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Notes to Accounts of LGB Forge Ltd.
Mar 31, 2025
a. Terms/ Rights attached to the Equity Shares:
i. The Company has only one class of equity shares having par value of '' 1/- per share. Each holder of Equity Shares is entitled to one vote per share. The company declares and pays dividend in Indian Rupees.
ii. The dividend proposed is as recommended by the Board of Directors and subject to the approval of the Shareholders in the Annual General Meeting.
iii. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
b. The Company does not have any holding company or ultimate holding company as on March 31, 2025.
LGB Forge Limited was demerged from M/s. L.G. Balakrishnan and Bros Limited in the year 2008. At the time of demerger on April 21, 2008, reserves on the date of demerger were transferred to Capital Reserves to the extent of the demerged portion.
1) The company has not defaulted in the repayment of loans and interest as at the balance sheet date.
2) Repayment and interest terms:
a) Term Loan from TATA Capital '' 13,00,00,000 has been received in 4 tranches of '' 3,00,00,000, '' 4,50,00,000, '' 1,00,00,000 and '' 4,50,00,000 disbursed on following dates 06-06-2023,15-09-2023, 08-02-2024 and 29-03-2024 respectively. The loan is repayable within 84 Months including moratorium period of 6 months.
Terms and conditions of short term loans taken from banks and financial institutions:
1) Cash Credit from Axis Bank carries an interest rate of â3 Months MCLR 1 %â payable at monthly intervals and are secured by first pari passu charge on entire current assets and second pari passu charge on the entire movable fixed assets of the Company, both present and future.
2) Cash Credit from ICICI Bank carries interest rate of â 6 Months MCLR 1 %â payable at monthly intervals and are secured by first charge of the Companyâs entire stock of raw materials, semi finished and finished goods, consumable stores and spares and such other movables including book debts, bills whether documentary or clean, outstanding monies, receivables , both present and future, ranking pari passu with other participating bank.
3) Cash Credit from IDBI bank carries interest rate of â10.35 %â payable at monthly intervals and are secured by pari passu first charge over the current assets of the Company, Collateral pari passu second charge over the fixed assets of the company except those that are exclusively charged to term lenders.
4) Term Loan from Smt. Rajsri Vijayakumar, disbursed on 30.09.2022 is repayable in 4 quarterly installments of '' 50 lakhs each within expiry of 3 years and has a moratorium of 2 year from the date of disbursement. Interest rate: 8% per annum, payable on quarterly basis. Accordingly, installment repayment has not yet commenced.
5) The term loan from Tata Capital is secured by way of:
a) First and exclusive charge by way of mortgage over on land and building located at plot no s.80/a, 80, 81 part, 82, 83 & 84, Belgoda Industrial area , Sy no 66 67 68 69 & 70 hebbal village, Kasaba Hobla Mysore Karnataka-570001 in the name of M/s LGB Forge ltd.
b) Hypothecation charge on the movable fixed assets located in the above factory at Mysore.
6) The above loans are further secured by Corporate Guarantee by M/s. L.G. Balakrishnan & Bros Limited.
i) Discontinued operations of Pondy Division :
The company has finalized a Business Transfer Agreement for sale of Pondy Division, effective from April 1, 2024. However, the impact of discontinuing operations has been addressed in accordance with IND AS 105. Consequently, the revenue and profit or Loss arising from discontinued operations (Pondy division) relating to the entire period from April 01, 2023 to March 31, 2024 are disclosed as discontinued operations in the financial statements. Profit from sale of the division is presented as an exceptional item in the financials for the year ended March 31, 2025.The breakup of Profit or Loss from Discontinued operations for the year ended March 31, 2024 is given below.
**A legal case filed by 22 employees of the Company, represented by their union, is currently pending before the Honâble High Court of Karnataka, Bangalore. The case was filed during the earlier financial years.
As of March 31, 2025
15 of the 22 employees have rejoined the company; 1 employee has passed away; 1 employee retired; 5 employees have not rejoined.
The legal proceedings are ongoing, and the final outcome remains uncertain. Accordingly, the quantum of potential compensation or financial liability, if any, arising from the litigation cannot be reasonably estimated at this stage.
The company continues to monitor the progress of the case and will assess the implications as developments unfold. The above information has been confirmed by the management.
The Company is engaged in the business of âManufacture of Forged and Machined Componentsââ and therefore, has only one reportable segment in accordance with Ind AS 108 âOperating Segmentsâ.
41. CORPORATE SOCIAL RESPONSIBILITY:
The Company does not exceed the amount specified in the Section 135 of the Companies Act, 2013, So the company is not mandated to spend any amount towards CSR activities for the financial year 2024-25.
42. DISCLOSURE AS REQUIRED UNDER REGULATION 34(3) AND 53(F) OF SEBI (LODR) REGULATIONS, 2015:
Loans and advances to firms / companies in which directors are interested - Nil (Previous year - Nil).
43. DISCLOSURE IN RELATION TO SECTION 186(4) OF THE COMPANIES ACT, 2013:
Nil (Previous year - Nil).
A. Capital Management:
The Company manages its capital to ensure that entities in the Company will be able to continue as going concern, while maximising the return to stakeholders through the optimisation of the debt and equity balance.
The Company determines the amount of capital required on the basis of annual operating plans and long term product and other strategic investment plans. The funding requirements are met through equity, Long term and Short term borrowings.
For the purposes of the Companyâs capital management, capital includes issued capital, share premium and all other equity reserves attributable to the equity holders. Debt includes Long term loans and Short term loans.
C. Financial Risk Management Objectives:
The Companyâs businesses are subject to several risks and uncertainties including financial risks.
The Companyâs activities expose it to credit risk, liquidity risk, market risk - interest rate risk and foreign currency risk. The Board of Directors has overall responsibility for the establishment and oversight of the Groupâs risk management framework. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the related impact in the financial statements.
C redit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of credit worthiness as well as concentration risks. The companyâs credit risk generally arises from cash and cash equivalents, trade receivables, and other financial assets.
Credit Risk Management:
The Company assesses and manages credit risk of financial assets based on following categories arrived on the basis of assumptions, inputs and factors specific to the class of financial assets.
A: Low credit risk B: Moderate credit risk C: High credit risk
Based on business environment in which the Company operates, a default on a financial asset is considered when the counterparty fails to make payments within the agreed time period as per contract. Loss rates reflecting defaults are based on actual credit loss experience and considering differences between current and historical economic conditions. Assets are written off when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or litigation decided against the Company. The Company continues to engage with parties whose balances are written off and attempts to enforce repayment. Recoveries made are recognized in statement of profit and loss.
As per simplified approach, the Company makes provision of expected credit losses on trade receivables based on past experiences to mitigate the risk of default in payments and makes appropriate provision at each reporting date wherever outstanding is for longer period and involves higher risk.
ii. Liquidity Risk:
L iquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company invests its surplus funds in bank fixed deposit. The Company also constantly monitors funding options available in the debt and capital markets with a view to maintaining financial flexibility.
Market risk is the risk of any loss in future earnings, in realizable fair values or in future cash flows that may result from a change in the price of a financial instrument. The Companyâs activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Company actively manages its currency and interest rate exposures through its finance division and uses derivative instruments such as forward contracts and currency swaps, wherever required, to mitigate the risks from such exposures. The use of derivative instruments is subject to limits and regular monitoring by appropriate levels of management.
The Company holds interest bearing assets in the form of fixed deposits with banks. The variation in interest risk not material as the balance in deposits is not significant.
The Company is exposed to interest rate risk because it borrows funds at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings.
Interest Rate Sensitivity Analysis:
If interest rates had been 100 basis points higher / lower and all other variables were held constant, the Companyâs profit for the year ended 31 March 2025 would decrease / increase by '' 21.39 Lakhs (for the year ended 31 March 2024: decrease / increase by '' 27.05 Lakhs). This is mainly attributable to the Companyâs exposure to interest rates on its variable rate borrowings.
v. Foreign Currency Risk Management:
The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The Company actively manages its currency rate exposures through a centralised treasury division and uses natural hedging principles to mitigate the risks from such exposures. The use of derivative instruments, if any, is subject to limits and regular monitoring by appropriate levels of management.
The carrying amounts of the Companyâs foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.
In addition, for financial reporting purposes, fair value measurements are categorised into level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety. The three levels are explained as follows:
Level 1 - Inputs are quoted prices in active markets for identical assets or liabilities that the company can access
at the measurement date. These quoted prices are unadjusted.
Level 2 - Inputs are inputs, other than quoted prices included in level 1, that are observable for the asset or
liability, either directly or indirectly.
Level 3 - Inputs are unobservable inputs for the asset or liability.
46. RETIREMENT BENEFIT PLANS:Defined Contribution Plans:
I n accordance with Indian law, eligible employees of the Company are entitled to receive benefits in respect of provident fund, a defined contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employeesâ salary. The contributions, as specified under the law, are made to the Provident fund as well as Employee State Insurance Fund.
T he expense recognised during the period towards this defined contribution plan is 38.33 Lakhs (March 31, 2024 - 51.72 Lakhs)
(a) Gratuity:
Gratuity is payable as per Payment of Gratuity Act, 1972. In terms of the same, gratuity is computed by multiplying last drawn salary (basic salary including dearness allowance, if any) by completed years of continuous service with part thereof in excess of six months and again by 15/26. The Act provides for a vesting period of 5 years for withdrawal and retirement and a monetary ceiling on gratuity payable to an employee on separation, as may be prescribed under the Payment of Gratuity Act, 1972, from time to time. However, in cases where an enterprise has more favourable terms in this regard the same has been adopted.
These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk and salary risk.
Investment risk The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to the market yields on government bonds denominated in Indian Rupees. If the actual return on plan asset is below this rate, it will create a plan deficit.
Interest risk A decrease in the bond interest rate will increase the plan liability. However, this
will be partially offset by an increase in the return on the planâs debt investments. Longevity risk The present value of the defined benefit plan liability is calculated by reference
to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan''s liability.
Salary risk The present value of the defined benefit plan liability is calculated by reference to
the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the planâs liability.
Details of the items included in numerator and denominator for computing the above ratios.
a) Capital employed refers to sum of [Share Capital Other equity - Intangible Assets Lease Liabilites Deferred Tax liabilities Total Debt]
b) Earnings before interest and taxes = [Profits after current & deferred taxes Finance Costs Current Taxes Deferred Taxes]
c) Earnings available for Debt Service = Net Profit after taxes Non-cash operating expenses like depreciation and other amortizations Interest Loss on sale of Fixed assets
d) Debt service = Interest & Lease payments Principal repayments
* The following ratios show a change of more than 25% as compared to last year. The reasons for the high variance are as under:
a) Debt Service Coverage Ratio:
The ratio improved due to substantial non-recurring profits from the sale of discontinuing operations.
b) Inventory Turnover Ratio:
The ratio increased due to a significant reduction in closing inventory.
c) Trade Payables Turnover Ratio:
The ratio increased due to a significant reduction in closing trade payables.
The ratio improved due to substantial gains from exceptional items.
e) Return on Capital Employed Ratio:
The ratio improved due to reduced losses and lower finance costs.
f) Return on Investment Ratio:
The ratio improved due to a reduction in losses before exceptional items and higher non-current assets.
Note: The comparative ratios for the financial year ended 31.03.2025 (i.e., for 31.03.2024) will not align with the financial statements of 31.03.2024, as the Pondy Division was discontinued during the current financial year. Accordingly, for the purpose of comparatives, the figures relating to the Pondy Division have been excluded, whereas they were included in the previous yearâs financials.
50. a) The title deeds of immovable properties (other than immovable properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) disclosed in the financial statements are held in the name of the Company.
50. b) The Company has not revalued its Property, Plant and Equipment (including right of use assets) and Intangible Assets during the year.
51 The company has no proceeding initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder.
52 No Scheme of Arrangement is approved u/s.230 to 237 of the Companies Act for the company.
53 The Companyâs borrowings from banks or financial institutions on the basis of security of current assets and the quarterly returns or statements of current assets filed by the Company with banks or financial institutions are in agreement with the books of accounts.
54 The Company is not declared as a wilful defaulter by any bank or financial institution.
55 The Company has complied with the number of layers prescribed under clause (87) of Section 2 of the Act read with Companies (Restriction on number of layers) Rules, 2017.
56 The Indian Parliament has approved the Code on Social Security, 2020 which would impact the contributions by the company towards Provident Fund and Gratuity. The Ministry of Labour and Employment had released draft rules for the Code on Social Security, 2020 on November 13, 2020, and invited suggestions from stakeholders which are under consideration by the Ministry. The Company will assess the impact and its evaluation once the subject rules are notified. The Company will give appropriate impact in its financial statements in the period in which, the Code becomes effective and the related rules to determine the financial impact are published.
57 The Company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to or in any other person or entity, including foreign entities (intermediaries) with the understanding (whether recorded in writing or otherwise) that the intermediary shall whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
58 The Company has not been received any funds from any person or entity, including foreign entity (âFunding Partiesâ) with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
59 The Company has no income which has been surrendered or disclosed as income during the year in any of the Tax assessments under the Income Tax Act, 1961.
60 The Company has not traded/invested in Crypto currency, virtual currency during the financial year.
61 Loans and advances in the nature of loan granted to promoter, KMP and related parties - Nil.
62 There are no charges or satisfaction of charges that are yet to be registered with Registrar of Companies beyond the statutory period.
63 The Company has not issued any securities for a specific purpose.
64 The Company has utilised the borrowings from banks and financial institutions for the purpose for which it was availed.
65 As per the information available with the company, the company has no transactions with the companies struck off under Section 248 of the Companies Act, 2013 or Section 560 of the Companies Act, 1956.
Mar 31, 2024
a. Terms/ Rights attached to the Equity Shares:
i. The Company has only one class of equity shares having par value of '' 1/- per share. Each holder of Equity
Shares is entitled to one vote per share. The company declares and pays dividend in Indian Rupees.
ii. The dividend proposed is as recommended by the Board of Directors and subject to the approval of the
Shareholders in the Annual General Meeting.
iii. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
b. The Company does not have any holding company or ultimate holding company as on March 31, 2024.
LGB Forge Limited was demerged from M/s. L.G. Balakrishnan and Bros Limited in the year 2008. At the time of demerger on April 21, 2008, reserves on the date of demerger were transferred to Capital Reserves to the extent of the demerged portion.
1) The company has not defaulted in the repayment of loans and interest as at the balance sheet date.
2) Repayment and interest terms:
a) Term Loan from Smt. Rajsri Vijayakumar, disbursed on September 30, 2022 is repayable in 4 quarterly installments of '' 50,00,000 each within expiry of 3 years and has a moratorium of 2 years from the date of disbursement. Interest rate: 8% per annum, payable on quarterly basis.
b) Term Loan from TATA Capital '' 13,00,00,000 has been received in 4 tranches of '' 3,00,00,000, '' 4,50,00,000, '' 1,00,00,000 and '' 4,50,00,000 disbursed on following dates June 06, 2023, September 15, 2023, February 08, 2024 and March 29, 2024 respectively. The loan is repayable within 84 Months including moratorium period of 6 months.
Terms and conditions of short term loans taken from banks and financial institutions:
1) Cash Credit from Axis Bank carries an interest rate of â3 Months MCLR 1 %â payable at monthly intervals and are secured by first pari passu charge on entire current assets and second pari passu charge on the entire movable fixed assets of the Company, both present and future.
2) Cash Credit from ICICI Bank carries interest rate of â 6 Months MCLR 1 %â payable at monthly intervals and are secured by first charge of the Companyâs entire stock of raw materials, semi finished and finished goods, consumable stores and spares and such other movables including book debts, bills whether documentary or clean, outstanding monies, receivables, both present and future, ranking pari passu with other participating bank.
3) Cash Credit from IDBI bank carries interest rate of â11.75 %â payable at monthly intervals and are secured by pari passu first charge over the current assets of the Company, Collateral pari passu second charge over the fixed assets of the company except those that are exclusively charged to term lenders.
4) Working Capital Loans from Bajaj Finance Limited carry interest of 12.8% and is secured by way of :
a) Factory Land and Building at No. 80 & 81, 5th Mile, Metagalli Post, KRS Road, Mysore, Karnataka and
b) a charge on all Movable Fixed Assets of the company both present and future.
5) The term loan from Tata Capital is secured by way of:
a) First and exclusive charge by way of mortgage over on land and building located at Plot No S. 80/a, 80, 81 Part, 82, 83 & 84, Belgoda Industrial Area , Sy no 66 67 68 69 & 70 Hebbal Village, Kasaba Hobla, Mysore, Karnataka - 570001 in the name of M/s. LGB Forge Limited.
b) Hypothecation charge on the movable fixed assets located in the above factory at Mysore.
6) The above loans are further secured by Corporate Guarantee by M/s. L.G. Balakrishnan & Bros Limited.
i) Discontinued operations of Pondicherry Division :
The Company has finalized a Business Transfer Agreement for sale of Pondicherry Division, effective from April 01, 2024. However, the impact of discontinued operations has been addressed in accordance with Ind AS 105 during financial year ended March 31, 2024. Consequently, the revenue and profit or loss arising from discontinued operations (Pondicherry division) relating to the entire period from April 01, 2023 to March 31, 2024 are disclosed as discontinued operations in the financial statements relating to the year ended March 31,2024. Accordingly, the company has re-presented the audited financial statements for the year ended March 31, 2023 for comparable information by segregating the operations that the company is continuing and operations that have discontinued by the end of March 31, 2024. The breakup of Profit or Loss from discontinued operations for the year ended March 31, 2024 along with re-presented comparative information for the year ended March 31, 2023 is given below.
|
37. COMMITMENTS AND CONTINGENT LIABILITIES: |
||
|
Bank Guarantees |
98.56 |
58.56 |
|
Claims anticipated towards termination of employee challenged by appeal |
9.30 |
9.30 |
|
Letter of credits |
131.08 |
226.27 |
41. CORPORATE SOCIAL RESPONSIBILITY:
The Company does not exceed the amount specified in the Section 135 of the Companies act, 2013, So the company is not mandated to spend any amount towards CSR activities for the financial year 2023-24.
42. DISCLOSURE AS REQUIRED UNDER REGULATION 34(3) AND 53(F) OF SEBI (LODR) REGULATIONS, 2015:
Loans and advances to firms / companies in which directors are interested - Nil (Previous year - Nil).
43. DISCLOSURE IN RELATION TO SECTION 186(4) OF THE COMPANIES ACT, 2013:
Nil (Previous year - Nil).
A. Capital Management:
The Company manages its capital to ensure that entities in the Company will be able to continue as going concern, while maximising the return to stakeholders through the optimisation of the debt and equity balance.
The Company determines the amount of capital required on the basis of annual operating plans and long term product and other strategic investment plans. The funding requirements are met through equity, long term and short term borrowings.
For the purposes of the Companyâs capital management, capital includes issued capital, share premium and all other equity reserves attributable to the equity holders. Debt includes long term loans and short term loans.
C. Financial Risk Management Objectives:
The Companyâs businesses are subject to several risks and uncertainties including financial risks.
The Companyâs activities expose it to credit risk, liquidity risk, market risk - interest rate risk and foreign currency risk. The Board of Directors has overall responsibility for the establishment and oversight of the Groupâs risk management framework. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the related impact in the financial statements.
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of credit worthiness as well as concentration risks. The companyâs credit risk generally arises from cash and cash equivalents, trade receivables, and other financial assets.
Credit Risk Management:
The Company assesses and manages credit risk of financial assets based on following categories arrived on the basis of assumptions, inputs and factors specific to the class of financial assets.
A: Low credit risk B: Moderate credit risk C: High credit risk
Based on business environment in which the Company operates, a default on a financial asset is considered when the counterparty fails to make payments within the agreed time period as per contract. Loss rates reflecting defaults are based on actual credit loss experience and considering differences between current and historical economic conditions. Assets are written off when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or litigation decided against the Company. The Company continues to engage with parties whose balances are written off and attempts to enforce repayment. Recoveries made are recognized in statement of profit and loss.
As per simplified approach, the Company makes provision of expected credit losses on trade receivables based on past experienes to mitigate the risk of default in payments and makes appropriate provision at each reporting date wherever outstanding is for longer period and involves higher risk.
ii. Liquidity Risk:
Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company invests its surplus funds in bank fixed deposit. The Company also constantly monitors funding options available in the debt and capital markets with a view to maintaining financial flexibility.
Liquidity Risk Management:
The following tables detail the Companyâs remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay.
Market risk is the risk of any loss in future earnings, in realizable fair values or in future cash flows that may result from a change in the price of a financial instrument. The Companyâs activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Company actively manages its currency and interest rate exposures through its finance division and uses derivative instruments such as forward contracts and currency swaps, wherever required, to mitigate the risks from such exposures. The use of derivative instruments is subject to limits and regular monitoring by appropriate levels of management.
The Company holds interest bearing assets in the form of fixed deposits with banks. The variation in interest risk not material as the balance in deposits is not significant.
Interest Rate Sensitivity Analysis:
If interest rates had been 100 basis points higher / lower and all other variables were held constant, the Companyâs profit for the year ended March 31, 2024 would decrease / increase by '' 27.05 Lakhs (for the year ended March 31, 2023: decrease / increase by '' 21.42 Lakhs). This is mainly attributable to the Companyâs exposure to interest rates on its variable rate borrowings.
iv. Foreign Currency Risk Management:
The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The Company actively manages its currency rate exposures through a centralised treasury division and uses natural hedging principles to mitigate the risks from such exposures. The use of derivative instruments, if any, is subject to limits and regular monitoring by appropriate levels of management.
The carrying amounts of the Companyâs foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.
In addition, for financial reporting purposes, fair value measurements are categorised into level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety. The three levels are explained as follows:
Level 1 - Inputs are quoted prices in active markets for identical assets or liabilities that the company can access
at the measurement date. These quoted prices are unadjusted.
Level 2 - Inputs are inputs, other than quoted prices included in level 1, that are observable for the asset or
liability, either directly or indirectly.
Level 3 - Inputs are unobservable inputs for the asset or liability.
1. Marked (#) Managerial remuneration does not include contribution made by the company towards Gratuity and Leave Encashment as the incremental liability has been accounted by the company as a whole and separate details for individual employee is not available.
2. Marked (*) Above figures includes GST, wherever it is applicable.
46. RETIREMENT BENEFIT PLANS:Defined Contribution Plans:
In accordance with Indian law, eligible employees of the Company are entitled to receive benefits in respect of provident fund, a defined contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employeesâ salary. The contributions, as specified under the law, are made to the Provident fund as well as Employee State Insurance Fund.
The expense recognised during the period towards this defined contribution plan is '' 51.72 Lakhs (March 31, 2023 - '' 72.83 Lakhs).
(a) Gratuity:
Gratuity is payable as per Payment of Gratuity Act, 1972. In terms of the same, gratuity is computed by multiplying last drawn salary (basic salary including dearness allowance, if any) by completed years of continuous service with part thereof in excess of six months and again by 15/26. The Act provides for a vesting period of 5 years for withdrawal and retirement and a monetary ceiling on gratuity payable to an employee on separation, as may be prescribed under the Payment of Gratuity Act, 1972, from time to time. However, in cases where an enterprise has more favourable terms in this regard the same has been adopted.
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
Note: The above values are present values as on March 31, 2024 & March 31, 2023 respectively.
The weighted average duration of the defined benefit obligation is 12.22 years (March 31, 2023 - 13.38 years).
b) Compensated absences:
The leave scheme is a final salary defined benefit plan, that provides for a lumpsum payment at the time of separation; based on scheme rules the benefits are calculated on the basis of last drawn salary and the leave count at the time of separation and paid as leave encashment.
Details of the items included in numerator and denominator for computing the above ratios.
a) Capital employed refers to sum of [Share Capital Other equity - Intangible Assets Lease Liabilites Deferred Tax liabilities Total Debt]
b) Earnings before interest and taxes = [Profits after current & deferred taxes Finance Costs Current Taxes Deferred Taxes]
c) Earnings available for Debt Service = Net Profit after taxes Non-cash operating expenses like depreciation and other amortizations Interest Loss on sale of Fixed assets
d) Debt service = Interest & Lease payments Principal repayments
* The following ratios show a change of more than 25% as compared to last year. The reasons for the high variance are as under:
a) Debt - Equity Ratio :The company has availed '' 13 Crores during the year. Therefore the debt equity ratio increased.
b) Debt - Service coverage Ratio :The companyâs loss has been increased during the year and availed the additional loan amounting to '' 13 Crores. Hence, there is a adverse effect on the ratio.
c) Return on equity Ratio: The companyâs loss has been increased during the year. Hence, there is a adverse effect on the ratio.
d) Return on Investments: The company has not made any investment and hence the relevant ratio is not applicable.
50. b) The Company has not revalued its Property, Plant and Equipment (including right of use assets)and Intangible Assets during the year.
51 The company has no proceeding initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder.
52 No Scheme of Arrangement is approved u/s.230 to 237 of the Companies Act for the company.
53 The Companyâs borrowings from banks or financial institutions on the basis of security of current assets and the quarterly returns or statements of current assets filed by the Company with banks or financial institutions are in agreement with the books of accounts.
54 The Company is not declared as a wilful defaulter by any bank or financial institution.
55 The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of layers) Rules, 2017.
56 The Indian Parliament has approved the Code on Social Security, 2020 which would impact the contributions by the company towards Provident Fund and Gratuity. The Ministry of Labour and Employment had released draft rules for the Code on Social Security, 2020 on November 13, 2020, and invited suggestions from stakeholders which are under consideration by the Ministry. The Company will assess the impact and its evaluation once the subject rules are notified. The Company will give appropriate impact in its financial statements in the period in which, the Code becomes effective and the related rules to determine the financial impact are published.
57 The Company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to or in any other person or entity, including foreign entities (intermediaries) with the understanding (whether recorded in writing or otherwise) that the intermediary shall whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
58 The Company has not been received any funds from any person or entity, including foreign entity (âFunding Partiesâ) with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
59 The Company has no income which has been surrendered or disclosed as income during the year in any of the Tax assessments under the Income Tax Act, 1961.
60 The Company has not traded/invested in Crypto currency, virtual currency during the financial year.
61 Loans and advances in the nature of loan granted to promoter, KMP and related parties - Nil.
62 There are no charges or satisfaction of charges that are yet to be registered with Registrar of Companies beyond the statutory period.
63 The Company has not issued any securities for a specific purpose.
64 The Company has utilised the borrowings from banks and financial institutions for the purpose for which it was availed.
65 As per the information available with the company, the company has no transactions with the companies struck off under Section 248 of the Companies Act, 2013 or Section 560 of the Companies Act, 1956.
Mar 31, 2019
1. A Corporate Information
LGB Forge Limited was incorporated on 07.06.2006. The company is into manufacturing of Cold and Hot forged components and has its manufacturing unit at Tamilnadu, Karnataka and Pondicherry. The company concentrates in manufacturing high volume Auto, Electrical & Transmission forged components for automobiles, non automotive segments like Valve Industry and infrastructure equipment industry including machining for customers in automotive, off-road and non-automotive segments.
Application of new and revised Indian Accounting Standards
The Company has applied all the Indian Accounting Standards (hereinafter referred to as âInd ASâ) notified by the Ministry of Corporate Affairs (MCA) to the extent applicable to the Company.
The following standards have been notified by Ministry of Corporate Affairs and are not effective as of 31st March 2019:
Ind AS 116 - Leases (Effective from April 1, 2019) The Company is evaluating the requirements of the above standards and the effect on the financial statements is also being evaluated.
Notes:
a) There are no Goods in Transit as on 31/03/2019
b) For method of valuation of inventories, refer Note No. 1.B.IX
c) Inventories with the above carrying value, pledged as security against borrowings, are stated in Note No 19
d) Cost of Inventory recognised as expenditure
Notes:
a) Allowance for ECL
In determining the allowances for doubtful trade receivables, the company uses ECL allowance method.Expected credit losses are accounted after taking into account historical credit loss experiences of the company.
b) Trade receivables with the above carrying value, pledged as security against borrowings, are stated in Note No 19.
c) Credit period offered to customers varies between 30 to 90 days.
b. Terms/ Rights attached to the Equity Shares
i. The Company has only one class of Equity Shares having par value of Rs.1/- per share. Each holder of Equity Shares is entitled to one vote per share. The company declares and pays Dividend in Indian Rupees.
ii. The Dividend Proposed is as recommended by the Board of Directors and subject to the approval of the Shareholdersâ in the Annual General Meeting.
iii. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders
c. The Company does not have any holding company or ultimate holding company as on 31.03.2019
1) The company has not defaulted in the repayment of loans and interest as at the balance sheet date.
2) Repayment and interest terms:
i) Term Loan from Bajaj Finanace Limited is repayable in 13 quarterly instalments of Rs. 50 lakhs each. Interest rate: âPLR minus 7.5%â, payable on monthly basis.
ii) Term Loan from Bajaj Finanace Limited repayable in 20 quarterly instalments of Rs. 10 lakhs each .âInterest rate : âPLR minus 8.25%â, payable on monthly basis.
3) Security Details
The loan is secured by way of :
a) Factory Land and Building at No. 80 & 81, 5th Mile, Matagalli post, KRS Road,Mysore, Karnataka, and
b) Charge on all Movable Fixed Assets of the Company both present and future.
Terms and conditions of short term loans taken from banks and financial institutions:
1) Cash Credit from Axis Bank carries an interest rate of â3 Months MCLR 1%â payable at monthly intervals and are secured by first pari passu charge on entire current assets and second pari passu charge on the entire movable fixed assets of the Company, both present and future.
2) Cash Credit from ICICI Bank carries interest rate of â6 Months MCLR 1.50%â payable at monthly intervals and are secured by first charge of the Companyâs entire stock of raw materials, semi finished and finished goods, consumable stores and spares and such other movables including book debts, bills whether documentary or clean, outstanding monies, receivables, both present and future, ranking pari passu with other participating bank.
3) Cash Credit from IDBI bank carries interest rate of â6 Months MCLR 3.15%â payable at monthly intervals and are secured by pari passu first charge over the current assets of the Company , Collateral pari passu second charge over the fixed assets of the company except those that are exclusively charged to term lenders.
4) Working Capital Loan from Bajaj Finance Limited carries interest of âPLR minus 9%â and is secured by way of:
a) Factory Land and Building at No. 80 & 81, 5th Mile, Matagalli post, KRS road, Mysore Karnataka, and
b) a charge on all Movable Fixed Assets of the company both present and future.â
5) The above loans are further secured by Corporate Guarantee by L.G. Balakrishnan & Bros Limited.
2. DEFERRED TAX ASSET
Deferred tax asset has not been recognised in respect of the following items because it is not probable that future taxable profits will be available against which the company can use the benefits thereon.
3. OPERATING LEASE ARRANGEMENTS
The Company has entered into operating leases, having a lease period ranging from one year to five years, with an option to renew the lease. The total amount of lease rents recognised on operating leases during the year is Rs. 104.69 Lakhs ( Previous Year Rs.72.16 lakhs).
4. Corporate Social Responsibility
The average net profit of the immediately proceeding three financial years is negative, accordingly, the company is not mandated to spend any amount towards CSR activitities for the financial year 2018-19.
5. Disclosure as required under Regulation 34(3) and 53 (f) of SEBI (LODR) Regulations,2015
Loans and advances to firms/ companies in which directors are interested - Rs. Nil (Previous year - Rs. Nil)
6. Disclosure in relation to Section 186 (4) of the Companies Act, 2013
Rs. Nil (Previous year - Rs. Nil)
7. Financial Instruments
A. Capital management
The Company manages its capital to ensure that entities in the Company will be able to continue as going concern, while maximising the return to stakeholders through the optimisation of the debt and equity balance.
The Company determines the amount of capital required on the basis of annual operating plans and longterm product and other strategic investment plans. The funding requirements are met through equity, long term and short-term borrowings.
For the purposes of the Companyâs capital management, capital includes issued capital, share premium and all other equity reserves attributable to the equity holders. Debt includes Long Term Loans and Short Term Loans.
C. Financial risk management objectives
The Companyâs businesses are subject to several risks and uncertainties including financial risks.
The Companyâs activities expose it to credit risk, liquidity risk, market risk - interest rate risk and foreign currency risk. The Board of Directors has overall responsibility for the establishment and oversight of the Groupâs risk management framework. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the related impact in the financial statements.
i. 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. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration risks.
The companyâs credit risk generally arises from Cash and cash equivalents, trade receivables, and other financial assets.
Credit Risk Management
The Company assesses and manages credit risk of financial assets based on following categories arrived on the basis of assumptions, inputs and factors specific to the class of financial assets.
A: Low credit risk
B: Moderate credit risk
C: High credit risk
Based on business environment in which the Company operates, a default on a financial asset is considered when the counterparty fails to make payments within the agreed time period as per contract. Loss rates reflecting defaults are based on actual credit loss experience and considering differences between current and historical economic conditions. Assets are written off when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or litigation decided against the Company. The Company continues to engage with parties whose balances are written off and attempts to enforce repayment. Recoveries made are recognized in statement of profit and loss.
As per simplified approach, the Company makes provision of expected credit losses on trade receivables based on past experiences to mitigate the risk of default in payments and makes appropriate provision at each reporting date wherever outstanding is for longer period and involves higher risk.
ii. Liquidity risk
Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company invests its surplus funds in bank fixed deposit . The Company also constantly monitors funding options available in the debt and capital markets with a view to maintaining financial flexibility.
iii. Market risk
Market risk is the risk of any loss in future earnings, in realizable fair values or in future cash flows that may result from a change in the price of a financial instrument. The Companyâs activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Company actively manages its currency and interest rate exposures through its finance division and uses derivative instruments such as forward contracts and currency swaps, wherever required, to mitigate the risks from such exposures. The use of derivative instruments is subject to limits and regular monitoring by appropriate levels of management. Interest Rate risk
The Company is exposed to interest rate risk because it borrow funds at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings
Interest rate sensitivity analysis
If interest rates had been 100 basis points higher / lower and all other variables were held constant, the Companyâs profit for the year ended 31st March 2019 would decrease / increase by Rs. 2.51 Lakhs (for the year ended 31st March 2018: decrease / increase by Rs. 2.66 Lakhs). This is mainly attributable to the Companyâs exposure to interest rates on its variable rate borrowings.
iv. Foreign currency risk management
The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The Company actively manages its currency rate exposures through a centralised treasury division and uses natural hedging principles to mitigate the risks from such exposures. The use of derivative instruments, if any, is subject to limits and regular monitoring by appropriate levels of management.
Fair Value Hierarchy
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.
In addition, for financial reporting purposes, fair value measurements are categorised into level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety. The three levels are explained as follows:
Level 1 - inputs are quoted prices in active markets for identical assets or liabilities that the company can access at the measurement date. These quoted prices are unadjusted.
Level 2 - inputs are inputs, other than quoted prices included in level 1, that are observable for the asset or liability, either directly or indirectly.
Level 3 - inputs are unobservable inputs for the asset or liability.
The table below categorises financial instruments and analyses those measured at fair value by the level into which the fair value measurement is categorised.
* Managerial remuneration does not include contribution made by the company towards Gratuity and Leave Encashment as the incremental liability has been accounted by the company as a whole and seperate details for individual employee is not available.
8. Retirement benefit plans
Defined contribution plans
In accordance with Indian law, eligible employees of the Company are entitled to receive benefits in respect of provident fund, a defined contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employeesâ salary. The contributions, as specified under the law, are made to the Provident fund as well as Employee State Insurance Fund.
The expense recognised during the period towards this defined contribution plan is Rs.107.90 Lakhs (March 31, 2018 - Rs.83.64 Lakhs).
Defined benefit plans
(a) Gratuity
Gratuity is payable as per Payment of Gratuity Act, 1972. In terms of the same, gratuity is computed by multiplying last drawn salary (basic salary including dearness Allowance if any) by completed years of continuous service with part thereof in excess of six months and again by 15/26. The Act provides for a vesting period of 5 years for withdrawal and retirement and a monetary ceiling on gratuity payable to an employee on separation, as may be prescribed under the Payment of Gratuity Act, 1972, from time to time. However, in cases where an enterprise has more favourable terms in this regard the same has been adopted.
These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk and salary risk.
b) Compensated absences
The leave scheme is a final salary defined benefit plan, that provides for a lumpsum payment at the time of separation; based on scheme rules the benefits are calculated on the basis of last drawn salary and the leave count at the time of separation and paid as leave encashment.
9. Figures have been rounded of to the nearest Lakh and two decimals thereof.
10. The amounts and disclosures included in the financial statements of the previous year have been reclassified / regrouped wherever necessary to conform to current yearâs classification.
Mar 31, 2018
A Corporate Information
LGB Forge Limited was incorporated on 07.06.2006. The company is into manufacturing of Cold and Hot forged components and has its manufacturing unit at Tamilnadu and Karnataka. The company concentrates in manufacturing high volume Auto, Electrical & Transmission forged components for automobiles, non automotive segments like Valve Industry and infrastructure equipment industry including machining for customers in automotive, off-road and non-automotive segments.
Application of new and revised Indian Accounting Standards
The Company has applied all the Indian Accounting Standards (hereinafter referred to as ''Ind AS'') notified by the Ministry of Corporate Affairs (MCA) to the extent applicable to the Company.
The following standards have been notified by Ministry of Corporate Affairs and are not effective as of 31st March 2018:
a. Ind AS 115 Revenue from Contracts with Customers (effective from April 1, 2018)
b. Ind AS 116 Leases
The Company is evaluating the requirements of the above standards and the effect on the financial statements is also being evaluated.
Notes :
a) Additions during the year includes purchase of vehicle, the registration formalities for which is under process.
b) Property, plant and equipment pledged as security against borrowings, are stated in Note No 17 and Note 19
c) The company has elected to use the exemption available under Ind AS 101 to continue the carrying value for all its Property, Plant and Equipment as recognised in the financial statements as at the date of transition to Ind AS(s), measured as per previous GAAP and use that as its deemed cost as at the date of transition (April 1, 2016) as per the following details:-
Notes:
a) The company has elected to use the exemption available under Ind AS 101 to continue the carrying value for all its Intangible Assets as recognised in the financial statements as at the date of transition to Ind AS(s), measured as per previous GAAP and use that as its deemed cost as at the date of transition (April 1, 2016) as per the following details:-
Notes:
a) There are no Goods in Transit as on 31/03/2018
b) For method of valuation of inventories, refer Note 1.B.IX
c) Inventories with the above carrying value, pledged as security against borrowings, are stated in Note No 19
d) Cost of Inventory recognised as expenditure
Notes:
a) Allowance for ECL
In determining the allowances for doubtful trade receivables, the company uses ECL allowance method. Expected credit losses are accounted after taking into account historical credit loss experiences of the company.
b) Trade receivables with the above carrying value, pledged as security against borrowings, are stated in Note No 19.
c) Credit period offered to customers varies between 30 to 90 days.
b. Terms/ Rights attached to the Equity Shares
i. The Company has only one class of Equity Shares having par value of Rs.1/- per share. Each holder of Equity Shares is entitled to one vote per share. The company declares and pays Dividend in Indian Rupees.
ii. The Dividend Proposed is as recommended by the Board of Directors and subject to the approval of the Shareholders'' in the Annual General Meeting.
iii. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders
c. The Company does not have any holding company or ultimate holding company as on 31.03.2018
d. Shareholders holding more than 5% shares
Capital Reserves:
LGB Forge Ltd was demerged from LG Balakrishnan and Bros Ltd in the year 2008. At the time of demerger on 21.04.2008, reserves on the date of demerger were transferred to Capital Reserves to the extent of the demerged portion.
1) The company has not defaulted in the repayment of loans and interest as at the balance sheet date.
2) Repayment and interest terms:
i) Term Loan from Bajaj Finanace Limited is repayable in 13 quarterly instalments of Rs. 50 lakhs each. Interest rate: ''PLR minus 7.5%'', payable on monthly basis.
ii) Term Loan from Bajaj Finanace Limited repayable in 20 quarterly instalments of Rs. 10 lakhs each . Interest rate : ''PLR minus 8.25%'', payable on monthly basis.
3) Security Details
The loan is secured by way of :
a) Factory Land and Building at No. 80 & 81, 5th Mile, Matagalli post, KRS Road,Mysore, Karnataka, and
b) Charge on all Movable Fixed Assets of the Company both present and future.
Terms and conditions of short term loans taken from banks and financial institutions:
1) Cash Credit from Axis Bank carries an interest rate of 3 Months MCLR 1.75% " payable at monthly intervals and are secured by first pari passu charge on entire current assets and second pari passu charge on the entire movable fixed assets of the Company, both present and future.
2) Cash Credit from ICICI Bank carries interest rate of 6 Months MCLR 1.50% payable at monthly intervals and are secured by first charge of the Company''s entire stock of raw materials, semi finished and finished goods, consumable stores and spares and such other movables including book debts, bills whether documentary or clean, outstanding monies, receivables, both present and future, ranking pari passu with other participating bank.
3) Cash Credit from IDBI bank carries interest rate of 6 Months MCLR 3.15% " payable at monthly intervals and are secured by pari passu first charge over the current assets of the Company , Collateral pari passu second charge over the fixed assets of the company except those that are exclusively charged to term lenders.
4) Working Capital Loan from Bajaj Finance Limited carries interest of PLR minus 9%""and is secured by way of:
a) Factory Land and Building at No. 80 & 81, 5th Mile, Matagalli post, KRS road, Mysore Karnataka, and
b) a charge on all Movable Fixed Assets of the company both present and future."
5) The above loans are further secured by Corporate Guarantee by L.G. Balakrishnan & Bros Limited.
1. OPERATING SEGMENTS
The company is engaged in the business of "Manufacture of Forged and Machined Components" and therefore, has only one reportable segment in accordance with Ind AS 108 ''Operating Segments''.
Information relating to geographical areas
2. OPERATING LEASE ARRANGEMENTS
The Company has entered into operating leases, having a lease period ranging from one year to five years, with an option to renew the lease. The total amount of lease rents recognised on operating leases during the year is Rs. 72.16 Lakhs (Previous year Rs.42.64 Lakhs).
3. Corporate Social Responsibility
The average net profit of the immediately proceeding three financial years is negative, accordingly, the company is not mandated to spend any amount towards CSR activities for the financial year 2017-18.
4. Disclosure as required under Regulation 34(3) and 53 (f) of SEBI (LODR) Regulations,2015
Loans and advances to firms/ companies in which directors are interested - Rs. Nil (Previous year - Rs. Nil)
5. Disclosure in relation to Section 186 (4) of the Companies Act, 2013
Rs. Nil (Previous year - Rs. Nil)
6. First-time adoption of Ind AS Transition to Ind AS
"The Company has adopted Ind AS with effect from 1st April 2017 with comparatives being restated. Accordingly the impact of transition has been provided in the Opening Reserves as at 1st April 2016. The figures for the previous period have been restated, regrouped and reclassified wherever required to comply with the requirement of Ind AS and Schedule III. Ind AS 101 First-time Adoption of Indian Accounting Standards allows first-time adopters certain exemptions from retrospective application of certain requirements under Ind AS. Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.
A.1 Ind AS optional exemptions
A.1.1 Deemed cost for PPE and Intangible Assets
"Ind AS 101 ''First-time Adoption of Indian Accounting Standards'' permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognized in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for decommissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38, ''Intangible Assets''. Accordingly, the Company has elected to measure all of its property, plant and equipment & intangible assets at their previous GAAP carrying value."
A.1.2. Leases
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. Ind AS 101 provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind AS, except where the effect is expected to be not material. The company has elected to apply this exemption for such contracts/ arrangements.
A.2 Ind AS mandatory exceptions
A.2.1 Estimates
An entity s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error. Ind AS estimates as at 1 April 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP.
The Group made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP Investments in equity instruments carried at FVOCI Other investments carried at FVTPL or FVOCI; and Impairment of financial assets based on expected credit loss model.
Notes to Reconciliation
1. Remeasurement of Financial Instruments
A. Security Deposits
Under previous GAAP, the security deposits were carried at nominal value. Ind AS requires these assets to be measured at fair value and subsequently these assets are measured at amortized cost. At the initial recognition, the company has recognised the difference between deposit fair value and nominal value as prepaid rental expenses and same is being recognised as rental expenses on straight line basis over the lease period. Further, Company recognises notional interest income on these deposit over the lease term.
B. Borrowings
Under the Previous GAAP, the Transaction Costs in respect of Borrowings were charged off to the Statement of Profit and Loss as and when incurred. Under IND AS, these transaction costs incurred are deducted from the carrying amount of the Borrowings on Initial Recognition. These costs are recognised in the statement of Profit and Loss over the tenor of the borrowings as part of Interest Expense by applying the Effective Interest Rate method.
2. Expected credit Losses
IND AS 109 requires a provision to be made for Expected Credit Losses on an unbiased basis, considering the time value of money, and with reasonable and supportable information and forecasts, and the economic conditions as on the reporting date. The provision shall be reviewed as at each reporting period, with respect to its sufficiency and appropriateness.
3. Other Comprehensive Income
Under IND AS, all items of income and expense recognized in the period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognized in profit or loss but are shown in the statement of profit and loss and other comprehensive income includes remeasurements of defined benefit plans and fair value gain or losses on FVTOCI equity instruments. The concept of other comprehensive income did not exist under previous GAAP.
4. Decommissioning Liability
Under Ind AS, any obligation towards decommissioning liability shall be estimated and provided. The Company has certain obligations to restore the leased plant and machinery to its original position, in respect of plant and machinery. The said liability has been estimated as per Ind AS 37 and accounted for in the Ind AS financial statements.
5. Deferred Tax on unused tax losses
As on the date of Ind AS Transition, the company assessed the following criteria in assessing the probability that taxable profit will be available against which the unused tax losses or unused tax credits can be utilised:
(i) evaluation of the existing level of taxable temporary differences relating to the same taxation authority and the same taxable entity, which will result in taxable amounts against which the unused tax losses or unused tax credits can be utilised before they expire;
(ii) assessing the probability of the entity having taxable profits before the unused tax losses or unused tax credits expire;
(iii) whether the unused tax losses result from identifiable causes which are unlikely to recur; and
(iv) availability of tax planning opportunities that will create taxable profit in the period in which the unused tax losses or unused tax credits can be utilised.
Considering the fact that ''the taxable profit will be available against which the unused tax losses or unused tax credits can be utilised'' is low, deferred tax asset recognised out of unused tax credits as per the previous GAAP has been reversed as on the transition date.
6. Reclassification under Ind AS
Assets and Liabilities have been regrouped/Reclassified wherever required to confirm to the requirements of Ind As
7. Financial Instruments
A. Capital management
The Company manages its capital to ensure that entities in the Company will be able to continue as going concern, while maximising the return to stakeholders through the optimisation of the debt and equity balance.
The Company determines the amount of capital required on the basis of annual operating plans and longterm product and other strategic investment plans. The funding requirements are met through equity, long term and short-term borrowings.
For the purposes of the Company s capital management, capital includes issued capital, share premium and all other equity reserves attributable to the equity holders. Debt includes Long Term Loans and Short Term Loans.
C. Financial risk management objectives
The Company s businesses are subject to several risks and uncertainties including financial risks.
The Company''s activities expose it to credit risk, liquidity risk, market risk - interest rate risk and foreign currency risk. The Board of Directors has overall responsibility for the establishment and oversight of the Group s risk management framework. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the related impact in the financial statements.
i. 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. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration risks.
The company''s credit risk generally arises from Cash and cash equivalents, trade receivables, and other financial assets.
Credit Risk Management
The Company assesses and manages credit risk of financial assets based on following categories arrived on the basis of assumptions, inputs and factors specific to the class of financial assets.
A: Low credit risk
B: Moderate credit risk
C: High credit risk
Based on business environment in which the Company operates, a default on a financial asset is considered when the counterparty fails to make payments within the agreed time period as per contract. Loss rates reflecting defaults are based on actual credit loss experience and considering differences between current and historical economic conditions. Assets are written off when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or litigation decided against the Company. The Company continues to engage with parties whose balances are written off and attempts to enforce repayment. Recoveries made are recognized in statement of profit and loss.
As per simplified approach, the Company makes provision of expected credit losses on trade receivables based on past experienes to mitigate the risk of default in payments and makes appropriate provision at each reporting date wherever outstanding is for longer period and involves higher risk.
ii. Liquidity risk
Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company invests its surplus funds in bank fixed deposit . The Company also constantly monitors funding options available in the debt and capital markets with a view to maintaining financial flexibility.
Liquidity risk management
The following tables detail the Company''s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay.
iii. Market risk
Market risk is the risk of any loss in future earnings, in realizable fair values or in future cash flows that may result from a change in the price of a financial instrument. The Company''s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Company actively manages its currency and interest rate exposures through its finance division and uses derivative instruments such as forward contracts and currency swaps, wherever required, to mitigate the risks from such exposures. The use of derivative instruments is subject to limits and regular monitoring by appropriate levels of management.
Interest Rate risk
The Company is exposed to interest rate risk because it borrow funds at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings
Interest rate sensitivity analysis
If interest rates had been 100 basis points higher / lower and all other variables were held constant, the Company s profit for the year ended 31 March 2018 would decrease / increase by Rs. 2.66 Lakhs (for the year ended 31 March 2017: decrease / increase by Rs.2.67 Lakhs). This is mainly attributable to the Company s exposure to interest rates on its variable rate borrowings.
iv. Foreign currency risk management
The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The Company actively manages its currency rate exposures through a centralised treasury division and uses natural hedging principles to mitigate the risks from such exposures. The use of derivative instruments, if any, is subject to limits and regular monitoring by appropriate levels of management.
The carrying amounts of the Company''s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:
Foreign currency sensitivity analysis
The following tables demonstrate the sensitivity to a reasonably possible change in foreign currency rates, with all other variables held constant.
Fair Value Hierarchy
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.
In addition, for financial reporting purposes, fair value measurements are categorised into level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety. The three levels are explained as follows:
Level 1 inputs are quoted prices in active markets for identical assets or liabilities that the company can access at the measurement date. These quoted prices are unadjusted.
Level 2 inputs are inputs, other than quoted prices included in level 1, that are observable for the asset or liability, either directly or indirectly.
Level 3 inputs are unobservable inputs for the asset or liability.
The table below categorises financial instruments and analyses those measured at fair value by the level into which the fair value measurement is categorised.
* Managerial remuneration does not include contribution made by the company towards Gratuity and Leave Encashment as the incremental liability has been accounted by the company as a whole and seperate details for individual employee is not available.
8. Retirement benefit plans Defined contribution plans
In accordance with Indian law, eligible employees of the Company are entitled to receive benefits in respect of provident fund, a defined contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employees salary. The contributions, as specified under the law, are made to the Provident fund as well as Employee State Insurance Fund.
The expense recognised during the period towards this defined contribution plan is Rs.83.64 Lakhs (March 31, 2017 Rs.85.33 Lakhs).
Defined benefit plans
(a) Gratuity
Gratuity is payable as per Payment of Gratuity Act, 1972. In terms of the same, gratuity is computed by multiplying last drawn salary (basic salary including dearness Allowance if any) by completed years of continuous service with part thereof in excess of six months and again by 15/26. The Act provides for a vesting period of 5 years for withdrawal and retirement and a monetary ceiling on gratuity payable to an employee on separation, as may be prescribed under the Payment of Gratuity Act, 1972, from time to time. However, in cases where an enterprise has more favourable terms in this regard the same has been adopted.
These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk and salary risk.
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
The current service cost and the net interest expense for the year are included in the ''employee benefits expense'' in profit or loss.
b) Compensated absences
The leave scheme is a final salary defined benefit plan, that provides for a lumpsum payment at the time of separation; based on scheme rules the benefits are calculated on the basis of last drawn salary and the leave count at the time of separation and paid as The design entitles the following risk
9. Figures have been rounded of to the nearest Lakh and two decimals thereof.
10. The amounts and disclosures included in the financial statements of the previous year have been reclassified / regrouped wherever necessary to conform to Current years classification.
Mar 31, 2017
Note No. 1 of the Audited financial Statements
The Company has not recognized the net deferred tax assets, in respect of accumulated losses and unabsorbed depreciation in view of absence of virtual certainty of availing the benefit in the future.
Note No. 2 of the Audited financial Statements
The balance in parties accounts are subject to confirmation and reconciliation, if any. In the opinion of the management all current assets including stock-in-trade/Trade receivables and loans and advances in the normal course of business would realize the value at least to the extent stated in the Balance sheet.
Note No. 3 of the Audited financial Statements Micro and Small Enterprises
There are no amounts payable to Micro and Small Enterprise as at 31st March 2017. Further, there are no interest payable on account of overdue payments. The above information regarding Micro and Small enterprises have been determined to the extent such parties have been identified on the basis of information available with the Company and relied upon by the auditors.
Note No. 4 of the Audited financial Statements
The company has only one reportable business segment namely manufacture of forged and machined components.
Note No.5 of the Audited financial Statements
Disclosure requirement Pursuant to Notification No. G. S.R. 307(E) and Notification No. G.S.R. 308(E) dated 30th March, 2017
The term "Specified Bank Notes" has the same meaning as provided in Notification of Government of India, Ministry of Finance, Department of Economy Affairs No.3407 (e) dt. 8th November, 2016.
Note No.6 of the Audited financial Statements
RELATED PARTY DISCLOSURES (As identified by the Management and relied upon by Auditors)
A. Name of the related parties and nature of relationship where control exists are as under :
i. Key Management Personnel
Note No. 7 of the Audited financial Statements
Exceptional items represents profit on sale of land & building at Pillaiappampalayam â Rs. 388.04 lakhs ( Previous year Rs. 211.55 lakhs)
Note No.8 of the Audited financial Statements
Figures have been rounded off to the nearest Lakh and two decimals thereof.
Note No 9 of the Audited financial Statements
The amounts and disclosures included in the financial statements of the previous year have been reclassified/ regrouped wherever necessary to conform to current years classification.
Mar 31, 2015
A. Terms/Rights attached to Equity shares
The Company has one class of issued shares referred to as equity shares
having a par value of Rs.1/- Each holder of equity shares is entitled to
one vote per share. The dividend proposed by the board of Directors, if
any,is subject to the approval of shareholders in Annual General
Meeting. In the event of liquidation of the Company the holder of the
equity shares will be entitled to receive remaining assets of the
Company after settlement of all preferential amounts. The distribution
will be in proportion to the number of equity shares held by the equity
shareholders.
b. There are no bonus shares, shares issued for consideration other
than cash and shares bought back during the period of five years
immediately preceeding the reporting date.
i. Rupee Term loan from ICICI Bank carries interest @ base rate plus
3.25% (i.e. 13.25 % p.a.), payable on monthly basis.The loan is
repayable in 7 quarterly installments of Rs.250 lakhs each. The loan is
secured by way (a) hypothecation (first charge) of whole movable
properties including its movable plant and machinery, machinery spares,
tools and accessories and other movable (except current assets), both
present and future located at Belagola Industrial Area, Hebbal village,
Mysore (Hot forging unit),Pillaiappanpalayam, Coimbatore (Hot and Warm
forging unit) and Kondayampalayam, Coimbatore(Cold forging unit); and
(b) first charge by way of deposit of title deeds in respect of
immovable properties situated at (i) Kariyampalayam Village,
Pillaiappanpalayam, Coimbatore; and (ii) Hebbal Village, Kasaba Hobli,
Mysore. Loan is further secured by corporate guarantee of
L.G.Balakrishnan & Bros Limited.
ii. Interest free Sales tax deferral scheme loan in respect of
Karnataka Sales Tax amounting to Rs.104.38 lakhs and Karnataka VAT
amounting to Rs.56.23 lakhs, has been repaid in 1 half yearly
installment of Rs.10.44 lakhs & Rs.5.62 lakhs respectively ending with
June 2014.
i ii. Intercorporate deposit of Rs.50 lakhs received from Tribe
Investments and Services Private Limited carries interest @ 14% p.a
and has been repaid in 2 quarterly installments of Rs.8.33 lakhs.
i. Working Capital/ Cash Credit loan from Axis Bank carries interest @
12.75% p.a and are secured by first pari passu charge on entire current
assets and second pari passu charge on the entire movable fixed assets
of the Company, both present and future.
ii. Working Capital/Cash Credit loan from ICICI Bank carries interest @
12.50 % p.a. and are secured by first charge by way of hypothecation of
the Company''s entire stock of raw materials, semi finished and
finished goods, consumable stores, tools and spares and such other
moveables including book debts, bills whether documentary or clean,
outstanding monies,receivables, both present and future, ranking pari
passu with other participating bank (viz., Axis bank).
iii. Working Capital/Cash Credit loan from IDBI bank carries interest @
14.00% and are secured by pari passu first charge over the current
assets of the Company. Collateral second pari passu charge over the
fixed assets of the Company except those that are exclusively charged
to term lenders.
iv. Packing Credit facility from IDBI Bank carries interest @ 11.75%
p.a. and is secured by pari pasu first charge over the current assets
of the Company. Collateral second pari pasu charge over the fixed
assets of the Company except those that are exclusively charged to term
lenders
v. The above loans are further secured by Corporate Guarantee of
L.G.Balakrishnan & Bros Ltd.
2 The Company has not recognised the net deferred tax assets, in
respect of accumulated losses and unabsorbed depreciation in view of
absence of virtual certainty of availing the benefit in the future.
3 The balance in parties accounts are subject to confirmation and
reconciliation, if any. In the opinion of the management all current
assets including stock-in-trade/sundry debtors and loans and advances
in the normal course of business would realize the value at least to
the extent stated in the Balance sheet.
4 Micro, Small and Medium Enterprises
There are no amounts payable to Micro, Small and Medium Enterprise as
at 31st March 2015. Further, there is no interest payable on account of
overdue payments. The above information regarding Micro, Small and
Medium enterprises have been determined to the extent such parties have
been identified on the basis of information available with the Company
and relied upon by the auditors.
5 The Company has only one reportable business segment namely
manufacture of forged and machined components.
6 CONTINGENT LIABILITIES (to the extent not provided for) Rs.in lakhs
As at As at
PARTICULARS 31.03.2015 31.03.2014
a Guarantee given by Bankers and outstanding 75.00 50.00
b Estimated amount of contracts remaining to
be executed on Capital Accounts and not
provided for (Net after advance payments) - 7.05
c Letter of Credits 324.48 261.93
d Counter guarantee given to L.G. Balakrishnan to the extent of
& Bros Limited for guarantee given loan guaranteed
7. RELATED PARTY DISCLOSURES (As identified by the Management and
relied upon by Auditors)
A. Name of related parties and nature of relationship where control
exists are as under :
i. Key Management Personnel
Sri. V. Rajvirdhan Sri. K. Karthik
1. Sri. V. Rajvirdhan has relinquished his office as a Executive
Director from w.e.f. 16.05.2014 2. Sri. V. Rajvirdhan has been
appointed as a Vice Chairman (Non-Executive Director) w.e.f. 16.05.2014
ii Relatives of Key Management Personnel - Sri. V. Rajvirdhan
Sri. B.Vijayakumar Sri. Arjun Karivardhan
Smt. D.Sasikala Sri. Nithin Karivardhan
Smt. Vijayshree.V Smt. V. Rajsri
ii Relatives of Key Management Personnel - Sri. K. Karthik
Sri. V. Kalyanasundaram Sri. Bharathi Sriram Ms. Kirthika Kalyan
Smt. K. Anuradha Sri. Eshwar K Srivats
iii. Others : (Enterprise over which key management personnel are able
to exercise significant influence) Companies
a. L.G. Balakrishnan & Bros Ltd
b. Elgi Automotive Service (P) Ltd
c. L.G.B Auto Products (P) Ltd
d. LG Farm Products (P) Ltd
e. L.G. Balakrishnan & Bros - Karur
f. LG Sports Ltd
g. Super Speeds Private Ltd
h. Super Transports Private Ltd
i. Silent Chain India Private Ltd
j. LGB Fuel Systems Private Ltd
k. BCW V Tech India Private Ltd
l. Rolon Fine Blank Ltd
m. LGB Rolon Chain Ltd
n. South Western Engineering India Ltd
o. Tribe Investments and Services Private Ltd
p. Renold Chain India Private Ltd
8 Gratuity:
Description of the Company''s defined benefit Plan:
The Company operates a defined benefit plan for the payment of the post
employee benefits in the form of gratuity. Benefits under the plan are
based on pay and years of service and are vested on completion of five
years of service, as provided for in the payment of Gratuity Act, 1972.
The terms of the benefits are common for all the employees of the
Company.
9 Operating Lease:
As Lessee:
The Company has entered into operating leases, having a lease period
ranging from one year to five years, with an option to renew the lease.
The future minimum lease payments are as follows: Rs.in Lakhs
10 Profit on sale of land at Pillaiappampalayam has been shown under
exceptional items.
11 a) Effective April 1, 2014, the Company has, with retrospective
effect, changed its method of providing depreciation on certain fixed
assets from ''Written Down Value'' method to ''Straight Line'' method.
Accordingly, depreciation is now provided on Straight Line basis for
all tangible fixed assets.
Management believes that this change will result in more appropriate
presentation and will give a systematic basis of depreciation charge,
representative of the time pattern in which the economic benefits will
be derived from the use of these assets. Consequent to the above, the
impact of the change in the method of providing depreciation upto March
31,2014 amounting to Rs.61.18 lacs has been credited to the Statement of
Profit and Loss for the year and balance of Net Tangible Fixed Assets
and Reserves and Surplus are higher by Rs. 61.18 lacs.
b) The management of the Company has reassessed the useful life of
tangible fixed assets in accordance with Schedule II of the Companies
Act, 2013 and depreciation has been provided based on the the remaining
useful life of the asset on a straight line basis. In respect of assets
whose remaining useful life is already exhausted as at April 1,2014,
depreciation of Rs. 115.57 lacs has been adjusted against the opening
balance of Retained Earnings as on that date.
Consequent to the above, depreciation for the year is higher by Rs.9.64
lacs.
This being a technical matter, has been relied upon by the auditors.
12 Unhedged foreign currency exposure :
13 Figures have been rounded off to the nearest Lakhs and two decimals
thereof.
14 The amounts and disclosures included in the financial statements of
the previous year have been reclassified/ regrouped wherever necessary
to confirm to current years'' classification.
Mar 31, 2014
1. LONG TERM BORROWINGS (Contd.)
i. Rupee Term loan from ICICI Bank carries interest @ base rate plus
3.25% (i.e. 13.25 % p.a.), payable on monthly basis. The loan is
repayable in 11 quarterly installments of Rs. 250 lakhs each. The loan is
secured by way (a) hypothecation(first charge) of whole movable
properties including its movable plant and machinery, machinery spares,
tools and accessories and other movable asset (except current assets),
both present and future located at Belagola Industrial Area, Hebbal
village, Mysore (Hot forging unit),Pillaiappanpalayam, Coimbatore (Hot
and Warm forging unit) and Kondayampalayam, Coimbatore(Cold forging
unit); and (b) first charge by way of deposit of title deeds in respect
of immovable properties situated at (i) Kariyampalayam Village,
Pillaiappanpalayam, Coimbatore; and (ii) Hebbal Village, Kasaba Hobli,
Mysore. Loan is further secured by corporate guarantee of
M/s.L.G.Balakrishnan & Bros Limited.
ii. Interest free Sales tax deferral scheme loan in respect of
Karnataka Sales Ta x amounting to Rs. 104.38 lakhs and Karnataka VAT
amounting to Rs. 56.23 lakhs, is repayable in 1 half yearly installment
of Rs. 10.44 lakhs & Rs. 5.62 lakhs respectively ending with June 2014.
iii. Interoperate deposit of Rs. 50 lakhs received from M/s.Tribe
Investments and Services Private Limited carries interest @ 14% p.a and
is repayable in 2 quarterly installments of Rs. 8.33 lakhs. Interest is
payable on monthly basis.
i. Working Capital/ Cash Credit loan from Axis Bank carries interest @
13.25% p.a and are secured by first pari passu charge on entire current
assets and second pari passu charge on the entire movable fixed assets
of the Company, both present and future.
ii. Working Capital/Cash Credit loan from Corporation Bank carries
interest @ 14.85% p.a. and are secured by:
(i) pari passu materials, first charge on entire stock of raw
materials, work-in-process, finished goods including goods held for
exports, stores & spares, book debts and other chargeable current
assets of the Company; and (ii) pari passu second charge on the entire
fixed assets of the Company.
iii. Working Capital/Cash Credit loan from ICICI Bank carries interest
@ 13.00 % p.a. and are secured by first charge by way of hypothecation
of the Company''s entire stock of raw materials, semi finished and
finished goods, consumable stores and spares and such other movables
including book debts, bills whether documentary or clean, outstanding
monies,receivables, both present and future, ranking pari passu with
other participating banks (viz., Andhra Bank, Corporation Bank, Axis
bank).
iv. Working Capital/Cash Credit loan from IDBI bank carries interest @
14.50% and are secured by pari passu first charge over the current
assets of the Company. Collateral second pari passu charge over the
fixed assets of the Company except those that are exclusively charged
to term lenders.
v. Working Capital/Cash Credit loan from Andhra Bank carries interest @
15.50% p.a and are secured by pari passu first charge on all current
assets of the company such as stock of raw materials, semi finished
goods, finished goods, packing materials and book debts.
2. The company has not recognised the net deferred tax assets, in
respect of accumulated losses and unabsorbed depreciation in view of
absence of virtual certainty of availing the benefit in the future.
3. The balance in parties accounts are subject to confirmation and
reconciliation, if any. In the opinion of the management all current
assets including stock-in-trade/sundry debtors and loans and advances
in the normal course of business would realize the value at least to
the extent stated in the Balance sheet.
4. Micro, Small and Medium Enterprises
There are no amounts payable to Micro, Small and Medium Enterprise as
at 31st March 2014. Further, there are no interest payable on account
of overdue payments. The above information regarding Micro, Small and
Medium enterprises have been determined to the extent such parties have
been identified on the basis of information available with the Company
and relied upon by the auditors.
5. The Company has only one reportable business segment namely
manufacture of forged and machined components
6. CONTINGENT LIABILITIES (to the extent not provided for) Rs. in lakhs
As at As at
PARTICULARS 31.03.2014 31.03.2013
a Guarantee given by Bankers and
outstanding 50.00 150.00
b Estimated amount of contracts
remaining to be executed on
Capital Accounts and not provided for
(Net after advance payments) 7.05 7.30
c Letter of Credits 261.93 102.44
d Counter guarantee given to L.G.
Balakrishnan & Bros Limited to the
extent of for guarantee given loan
guaranteed
7. Gratuity:
Description of the Company''s defined benefit Plan:
The Company operates a defined benefit plan for the payment of the post
employee benefits in the form of gratuity. Benefits under the plan are
based on pay and years of service and are vested on completion of five
years of service, as provided for in the payment of Gratuity Act, 1972.
The terms of the benefits are common for all the employees of the
Company.
8. Exceptional Item during the year represents profit on sale of land
and building located at Pillianpapalayam, Annur via Coimbatore - 641
653
9. Operating Lease:
10. Figures have been rounded off to the nearest Lakhs and two decimals
thereof.
11. The amounts and disclosures included in the financial statements of
the previous year have been reclassified/ regrouped wherever necessary
to confirm to current years'' classification.
Mar 31, 2013
1 The Company has not recognised the net deferred tax assets, in
respect of accumulated losses and unabsorbed depreciation in view of
absence of virtual certainty of availing the benefit in the future.
2 The balance in parties accounts are subject to confirmation and
reconciliation, if any. In the opinion of the Management all current
assets including stock-in-trade/sundry debtors and loans and advances
in the normal course of business would realize the value at least to
the extent stated in the Balance Sheet.
3 Micro, Small and Medium Enterprises
There are no overdue amounts paid/payable to Micro, Small and Medium
Enterprises. The above information regarding Micro, Small and Medium
enterprises have been determined to the extent such parties have been
identified on the basis of information available with the Company and
relied upon by the auditors.
4 Figures have been rounded off to the nearest Lakhs and two decimals
thereof.
5 The amounts and disclosures included in the financial statements of
the previous year have been reclassified/ regrouped wherever necessary
to confirm to current years'' classification.
6 The Company has only one reportable business segment namely
manufacture of forged and machined components.
7 Gratuity:
Description of the Company''s defined benefit Plan:
The Company operates a defined benefit plan for the payment of the post
employee benefits in the form of gratuity. Benefits under the plan are
based on pay and years of service and are vested on completion of five
years of service, as provided for in the payment of Gratuity Act, 1972.
The terms of the benefits are common for all the employees of the
Company.
8. Exceptional items represents expenses incurred towards relocation
and other incidental expenses incurred on shifting of machines from one
manufActuring unit to another.
Mar 31, 2012
A. Terms/Rights attached to Equity shares
The Company has one class of issued shares referred to as equity shares
having a par value of Rs 1 /-. Each holder of equity shares is entitled
to one vote per share. The dividend proposed by the board of directors,
if any, is subject to the approval of shareholders in Annual General
Meeting. In the event of liquidation of the Company the holder of the
equity shares will be entitled to receive remaining assets of the
Company after settlement of all preferential amounts. The distribution
will be in proportion to the number of equity shares held by the equity
shareholders.
The Company has issued 5,00,00,017 equity shares of face value of Rs 1
each at a premium of Rs 1.75 per Equity Share for an amount aggregating
Rs 1,375.01 Lakhs on a rights basis to the existing equity shareholders
of LGB forge Limited in the ratio of one equity share for every
two.fully paid up equity shares held by the exising equity shareholders
on the record date viz., 21st March,2012.The Rights issue closes on
28th April, 2012.
i. Rupee Term loan from ICICI Bank carries interest @ base rate
3.25% (i.e. 13.25% p.a.) The loan is repayable in 16 quarterly
installments of Rs 250 lakhs each starting from March 2013. Interest is
payable on monthly basis, from the date of loan viz., 30th March 2011.
The loan is secured by way of hypothecation of whole movable properties
including its movable plant and machinery, machinery spares, tools and
accessories and other movable (except current assets), both present and
future located at Belagola Industrial Area, Hebbal village, Mysore (Hot
forging unit), Pillaiappanpalayam, Coimbatore (Hot and Warm forging
unit) and Kondayampalayam, Coimbatore(Cold forging unit). Loan is
further secured by corporate guarantee of M/s. L.G.Balakrishnan fñ
Bros Limited.
Term loan from Axis Bank carried interest @ 13.25% p.a. The loan was
repaid during the year. The loan was secured by hypothication of entire
movable assets at plants located at Pillaiappanpalayam,
Kondayampalayam, forging division Mysore. The loan was further secured
by corporate guarantee of M/s. L.G. Balakrishnan & Bros Ltd. Interest
was paid on mothly basis.
ii. Sales tax deferral scheme loan in respect of Karnataka Sales Tax
amounting to Rs 104.38 lakhs and Karnataka VAT amounting to Rs 56.23
lakhs, is repayable in 10 half yearly installments of Rs 10.44 lakhs & Rs
5.62 lakhs respectively commencing from December 2009 and ending with
June 2014.
iii. Fixed deposit carries interest @ 10.5% p.a. having a maturity
period of 3 years which was received in November 2009 Rs 100 lakhs, out
of which, 50 lakhs was preclosed in April 2011. Interest is payable on
quarterly basis.
iv. Intercorporate deposit of Rs 150 lakhs received from M/s. Tribe
Investments and Services Private Limited carries interest @ 14% p.a.
and is repayable in 18 quarterly installments ofRs 8.33 lakhs commencing
from June 2010. Interest is payable on monthly basis.
i. Short term loan from Yes Bank carries interest @11.5% p.a . The
loan can be rolled over every 6 months. The loan is secured by
subservient charge on the fixed asset of the Company. Loan is further
secured by corporate guarantee of M/s.L.G.Balakrishnan & Bros Limited.
ii. Working Capital loans from ICICI Bank, Axis Bank, Corporation
Bank, Andhra Bank, IDBI Bank carries an interest @ 12.00% to 15.25% are
primarily secured by hypothecation of inventories and book debts of the
Company and also secured by hypothecation of existing block of assets
of the company excluding those specific machineries charged to
banks/financial institutions.
iii. Intercorporate deposit of Rs 340 lakhs received from M/s.Silent
Chain India Private Limited carries interest @ 11% p.a repayable on
demand. Interest is being paid on quarterly basis.
iv. Loan from Directors carries interest @11% p.a. which is repayable
on demand.
v. Fixed Deposit of Rs 8 lakhs carries interest @ 9% p.a. for a period
of 1 year received on November 2010.
The Company has given on tease, furnished premises situated at
Pillaiappanpalayam, Coimbatore to M/s. L.G.Batakrishnan 6t Bros. Ltd.
for a period of eleven months. Lease rental income received during the
year for the lease of said property amounts to Rs 7.34 lakhs(Previous
year Rs 10.25 Lakhs)
1 The Company has not recognised the net deferred tax assets, in
respect of accumulated losses and unabsorbed depreciation in view of
absence of virtual certainty of availing the benefit in the future.
2 The balance in parties accounts are subject to confirmation and
reconciliation, if any. In the opinion of the management all current
assets including stock-in-trade/sundry debtors and loans and advances
in the normal course of business would realize the value at least to
the extent stated in the Balance Sheet.
3 Micro, Small and Medium Enterprises
There are no Micro, Small and Medium Enterprises in respect of whom
the Company dues are outstanding for more than 45 days at the Balance
Sheet date. The above information regarding Micro, Small and Medium
enterprises have been determined to the extent such parties have been
identified on the basis of information available with the Company and
relied upon by the auditors.
4 Consequent to the Demerger, the Company is in the process of
transferring the title deeds in the name of the Company.
5 Figures have been rounded of the nearest Lakhs and decimals thereof.
6 As notified by Ministry of Corporate Affairs, Revised Schedule VI
under the Companies Act, 1956 is applicable to the Financial
Statements for the financial year commencing on or after 1st April,
2011. Accordingly, the financial statements for the year ended March
31, 2012 are prepared in accordance with the Revised Schedule VI. The
amounts and disclosures included in the financial statements of the
previous year have been reclassified to conform to the requirements of
Revised Schedule VI.
7 The Company has only one reportable business segment namely
manufacture of forged and machined components
8 CONTINGENT LIABILITIES (to the extent not provided for)
As at As at
31.03.2012 31.03.2011
Rs in lakhs Rs in lakhs
a Guarantee given by Bankers and
outstanding 150.00 150.00
b Estimated amount of contracts
remaining to be executed on Capital
Accounts and not provided for
(Net after advance payments) 12.10 -
c Counter guarantee given to LG
Balakrishnan & Bros Limited to the extent of -
for guarantee given loan guaranteed
9. Gratuity:
Description of the Company's defined benefit Plan:
The company operates a defined benefit plan for the payment of the post
employee benefits in the form of gratuity. Benefits under the plan are
based on pay and years of service and are vested on completion of five
years of service, as provided for in the payment of Gratuity Act, 1972.
The terms of the benefits are common for all the employees of the
Company.
Mar 31, 2011
1. Secured Loans:
a) The rupee term loan from ICICI Bank is secured by hypothecation of
movable fixed assets as at 31.03.2011 along with the corporate
guarantee given by M/s. L.G. Balakrishnan & Bros Limited, with creation
of mortgage on immovable fixed assets of the Company subsequently.
b) The rupee term loan from Axis Bank is secured by hypothecation of
movable fixed assets, mortgage of immovable fixed assets and the
corporate guarantee given by M/s. L.G. Balakrishnan & Bros Limited.
c) The Working Capital/ Cash Credit loans from ICICI Bank, Axis Bank,
Corporation Bank, Andhra Bank, IDBI Bank are primarily secured by
hypothecation of inventories and book debts of the Company, also
secured by hypothecation of existing block of assets of the Company
excluding those specific machineries charged to Banks/Financial
Institution.
2. Estimated value of contracts remaining to be executed on capital
accounts is Rs.Nil
3. The Company has not recognized the net deferred tax assets, in
respect of accumulated losses and unabsorbed depreciation in view of
the virtual uncertainity of availing the benefit in future.
4. The balances in parties accounts are subject to confirmation and
reconciliation, if any. In the opinion of the management all current
assets including stock- in-trade/sundry debtors and loans and advances
in the normal course of business would realize the value at least to
the extent stated in the Balance Sheet.
5. Micro, Small and Medium enterprises:
There are no Micro, Small and Medium Enterprises in respect of whom the
Companys dues are outstanding for more than 45 days at the Balance
Sheet date. The above information and that given under Current
Liabilities and Provisions regarding Micro, Small and Medium
Enterprises have been determined to the extent such parties have been
identified on the basis of information available with the Company and
relied upon by the auditors.
6. Consequent to demerger the Company is in the process of
transferring the title deeds in the name of the Company.
7. Figures have been rounded off to the nearest thousand.
8. Previous years figures have been regrouped wherever necessary to
conform to the current years classification.
9 CONTINGENT LIABILITIES Rs. in Lakhs
31.03.2011 31.03.2010
a Guarantee given by Bankers and outstanding 150.00 101.30
b Amount outstanding on Letter of Credit - 703.64
c Estimated amount of contracts remaining
to be executed on Capital Accounts arid not
provided for (Net after advance payments) Nil Nil
d Bills discounted with Banks Nil Nil
e Disputed tax liability Nil Nil
f Export obligation Nil Nil
Duty involved Nil Nil
11. RELATED PARTY DISCLOSURES (As identified by the management and
relied upon by Auditors)
A. Name of related parties and nature of relationship where control
exists are as under:
i. Associate Companies
a. L.G. Balakrishnan fr Bros Ltd
b. Elgi Automotive Service (P) Ltd
c. L.G.B Auto Products (P) Ltd
d. LG Farm Products (P) Ltd
e. L.G. Balakrishnan & Bros - Karur
f. LG Sports Ltd
g. Super Speeds Private Ltd
h. Super Transports Private Ltd
i. Silent Chain India Private Ltd
j. LGB Fuel Systems Private Ltd
k. BCW V Tech India Private Ltd
l. Rolon Fine Blank Ltd
m. LGB Rolon Chain Ltd
n. South Western Engineering India Ltd
o. Vijayshree Spinning Mills Private Ltd
p. Renold Chain India Private Ltd
ii. Key Management Personnel iii. Relatives of Key Management
Personnel
Sri. V. Rajvirdhan Sri. V. Rajvirdhan and his Relatives
12. Gratuity:
The Company operates a defined benefit plan for the payment of the post
employee benefits in the form of gratuity. Benefits under the plan are
based on pay and years of service and are vested on completion of five
years of service, as provided for in the payment of Gratuity Act, 1972.
The terms of the benefits are common for all the employees of the
Company.
13. The Company has only one reportable business segment namely
manufacture of forged and machined components.
Mar 31, 2010
1. Secured Loans:
a) The rupee term loan from Axis Bank is secured by the hypothecation
of Plant and Machineries purchased out of the said loans and are
collaterally secured by the equitable mortgage by deposits of title
deeds of certain immovable properties and the corporate guarantee given
by M/s. L.G. Balakrishnan & Bros Limited.
b) The Working Capita 1/ cash credit loans from ICICI Bank, Axis Bank,
Corporation Bank, Andhra Bank, IDBI Bank are primarily secured by
hypothecation of inventories and book debts of the company. Also
collaterally secured by hypothecation of existing block of assets of
the company excluding those specific machineries charged to
Banks/Financial Institution.
2. Estimated value of contracts remaining to be executed on capital
accounts is Rs.Nil
3. The company has not recognized the net deferred tax assets, in
respect of accumulated losses and unabsorbed depreciation in view of
the virtual uncertainty of availing the benefit in future.
4. The balances in parties Accounts are subject to confirmation and
reconciliation, if any. In the opinion of the management all current
assets including stock- in-trade/sundry debtors and loans and advances
in the normal course of business would realize the value stated.
5. Power and fuel are net of own generation.
6. Micro, Small and Medium enterprises
There are no Micro, Small and Medium Enterprises in respect of whom the
companys dues are outstanding for more than 45 days at the Balance
sheet date.
The above information and that given under Current Liabilities and
Provisions regarding Micro, Small and Medium Enterprises have been
determined to the extent such parties have been identified on the basis
of information available with the company and relied upon by the
auditors.
7. Consequent to demerger the company is in the process of transferring
the title deeds in the name of the company.
8. Preliminary expenses have been written off in accordance with the
accounting standard on intangible.
9. Figures have been rounded off to the nearest thousand.
10. Previous years figures have been regrouped wherever necessary to
conform to the current years classification.
Rs. in Lakhs
11 CONTINGENT LIABILITIES
31.03.2010 31.03.2009
a Guarantee given by Bankers
and outstanding 101.30 153.00
b Amount outstanding on letters of Credit 703.64 35.97
c Estimated amount of contracts remaining
to be executed on Capital Accounts and not
provided for (Net after advance
payments) Nil Nil
d Bills discounted with Banks Nil Nil
e Disputed tax liability Nil Nil
f Export obligation Nil Nil
Duty involved Nil Nil
12. RELATED PARTY DISCLOSURES (As identified by the management and
relied upon by Auditors)
A. Name of related parties and nature of relationship where control
exists are as under:
i. Associate Companies
a. L.G. Balakrishnan & Bros Ltd
b. Elgi Automotive Service Ltd
c. L. G. B Auto Products Ltd
d. LG Farm Products Ltd
e. L.G. Balakrishnan & Bros - Karur
f. LG Sports Ltd
g. Super Speeds Private Ltd
h. Super Transports Private Ltd
i. Silent Chain India Private Ltd
j. LGB Fuel Systems Private Ltd
k. BCW V Tech India Private Ltd
I. Rolon Fine Blank Ltd
m. LGB Rolon Chain Ltd
n. South Western Engineering India Ltd
o. Vijayshree Spinning Mills Private Ltd
p. Renold Chain India Private Ltd
ii. Key Management Personnel
Sri. V. Rajvirdhan
iii. Relatives of Key Management Personnel
Sri. V. Rajvirdhan and his Relatives
13. Gratuity:
Description of the Companys defined benefit Plan:
The company operates a defined benefit plan for the payment of the post
employee benefits in the form of gratuity. Benefits under the plan are
based on pay and years of service and are vested on completion of five
years of service, as provided for in the payment of Gratuity Act, 1972.
The terms of the benefits are common for all the employees of the
Company
14. The Company has only one reportable business segment namely
manufacture of forged and machined components.
Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article
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LGB Forge Ltd. Key Financial Ratios
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LGB Forge Ltd. Financial Data
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LGB Forge Ltd. Reports
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LGB Forge Ltd. Corporate Announcements
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