Notes to Accounts of Stovec Industries Ltd.

Dec 31, 2018

1 ) General Information

Stovec Industries Limited ("the Company") was incorporated on 5th June, 1973. The Company''s factory and registered office is located in Ahmedabad, Gujarat. The Company is listed on Bombay Stock Exchange Ltd. and Ahmedabad Stock Exchange Ltd. The Company has three major Business Segments: Textile Machinery & Consumables,Graphics Consumables and Galvanic. The Company is a Technology and Market leader in Rotary Screen Printing Industry in India.

Notes

1 Change in Fair Value of investments measured at FVTOCI (net of tax)

Under Indian GAAP, the Company accounted for long term investments in equity shares as investment measured at cost less provision for other than temporary diminution in the value of investments. Under Ind AS 109, the Company''s investments are fair valued as FVTOCI investments. The fair value impact at the date of transition to Ind AS and in comparative previous year are adjusted in carrying value of investments under Indian GAAP with impact in the Opening Balance of Retained Earnings at the date of transition to Ind AS, and in the FVTOCI reserve in comparative previous year, net of related deferred taxes.

2 Expected Credit Loss

Under Indian GAAP, the provision for doubtful debts was made when the receivable turned doubtful based on the assessment on case to case basis. Under Ind AS, the provision is made against trade receivables based on "expected credit loss" model in accordance with Ind AS 109.

3 Dividend

Under Indian GAAP, dividends on equity shares (including dividend distribution tax thereon) recommended by the board of directors after the end of reporting period but before the financial statements were approved for issue were recoginsed in the financial statements as a liability. Under Ind AS, such dividends (including dividend distribution tax thereon) are recognised when approved by the members in general meeting.

4 Deferred Tax

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. Inaddition, 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 recognised in correlation to the underlying transaction either in retained earnings or a separate component of equity.

Notes

1 Expected Credit Loss

Under Indian GAAP, the provision for doubtful debts was made when the receivable turned doubtful based on the assessment on case to case basis. Under Ind AS, the provision is made against trade receivables based on "expected credit loss" model as per Ind AS 109.

2 Remeasurement of Defined Benefit Liability

Under Indian GAAP, actuarial gains and losses were recognised in the statement of profit or loss. Under Ind AS, the actuarial gains and losses form part of remeasurement of the net defined benefit liability / asset which is recognised in other comprehensive income. Consequently, the tax effect of the same has also been recognised in other comprehensive income under Ind AS instead of profit or loss.

3 Deferred Tax

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. Inaddition, 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 recognised in correlation to the underlying transaction either in retained earnings or a separate component of equity.

4 Change in Fair Value of investments measured at FVTOCI

Under Indian GAAP, the Company accounted for long term investments in equity shares as investment measured at cost less provision for other than temporary diminution in the value of investments. Under Ind AS, the Company''s investments are fair valued as FVTOCI investments. The fair value impact at the date of transition to Ind AS and in comparative previous year are adjusted in carrying value of investments under Indian GAAP with impact in the FVTOCI reserve.

Note : The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward-looking information. The expected credit loss allowance is based on ageing of the days the receivables are over/past due and the rates as given in the provision matrix. The provision matrix at the end of the reporting period is as follows:

(1) The fair value of Bank Balances (Other than Cash and Cash Equivalents) is not materially different from the carrying value presented.

(2) Deposits amounting to Rs. 7,291,211 (December 31, 2017 Rs. Nil and January 1, 2017 Rs. Nil) is marked as lien against the outstanding bank guarantee.

b) Rights, preferences and restrictions attached to shares

Equity shares: The Company has one class of equity shares having a par value of Rs. 10 per share. Each shareholder is eligible for one vote per share held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amount, in proportion to their shareholding.

Notes:

(i) Capital Redemeption Reserve created on redemption of Redeemable Preference shares.

(ii) Securities Premium Reserve represents the premium received on issue of shares over and above the face value of equity shares. The reserve is available for utilisation in accordance with the provisions of the Companies Act, 2013.

(iii) General Reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to profit or loss.

(iv) Retained Earnings can be distributed by the Company as dividend to its equity shareholders and the same is determined based on the separate financial statements of the Company and also considering the requirements of the Companies Act, 2013. Thus, the amounts reported above are not distributable in entirety.

Note 1: The Government of India has implemented Goods and Service Tax ("GST") from 1st July, 2017 replacing Excise Duty, Service Tax and various other indirect taxes. Revenue for the period up to 30th June, 2017 are inclusive of excise duty of Rs. 77,486,317; however, revenue for the period 1st July, 2017 to 31st December, 2017 and for the year ended 31st December, 2018 are shown net of GST.

B. Employee Benefits :

(a) Defined Contribution Plan :

The Company''s contribution to Provident Fund aggregating Rs. 5,213,002 (Previous Year Rs. 4,287,032) has been recognised in the Statement of Profit or Loss under the head Employee Benefits Expense.

(b) Defined Benefit Plans :

Gratuity

The Company operates a defined benefit plan (the Gratuity plan) covering eligible employees, which provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and the tenure of employment.

The status of gratuity plan as required under Ind AS-19 :

ix. Asset Liability Matching Strategies

The Company has purchased insurance policy, which is basically a year-on-year cash accumulation plan in which the interest rate is declared on yearly basis and is guaranteed for a period of one year. The insurance Company, as part of the policy rules, makes payment of all gratuity outgoes happening during the year (subject to sufficiency of funds under the policy).The policy, thus, mitigates the liquidity risk. However, being a cash accumulation plan,the duration of assets is shorter compared to the duration of liabilities. Thus, the Company is exposed to movement in interest rate (in particular, the significant fall in interest rates, which should result in a increase in liability without corresponding increase in the asset).

x. Effect of Plan on Entity''s Future Cash Flows

a) Funding arrangements and Funding Policy

The Company has purchased an insurance policy to provide for payment of gratuity to the employees. Every year, the insurance Company carries out a funding valuation based on the latest employee data provided by the Company. Any deficit in the assets arising as a result of such valuation is funded by the Company.

b) Maturity Profile of Defined Benefit Obligation

Projected benefits payable in future years from the date of reporting.

xi. The Company has defined benefit plans for Gratuity to eligible employees, the contributions for which are made to Life Insurance Corporation of India who invests the funds as per Insurance Regulatory Development Authority guidelines.

The discount rate is based on the prevailing market yields of Government of India''s securities as at the Balance Sheet date for the estimated term of the obligations.

The defined benefit plans expose the Company to acturial risks such as Interest rate risk, Salary risk, Investment risk, Asset liability matching risk, longevity risk.

Interest rate risk: A fall in the discount rate which is linked to the G.Sec. Rate will increase the present value of the liability requiring higher provision. A fall in the discount rate generally increase the mark to market value of the assets depending on the duration of asset.

Salary Risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of members. As such, an increase in the salary of the members more than assumed level will increase the plan''s liability.

Investment Risk: The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. If the return on plan asset is below this rate, it will create a plan deficit. Currently, for the plan in India, it has a relatively balanced mix of investments in government securities, and other debt instruments.

Asset Liability Matching Risk: The plan faces the ALM risk as to the matching cash flow. Since the plan is invested in lines of Rule 101 of Income Tax Rules, 1962, this generally reduces ALM risk.

Longevity risk: Since the benefits under the plan is not payable for life time and payable till retirement age only, plan do not have any longevity risk.

c) Other Long Term Employee Benefits:

The actuarial liability for compensated absences as at the year ended December 31, 2018 is Rs. 18,387,453 (December 31, 2017 Rs. 13,650,740 ; January 1, 2017 Rs. 10,823,712)

Management is of the view that no liability shall arise on the Company for all the above cases.

b) Capital Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of Capital Advances) as at December 31, 2018 is Rs. 1,331,417 (December 31, 2017 Rs. Nil, January 1, 2017 Rs. 33,827,217).

Notes:

(1) The Key Managerial Persons are covered by the Company''s gratuity policy along with other employees of the company. The proportionate amount of gratuity pertaining to the Key Managerial Persons has not been included in the aforementioned disclosures as these are not determined on individual basis.

(2) The amounts outstanding are unsecured and will be settled in cash or kind, for which no guarantees have been given or received. No expense has been recognised in current or prior years for bad and doubtful debts in respect of the amounts owed by related parties.

Fair Value hierarchy

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

(B) Capital Management

For the purpose of the Company''s capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders of the Company. The Company strives to safeguard its ability to continue as a going concern so that they can maximise returns for the shareholders and benefits for other stake holders. The Company maintains a debt free status and regularly declares dividend to its shareholders.

(C) Financial risk management objectives and policies

The Company''s principal financial liabilities comprises of trade and other payables. The Company''s financial assets include trade and other receivables, and cash & cash equivalents that it derives directly from its operations.

The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks. The Company''s senior management is supported by the Board of Directors that advises on financial risks and the appropriate financial risk governance framework for the Company. This provides assurance to the Company''s senior management that the Company''s financial risk activities are governed by appropriate policies and procedure and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. The Board of Directors reviews and agrees policies for managing each risk, which are summarised as below:

(1) 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 of interest rate risk, foreign currency risk and commodity risk.

1.1 Interest Rate risk : Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s investment in bank deposits. The interest rates for the tenure of the fixed deposits are fixed. However, with the continuous decrease in the returns on fixed deposits, the income earned on such deposits may change in future based on the interest rates.

1.2 Foreign Currency Risk : Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company''s foreign currency risk arises out of various imports of raw materials and exports of its finished goods.

The Company has a forex policy in place where the objective is to mitigate foreign exchange risk by deploying the appropriate hedging strategies through use of foreign currency forward contracts. The Company follows netting principle for managing the foreign exchange exposure.

The Carrying Amounts of the Company''s Foreign Currency Denominated Monetary Assets and Liabilities based on Gross Exposure at the end of the Reporting Period is as under. There are no open derivate contracts at the end of the year.

1.3 Commodity Risk : The Company is affected by price volatility of certain commodities. Its operating activities require the on-going purchase or continuous supply of such commodities. Therefore the Company monitors its purchases closely to optimise the prices.

(2) Credit Risk : 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 having majority of the receivables from private sectors. The Company does not have significant credit risk exposure to any single counterparty. Concentration of credit risk to any counterparty did not exceed 5% of gross monetary assets at any time during the year.

(3) Liquidity Risk : The Company monitors its risk of a shortage of funds by estimating the future cash flows. The Company''s objective is to maintain a balance between working capital of the company. The Company generates sufficient cashflow from operations to maintain a healthy working capital balance.

2) Segment Reporting

Operating segments are identified as those components of the Company (a) that engage in business activities to earn revenues and incur expenses; (b) whose operating results are regularly reviewed by the Company''s Operating Decision Maker (''CODM'') to make decisions about resource allocation and performance assessment and (c) for which discrete financial information is available.

The Company has determined following reporting segments based on the information reviewed by the Company''s CODM.

Reportable segments:

An operating segment is classified as reportable segment if reported revenue (including intersegment revenue) or absolute amount of result or assets exceeds 10% or more of the combined total of all the operating segments.

Segment revenue and results:

The expenses and income which are not directly attributable to any business segment are shown as unallocable expenditure.

Segment assets and liabilities:

Segment assets include all operating assets used by the operating segment and mainly consist of property, plant and equipment, trade receivables, Inventory and other operating assets. Segment liabilities primarily include trade payable and other liabilities. Common assets and liabilities which can not be allocated to any of the business segment are shown as unallocable assets / liabilities.

b) Information about secondary business segments

The Company uses same set of assets for the sales made in the India and outside India. The expenses incurred for sales to be made in India and outside are Common. Hence, the only the details related to Revenue related to the geographical segments are presented to the CODM.

3) Provision for Warranty

A provision is recognised for expected warranty claims on products sold during the year, based on past experience of level of repairs and returns. It is expected that this cost will be incurred by end of next financial year. Assumptions used to calculate the provision for warranties were based on current sales level and information available about returns.

4) Leases

Operating Lease : As a Lessor

The Company had given Land and Building on operating lease for a period of 7 years which was completed on June 30, 2018 and after that the agreement is not renewed.

The Company has entered into cancellable lease agreements for use of certain area of its building premises for a period of one year. The lease rentals aggregating Rs. 8,631,330 (Previous Year Rs. 11,605,260) have been included under the head "Other Income" Note 25 "Lease Rentals" of Statements of Profit and Loss.

Operating Lease : As a Lessee

The Company has entered into cancellable lease agreements for premises for a period of one year. The lease rentals aggregating Rs. 1,797,228 (Previous Year Rs. 2,020,160) have been included under the head "Other Expenses" Note 31 "Rent" of Statements of Profit and Loss .

5) The Company has executed Share Purchase Agreement on March 14, 2018 for divestment of 100% equity investment held by the Company in Atul Sugar Screens Private Limited to Veco B.V., for an aggregate consideration of Rs. 104,000,000. Consequent to said divestment, Atul Sugar Screens Private Limited ceased to be subsidiary of the Company w.e.f March 22, 2018. Gain on sale of such investment has been shown as exceptional item in the financial statement.

During the year 2018, the Company had sold certain identified assets of galvanic business. Resultant gain on such sale of assets of Rs. 37,440,975 has been shown as exceptional items in the financial statements for the year ended December 31, 2018. However, the operations of galvanic business is continued by the Company by entering into the Contract Manufacturing Agreement.

6) Board of Directors have recommended the final dividend of Rs. 55 per equity share having face value of Rs. 10 each (550%) for the financial year ended December 31, 2018, subject to approval of the Members. This comprises of normal dividend of Rs. 40 per equity share and a special dividend of Rs. 15 per equity share on account of gains arising from divestment of equity investment and sale of assets of galvanic business.

7) The financial statements were reviewed and recommended by the Audit Committee and approved by the Board of Directors of the Company at their meeting held on February 14, 2019.

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Dec 31, 2016

1) Related party disclosure:

Related party disclosure as required by AS-18,"Related Party Disclosure", is given below:

I. Parties where control exists:

Related Party __Relationship_

SPGPrints B.V.__Holding Company_

SPGPrints Group B.V.__Holding Company of SPGPrints B.V.

Print II B.V.__Ultimate Holding Company_

Atul Sugar Screens Private Limited Wholly-owned Subsidiary

II. Fellow Subsidiaries where common control exists and transactions have taken place:

- SPGPrints Printing Systems Wuxi Co Ltd.

- SPGPrints Austria GMBH

- Veco B.V.

- SPGPrints Brasil Ltda.

- SPGPrints Mexico S.A. De C.V

III. Key Management Personnel:

Mr. Shailesh Wani Managing Director

c) Other Disclosure

1 Segment have been identified in line with the Accounting Standard -17 "Segment Reporting" taking into account the organization structure as well as the differing risks and returns.

2 Company has disclosed business segment as the primary segment.

3 Composition of business Segment:

Name of Segment__Comprises_

Textile Consumables and Textile Perforated Rotary Screens, Lacquer & Auxiliary Machinery Chemicals, Rotary Screen Printing Machine,

Engraving Equipment, Components and Spares,

__Digital Ink_

Graphics Product__Anilox Rollers, Rotamesh screens and RotaPlate

Galvanic Galvano consumables

2) Leases

Operating Lease : As a Less or

The Company has given Land and Building on operating lease. This lease arrangement is for a period of 7 years and it is non-cancellable. This lease is renewable for the further period on mutually agreeable terms:

Operating Lease : As a Lessee

The Company has entered into cancellable lease agreements for premises for a period of one year. The lease rentals aggregating Rs. 1,681,800 (Previous Year Rs. 384,000) have been included under the head "Other Expenses" Note 27 "Rent" of Statement of Profit and Loss.

3) Previous year figures have been reclassified to conform to this year''s classification.

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Dec 31, 2014

1. General Information

The Stovec Industries was incorporated in 1973, in Ahmedabad, Gujarat. The Company is listed on Bombay Stock Exchange and Ahmedabad Stock Exchange. The Company has three major Business segments : Textile Machinery and Consumables, Graphics Consumables and Galvanic. "Textile Machinery and Consumables" segment includes Perforated Rotary Screens, Laquer & Auxiliary Chemicals, Digital Ink, Rotary Screen Printing Machine, Engraving Equipment, Components and Spares. "Graphics Consumables" segment includes Anilox Rollers, Rotamesh screens and RotaPlate. "Galvanic" Segment includes Galvano Consumables.

2. Rights, preferences and restrictions attached to shares

Equity shares: The Company has one class of equity shares having a par value of Rs. 10 per share. Each shareholder is eligible for one vote per share held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amount, in proportion to their shareholding.

3. a) Contingent Liabilities not provided for in respect of :

Particulars As at As at December 31, December 31, 2014 2013 (Rs.) (Rs.)

Claims against the Company not acknowledged as debts - 975,100

Disputed claims made by workers for re-instatement 903,680 937,515

Disputed Sales Tax liability including penalty - 16,349,472

Disputed income tax liability including interest 10,907,214 11,470,831

Disputed excise and service tax liability including penalty 4,611,245 4,611,245

Guarantees given by the Company 5,819,664 1,878,525

Total 22,241,803 36,222,688

b) Capital Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for as at December 31, 2014 is Rs. 147,578 (Previous Year Rs. 2,063,920).

4. The tax year for the Company being the year ending March 31, the provision for taxation for the year is arrived at on the basis of year ending on December 31, the ultimate tax liability of which will be determined on the basis of the taxable income for the year April 1, 2014 to March 31, 2015.

5. Previous year figures have been reclassified to conform to this year''s classification.

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Dec 31, 2013

1) a) Contingent Liabilities not provided for in respect of :

Particulars As at As at December 31, December 31, 2013 2012 (Rs.) (Rs.)

Bills Discounted (Since realised) - 6,715,925

Claims against the Company not acknowledged as debts 975,100 975,100

Disputed claims made by workers for re-instatement 937,515 2,357,544

Disputed Sales Tax liability including penalty 16,349,472 16,349,472

Disputed income tax liability including interest 11,470,831 11,563,330

Disputed excise and service tax liability including penalty 4,611,245 5,056,022

Guarantees given by the Company 1,878,525 2,579,480

Total 36,222,688 45,596,873

b) Capital Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for X 2,063,920 (Previous Year X 3,085,342).

II. Fellow Subsidiaries where common control exists and transactions have taken place:

i) SPG Prints Printing Systems Wuxi Co Ltd.

(Formerly known as Stork Textile Systems Wuxi Co Ltd.)

ii) SPG Prints Austria GMBH (Formerly known as Stork Print Austria GMBH)

iii) Veco B.V. (Formerly known as Stork Veco B.V.)

iv) SPG Prints Brasil Ltda. (Formerly known as Stork Print Brasil Ltda.)

III. Key Management Personnel:

Mr. Ashish Kaul Managing Director(Upto February 28, 2013)

Mr. Girish M Deshpande Wholetime Director(From March 1, 2013 to September 30,2013)

Mr. Shailesh Wani Managing Director(w.e.f. October 1, 2013)

2) Provision for Warranty and Contingency

A provision is recognised for expected warranty claims on products sold during the last one year, based on past experience of level of repairs and returns. It is expected that this cost will be incurred by end of next financial year. Assumptions used to calculate the provision for warranties were based on sales level and information available about returns.

Provision for contingencies represents estimate made for probable liabilities arising out of pending disputes / litigations with various tax authorities. The timing of the outflow with regard to the said matter depends on the exhaustion of remedies available to the Company under relevant laws and hence the company is not able to reasonably ascertain the timing of the outflow.

3) The tax year for the Company being the year ending March 31, the provision for taxation for the year is arrived at on the basis of year ending on December 31, the ultimate tax liability of which will be determined on the basis of the taxable income for the year April 1, 2013 to March 31, 2014.

4) Previous year figures have been reclassified to conform to this year''s classification.

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Dec 31, 2012

A) Rights, preferences and restrictions attached to shares

Equity shares: The Company has one class of equity shares having a par value of Rs. 10 per share. Each shareholder is eligible for one vote per share held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amount, in proportion to their shareholding.

1) A. The Company has classified the various benefits provided to employees'' as under:-

I. Defined Contribution Plans

a. Provident Fund

b. State Defined Contribution Plans

1. Employers'' Contribution to Employee''s State Insurance.

2. Employers'' Contribution to Employee''s Pension Scheme 1995.

b) Capital Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 3,085,342 (Previous Year Rs. 684,576).

2) Earnings per share

Earning per share is calculated by dividing the profit attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year. The numbers used in calculating basic and diluted earnings are stated below:

3) Related party disclosure:

Related party disclosure as required by AS-18,"Related Party Disclosure", is given below:

I. Parties where control exists:

II. Fellow Subsidiaries where common control exists and transactions have taken place:

Stork Textile Systems Wuxi Co Ltd.

Stork Print Brasil Ltda.

Stork Print Austria GMBH

Stork Digital Imaging B.V.

Stork Veco B.V.

III. Key Management Personnel:

Mr. Ashish Kaul Managing Director

4) Provision for Warranty and Others

A provision is recognised for expected warranty claims on products sold during the last one year, based on past experience of level of repairs and returns. It is expected that this cost will be incurred by end of next financial year. Assumptions used to calculate the provision for warranties were based on sales level and information available about returns.

Note: Figures in brackets represent figures for the previous year.

The foreign currency outstanding has been translated at the rates of exchange prevailing on the Balance Sheet date in accordance with Accounting Standard 11 - ''The Effects of Changes in Foreign Exchange Rates (Revised 2003)''.

5) The tax year for the Company being the year ending March 31, the provision for taxation for the year is arrived at on the basis of year ending on December 31, the ultimate tax liability of which will be determined on the basis of the taxable income for the year April 1, 2012 to March 31, 2013.

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

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Dec 31, 2010

1. Capital Commitments

Estimated amount of contracts [net of advances of Rs. Nil (Previous Year Rs. 200,000] remaining to be executed on capital account and not provided for Rs. 1,959,273 (Previous Year Rs. 9,329,541).

2. Contingent Liabilities

Contingent liabilities not provided for in respect of: -

a. Bills discounted Rs. 3,551,475 (since realised) (Previous Year Rs. Nil)

b. Claims against the Company not acknowledged as debts Rs. 975,000 (Previous Year Rs. 9,049,264).

c. Disputed claims made by workers for re-instatement estimated at Rs. 6,479,337 (Previous Year Rs. 6,682,662)

d. Disputed Sales Tax liability including of interest and penalty aggregating Rs. 16,349,472 (Previous Year 17,933,222). The Company has issued Bank Guarantee of Rs. Nil favouring sales tax department against disputed liability (Previous year Rs. 24,480,000).

e. Disputed income tax liability (net of provision) Rs. 6,988,292/- (Previous year Rs. 6,690,488).

f. Disputed excise and service tax liability including interest and penalty under appeal before the Tribunal (CESTAT) of Rs. 4,999,264 (Previous year Rs. Nil).

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

4. The Company has classified the various benefits provided to employees as under:- I. Defined Contribution Plans

a. Provident Fund

b. Superannuation Fund

c. State Defined Contribution Plans

III. Expected gratuity contribution for the next year is aggregating Rs. 902,870 (Previous Year Rs. 841,582)

IV. The liability for leave encashment and compensated absences as at the year end is Rs. 5,266,175 (Previous Year Rs. 4,585,302).

5. Segment Reporting

To provide meaningful and better information to stakeholders, with effect from January 1, 2010 the Company has reclassified the Segments on the basis of Class of Customers where associated Risk and Rewards are similar as against based on Nature of Products disclosed in earlier periods.

c) Other Disclosure

1. Segment have been identified in line with the Accounting Standard -17 "Segment Reporting" taking into account the organisation structure as well as the differing risks and returns.

2. Company has disclosed business segment as the primary segment.

17. Related Party Disclosure

Related party disclosure as required by AS-18,”Related Party Disclosure”, is given below:

1 RELATIONSHIP:

I. Parties where control exists:

Related Party Relationship

Stork Prints B.V.

(Formerly known as Stork Screens B.V.) Holding Company

Stork Prints Group B.V. Ultimate Holding Company

II. Fellow Subsidiaries where common control exists and transactions have taken place:

Stork Textile Systems Wuxi Co Ltd. Stork Print Brasil Ltda. Stork Print Austria GMBH Stork Digital Imaging B.V. Stork Veco B.V.

III. Key Management Personnel/Directors of the Company

Mr. Ashish Kaul (Managing Director) Managing Director

Mr. Dirk W Joustra Director

Mr. Aschwin Hollander Director

Mr. Joost Willem Pieter Smits Director

Mr. Khurshed M. Thanawalla Director

Mr. Marco Philippus A Wadia Director

Mr. Girish C. Sharedalal Director

6. The tax year for the Company being the year ending March 31, the provision for taxation for the year is the arrived at on the basis of year ending on December 31, the ultimate tax liability of which will be determined on the basis of the figures for the period April 1, 2010 to March 31, 2011.

7. Previous years figures have been regrouped / rearranged to conform to the current years classification.

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Dec 31, 2009

1. CONTINGENT LIABILITIES

Contingent liabilities are determined /disclosed on the basis of available information and auditors have relied upon the same.

Contingent liabilities not provided for in respect of: -

a. Claims against the Company not acknowledged as debts Rs. 9,049,264/- (Previous year Rs. 10,297,714/-).

b. Disputed claims made by workers for re-instatement estimated at Rs. 6,682,662/- (Previous year Rs. 6,683,960/-)

c." Disputed Sales Tax liability including of interest and penalty aggregating to Rs. 17,933,222/- (Previous year Nil). The company has issued Bank Guarantee of Rs. 24,480,000/- favouring sales tax department against disputed liability (Previous year Rs. Nil).

d. Disputed income tax liability (net of provision) Rs. 6,690,488/- (Previous year Rs. Nil)

e. Bonds executed by the Company in favour of Central Excise/Custom authorities for clearance of imported raw materials and components at concessional rate of import duty Rs. 8,457,500/- (Previous year Rs. 8,457,500/-). The corresponding obligation is fulfilled and the bond is submitted for cancellation in earlier years, however the clearance from excise / custom authorities is awaited since long.

2. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advance paid) Rs.9,329,541/- (Previous year Rs. 2,487,300/-).

3. Disclosure in movement of Provisions as required by AS - 29 "Provisions, Contingent Liabilities and Contingent Assets"

Particulars Warranty Others Total

Opening Balance 3,885,738 5,829,991 9,715,729 (1,500,484) (4,890,492) (6,390,946)

Additional Provision made (* including Rs. 67,080 *3,552,470 11,347,124 14,899,594 regrouped from Other items) (2,708,998) (1,542,398) (4,251,396)

Amount utilized / Provision written back 1,602,552 *67,080 1,669,632 (323,714) (602,899) (926,613)

Closing Balance 5,835,656 17,110,035 22,945,691 (3,885,738) (5,829,991) (9,715,729)

Note: Previous year figures are given in bracket

The above warranty amount utilised excludes Rs. 218,196/- (Previous year Rs. 7,248,116/-) directly debited to Raw Material Consumption account representing additional / unusual warranty claims received in excess of normal provision.

Notes:

Warranty

Represents estimate made for probable liabilities for product warranty provided to the customers. The timing for outflow does not coincide with customers complaints and hence the company is not able to reasonably ascertain the timing of the outflow.

Others

Represents estimates made for probable liabilities / claims arising out of transactions. The timing of the outflow is dependent on conclusion of negotiation which is in progress in respect of the claims received. Further information required by AS - 29 "Provision, Contingent liabilities and Contingent Assets" is not disclosed since the same can be prejudicial to the interest of the company.

4. Effective from 1st October 2009, based on the review of useful life of New Generation Technical Know- How, management has determined that the original estimate of useful life of these assets requires a revision. Accordingly the useful life was revised to two years as against five years estimated in earlier years. The unamortised depreciation is charged over the remaining useful life of these assets. Consequently depreciation is higher by Rs. 6,034,635/- (Previous year Nil) for the year ended 31st December, 2009 and net block of new generation technical know how is lower by the corresponding amount.

5. The profit on sale of land and building of Rs. Nil (Previous year Rs. 47,613,807/-) represents sale of surplus commercial land and building of the Industrial Machinery Division for a net sale consideration of Rs. Nil (Previous year Rs. 51,750,000/-).

6. Provision no longer required written back includes :

(a) Rs. 6,250,000 (Previous year Nil) representing provision made in earlier year in relation to the transaction of sale of land and building of Industrial Machinery Division. No further cost in relation to the transaction is likely to be incurred.

(b) Rs. 21,735,268 (Previous year Nil) representing write-back of old outstanding credit balances against which the company has not received any claim and are time barred as per Limitation Act.

7. Depreciation includes additional depreciation of Rs. 2,527,850/- (Previous year Rs. 3,012,241/-) in respect of assets costing more than Rs.5,000/- and upto EURO 5,000 which are depreciated pro- rata over the period of 12 months.

8. During the current year the company has migrated to new ERP package and regrouped certain items of Work-in-process and Finished Goods to raw material. As a result Increased/Decreased in stock is higher by Rs. 9,812,254/- (Previous year Nil) and consumption is lower by equivalent amount. There is no impact on profit for the year due to above regrouping.

9. Details of future lease rental receivable/obligation payable is as under-

a. As Lessee:

- Leased Assets: Godown premises

b. As Lessor:

- Leased Assets: Land and Factory premises

This information as required to be disclosed in pursuance of the said act has been determined to the extent such parties have been identified on the basis of information given by the suppliers to the company.

10. Raw Material consumed include tools, jigs, fixtures etc. consumed of Rs. 151,356/- (Previous year Rs. 316,927/-)

11. Computation for provision for taxes is on the basis of income computed under the Income Tax Act, 1961. The tax year for the company is 1st April 2009 to 31st March, 2010. The ultimate liability for which shall be determined on the basis of figures for the period 1st April 2009 to 31st March, 2010.

12. Segmental information for the year ended 31st December 2009

a) Information of Segments:

The Company has disclosed Business Segment as primary segment and Geographical segment as secondary segment. Segments have been identified taking into account the nature of the products, geographical locations, the differing risk and returns, the organisation structure and internal reporting system.

Segmental Revenue, Segmental Results, Segmental Assets and Segmental Liabilities include the respective amounts identifiable to each of the segments as also amounts allocated on a reasonable basis.

b) Unallocated items:

The net expenses, which are not attributable to the Business Segment, are shown as unallocated corporate cost. Assets and Liabilities that cannot be allocated between the segments are shown as a part of unallocated corporate assets and liabilities respectively.

13. RELATED PARTY DISCLOSURES

Related party disclosures, as required by AS-18, Related Party Disclosures, are given below:

1 RELATIONSHIPS:

I Parties where control exists Stork Prints B.V. Holding Company (Formerly known as Stork Screens B.V.)

Stork Prints Group B.V. Holding Company of Stork Prints B.V.

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

a) Fellow subsidiaries

Stork Print Pakistan Pvt Ltd. Stork Textile Systems Wuxi Co Ltd. Stork Print Brasil Ltda. Stork Prints (Indonesia) P.T. Stork MBK GMBH Stork Print Austria GMBH Stork Prints America INC Stork Digital Imaging B.V. Stork Veco B.V.

b) Other related parties

Pramol Traders Holding Private Limited (ceased to be a director w.e.f. 4th July 2008) Inspiron Engineering Private Limited (ceased to be a director w.e.f. 4th July 2008) Tyabji Dayabhai (ceased to be a related party w.e.f. 5th June 2008)

c) Directors of the Company

Mr. Ashish Kaul (Managing Director) Mr. Dirk W Joustra Mr. Aschwin Hollander Mr. Joost Willem Pieter Smits Mr. Khurshed M. Thanawalla Mr. Marco Philippus A Wadia Mr. Girish C. Sharedalal d) Relatives of the Directors Mr. Ardeshir Ruttonji Wadia Ms. Ingrid M Wadia Mrs. Pragnya Girish Sharedalal

14. Disclosure in respect of Derivative Instruments as at year end.

a. Foreign Currency exposure that are hedge by Derivative Instrument: NIL

15. There is no amount due and outstanding to be credited to Investor Education and Protection Fund.

16. Previous year figures have been rearranged, regrouped and restated wherever necessary.