee benefits including union agreements in normal course of business. The Company does not have any other long term commitments or material non-cancellable contractual commitments/contracts, which may have a material impact on the financial statements.

3. Managerial remuneration

As there is a global contribution to gratuity fund, the amount applicable to an individual employee is not ascertainable and accordingly, contribution to gratuity fund in respect of directors has not been considered in the above computation. Further, the liability on account of compensated absences in respect of directors has not been considered above, since the provision is based on an actuarial basis for the Company as a whole.

4. Employee benefits

The Company has classifed various benefits provided to employees as under: i) Defined contribution plans

a) Superannuation fund

b) Provident fund administered through Regional Provident Fund Commissioner

c) Employees'' State Insurance Corporation

The expenses incurred on account of the above benefits have been included in Note 25 "Employee benefits Expenses" under the head "Contribution to provident and other funds"

ii) Defined benefit plans a) Gratuity

b) Compensated absences – earned leaves

c) Provident fund for certain category of employees administered through a recognised provident fund trust

The Company''s best estimate of the contribution expected to be paid in the next year is Rs. 474.37 lakhs (Previous Year – Rs. 583.13 lakhs) for gratuity and Rs. 344.93 lakhs (Previous Year - Rs. 380.34 lakhs) for leave encashment.

Long Term Retention Pay

The Company has a Long Term Retention Pay Plan. The plan covers employees selected on the basis of their current band and their long term value to the Company. The incentive is payable in three years which commenced from financial year 2010-11 subject to achievement of certain performance ratings. Based on actuarial valuation, the Company has accrued Rs. 212.79 lakhs (Previous Year – Rs. 244.71 lakhs) towards this plan till 31 March 2014.

Superannuation - Defined Contribution Plan where contributions are made to a Trust which in turn contributes to ICICI Prudential Life Insurance Co. Limited

Apart from being covered under the Gratuity Plan described above, the employees of the Company also participate in a Defined contribution superannuation plan maintained by the Company. The Company has no further obligations under the plan except making annual contributions based on a specified percentage of each covered employee''s salary. From 1 November 2006, the Company provided an option to the employees to receive the said benefit as cash compensation along with salary in lieu of the superannuation benefit. Thus, no contribution is required to be made for the category of employees who opted to receive the benefit in cash.

Provident Fund

In addition to the above benefits, all employees are entitled to Provident Fund benefits as per the law. For certain category of employees the Company administers the benefits through a recognised Provident fund trust. For other employees contributions are made to the regional Provident Fund Commissioners as per law. The Government mandates the annual yield to be provided to the employees on their corpus. This plan is considered as a Defined Contribution Plan. For the frst category of employees (covered by the Trust), the Company has an obligation to make good the shortfall, if any, between the yield on the investments of the trust and the yield mandated by the Government and these are considered as Defined benefit Plans accounted for on the basis of an actuarial valuation. The details of the valuation are as below:

5. Segment reporting

A. Business segments

Based on the guiding principles laid down in Accounting Standard (AS) - 17 "Segment Reporting", the Company''s business segments include:

- Technical Textiles business: includes nylon tyre cord fabric, belting fabric, coated fabric, laminated fabric, polyester tyre cord fabric and industrial yarns and its research and development.

- Chemicals and Polymers business: includes refrigerant gases, chloromethanes, pharmaceuticals, certified Emissions Reductions & Allied products, Engineering Plastics business and its research and development.

- Packaging Film Business includes Polyester Films.

Segment revenue, Results and Capital Employed include the respective amounts identifable to each of the segments. Other unallocable expenditure includes expenses incurred on common services provided to the segments, which are not directly identifable.

In addition to the significant accounting policies applicable to the business segments as set out in note 1 above, the accounting policies in relation to segment accounting are as under:

a) Segment revenue and expenses

Joint revenue and expenses of segments are allocated amongst them on a reasonable basis. All other segment revenue and expenses are directly attributable to the segments.

b) Segment assets and liabilities

Segment assets include all operating assets used by a segment and consist principally of operating cash, debtors, inventories and fixed assets, net of allowances and provisions, which are reported as direct offsets in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities and do not include deferred income taxes. While most of the assets/liabilities can be directly attributed to individual segments, the carrying amount of certain assets/liabilities pertaining to two or more segments are allocated to the segments on a reasonable basis.

6. Foreign currency exposure

SRF has three diverse businesses with transactions both in the nature of imports and exports. This provides a natural hedge against the exchange rate fuctuations. As per the board mandated policy, hedging is done the basis of net exposure. Further, with respect to volatility in interest rates, certain hedging transactions are entered into by the Company. Various kind of instruments are used for hedging which are mandated as per regulatory requirements and board guidelines.

7. In the previous year, pursuant to the adoption of Guidance Note on Accounting for Self-Generated certified Emission Reductions (CER) effective 1 April 2012, the stock of CER as on 1 April 2012 has been recognised at cost amounting to Rs. 135.22 lakhs, net of tax of Rs. 43.87 lakhs, by adjusting ''Surplus in statement of Profit and loss'' by Rs. 91.35 lakhs.

8. The Company had opted to apply the provisions under paragraph 46A of Accounting Standard (AS) - 11 "The Effects of Changes in Foreign Exchange Rates" with effect from 1 April 2013. Accordingly, exchange difference of Rs. 4872.23 lakhs, arising on all long term monetary items relating to acquisition of depreciable assets are added to the cost of Fixed Assets/Capital Work in Progress and will be depreciated over the balance useful life of the assets. The unamortised portion carried forward as at 31 March 2014 is Rs. 4514.50 lakhs. As a result of such change, the net Profit after tax for the year is higher by Rs. 2297.53 lakhs.

9. The Company has established a comprehensive system of maintenance of information and documents as required by transfer pricing legislation under section 92D for its international transactions as well as specified domestic transactions. Based on the transfer pricing regulations/policy, the transfer pricing study for the year ended 31 March 2014 is to be conducted on or before due date of the fling of return and the Company will further update above information and records based on the same and expects these to be in existence latest by that date. Management believes that all the above transactions are at arm''s length price and the aforesaid legislations will not have impact on the financial statement, particularly on the amount of tax expense and provision for taxation.

10. Previous year''s fgures have been regrouped/reclassified, wherever necessary, to correspond with the current year''s classification/ disclosure.


Mar 31, 2013

1 Corporate information:

SNL Bearings Limited, established in 1983, is engaged in the manufacture and marketing of antifriction bearing products. The holding company NRB Bearings acquired the company on June 01, 2000.

2 Additional information to the fnancial statements:

(a) Contingent liabilities not provided for :

(i) The Company had received an Order dated 6th September, 2004 from the Employees Provident Fund Organisation raising a demand of Rs. 161.36 lakhs including interest of Rs. 46.73 lakhs for default in making payment of Employees Provident Fund and allied dues for the period April, 1986 to February, 2003. The Company has been making contributions to the ''SNL Offcers Provident Fund Trust'' and ''SNL Employee''s Provident Fund Trust'', being Trusts formed by the Company in earlier years; these Trusts have net assets of Rs. 91.68 lakhs and Rs. 55.30 lakhs respectively as at 31st March, 2012 as refected in their audited balance sheets. As per the order, the existence of the said Trusts and the act of switching over from Employees trust to the Offcers trust on salary exceeding the statutory limit fxed by the Employees Provident Fund and Miscellaneous Act,1952, have been considered violative of the Act. The authorities had attached one of the company''s bank accounts and had recovered an amount of Rs. 2.75 lakhs in an earlier year. The company has contested the above demand and on a writ petition fled by the company in the High Court of Jharkhand, Ranchi, the High Court has directed the authorities not to take coercive steps till the disposal of the petition. The Company denies all the allegations made against it since the company had made the necessary applications to grant exemption to the Trusts which was neither granted nor rejected in spite of several reminders from time to time. In view of the facts of the case, the company does not expect any liability in this regard.

(ii) Provident fund and other matters in respect of workers: Nil, (as at 31.03.2012 : Rs. 5.05 lakhs).

(iii) Disputed penalty claim by the Central Excise and Service Tax Department vide order C.V.No. (65) (12) 79/SNL/Denovo/Adjn/Ran/11 dated January 8, 2013 under section 78 of the Finance Act, 1994 amounting to Rs. 1,170,248/- and an addtional penality of Rs 2,000/- for non-compliance with rules 4 & 7 of the Service Tax Rules, 1994, in respect of failure to pay service tax on lease rent received for leasing of equipments during the fnancial periods ending March 31, 2003, 2004, 2005 and 2006. Further, interest is also levied on the above dues by the said depatment in terms of section 75 of the Finance Act, 1994. The Company has, in earlier years, paid the service tax dues amounting to Rs.1,170,248/- against show cause notice C.V.No. V(4)65/ADJ/RAN/06/3208 dated May 22, 2007 in respect of the said service tax liability on lease rent received. Further, during the year the Company has paid Rs.294,562/- in terms of proviso to section 78 under protest in respect of the penalty claim as discussed above. The Company is of the view that the order will be settled in their favor and accordingly has not made any provison in the books of account for the year ended March 31, 2013.

(b) There are no amounts due to the suppliers covered under Micro, Small and Medium Enterprises Development Act, 2006; this information takes into account only those suppliers who have responded to the enquiries made by the Company for this purpose. The auditors have relied on the representation made by the management.

(c) Related party disclosures:

(i) Names of related parties and nature of relationship where control exists: Holding Company: - NRB Bearings Limited

Fellow Subsidiary : - NRB Bearings (Thailand) Limited

Group Company : - NRB Industrial Bearings Limited

Key Management Personnel : - Ms. H. S. Zaveri

- Ms. A. A. Gowariker

- Mr. S. C. Rangani

- M r. J. S. Maini

- M r. V. S. Iyer

VII Notes:

a. The company''s best estimate of contributions expected to be paid to the plan during the annual period beginning after 31st March, 2013 is Rs. Nil.

b. Compensated absences recognized in the statement of proft and loss for the current year, under the employee cost in note 24, is Rs. 4.91 lakhs and for previous year was Rs. 2.84 lakhs.

3 Previous year''s fgures have been regrouped / reclassifed wherever necessary to correspond with the current year''s classifcation / disclosure.


Mar 31, 2012

1. Contingent Liabilities Not Provided For

a) Claims against the Company not acknowledged as debts:

As at March 31, 2012 As at March 31, 2011 (Rs lakhs) (Rs lakhs)

Excise duty, customs duty and service tax* @ 5924.08 5865.44

Sales Tax** @ 1225.28 925.42

Income Tax 356.82 976.37

Stamp Duty**** 2881.55 2881.55

Others *** 474.33 94.43

* Amount deposited Rs 315.92 lakhs (Previous year - Rs 315.92 lakhs)

** Amount deposited Rs 7.16 lakhs (Previous Year - Rs 7.16 lakhs)

*** Amount deposited Rs 8.00 lakhs (Previous Year – Rs 8.00 lakhs)

**** In the matter of acquisition of the Tyrecord Division at Malanpur from Ceat Limited the Collector of Stamps, Bhind (Madhya Pradesh) has by his order dated 07.11.2001 assessed the value of the subject matter of the Deed of Conveyance dated 13.06.1996 at Rs 30300 lakhs and levied a stamp duty of Rs 2372.50 lakhs and imposed a penalty of Rs 509.05 lakhs. The said demand was challenged before the High Court of Madhya Pradesh Bench at Gwalior. The High Court accepted the case of the Company that the subject matter of the Deed of Conveyance dated 13.06.1996 is only the superstructures valued at Rs 2776.18 lakhs and not the entire undertaking valued at Rs 30300.00 lakhs as claimed by the State. Consequently, the High Court of Madhya Pradesh quashed the order and demands issued by the Collector of Stamps, Bhind (Madhya Pradesh) and allowed the writ petition by an order dated 29th November 2004. Against the said order, the State of Madhya Pradesh preferred a Special Leave Petition before the Hon'ble Supreme Court which the State of Madhya Pradesh has withdrawn to enable it to approach the Hon'ble High Court of Madhya Pradesh at Gwalior in view of the change in law in the State of Madhya Pradesh relating to Letters Patent Appeal.

@ As per Business Transfer Agreement with KAMA Holdings Limited, the liabilities of Rs 1793.81 lakhs (Previous Year - Rs 1793.81

lakhs) and Rs 38.00 lakhs (Previous Year - Rs 38.00 lakhs) respectively towards Excise Duty and Sales tax are covered under Representations and Warranties.

All the above matters are subject to legal proceedings in the ordinary course of business. In the opinion of the management, the legal proceedings, when ultimately concluded, will not have a material effect on the results of the operations or financial position of the Company.

b) Liability on account of Bank Guarantees Rs 1260.26 lakhs (Previous Year – Rs 1137.53 lakhs)

c) Guarantees given to banks for repayment of financial facilities availed by wholly owned subsidiaries:

(i) USD 20.00 million (Previous Year – USD 20.00 million). Outstanding amount as at the year-end is USD 20.00 million (Previous Year – USD 20.00 million)

(ii) Nil (Previous Year – AED 10.35 million) and Nil (Previous Year – Euro 0.20 million). Outstanding amount as at the year-end is Nil (Previous Year – Nil)

(iii) USD 15.00 million (Previous Year – Nil). Outstanding amount as at the year-end is USD 13.00 million (Previous Year – Nil).

(iv) USD 16.00 million (Previous Year – Nil). Outstanding amount as at year end is EURO 11.25 million (Previous Year – Nil).

(v) EURO 3.50 million (Previous Year – Nil). Outstanding amount as at year end is EURO 3.50 million (Previous Year – Nil)

d) Guarantees given to banks for repayment of financial facilities availed by others – Rs 250.00 lakhs (Previous Year – Nil). Outstanding amount as at the year-end is Nil (Previous Year – Nil).

e) The Company has been served with show cause notices regarding certain transactions as to why additional customs / excise duty amounting to Rs 72.24 lakhs (Previous year - Rs 76.04 lakhs) should not be levied. The Company has been advised that the contention of the department is not tenable and hence the show cause notice may not be sustainable.

2. Capital and other commitments

The estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) amounts to Rs 10233.03 lakhs (Previous Year - Rs 12965.89 lakhs).

Further, the Company is to make the following investments:

i) Capital expenditure projects for Packaging Films Business in South Africa and Thailand – USD 89.50 million (equivalent to Rs 45528.65 lakhs) (Previous Year – Nil).

ii) SRF Holiday Home Limited – Rs 309.00 lakhs (Previous Year – Rs 353.00 lakhs)

The Company has other commitments, for purchase / sales orders which are issued after considering requirements per operating cycle for purchase / sale of goods and services, employee benefits including union agreements in normal course of business. The Company does not have any other long term commitments or material non-cancellable contractual commitments / contracts, which might have material impact on the financial statements.

3. Employee Benefits

The Company has classified various benefits provided to employees as under: i) Defined contribution plans

a) Superannuation fund

b) Provident fund administered through Regional Provident Fund Commissioner

c) Employees' State Insurance Corporation

The expenses incurred on account of the above benefits have been included in Note 25 "Employee Benefits Expenses" under the head "Contribution to provident and other funds"

ii) Defined benefit plans

a) Gratuity

b) Compensated absences – earned leaves

c) Provident fund for certain category of employees administered through a recognized provident fund trust

Long Term Retention Pay

The Company has a Long Term Retention Pay Plan extending over 3 years. The plan covers employees selected on the basis of their current band and their long term value to the Company. The incentive is payable in three years starting from financial year 2010-11 subject to achievement of certain performance ratings. Based on the management estimate, the Company has accrued Rs 259.39 lakhs (Previous Year – Rs 295.52 lakhs) towards this plan till March 31, 2012.

Superannuation - Defined Contribution Plan where contributions are made to a Trust which in turn contributes to ICICI Prudential Life Insurance Co. Limited

Apart from being covered under the Gratuity Plan described above, the employees of the Company also participate in a defined contribution superannuation plan maintained by the Company. The Company has no further obligations under the plan except making annual contributions based on a specified percentage of each covered employee's salary. From 1st November, 2006, the Company provided an option to the employees to receive the said benefit as cash compensation along with salary in lieu of the superannuation benefit. Thus, no contribution is required to be made for the category of employees who opted to receive the benefit in cash.

Provident Fund - Defined Contribution Plan

In addition to the above benefits, all employees are entitled to Provident Fund benefits as per the law. For certain category of employees the Company administers the benefits through a recognized Provident fund trust. For other employees contributions are made to the regional Provident Fund Commissioners as per law. The Government mandates the annual yield to be provided to the employees on their corpus. For the first category of employees (covered by the Trust), the Company has an obligation to make good the shortfall, if any, between the yield on the investments of the trust and the yield mandated by the Government.

4. Segment Reporting

A. Business Segments

Based on the guiding principles laid down in Accounting Standard (AS) - 17 "Segment Reporting", the Company's business segments include:

- Technical Textiles Business: includes nylon tyre cord fabric, belting fabric, coated fabric, laminated fabric, polyester tyre cord fabric and industrial yarns and its research and development

- Chemicals and Polymers Business: includes refrigerant gases, chloromethanes, pharmaceuticals, Certified Emissions Reductions & Allied products, Engineering Plastics business and its research and development.

- Packaging Film Business includes Polyester Films.

Segment revenue, Results and Capital Employed include the respective amounts identifiable to each of the segments. Other unallocable expenditure includes expenses incurred on common services provided to the segments, which are not directly identifiable.

In addition to the significant accounting policies applicable to the business segments as set out in note 1 above, the accounting policies in relation to segment accounting are as under: -

a) Segment revenue and expenses

Joint revenue and expenses of segments are allocated amongst them on a reasonable basis. All other segment revenue and expenses are directly attributable to the segments.

b) Segment assets and liabilities

Segment assets include all operating assets used by a segment and consist principally of operating cash, debtors, inventories and fixed assets, net of allowances and provisions, which are reported as direct offsets in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities and do not include deferred income taxes. While most of the assets / liabilities can be directly attributed to individual segments, the carrying amount of certain assets / liabilities pertaining to two or more segments are allocated to the segments on a reasonable basis.

5. The Revised Schedule VI has become effective from April 1, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped / reclassified, wherever necessary, to correspond with the current year's classification / disclosure.


Mar 31, 2011

1. CAPITAL COMMITMENTS

The estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) amounts to Rs. 12965.89 lakhs (Previous Year - Rs. 4283.70 lakhs).

Further, the Company is to make investment in the following companies

i) SRF Cord GmbH - Nil (Previous Year – Euro 98000).

ii) SRF Holiday Home Limited – Rs. 353.00 lakhs (Previous Year – Nil)

2. CONTINGENT LIABILITIES NOT PROVIDED FOR

a. Claims against the Company not acknowledged as debts:

As at As at March 31, 2011 March 31, 2010 (Rs. lakhs) (Rs. lakhs)

Excise duty, customs duty and service tax *@ 5865.44 5652.81

Sales Tax** @ 925.42 249.38

Income Tax 976.37 897.00

Stamp Duty**** 2881.55 2881.55

Others*** 94.43 210.10

* Amount deposited Rs. 315.92 lakhs (Previous year - Rs. 222.60 lakhs)

** Amount deposited Rs. 7.16 lakhs (Previous Year - Rs. 7.16 lakhs)

*** Amount deposited Rs. 8.00 lakhs (Previous Year – Rs. 119.06 lakhs)

**** In the matter of acquisition of the Tyrecord Division at Malanpur from Ceat Limited the Collector of Stamps, Bhind (Madhya Pradesh) has by his order dated 07.11.2001 assessed the value of the subject matter of the Deed of Conveyance dated 13.06.1996 at Rs. 30300.00 lakhs and levied a stamp duty of Rs. 2372.50 lakhs and imposed a penalty of Rs. 509.05 lakhs. The said demand was challenged before the High Court of Madhya Pradesh Bench at Gwalior. The High Court accepted the case of the Company that the subject matter of the Deed of Conveyance dated 13.06.1996 is only the superstructures valued at Rs. 2776.18 lakhs and not the entire undertaking valued at Rs. 30300.00 lakhs as claimed by the State. Consequently, the High Court of Madhya Pradesh quashed the order and demands issued by the Collector of Stamps, Bhind (Madhya Pradesh) and allowed the writ petition by an order dated 29th November 2004. Against the said order, the State of Madhya Pradesh preferred a Special Leave Petition before the Honble Supreme Court which the State of Madhya Pradesh has withdrawn to enable it to approach the Honble High Court of Madhya Pradesh at Gwalior in view of the change in law in the State of Madhya Pradesh relating to Letters Patent Appeal.

@ As per Business Transfer Agreement with KAMA Holdings Limited, the liabilities of Rs. 1793.81 lakhs (Previous Year - Rs. 1813.21 lakhs) and Rs. 38.00 lakhs (Previous Year - Rs. 28.10 lakhs) respectively towards Excise Duty and Sales tax are covered under Representations and Warranties.

All the above matters are subject to legal proceedings in the ordinary course of business. In the opinion of the management, the legal proceedings, when ultimately concluded, will not have a material effect on the results of the operations or financial position of the Company.

b. Liability on account of Bank Guarantees Rs. 1137.53 lakhs (Previous Year – Rs. 745.04 lakhs)

c. Guarantees given to a bank for repayment of financial facilities availed by wholly owned subsidiaries:

(i) Nil [Previous Year – Baht 900.00 millions (Equivalent to USD 27.81 millions)] and Nil (Previous Year – USD 6.00 millions). Outstanding amount as at the year end is Nil [Previous Year – Baht 825.70 millions (Equivalent to USD 25.52 millions)]

(ii) USD 20 million (Previous Year – Nil). Outstanding amount as at the year end is USD 20 million (Previous Year – Nil)

(iii) AED 10.35 million (Previous Year – Nil) and Euro 0.2 million (Previous Year – Nil). Outstanding amount as at the year end is Nil (Previous Year – Nil)

d. The Company has been served with show cause notices regarding certain transactions as to why additional customs / excise duty amounting to Rs. 76.04 lakhs (Previous year - Rs. 416.29 lakhs) should not be levied. The Company has been advised that the contention of the department is not tenable and hence the show cause notice may not be sustainable.

3. MANAGERIAL REMUNERATION

As there is a global contribution to gratuity fund, the amount applicable to an individual employee is not ascertainable and accordingly, contribution to gratuity fund in respect of directors has not been considered in the above computation. Further, the liability on account of compensated absences in respect of directors has not been considered above, since the provision is based on an actuarial basis for the Company as a whole.

4. DUES TO MICRO, SMALL AND MEDIUM ENTERPRISES

Sundry Creditors include the following dues to micro and small enterprises covered under "The Micro, Small and Medium Enterprises Development Act, 2006" (MSMED) to the extent such parties have been identified from the available information.

5. RELATED PARTY DISCLOSURES UNDER AS-18 "RELATED PARTY DISCLOSURES"

As per Accounting standard AS –18 "Related Party Disclosures" the Companys related parties and transactions with them are disclosed below:

A. NAME OF RELATED PARTY AND NATURE OF RELATED PARTY RELATIONSHIP

By virtue of control Joint Venture Key Management Enterprises over which (c) have (Subsidiaries) Personnel significant influence

(a) (b) (c) (d)

SRF Overseas Limited Jingde Yangtze- Mr. Arun Bharat KAMA Holdings Limited*

SRF Transnational Holdings Ganga Fluorine Ram, Bhairav Farms Private Limited* Limited Chemical Co. Chairman Narmada Farms Private Limited*

SRF Properties Limited Limited Mr. Ashish Bharat SRF Polymers Investments

SRF Holiday Home Limited (upto February 26, Ram Limited*

SRF Energy Limited 2011) Managing Director KAMA Realty (Delhi) Limited*

SRF Fluorochemicals Limited (Refer note 11 Mr. Kartikeya Bharat Shri Educare Limited

SRF Fluor Private Limited below) Ram Shri Educare Maldives Private

SRF Global BV Deputy Managing Limited

SRF Tech Textile BV Director SRF Foundation

SRF Technical Textiles (Thailand) Mr. K. Ravichandra, Karm Farms Private Limited* Limited Whole Time Srishti Westend Greens Farms SRF Industex Belting (Pty) Limited Director Private Limited*

* Pursuant to the Scheme of Arrangement between Narmada Farms Private Limited, Bhairav Farms Private Limited and SRF Polymers Investments Limited ("the transferor companies") and Srishti Westend Greens Farms Private Limited, Karm Farms Private Limited, KAMA Realty (Delhi) Limited and KAMA Holdings Limited ("the transferee companies") and their respective shareholders and creditors :-

a) real estate divisions of Narmada Farms Private Limited, Bhairav Farms Private Limited and SRF Polymers Investments Limited was transferred and vested in Srishti Westend Greens Farms Private Limited, Karm Farms Private Limited and KAMA Realty (Delhi) Limited respectively ; and

b) investment divisions of Narmada Farms Private Limited, Bhairav Farms Private Limited and SRF Polymers Investments Limited were transferred and vested in KAMA Holdings Limited with effect from March 31, 2011.

The transferor companies had conducted their business in respect of their respective real estate divisions and investment divisions in trust and on behalf of the respective transferee companies from the appointed date of the said Scheme - April 1, 2010

6. EMPLOYEE BENEFITS

The Company has classified various benefits provided to employees as under:

i) Defined contribution plans

a) Superannuation fund

b) Provident fund

c) Employees State Insurance Corporation

The expenses incurred on account of the above benefits have been included in Schedule 12 "Manufacturing and other expenses" under the head "Contribution to provident fund, superannuation, employees state insurance, gratuity and other funds"

ii) Defined benefit plans

a) Gratuity

b) Compensated absences – earned leaves

The Company assesses these assumptions with its projected long-term plans of growth and prevalent industry standards.

Long Term Retention Pay

The Company has a Long Term Retention Pay Plan extending over 3 years. The plan covers employees selected on the basis of their current band and their long term value to the Company. The incentive is payable in three years starting from financial year 2010-11 subject to achievement of certain performance ratings. Based on the management estimate, the Company has accrued Rs. 295.52 lakhs (Previous Year – Rs. 93.00 lakhs) towards this plan till March 31, 2011.

Superannuation - Defined Contribution Plan where contributions are made to a Trust which in turn contributes to ICICI Prudential Life Insurance Co. Limited

Apart from being covered under the Gratuity Plan described above, the employees of the Company also participate in a defined contribution superannuation plan maintained by the Company. The Company has no further obligations under the plan except making annual contributions based on a specified percentage of each covered employees salary. From 1st November, 2006, the Company provided an option to the employees to receive the said benefit as cash compensation along with salary in lieu of the superannuation benefit. Thus, no contribution is required to be made for the category of employees who opted to receive the benefit in cash.

Provident Fund - Defined Contribution Plan

In addition to the above benefits, all employees are entitled to Provident Fund benefits as per the law. For certain category of employees the Company administers the benefits through a recognized Provident fund trust. For other employees contributions are made to the regional Provident Fund Commissioners as per law. The Government mandates the annual yield to be provided to the employees on their corpus. For the first category of employees (covered by the Trust), the Company has an obligation to make good the shortfall, if any, between the yield on the investments of the trust and the yield mandated by the Government

7. SEGMENT REPORTING

A. Business Segments

Based on the guiding principles laid down in Accounting Standard (AS) - 17 "Segment Reporting", the Companys business segments include:

- Technical Textiles business: includes nylon tyre cord fabric, belting fabric, coated fabric, laminated fabric, polyester tyre cord fabric and industrial yarns and its research and development

- Chemicals and Polymers business: includes refrigerant gases, chloromethanes, pharmaceuticals, Certified Emissions Reductions & Allied products, Engineering Plastics business and its research and development.

- Packaging Film Business includes Polyester Films.

Segment revenue, Results and Capital Employed include the respective amounts identifiable to each of the segments. Other unallocable expenditure includes expenses incurred on common services provided to the segments, which are not directly identifiable.

In addition to the significant accounting policies applicable to the business segments as set out in note 1 above, the accounting policies in relation to segment accounting are as under:

a) Segment revenue and expenses

Joint revenue and expenses of segments are allocated amongst them on a reasonable basis. All other segment revenue and expenses are directly attributable to the segments.

b) Segment assets and liabilities

Segment assets include all operating assets used by a segment and consist principally of operating cash, debtors, inventories and fixed assets, net of allowances and provisions, which are reported as direct offsets in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities and do not include deferred income taxes. While most of the assets / liabilities can be directly attributed to individual segments, the carrying amount of certain assets / liabilities pertaining to two or more segments are allocated to the segments on a reasonable basis.

8. FOREIGN CURRENCY EXPOSURE

SRF has entered into long term contracts for the transfer / sale of Certified Emission Reductions (CERs) with reputable global buyers. The cash flow from these sales forms the mainstay of SRFs multi-year capital expansion plan, and as such these cash flows need to be both stable and secure. To ensure stability of revenues in foreign currency from the transfer / sale of CERs, the Company has entered into forward contracts with banks to part sell Euros to be earned out of future CER sales.

9. Schedules 1 to 8 form an integral part of the Balance Sheet, Schedules 9 to 13 form and integral part of the Profit and Loss Account and Schedule 14 and the Statement of Additional Information form an integral part of the Balance Sheet and Profit and Loss Account.

10. Previous year figures have been regrouped / recast / rearranged, wherever necessary, to conform to current year classifications.


Mar 31, 2010

1. cApitAl commitments

The estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) amounts to Rs 4283.70 lakhs (Previous Year - Rs 16608.87 lakhs).

The Company is to make investments in the joint venture JingdeYangtze-Ganga Fluorine Chemical Co Limited up to USD 2.65 million (Previous Year – USD 2.65 million).The Company has made an application to the People’s Republic of China seeking an extension to the original timeline which was 15th March, 2010 for effecting this investment. further, the Company is to make investment in the following companies

i) SRF Fluorochemicals Limited – Nil (Previous Year - Rs 5.00 lakhs)

ii) SRF Energy Limited – Nil (Previous Year - Rs 5.00 lakhs)

iii) SRF Cord GmbH – Euro 98000 (Previous Year - Euro 196000)

2. contingent liAbilities not provided for

a. Claims against the Company not acknowledged as debts:

As at March 31, 2010 As at March 31, 2009 Rs lakhs Rs lakhs Excise duty, customs duty and service tax * @ 5652.81 5713.25 Sales Tax ** @ 249.38 231.57 Income Tax 897.00 749.00 Stamp Duty **** 2881.55 2881.55 Others *** 210.10 94.43

Amount deposited Rs 222.60 lakhs (Previous year - Rs 240.35 lakhs)

** Amount deposited Rs 7.16 lakhs (Previous Year - Rs 52.00 lakhs)

*** Amount deposited Rs 119.06 lakhs (Previous Year - Nil)

**** In the matter of acquisition of the Tyrecord Division at Malanpur from Ceat Limited the Collector of Stamps, Bhind (Madhya Pradesh) has by his order dated 07.11.2001 assessed the value of the subject matter of the Deed of Conveyance dated 13.06.1996 at Rs 30300 lakhs and levied a stamp duty of Rs 2372.50 lakhs and imposed a penalty of Rs 509.05 lakhs.The said demand was challenged before the High Court of Madhya Pradesh Bench at Gwalior. The High Court accepted the case of the Company that the subject matter of the Deed of Conveyance dated 13.06.1996 is only the superstructures valued at Rs 2776.18 lakhs and not the entire undertaking valued at Rs 30300 lakhs as claimed by the State. Consequently, the High Court of Madhya Pradesh quashed the order and demands issued by the Collector of Stamps, Bhind (Madhya Pradesh) and allowed the writ petition by an order dated 29th November 2004. Against the said order, the State of Madhya Pradesh preferred a Special Leave Petition before the Hon’ble Supreme Court which the State of Madhya Pradesh has withdrawn to enable it to approach the Hon’ble High Court of Madhya Pradesh at Gwalior in view of the change in law in the State of Madhya Pradesh relating to Letters Patent Appeal.

@ As per Business Transfer Agreement with KAMA Holdings Limited (formerly SRF Polymers Limited), the liabilities of Rs 1813.21 lakhs (Previous Year -

Rs 1821.93 lakhs) and Rs 28.10 lakhs (Previous Year - Rs 28.10 lakhs) respectively towards Excise Duty and Sales tax are covered under Representations and Warranties.

All the above matters are subject to legal proceedings in the ordinary course of business. In the opinion of the management, the legal proceedings, when ultimately concluded, will not have a material effect on the results of the operations or fnancial position of the Company.

b. Liability on account of Bank Guarantees Rs 745.04 lakhs (Previous Year – Rs 625.75 lakhs)

c. Guarantee given to a bank for repayment of fnancial facilities availed by a wholly owned subsidiary:

(i) Baht 900.00 millions (Equivalent to USD 27.81 millions) (PreviousYear - Nil) and USD 6.00 millions (PreviousYear – Nil). Outstanding amount as at the year end is Baht 825.70 millions (Equivalent to USD 25.52 millions) (Previous Year – Nil)

(ii) Nil (PreviousYear - USD 45.00 millions) outstanding amount as at the year end is Nil (PreviousYear - USD 32.00 millions)

d. (i) The Company has received a notice from Officer on Special Duty, Diversion Tax, Bhind, imposing Diversion Tax of Rs 197.00 lakhs (PreviousYear – Rs 197.00 lakhs) for converting the agricultural land into Industrial land.The Company has been advised that the above notice will not be sustained since the land has been acquired from Government Authority and no Diversion Tax is payable on Government land.

(ii) The Company has been served with show cause notices regarding certain transactions as to why additional customs / excise duty amounting to Rs 416.29 lakhs (Previous year - Rs 297.59 lakhs) should not be levied.The Company has been advised that the contention of the department is not tenable and hence the show cause notice may not be sustainable.

4. The Company had, in the previous year, acquired the Engineering Plastics Business and Industrial Yarn Business from KAMA

Holdings Limited (formerly SRF Polymers Limited) on a going concern basis with effect from January 1, 2009 under a Business Transfer Agreement (BTA) at a consideration of Rs 15031.26 lakhs.

5. dues to micro, smAll And medium enterprises

Sundry creditors include Rs 164.45 lakhs (PreviousYear – Rs 57.87 lakhs) due to micro and small enterprises covered under “The Micro, Small and Medium Enterprises Development Act, 2006” to the extent such parties have been identified from the available information.The Company has not received any claim for interest from any party covered under the said Act.

6. Related PaRty disclosu Res unde R as-18 “Related PaRty disclosuRes”

As per Accounting standard AS -18 “Related Party Disclosures” the Company’s related parties and transactions with them are disclosed below:

7. EMPLOYEE BENEFITS

The Company has classified various benefits provided to employees as under:

i) Defined contribution plans

a) Superannuation fund

b) Provident fund

c) Employees’ State Insurance Corporation

The expenses incurred on account of the above benefits have been included in Schedule 12 “Manufacturing and other expenses” under the head “Contribution to provident fund, superannuation, employees’ state insurance, gratuity and other funds”

ii) Defined benefit plans

a) Gratuity

b) Compensated absences - earned leaves

In accordance with Accounting Standard (AS) - 15 (Revised 2005), actuarial valuation was obtained from the actuary in respect of the aforesaid defined benefit plans using Projected Unit Credit Method. The details of the same are as follows:-

The Company’s best estimate of the contribution expected to be paid in the next year is Rs 120.83 lakhs (Previous Year – Rs (67.79) lakhs) for gratuity and Rs 122.74 lakhs (Previous Year - Rs 22.18 lakhs) for leave encashment.

Long Term Retention Pay

During the year, the Company has introduced a Long Term retention Pay Plan extending over 3 years. The plan covers employees selected on the basis of their current band and their long term value to the Company. The incentive is payable in three years starting from fnancial year 2010-11 subject to achievement of certain performance ratings. Based on the management estimate, the Company has accrued Rs 93 lakhs (Previous Year – Nil) towards this plan till March 31,2010.

Superannuation - Defined Contribution Plan where contributions are made to a Trust which in turn contributes to ICICI Prudential Life Insurance Co. Limited.

Apart from being covered under the Gratuity Plan described above, the employees of the Company also participate in a defined contribution superannuation plan maintained by the Company.The Company has no further obligations under the plan except making annual contributions based on a specified percentage of each covered employee’s salary. From 1st November, 2006, the Company provided an option to the employees to receive the said benefit as cash compensation along with salary in lieu of the superannuation benefitThus, no contribution is required to be made for the category of employees who opted to receive the benefit in cash.

Provident Fund - Defined Contribution Plan

In addition to the above benefits, all employees are entitled to Provident Fund benefits as per the law. For certain category of employees the Company administers the benefits through a recognised Provident fund trust. For other employees contributions are made to the regional Provident Fund Commissioners as per law.The Government mandates the annual yield to be provided to the employees on their corpus. For the frst category of employees (covered by the Trust), the Company has an obligation to make good the shortfall, if any, between the yield on the investments of the trust and the yield mandated by the Government

8. segment reporting

A. Business Segments

Based on the guiding principles laid down in Accounting Standard (AS) - 17 “Segment Reporting”, the Company’s business segments include:

- Technical Textiles business: includes nylon tyre cord fabric, belting fabric, coated fabric, laminated fabric, polyester tyre cord fabric and industrial yarns and its research and development

- Chemicals and Polymers business: includes refrigerant gases, chloromethanes, pharmaceuticals, Certified Emissions Reductions & Allied products, Engineering Plastics business and its research and development.

- Packaging film Business includes Polyester films.

Segment revenue, Results and Capital Employed include the respective amounts identifiable to each of the segments. Other unallocable expenditure includes expenses incurred on common services provided to the segments, which are not directly identifiable.

In addition to the significant accounting policies applicable to the business segments as set out in note 1 above, the accounting policies in relation to segment accounting are as under: -

a) Segment revenue and expenses

Joint revenue and expenses of segments are allocated amongst them on a reasonable basis.All other segment revenue and expenses are directly attributable to the segments.

b) Segment assets and liabilities

Segment assets include all operating assets used by a segment and consist principally of operating cash, debtors, inventories and fxed assets, net of allowances and provisions, which are reported as direct offsets in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities and do not include deferred income taxes. While most of the assets / liabilities can be directly attributed to individual segments, the carrying amount of certain assets / liabilities pertaining to two or more segments are allocated to the segments on a reasonable basis.

9. operAting le Ases

The Company has entered into operating lease agreements for various premises taken for accommodation of Company’s officers / directors and various offices of the Company. These arrangements are both cancellable and non-cancellable in nature and range between three to fve years. As at March 31, 2010, the future minimum lease payments under non- cancellable operating leases as set out below: -

10. Schedules 1 to 14 and the statement of additional information form an integral part of the fnancial statements.

11. Previous year fgures have been regrouped / recast / rearranged, wherever necessary, to conform to current year classifications. The fgures for the previous year are inclusive of the Engineering Plastics Business and Industrial Yarn Business for the period from January 1, 2009 to March 31,2009 acquired from KAMA Holdings Limited (formerly SRF Polymers Limited), whereas the current year fgures are for whole year.Therefore, the corresponding fgures of the previous year are not comparable with those of the current year.

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