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Notes to Accounts of Morganite Crucible (India) Ltd.
Mar 31, 2025
The Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s risk management
framework. The board of directors has established the risk management committee, which is responsible for developing and
monitoring the Company''s risk management policies. The committee reports regularly to the board of directors on its activities.
The Company''s risk management policies are established to identify and analyse the risks faced by the Company, to set
appropriate limits and controls and to monitor risks and adherence to limits. The Company, through its training and established
procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles
and obligations.
The nature of the Company''s business exposes it to a range of financial risks. These risks include:
(i) credit risk;
(ii) liquidity risk; and
(iii) market risk.
Credit risk refers to the risk that a counterpart will default on its contractual obligations resulting in financial loss to
the Company. As at March 31, 2025, the company''s maximum exposure to credit risk without taking into account any
collateral held or other credit enhancements which will cause a financial loss to the group due to failure to discharge an
obligation by the counterparties and financial guarantees provided by the company arises from the carrying amount of
the respective recognized financial assets as stated in the balance sheet.
a. Cash and bank balance
Credit risk from balances/ fixed deposits banks is managed in accordance with the Company''s risk management
policy. Investments of surplus funds are made only with approved counterparties and within limits assigned to each
counterparty. The limits are assigned based on corpus of investable surplus and corpus of the investment avenue.
The limits are set to minimize the concentration of risks and therefore mitigate financial loss through counterparty''s
potential failure to make payments. The Company''s maximum exposure to credit risk on account of deposits with
banks is as mentioned below -
(ii) Liquidity risk:
Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an
appropriate liquidity risk management framework for management of the company''s short, medium and long-term
funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves,
banking facilities and by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles
of financial assets and liabilities.
The Company''s principal sources of liquidity are cash and cash equivalents and cash flow that is generated from
operations. The Company has no outstanding bank borrowings. The Company believes that the current working capital
is sufficient to meet its current obligatory requirements. Accordingly, no liquidity risk is perceived.
As on 31 March 2025, the Company had a working capital of '' 4040.20 lakhs (as on 31 March 2024''5,735.03 lakhs)
including cash and cash equivalents and other bank balance of '' 2,198.07 lakhs (as on 31 March 2024''5,000.18 lakhs).
The working capital of the Company for this purpose has been derived as follows:
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes
in market prices- such as foreign exchange rates, interest rates and equity prices - will affect the Company''s income or
the value of its holdings of financial instruments. The objective of market risk management is to manage and control
market risk exposures within acceptable parameters, while optimizing the return.
Market risk comprises of:
a. Interest rate risk
b. Foreign currency risk
Financial instruments affected by market risk include other financial assets, trade receivables and trade payables.
a. Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. Since the Company does not have any financial instrument with variable interest
rates, it is not exposed to interest rate risk.
b. Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of
changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates
primarily to the Company''s operating activities (when revenue or expense is denominated in a foreign currency).
The foreign currency to which the Company is majorly exposed to are US Dollars, EURO and GBP.
The following tables demonstrate the sensitivity to a reasonably possible change in USD, EURO and GBP exchange
rates, with all other variables held constant -
Note 1
Financial assets carried at fair value as at 31 March 2025 is Rs. Nil and financial assets carried at amortized cost as at 31
March 2025 is Rs. 5,392.53 lakhs. The Company has assessed the counterparty credit risk in connection with Cash and cash
equivalents, bank deposits and earmarked balances with banks amount to Rs. 2,119.40 lakhs as at 31 March 2025 where the
Company has assessed the counterparty credit risk.
Trade receivables amounting to Rs. 3,124.08 lakhs as at 31 March 2025 is valued at considering provision for allowance
under the expected credit loss method. This assessment is based on the likelihood of the recoveries from the customers in the
present situation. The Company closely monitors its customers who are going through financial stress and assesses actions
such as change in payment terms, recognition of revenue on collection basis etc., depending on severity of each case.
Basis this assessment, the allowance for doubtful trade receivables is considered adequate.
Defined contributions plans
The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying
employees towards Provident Fund, Labour Welfare Fund and Superannuation Scheme, which are the defined contribution
plans. The Company has no obligations other than to make the specified contributions. The contributions are charged to the
Statement of Profit and Loss as they accrue. The amount recognized as an expense towards defined contribution plans for the
year for provident fund and superannuation scheme aggregated to '' 92.92 Lakhs (31 March 2024: '' 93.63 Lakhs).
defined benefit plans
Gratuity
The company sponsors defined benefit plans for qualifying employees. The defined benefit plans are administered by a
separate fund that is legally separated from the entity. The trustees of the pension fund are required by law to act in the
interest of the fund and of all relevant stakeholders in the plan. The trustees of the pension fund are responsible for the
investment policy with regard to the assets of the fund.
Under the plans, the employees are entitled to post-retirement yearly instalments amounting to 15 days salary for each year
of completed service at the time of retirement / exit. The scheme is funded by plan assets.
The most recent actuarial valuations of the planned assets and the present value of the defined benefit liability were carried
out at March 31, 2025 by appointed actuaries. The present value of the defined benefit liability, and the related current service
cost and past service cost, were measured using the projected unit credit method.
The following table summarizes the position of assets and obligations relating to the plan.
a) Gratuity is payable to all eligible employees of the Company on superannuation, death, and permanent disablement, in
terms of the provisions of the Payment of Gratuity Act, 1972.
b) The discount rate is based on the prevailing market yields Indian Government securities as at the Balance Sheet date for
the estimated term of the obligations.
c) The Company''s gratuity fund is managed by Life Insurance Corporation of India, details of those funds invested by LIC
are not readily available with the Company.
Performance obligations
The Company satisfies its performance obligations pertaining to the sale of crucibles at point in time when the control of
goods is actually transferred to the customers. No significant judgment is involved in evaluating when a customer obtains
control of promised goods. The payment is generally due within 45-60 days.
The Company is obliged for refunds due to shortages during the mode of transportation. There are no other significant
obligations attached in the contract with customer.
Transaction price
There is no remaining performance obligation for any contract for which revenue has been recognized till period end.
Further, the Company has not applied the practical expedient as specified in para 121 of Ind AS 115 as the Company do not
have any performance obligations that has an original expected duration of one year or less or any revenue stream in which
consideration from a customer corresponds directly with the value to the customer of the entity''s performance completed to
date.
Determining the timing of satisfaction of performance obligations
There is no significant judgements involved in ascertaining the timing of satisfaction of performance obligations, in
evaluating when a customer obtains control of promised goods, transaction price and allocation of it to the performance
obligations.
Determining the transaction price and the amounts allocated to performance obligations
The transaction price ascertained for the only performance obligation of the Company (i.e. Sale of goods) is agreed in the
contract with the customer. There is no variable consideration involved in the transaction price except for refund due to
shortages which is adjusted with revenue.
39. VOLUNTARY RETIREMENT SCHEME
During the year ended March 31, 2024, the Company had initiated the discussions with the workers for the Voluntary
Retirement Scheme (VRS). The Board of Directors in their meeting held on February 13, 2024 had approved the Voluntary
Retirement Scheme 2023-24 ("Scheme"). The Company had considered a provision of Rs. 321.08 lakhs and disclosed that as
an exceptional item in the Financial statements / results. 14 eligible employees opted for the scheme and their dues were paid
in April 2024.
The Company has developed a comprehensive system of maintenance of information and documents as required by the
transfer pricing legislation under section 92-92F of the Income Tax Act, 1961. The management is of the opinion that its
international transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial
statements, particularly on the amount of tax expense and that of provision for taxation.
During the earlier years the Company has applied for Advance Pricing Agreement (APA) before the Central Board of Direct Tax
(CBDT) and Government of India for International Inter-company related party transactions with Associated Enterprises (AE).
The Company has entered into in APA agreement with CBDT dated 18 August 2021 for 5 years ended 31 March 2021.
The Company has also filed application for renewal of APA agreement for five years (FY 2021-22 to 2025-26) on 26 March
2021 and current tax working for FY 2024-25 is calculated based on the APA agreement signed on 18th August 2021 for 5
years ended 31 March 2021.
The Domestic Transfer Pricing Regulations as prescribed under section 92BA of the Income Tax Act, 1961 was introduced from
April 1, 2012. The Company has been consistently transacting with related parties on an Arm''s Length basis in accordance
with the Group Transfer Pricing Policy. The Company is of the opinion that there will be no significant changes to Arm''s length
price under determination in order to comply with the requirement of section 92BA of Income Tax Act. Hence, there will be
no material impact on the financial statements.
The Company tests goodwill for impairment at least annually, or more frequently if events or changes in circumstances
indicate that it might be impaired. The Company has identified a single cash generating unit ("CGU") based on the business.
The recoverable amount of CGU is determined based on higher of value-in-use and fair value less cost to sell. The recoverable
value was determined by value in use in cases where there is no basis for making a reliable estimate of the price at which
an orderly transaction to sell the asset would take place between market participants at the measurement date under
current market conditions. In determining the value in use, cash flow projections from financial budgets approved by senior
management have been considered.
Market related information and estimates are used to determine the recoverable amount. Key assumptions on which
management has based its determination of recoverable amount include estimated long-term growth rates, weighted average
cost of capital and estimated operating margins. Cash flow projections are considered for next 5 years and consider past
experience and represent management''s best estimate about future developments. Cash flows beyond the five-year period
are extrapolated using a 2% growth rate. The pre-tax discount rate applied to cash flow projections for impairment testing
during the current year is 12%. An analysis of the sensitivity of the computation of recoverable amount to a change in key
parameters, based on reasonable assumptions, did not identify any probable scenario in which the recoverable amount of the
CGU would decrease below its carrying amount other than the amount.
42. The Code on Social Security, 2020 (''Code'') relating to employee benefits during employment and post-employment benefits
received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on
which the Code will come into effect has not been notified and the rules are yet to be framed. The Company will assess the
impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective
and the related rules are published.
43. OTHER INFORMATION
a) The Company did not have any transactions with companies struck off under Section 248 of the Companies Act, 2013
or Section 560 of Companies Act, 1956 during the financial year except as mentioned in Note 12.
b) The Company does not have any Benami property, where any proceedings have been initiated or are pending against the
Company for holding any Benami property.
c) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory
period.
d) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.
e) The Company have not advanced or loaned or invested funds (either from borrowed funds or share premium or any
other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the
understanding, whether recorded in writing or otherwise, that the Intermediary shall:
(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf
of the company (Ultimate Beneficiaries) or
(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
f) The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with
the understanding (whether recorded in writing or otherwise) that the Company shall:
(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf
of the Funding Party (Ultimate Beneficiaries) or
(ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,
g) No direct database changes in accounting software are allowed and all data changes are governed at application layer
to avoid system performance problems and to follow the principle of data minimization. There are alternate governing
processes in place to mitigate any risk of unauthorized access to database.
h) The Company maintains the books of account electronically and its back-up is maintained on a server physically located
outside India.
i) The Company does not have any transaction which is not recorded in the books of accounts that has been surrendered
or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey).
A There is no significant change (i.e. change of not more than 25% as compared to the immediately previous financial year)
in the key financial ratios.
* There is an increase in net capital tunover ratio by about 47% in the current year as compared to previous year due to the
factors below :
1. Increase in total revenue from operations by 3.72% in the current year as compared to previous year is attributable to
increased demand in sales and new customers.
2. There is reduction in cash and cash equivalent due to payment of interim dividend and purchase of capital goods, which
leads to decreased in working capital.
for and on behalf of the board of directors of
Morganite Crucible (India) Limited
CIN: L26920MH1986PLC038607
Jonathan Percival Poonam Bopshetti
Director Manager & Director
DIN : 09701284 DIN : 11109675
Place : Chhatrapati Sambhajinagar Place : Chhatrapati Sambhajinagar
Date : 22 May 2025 Date : 22 May 2025
Hanumant Mandale pooja Jindal
Chief Financial Officer Company Secretary
Place : Pune Place : Chhatrapati Sambhajinagar
Date : 22 May 2025 Date : 22 May 2025
Mar 31, 2024
The average credit period on sales of goods is 45 - 60 days. Interest is charged below 30 days @12% and above 30 days @15% on overdue receivables from dealer, however no interest is charged on outstanding trade receivables (Other than dealer).
The Company always measures the loss allowance for trade receivables at an amount equal to lifetime expected credit loss. The expected credit losses on trade receivables are estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the debtor''s current financial position, adjusted for factors that are specific to the debtors, general economic conditions of the industry in which the debtors operate, and an assessment of both the current as well as the forecast direction of conditions at the reporting date. Outstanding customer receivables are reviewed periodically. Provision is made based on expected credit loss method or specific identification method.
The Company writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation or has entered into bankruptcy proceedings, or when the trade receivables are over 180 days past due, whichever occurs earlier. None of the trade receivables are subject to enforcement activities.
(a) Rights, preferences and restrictions attached to equity shares
The Company has only one class of equity shares having a par value of '' 5 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
The Company manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to stakeholders through the optimization of the equity balance. The Company is not subject to any externally imposed capital requirements.
The amount that can be distributed as dividend by the company to its equity shareholders is determined based on the separate financial statements of the company and considering the requirements of the Companies Act, 2013. Thus, the amounts reported above are not distributable in entirety.
On 1 September 2023, the final dividend paid for FY 2023-24 was '' 11/- per share (total dividend '' 616 lakhs). On 9 November 2023, an interim dividend for FY 2023-24 of '' 28/- per share (total dividend '' 1568 lakhs) was paid to holders of fully paid equity shares.
In respect of the current year, the directors proposed that a dividend of Rs. 12 per share be paid on equity shares. The equity dividend is subject to approval by shareholders at the annual general meeting and has not been included as a liability in these financial statements. The total estimated equity dividend to be paid is Rs. 672 Lakhs.
Nature of Reserves -
a) General reserve : The General reserve comprises of transfer of profits from retained earnings for appropriation purposes. The reserve can be distributed/utilized by the Company in accordance with the Companies Act, 2013.
The general reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. There is no policy of regular transfer. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to profit or loss.
b) Securities premium : The Securities premium is created on issue of shares at a premium.
c) Capital reserve : Capital reserve comprises of receipt of Central Government investment subsidy under ''1993 package scheme of incentives'', State government investment subsidy under ''1983 package scheme of incentives and capital reserve arising on amalgamation of Diamond Crucible Company Limited.
d) Capital profit on forfeited shares - The capital profit on forfeited shares comprises of profit on re-issue of forfeited shares.
e) statutory Reserve : The statutory reserves comprises of the Investment allowance reserve created under the Income tax Act, 1961.
Trade payables principally comprise amounts outstanding for trade purchases. The average credit period taken for trade purchases is 30-45 days. For most suppliers, no interest is charged on the trade payables for the outstanding balances. The Company has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms.
The Company derives its revenue from contracts with customers for the transfer of goods and services at a point in time. The disclosure of revenue by product line is consistent with the revenue information that is disclosed for each reportable segment under Ind AS 108 (refer note 34).
ii) CORPORATE SOCIAL RESPONSIBILITY (CSR) :
As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. The areas for CSR activities are eradication of hunger and malnutrition, promoting education, art and culture, healthcare, destitute care and rehabilitation, environment sustainability, disaster relief and rural development projects. A CSR committee has been formed by the company as per the Act. The funds were primarily allocated to a corpus and utilized through the year on these activities which are specified in Schedule VII of the Companies Act, 2013:
|
(i) Contingent Liabilities: |
('' in Lakhs) |
|
|
As at 31 March, 2024 |
As at 31 March, 2023 |
|
|
- Matters relating to income tax |
- |
- |
|
- Matters relating to excise duty, value added tax and service tax (Refer note 1) [Excluding interest on value added tax liability '' 71.60 lakhs (2023 : '' 67.81 lakhs)] |
20.92 |
29.75 |
|
- Other Legal Cases |
6.14 |
- |
|
27.06 |
29.75 |
Notes:
(i) The Company is subject to legal proceedings and claims, which have arisen in the ordinary course of business. The Company''s management does not reasonably expect that these legal actions, when ultimately concluded and determined, will have a material and adverse effect on the Company''s results of operations or financial condition.
(ii) The Company has filed an application for renewal of the Advanced Pricing Agreement (APA) for five years (FY 2021-22 to 2025-26) on 26 March 2021. The current tax working for period ended 31 March 2024 is calculated based on the APA signed on 18th August 2021 for 5 years ended 31 March 2021.
|
31 CoMMITMENTs: |
('' in Lakhs) |
|
|
As at |
As at |
|
|
31 March, 2024 |
31 March, 2023 |
|
|
Estimated amount of contracts remaining to be executed on capital account and not provided for (net of capital advances) |
426.37 |
226.29 |
The information has been given in respect of such vendors to the extent they could be identified as micro and small enterprises as per the MSMED Act on the basis of information available with the Company.
a) Business Segments:
The Company recognizes its sale of crucibles activity as its only primary business segment since its operations predominantly consist of manufacture and sale of crucibles to its customers. The ''Chief Operating Decision Maker'' monitors the operating results of the Company''s business as single segment. Accordingly in context of Ind AS "Operating Segments" the principle business of the Company constitute a single reportable segment. Accordingly, income from sale of crucibles comprises the primary basis of segmental information set out in these financial statements.
b) Geographical segments:
The geographical information analyses the Company''s revenues and assets by the Company''s country of domicile (i.e. India) and outside India presenting geographical information, segment revenue has been on the geographic location of customers and segment assets which have been based on the geographical location of the assets.
B. Measurement of fair values
(i) Valuation techniques and significant unobservable inputs.
Level 1: Fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities
level 2: Fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)
level 3: Fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data
(ii) valuation techniques used to determine fair value "
Specific valuation techniques used to value the financial instruments include:
- the use of quoted market prices or dealer quotes for similar instruments
- the fair value of the remaining financial instruments is determined using discounted cash flow analysis.
(iii) valuation processes
The finance team performs the valuation of financial assets and liabilities required for financial reporting purposes.
C. Risk Management Framework
The Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s risk management framework. The board of directors has established the risk management committee, which is responsible for developing and monitoring the Company''s risk management policies. The committee reports regularly to the board of directors on its activities. The Company''s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate limits and controls and to monitor risks and adherence to limits. The Company, through its training and established procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
The nature of the Company''s business exposes it to a range of financial risks. These risks include:
(i) credit risk;
(ii) liquidity risk; and
(iii) market risk.
(i) Credit risk:
Credit risk refers to the risk that a counterpart will default on its contractual obligations resulting in financial loss to the Company. As at March 31, 2024, the company''s maximum exposure to credit risk without taking into account any collateral held or other credit enhancements which will cause a financial loss to the group due to failure to discharge an obligation by the counterparties and financial guarantees provided by the company arises from the carrying amount of the respective recognized financial assets as stated in the balance sheet.
a. Cash and bank balance
Credit risk from balances/ fixed deposits banks is managed in accordance with the Company''s risk management policy. Investments of surplus funds are made only with approved counterparties and within limits assigned to each counterparty. The limits are assigned based on corpus of investable surplus and corpus of the investment avenue. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments. The Company''s maximum exposure to credit risk on account of deposits with banks is as mentioned below -
(ii) Liquidity risk:
Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidity risk management framework for management of the company''s short, medium and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.
The Company''s principal sources of liquidity are cash and cash equivalents and cash flow that is generated from operations. The Company has no outstanding bank borrowings. The Company believes that the current working capital is sufficient to meet its current obligatory requirements. Accordingly, no liquidity risk is perceived.
As on 31 March 2024, the Company had a working capital of '' 5,735.06 lakhs (as on 31 March 2023''6,619.17 lakhs) including cash and cash equivalents and other bank balance of '' 5,000.18 lakhs (as on 31 March 2023''4,567.11 lakhs). The working capital of the Company for this purpose has been derived as follows:
(iii) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices- such as foreign exchange rates, interest rates and equity prices - will affect the Company''s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.
Market risk comprises of:
a. Interest rate risk
b. Foreign currency risk
Financial instruments affected by market risk include other financial assets, trade receivables and trade payables.
a. Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Since the Company does not have any financial instrument with variable interest rates, it is not exposed to interest rate risk.
b. Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s operating activities (when revenue or expense is denominated in a foreign currency). The foreign currency to which the Company is majorly exposed to are US Dollars, EURO and GBP.
The following tables demonstrate the sensitivity to a reasonably possible change in USD, EURO and GBP exchange rates, with all other variables held constant -
Sensitivity Analysis
A reasonable possible strengthening / (weakening) of the major currencies US Dollar, EURO or GBP against all other currencies as at 31 March 2023 would have affected the measurement of financial instruments (including derivatives) denominated in a foreign currency and affected equity and profit by the amounts shown below. This analysis assumed that all other variables, in particular interest rates, remain constant and ignores any impact of the forecast sales and purchases.
Note 1
Financial assets carried at fair value as at 31 March 2024 is '' Nil and financial assets carried at amortized cost as at 31 March 2024 is '' 7753.82 lakhs. The Company has assessed the counterparty credit risk in connection with Cash and cash equivalents, bank deposits and earmarked balances with banks amount to '' 4,936.62 lakhs as at 31 March 2024 where the Company has assessed the counterparty credit risk.
Trade receivables amounting to '' 2,671.36 lakhs as at 31 March 2024 is valued at considering provision for allowance under the expected credit loss method. This assessment is based on the likelihood of the recoveries from the customers in the present situation. The Company closely monitors its customers who are going through financial stress and assesses actions such as change in payment terms, recognition of revenue on collection basis etc., depending on severity of each case.
Basis this assessment, the allowance for doubtful trade receivables is considered adequate.
Defined contributions plans
The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund, Labour Welfare Fund and Superannuation Scheme, which are the defined contribution plans. The Company has no obligations other than to make the specified contributions. The contributions are charged to the Statement of Profit and Loss as they accrue. The amount recognized as an expense towards defined contribution plans for the year for provident fund and superannuation scheme aggregated to '' 93.63 Lakhs (31 March 2023: '' 79.35 Lakhs).
defined benefit plans Gratuity
The company sponsors defined benefit plans for qualifying employees. The defined benefit plans are administered by a separate fund that is legally separated from the entity. The trustees of the pension fund are required by law to act in the interest of the fund and of all relevant stakeholders in the plan. The trustees of the pension fund are responsible for the investment policy with regard to the assets of the fund. Under the plans, the employees are entitled to post-retirement yearly instalments amounting to 15 days salary for each year of completed service at the time of retirement / exit. The scheme is funded by plan assets.
The most recent actuarial valuations of the planned assets and the present value of the defined benefit liability were carried out at March 31, 2024 by appointed actuaries. The present value of the defined benefit liability, and the related current service cost and past service cost, were measured using the projected unit credit method.
The following table summarizes the position of assets and obligations relating to the plan.
a) Gratuity is payable to all eligible employees of the Company on superannuation, death, and permanent disablement, in terms of the provisions of the Payment of Gratuity Act, 1972.
b) The discount rate is based on the prevailing market yields Indian Government securities as at the Balance Sheet date for the estimated term of the obligations.
c) The Company''s gratuity fund is managed by Life Insurance Corporation of India, details of those funds invested by LIC are not readily available with the Company.
Performance obligations
The Company satisfies its performance obligations pertaining to the sale of crucibles at point in time when the control of goods is actually transferred to the customers. No significant judgment is involved in evaluating when a customer obtains control of promised goods. The payment is generally due within 45-60 days.
The Company is obliged for refunds due to shortages during the mode of transportation. There are no other significant obligations attached in the contract with customer.
Transaction price
There is no remaining performance obligation for any contract for which revenue has been recognized till period end. Further, the Company has not applied the practical expedient as specified in para 121 of Ind AS 115 as the Company do not have any performance obligations that has an original expected duration of one year or less or any revenue stream in which consideration from a customer corresponds directly with the value to the customer of the entity''s performance completed to date.
Determining the timing of satisfaction of performance obligations
There is no significant judgements involved in ascertaining the timing of satisfaction of performance obligations, in evaluating when a customer obtains control of promised goods, transaction price and allocation of it to the performance obligations.
Determining the transaction price and the amounts allocated to performance obligations
The transaction price ascertained for the only performance obligation of the Company (i.e. Sale of goods) is agreed in the contract with the customer. There is no variable consideration involved in the transaction price except for refund due to shortages which is adjusted with revenue.
39 VOLUNTARY RETIREMENT SCHEME
During the year ended March 31, 2024, the Company had initiated the discussions with the workers for the Voluntary Retirement Scheme (VRS). The Board of Directors in their meeting held on February 13, 2024 have approved the Voluntary Retirement Scheme 2023-24 ("Scheme"). The Company has considered a provision of '' 321.08 lakhs and reported the same as exceptional item in the Financial statements.
40 Goodwill
Following is the summary of changes in carrying amount of goodwill:
The Company tests goodwill for impairment at least annually, or more frequently if events or changes in circumstances indicate that it might be impaired. The Company has identified a single cash generating unit ("CGU") based on the business. The recoverable amount of CGU is determined based on higher of value-in-use and fair value less cost to sell. The recoverable value was determined by value in use in cases where there is no basis for making a reliable estimate of the price at which an orderly transaction to sell the asset would take place between market participants at the measurement date under current market conditions. In determining the value in use, cash flow projections from financial budgets approved by senior management have been considered.
Market related information and estimates are used to determine the recoverable amount. Key assumptions on which management has based its determination of recoverable amount include estimated long-term growth rates, weighted average cost of capital and estimated operating margins. Cash flow projections are considered for next 5 years and consider past experience and represent management''s best estimate about future developments. Cash flows beyond the five-year period are extrapolated using a 2% growth rate. The pre-tax discount rate applied to cash flow projections for impairment testing during the current year is 12%. An analysis of the sensitivity of the computation of recoverable amount to a change in key parameters, based on reasonable assumptions, did not identify any probable scenario in which the recoverable amount of the CGU would decrease below its carrying amount other than the amount.
41 transfer pricing
The Company has developed a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under section 92-92F of the Income Tax Act, 1961. The management is of the opinion that its international transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.
During the earlier years the Company has applied for Advance Pricing Agreement (APA) before the Central Board of Direct Tax (CBDT) and Government of India for International Inter-company related party transactions with Associated Enterprises (AE). The Company has entered into in APA agreement with CBDT dated 18 August 2021 for 5 years ended 31 March 2021.
The Company has also filed application for renewal of APA agreement for five years (FY 2021-22 to 2025-26) on 26 March 2021 and current tax working for FY 2023-24 is calculated based on the APA agreement signed on 18th August 2021 for 5 years ended 31 March 2021.
The Domestic Transfer Pricing Regulations as prescribed under section 92BA of the Income Tax Act, 1961 was introduced from April 1, 2012. The Company has been consistently transacting with related parties on an Arm''s Length basis in accordance
with the Group Transfer Pricing Policy. The Company is of the opinion that there will be no significant changes to Arm''s length price under determination in order to comply with the requirement of section 92BA of Income Tax Act. Hence, there will be no material impact on the financial statements.
42 The Code on Social Security, 2020 (''Code'') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the rules are yet to be framed. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective and the related rules are published.
a) The Company did not have any transactions with companies struck off under Section 248 of the Companies Act, 2013 or Section 560 of Companies Act, 1956 during the financial year except as mentioned in Note 12.
b) The Company does not have any Benami property, where any proceedings have been initiated or are pending against the Company for holding any Benami property.
c) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
d) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.
e) The Company have not advanced or loaned or invested funds (either from borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall:
(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or
(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
f) The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
(ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,
g) The Company does not have any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey).
A There is no significant change (i.e. change of more than 25% as compared to the immediately previous financial year) in the key financial ratios.
* There is an increase in profits by about 45% in the current year as compared to previous year due to the factors below :
1. I ncrease in total revenue from operations by 8.63% in the current year as compared to previous year is attributable to increased demand in sales and new customers.
2. There is reduction in cost of goods sold due to cost optimization programmes.
Mar 31, 2023
The average credit period on sales of goods is 45 - 60 days. Interest is charged below 30 days @12% and above 30 days @15% on overdue receivables from dealer, however no interest is charged on outstanding trade receivables (Other than dealer).
The Company always measures the loss allowance for trade receivables at an amount equal to lifetime expected credit loss. The expected credit losses on trade receivables are estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the debtor''s current financial position, adjusted for factors that are specific to the debtors, general economic conditions of the industry in which the debtors operate, and an assessment of both the current as well as the forecast direction of conditions at the reporting date. Outstanding customer receivables are reviewed periodically. Provision is made based on expected credit loss method or specific identification method.
(a) Rights, preferences and restrictions attached to equity shares
The Company has only one class of equity shares having a par value of '' 5 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
The board of director at the board meeting held on 10th November 2022 approved dividend of '' 9 per equity share for interim period ended 30 September 2022 which was subsequently paid during the quarter ended 31 December 2022. The amount was recognized as distributions to equity shareholders during the year ended 31 March 2023 and the total appropriation was '' 504 lakhs.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
The Company manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to stakeholders through the optimization of the equity balance. The Company is not subject to any externally imposed capital requirements.
a) General reserve : The General reserve comprises of transfer of profits from retained earnings for appropriation purposes. The reserve can be distributed/utilized by the Company in accordance with the Companies Act, 2013.
The general reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. There is no policy of regular transfer. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to profit or loss.
b) Securities premium : The Securities premium is created on issue of shares at a premium.
c) Capital reserve: Capital reserve comprises of receipt of Central Government investment subsidy under ''1993 package scheme of incentives'', State government investment subsidy under ''1983 package scheme of incentives and capital reserve arising on amalgamation of Diamond Crucible Company Limited.
d) Capital profit on forfeited shares - The capital profit on forfeited shares comprises of profit on re-issue of forfeited shares.
e) statutory Reserve : The statutory reserves comprises of the Investment allowance reserve created under the Income tax Act, 1961.
Trade payables principally comprise amounts outstanding for trade purchases. The average credit period taken for trade purchases is 30-45 days. For most suppliers, no interest is charged on the trade payables for the outstanding balances. The Company has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms.
The Company derives its revenue from contracts with customers for the transfer of goods and services at a point in time. The disclosure of revenue by product line is consistent with the revenue information that is disclosed for each reportable segment under Ind AS 108 (refer note 34).
ii) CORPORATE SOCIAL RESPONSIBILITY (CSR) :
As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. The areas for CSR activities are eradication of hunger and malnutrition, promoting education, art and culture, healthcare, destitute care and rehabilitation, environment sustainability, disaster relief and rural development projects. A CSR committee has been formed by the company as per the Act. The funds were primarily allocated to a corpus and utilized through the year on these activities which are specified in Schedule VII of the Companies Act, 2013:
|
30 TAXATION (i) Contingent Liabilities: |
('' in Lakhs) |
|
|
As at March 31, 2023 |
As at March 31, 2022 |
|
|
- Matters relating to income tax |
- |
- |
|
- Matters relating to excise duty, value added tax and service tax (Refer note 1) [Excluding interest on value added tax liability '' 67.81 lakhs (2022 : '' 64.05 lakhs)] |
29.75 |
43.66 |
|
29.75 |
43.66 |
Note 1 - The Company is subject to legal proceedings and claims, which have arisen in the ordinary course of business. The Company''s management does not reasonably expect that these legal actions, when ultimately concluded and determined, will have a material and adverse effect on the Company''s results of operations or financial condition.
(ii) The Company has filed an application for renewal of the Advanced Pricing Agreement (APA) for five years (FY 2021-22 to 2025-26) on 26 March 2021. The current tax working for period ended 31 March 2023 is calculated based on the APA signed on 18th August 2021 for 5 years ended 31 March 2021.
|
31 CoMMITMENTs: |
('' in Lakhs) |
|
|
As at |
As at |
|
|
March 31, 2023 |
March 31, 2022 |
|
|
Estimated amount of contracts remaining to be executed on capital account and not provided for (net of capital advances) |
226.29 |
501.62 |
The information has been given in respect of such vendors to the extent they could be identified as micro and small enterprises as per the MSMED Act on the basis of information available with the Company.
34 SEGMENT REPORTINGa) Business Segments:
The Company recognizes its sale of crucibles activity as its only primary business segment since its operations predominantly consist of manufacture and sale of crucibles to its customers. The ''Chief Operating Decision Maker'' monitors the operating results of the Company''s business as single segment. Accordingly in context of Ind AS "Operating Segments" the principle business of the Company constitute a single reportable segment. Accordingly, income from sale of crucibles comprises the primary basis of segmental information set out in these financial statements.
The geographical information analyses the Company''s revenues and assets by the Company''s country of domicile (i.e. India) and outside India presenting geographical information, segment revenue has been on the geographic location of customers and segment assets which have been based on the geographical location of the assets.
(i) Valuation techniques and significant unobservable inputs.
Level 1: Fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: Fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)
Level 3: Fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).
(ii) Valuation techniques used to determine fair value
Specific valuation techniques used to value the financial instruments include:
- the use of quoted market prices or dealer quotes for similar instruments
- the fair value of the remaining financial instruments is determined using discounted cash flow analysis.
(iii) Valuation processes
The finance team performs the valuation of financial assets and liabilities required for financial reporting purposes.
The Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s risk management framework. The board of directors has established the risk management committee, which is responsible for developing and monitoring the Company''s risk management policies. The committee reports regularly to the board of directors on its activities. The Company''s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate limits and controls and to monitor risks and adherence to limits. The Company, through its training and established procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
The nature of the Company''s business exposes it to a range of financial risks. These risks include:
(i) credit risk;
(ii) liquidity risk; and
(iii) market risk.
Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. a. Cash and bank balance
Credit risk from balances/ fixed deposits banks is managed in accordance with the Company''s risk management policy. Investments of surplus funds are made only with approved counterparties and within limits assigned to each counterparty. The limits are assigned based on corpus of investable surplus and corpus of the investment avenue. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments. The Company''s maximum exposure to credit risk on account of deposits with banks is as mentioned below -
The Company''s principal sources of liquidity are cash and cash equivalents and cash flow that is generated from operations. The Company has no outstanding bank borrowings. The Company believes that the current working capital is sufficient to meet its current obligatory requirements. Accordingly, no liquidity risk is perceived.
As on 31 March 2023, the Company had a working capital of '' 6,619.17 lakhs (as on 31 March 2022''6570.09 lakhs) including cash and cash equivalents and other bank balance of '' 4,567.11 lakhs (as on 31 March 2022''3624.38 lakhs). The working capital of the Company for this purpose has been derived as follows:
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices- such as foreign exchange rates, interest rates and equity prices - will affect the Company''s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.
Market risk comprises of:
a. Interest rate risk
b. Foreign currency risk
Financial instruments affected by market risk include other financial assets, trade receivables and trade payables.
a. Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Since the Company does not have any financial instrument with variable interest rates, it is not exposed to interest rate risk.
b. Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s operating activities (when revenue or expense is denominated in a foreign currency). The foreign currency to which the Company is majorly exposed to are US Dollars, EURO and GBP.
The following tables demonstrate the sensitivity to a reasonably possible change in USD, EURO and GBP exchange rates, with all other variables held constant -
A reasonable possible strengthening / (weakening) of the major currencies US Dollar, EURO or GBP against all other currencies as at 31 March 2023 would have affected the measurement of financial instruments (including derivatives) denominated in a foreign currency and affected equity and profit by the amounts shown below. This analysis assumed that all other variables, in particular interest rates, remain constant and ignores any impact of the forecast sales and purchases.
Financial assets carried at fair value as at 31 March 2023 is '' Nil and financial assets carried at amortized cost as at 31 March 2023 is '' 7339.27 lakhs. The Company has assessed the counterparty credit risk in connection with Cash and cash equivalents, bank deposits and earmarked balances with banks amount to '' 4515.04 lakhs as at 31 March 2023 where the Company has assessed the counterparty credit risk.
Trade receivables amounting to '' 2706.06 lakhs as at 31 March 2023 is valued at considering provision for allowance under the expected credit loss method. This assessment is based on the likelihood of the recoveries from the customers in the present situation. The Company closely monitors its customers who are going through financial stress and assesses actions such as change in payment terms, recognition of revenue on collection basis etc., depending on severity of each case.
Basis this assessment, the allowance for doubtful trade receivables is considered adequate.
37 EMPLOYEE BENEFITSDefined contributions plans
The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund, Labour Welfare Fund and Superannuation Scheme, which are the defined contribution plans. The Company has no obligations other than to make the specified contributions. The contributions are charged to the Statement of Profit and Loss as they accrue. The amount recognized as an expense towards defined contribution plans for the year for provident fund and superannuation scheme aggregated to '' 53.28 Lakhs (31 March 2022: '' 80.89 Lakhs).
Gratuity
The Company operates post employment defined benefit plans that provide gratuity benefit. The gratuity plan entitles an employee, who has rendered at least five years of continuous service, to receive 15 days salary for each year of completed service at the time of retirement / exit. The scheme is funded by plan assets.
The following table summarizes the position of assets and obligations relating to the plan.
a) Gratuity is payable to all eligible employees of the Company on superannuation, death, and permanent disablement, in terms of the provisions of the Payment of Gratuity Act, 1972.
b) The discount rate is based on the prevailing market yields Indian Government securities as at the Balance Sheet date for the estimated term of the obligations.
c) The Company''s gratuity fund is managed by Life Insurance Corporation of India, details of those funds invested by LIC are not available with the Company.
The Company satisfies its performance obligations pertaining to the sale of crucibles at point in time when the control of goods is actually transferred to the customers. No significant judgment is involved in evaluating when a customer obtains control of promised goods. The payment is generally due within 45-60 days.
The Company is obliged for refunds due to shortages during the mode of transportation. There are no other significant obligations attached in the contract with customer.
There is no remaining performance obligation for any contract for which revenue has been recognized till period end. Further, the Company has not applied the practical expedient as specified in para 121 of Ind AS 115 as the Company do not have any performance obligations that has an original expected duration of one year or less or any revenue stream in which consideration from a customer corresponds directly with the value to the customer of the entity''s performance completed to date.
Determining the timing of satisfaction of performance obligations
There is no significant judgements involved in ascertaining the timing of satisfaction of performance obligations, in evaluating when a customer obtains control of promised goods, transaction price and allocation of it to the performance obligations.
Determining the transaction price and the amounts allocated to performance obligations
The transaction price ascertained for the only performance obligation of the Company (i.e. Sale of goods) is agreed in the contract with the customer. There is no variable consideration involved in the transaction price except for refund due to shortages which is adjusted with revenue.
39. CLOSURE AND RELOCATION EXPENSES RELATING TO MEHSANA PLANT
During the previous year ended 31 March 2021, the management had identified the potential buyer for sale of Land and Building of Mehsana Plant. The management had entered into an "Memorandum of Understanding" (MOU) dated 12 February 2021 for sale of land and building.
With effect from May 21 production activities have been stopped at Mehsana plant, all assets has been transferred from Mehsana to Aurangabad plant. The Company has sold the land and building of Mehsana Plant on November 1 1, 2021 and subsequently submitted the application before GIDC for effecting the transfer of the property. The GIDC vide its Officer Order dated 04 December 2021 had approved the transfer of property in the name of Buyer and accordingly the possession of the property handed over to the Buyer effective from December 06, 2021. Basis the approval from GIDC, the Company executed sale deed for Rs. 900 lakhs for Mehsana Plant Land & building in November 2021 and transferred the land & Building to prospective buyer in the month of December 2021. The profit on sale of Land and Building to the extent of Rs. 738 Lakhs was recognized in Other Income in the year ended on 31 March 2022.
The Ministry of Corporate Affairs has notified Indian Accounting Standard 116 (''Ind AS 116''), Leases, with effect from 1 April 2019. The Standard primarily requires the Company, as a lessee, to recognize, at the commencement of the lease a right-to-use asset and a lease liability (representing present value of unpaid lease payments). Such right-to-use assets are subsequently depreciated and the lease liability reduced when paid, with the interest on the lease liability being recognized as finance costs, subject to certain remeasurement adjustments.
The Company has adopted the modified prospective transition method recognizing the lease liability at the present value of the remaining lease payments, discounted using the lessee''s incremental borrowing rate at the date of initial application and recognized the Right of Use Asset (ROU) an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognized in the balance sheet immediately before the date of initial application.
The total cash outflow for leases is '' Nil ( 2022 : '' 6.29 lakhs), including cash outflow for short term and low value leases.
The Company has developed a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under section 92-92F of the Income Tax Act, 1961. The management is of the opinion that its international transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.
During the earlier years the Company has applied for Advance Pricing Agreement (APA) before the Central Board of Direct Tax (CBDT) and Government of India for International Inter-company related party transactions with Associated Enterprises (AE). The Company has entered into in APA agreement with CBDT dated 18 August 2021 for 5 years ended 31 March 2021.
The Company has also filled application for renewal of APA agreement for five years (FY 2021-22 to 2025-26) on 26 March 2021 and current tax working for FY 2022-23 is calculated based on the APA agreement signed on 18th August 2021 for 5 years ended 31 March 2021.
The Domestic Transfer Pricing Regulations as prescribed under section 92BA of the Income Tax Act, 1961 was introduced from April 1, 2012. The Company has been consistently transacting with related parties on an Arm''s Length basis in accordance with the Group Transfer Pricing Policy. The Company is of the opinion that there will be no significant changes to Arm''s length price under determination in order to comply with the requirement of section 92BA of Income Tax Act. Hence, there will no material impact on the financial statements.
The Company tests goodwill for impairment at least annually, or more frequently if events or changes in circumstances indicate that it might be impaired. The Company has identified a single cash generating unit ("CGU") based on the business. The recoverable amount of CGU is determined based on higher of value-in-use and fair value less cost to sell. The recoverable value was determined by value in use in cases where there is no basis for making a reliable estimate of the price at which an orderly transaction to sell the asset would take place between market participants at the measurement date under current market conditions. In determining the value in use, cash flow projections from financial budgets approved by senior management have been considered.
Market related information and estimates are used to determine the recoverable amount. Key assumptions on which management has based its determination of recoverable amount include estimated long-term growth rates, weighted average cost of capital and estimated operating margins. Cash flow projections are considered for next 5 years and consider past experience and represent management''s best estimate about future developments. Cash flows beyond the five-year period are extrapolated using a 2% growth rate. The pre-tax discount rate applied to cash flow projections for impairment testing during the current year is 12%. An analysis of the sensitivity of the computation of recoverable amount to a change in key parameters, based on reasonable assumptions, did not identify any probable scenario in which the recoverable amount of the CGU would decrease below its carrying amount other than the amount.
43. ''During the month of January 2023, the Company was informed by the ultimate holding entity viz. Morgan Advanced Materials Plc, that the ultimate holding entity had encountered a cyber incident on their IT systems. Although, the Company has separate IT systems and infrastructure in India, as an immediate precautionary measure, basis advice from ultimate holding entity, the Company had temporarily shut down access to IT systems for security reasons which led to temporary disruption in some of the Company''s business activities. The Company had put in place alternative control mechanism in the absence of the access to the said systems. Based on the investigation carried out by the ultimate holding company at group level, the said systems were restored in a phased manner after taking all the possible necessary measures and it was informed that there was no impact on the Company''s IT systems and infrastructure. As per the Company''s assessment there was no impact on the financial statement and results of the Company for the year ended 31 March 2023 due to cyber incident at the ultimate holding entity level.
44. The Code on Social Security, 2020 (''Code'') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the rules are yet to be framed. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective and the related rules are published.
a) The Company did not have any transactions with companies struck off under Section 248 of the Companies Act, 2013 or Section 560 of Companies Act, 1956 during the financial year except as mentioned in Note 12.
b) The Company does not have any Benami property, where any proceedings have been initiated or are pending against the Company for holding any Benami property.
c) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
d) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.
e) The Company have not advanced or loaned or invested funds (either from borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall:
(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or
(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
f) The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
(ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,
g) The Company does not have any transaction which is not recorded in the books of accounts that has been surrendered
or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey).
A There is no significant change (i.e. change of more than 25% as compared to the immediately previous financial year) in the key financial ratios.
* Higher amount of Other income was earned in PY due to Non-operating income earned from holding company and Sale of Mehsana Plant, which is Nil in CY
Hence major reduction is seen in profit as compared to PY resulting in decrease in the ratio.
@ Increase in COGS is seen due to major increase in RM costs for Graphite and silicon in the CY as compared to the PY, due to which increase is seen in ratio.
Mar 31, 2018
1. RECENT ACCOUNTING PRONOUNCEMENTS
Standards issued but not yet effective
4.1 New Accounting Standards yet to be adopted
Ministry of Corporate Affairs ("MCA") through Companies (Indian Accounting Standards) Amendment Rules, 2018 has notified the following new Accounting Standards (''Ind AS'') and amendments to Ind ASs which the Company has not applied as they are effective for annual periods beginning on or after April 1, 2018:
Ind AS 115 - Revenue from Contracts with Customers
Ind AS 115 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Ind AS 115 will supersede the current revenue recognition standard Ind AS 18 Revenue, Ind AS 11 Construction Contracts when it becomes effective.
The core principle of Ind AS 115 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the standard introduces a 5-step approach to revenue recognition:
- Step 1: Identify the contract(s) with a customer
- Step 2: Identify the performance obligation in contract
- Step 3: Determine the transaction price
- Step 4: Allocate the transaction price to the performance obligations in the contract
- Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
Under Ind AS 115, an entity recognizes revenue when (or as) a performance obligation is satisfied, i.e. when ''control'' of the goods or services underlying the particular performance obligation is transferred to the customer
The Company has completed an initial assessment of the potential impact of the adoption of Ind AS 115 on accounting policies followed in its financial statements. The quantitative impact of adoption of Ind AS 115 on the financial statements in the period
of initial application is not reasonably estimable as at present. However as per the management assessment the impact is not expected to be significant.
Transition
The Company plans to apply Ind AS 115 using the cumulative effect method , with the effect of initially applying this standard recognized at the date of initial application (i.e. 1 April 2018) in retained earnings. As a result, the Company will not present relevant individual line items appearing under comparative period presentation.
Ind AS 21 - The effect of changes in Foreign Exchanges rates
The amendment has been incorporated in Ind AS 21 as Appendix B which clarifies on the accounting of transactions that include the receipt or payment of advance consideration in a foreign currency. The appendix is applicable for accounting periods beginning on or after 1 April 2018. The appendix explains that the date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the non-monetary prepayment asset or deferred income liability. If there are multiple payments or receipts in advance, a date of transaction is established for each payment or receipt. The Company is evaluating the impact of this amendment on its financial statements.
(a) Rights, preferences and restrictions attached to equity shares
The Company has only one class of equity shares having a par value of '' 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
The shareholders at the Annual General Meeting held on 09 August 2017 approved dividend of Rs, 8 per equity share for year ended 31 March 2017 which was subsequently paid during the quarter ended 30 September 2017. The amount was recognized as distributions to equity shareholders during the nine month period ended 31 December 2017 and the total appropriation was Rs, 269.60 lakhs including corporate dividend tax of Rs, 45.60 lakhs.
On 24 May 2018, the Board of Directors have proposed a final dividend of Rs, 16 per equity share for the financial year ended 31 March 2018. The proposal is subject to the approval of shareholders at the Annual General Meeting. If approved, the dividend would result in a cash outflow of Rs, 540.10 lakhs inclusive of dividend distribution tax of Rs, 92.10 lakhs.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
The information has been given in respect of such vendors to the extent they could be identified as micro and small enterprises as per the MSMED Act on the basis of information available with the Company
2. Segment reporting
a) Business Segments:
The Company recognizes its sale of crucibles activity as its only primary business segment since its operations predominantly consist of manufacture and sale of crucibles to its customers. The ''Chief Operating Decision Maker'' monitors the operating results of the Company''s business as single segment. Accordingly in context of Ind AS "Operating Segments" the principle business of the Company constitute a single reportable segment. Accordingly, income from sale of crucibles comprises the primary basis of segmental information set out in these financial statements.
b) Geographical segments:
The geographical information analyses the Company''s revenues and assets by the Company''s country of domicile (i.e. India) and outside India presenting geographical information, segment revenue has been on the geographic location of customers and segment assets which have been based on the geographical location of the assets.
* The non-current assets in the above table excludes financial assets, deferred tax assets and post-employment benefits assets.
3. RELATED PARTY DISCLOSURES A. Names of related parties
a. Parties (where controls exists)
Morgan Advanced Materials Plc - Ultimate Holding Company
b. Investing Associates
Morganite Crucible Limited (holds 38.50% of issues, subscribed and paid up capital)
Morgan Terreassen BV (holds 36.50% of issues, subscribed and paid up capital)
c. Other related parties with whom transactions have taken place during the year
i Fellow subsidiary companies Morganite Crucible Inc.
Mkgs. Morgan Karbon Grafit
Morgan Molten Metal System (Suzhou) Company Limited
Morgan Molten Metal System GMBH Morganite Brasil Ltda.
Grupo Industrial Morgan, S.A. De C.
Morganite Carbon Kabushiki Kaisha Dalian Morgan Refractories Ltd Morgan Am&T Hong Kong Co., Ltd.
Morgan Advanced Materials Furnace Indust Morgan Advanced Materials (Taiwan) Co.
Murgappa Morgan Thermal Ceramics Limited, Chennai Thermal Ceramics Limited, Uk Molten Ceramics Asia Pte. Ltd.
Morgan Ceramics Middle East FZE Furnace Industries
Morgan Advanced Materials India Private Limited
ii Key Management Personnel Mr. Aniruddha Karve - Managing Director (upto 31 March 2018)
Late Mr. Hitesh Saiwal - Managing Director (upto 30 April 2015)
Mr. Atithi Majumdar - Chief Financial Officer
Mr. Rupesh Khokle - Company Secretary
Mr. Mukund Bhogale -Non-Executive Independent Director **
Mr. Subhash Kolakpar -Non-Executive Independent Director** Ms. Maithilee Tambolkar -Non-Executive Independent Director**
C. Risk Management Framework
The Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s risk management framework. The board of directors has established the risk management committee, which is responsible for developing and monitoring the Company''s risk management policies. The committee reports regularly to the board of directors on its activities. The Company''s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate limits and controls and to monitor risks and adherence to limits. The Company, through its training and established procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
The nature of the Company''s business exposes it to a range of financial risks. These risks include:
(i) credit risk;
(ii) liquidity risk; and
(iii) market risk.
(i) Credit risk:
Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to '' 1,696.51 lakhs and '' 1,841.52 lakhs as of 31 March 2018 and 31 March 2017, respectively. Trade receivables are typically unsecured and are derived from revenue earned from customers located in India and outside India. The management has established accounts receivable policy under which customer accounts are regularly monitored. The Company has a dedicated sales team which is responsible for collecting dues from the customer within stipulated period. The management reviews status of critical accounts on a regular basis.
On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss of trade receivables.
a) Expected credit loss assessment for trade receivables as at 31 March 2018, 31 March 2017 and 1 April 2016 :
The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. Expected loss rates are based on average computed default rate based on historical analysis of trade receivables.
The following table provides information about the exposure to credit risk and expected credit loss for trade receivables -
(ii) Liquidity risk:
The Company''s principal sources of liquidity are cash and cash equivalents and cash flow that is generated from operations. The Company has no outstanding bank borrowings. The Company believes that the current working capital is sufficient to meet its current obligatory requirements. Accordingly, no liquidity risk is perceived.
As on 31 March 2018, the Company had a working capital of Rs, 5,838.33 lakhs (as on 31 March 2017 Rs, 4731.79 lakhs, as on 1 April 2016 Rs, 3,359.60 lakhs) including cash and cash equivalents and other bank balance of Rs, 4,038.39 lakhs (as on 31 March 2017 Rs, 4,586.21 lakhs; as on 1 April 2016 Rs, 2,859.95 lakhs). The working capital of the Company for this
(iii) Market risk
"Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices- such as foreign exchange rates, interest rates and equity prices - will affect the Company''s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.
Market risk comprises of:
a. Interest rate risk
b. Foreign currency risk
Financial instruments affected by market risk include other financial assets, trade receivables and trade payables.
a. Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Since the Company does not have any financial instrument with variable interest rates, it is not exposed to interest rate risk.
b. Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s operating activities (when revenue or expense is denominated in a foreign currency). The foreign currency to which the Company is majorly exposed to are US Dollars and GBP
The Company has entered into derivative contracts to hedge its risk associated with foreign currency fluctuations. However, none of these contracts can be co-related on one to one basis against the underlying exposure. The forward sell contracts which are outstanding as at end of the year is as follows:
4. Scheme of amalgamation with Diamond Crucible Company Limited -
As on 31 March 2017, the company held 51% equity shares of ''Diamond Crucible Company Limited'' (DCCL) and during the year on 30 June 17, the company acquired the balance stake (49%) in DCCL from Terrassen Holdings Limited for cash consideration amounting to Rs, 1,675 lakhs to make it a wholly owned subsidiary.
On 10 August 2017, the Board of Directors of the Company approved a scheme of amalgamation ("the Scheme") for amalgamation of ''Diamond Crucible Company Limited ''into the Company. The Scheme has been approved by the National Company Law Tribunal (NCLT), Mumbai Bench on 22 February 2018.
Appointed date for the scheme is 1 October 2017. Under the Scheme, the Company has accounted for the amalgamation of DCCL on the pooling of interest method as stated in Appendix C of Indian Accounting Standard (IND AS 103) Business Combination. Accordingly all the assets and liabilities of DCCL are acquired at book values and the identity of reserves of DCCL are preserved in the books of the Company post amalgamation.
As per the requirements of IND AS 103, being a common control business combination, financial information in the financial statements in respect of prior periods have been restated as if the business combination had occurred from the beginning of the preceding period in the financial statements i.e 1 April 2016.
(i) Summary of assets and liabilities acquired as a result of the scheme is as given below -
1 The value of the investments of Rs. 2,171.99 lakhs in the equity shares of DCCL held by the Company shall stand cancelled in the books of the Company, without further act or deed. Accordingly carrying value of investments cancelled is debited to opening retained earnings.
ii The Company undertakes to have all legal or other proceedings initiated by or against DCCL transferred in its name respectively and to have the same continued, prosecuted and enforced by or against it to the same extent as would or might have been continued and enforced by or against DCCL, to the exclusion of it.
iii As per Appendix C, Business Combinations of Entities under Common Control of Ind AS 103, Business Combinations, in case of common control business combinations, the assets and liabilities of the combining entities are reflected at their carrying amounts. As per the ITFG 9, carrying value of assets and liabilities of the transferor entity (''DCCL'') as considered in the consolidated financials of the Company prior to amalgamation is considered for accounting of common control business combination.
5. First time adoption of Ind AS
As stated in Note 2(a), Pursuant to the scheme of merger approved by NCLT by its Order dated 22 February 2018, Diamond Crucible Company Limited (100% subsidiary) was merged with the Company with effect from 1 October 2017. As per the requirements of Appendix C of Ind AS 103, being a common control business combination, financial information presented in the financial statements in respect of prior periods have been restated as if the business combination had occurred from the beginning of the preceding period in the financial statements i.e 1 April 2016.
These are the Company''s first financial statements prepared in accordance with Ind AS. For the year ended 31 March 2017, the Company had prepared its financial statements in accordance with Companies (Accounting Standards) Rules, 2006, notified under Section 133 of the Act and other relevant provisions of the Act (''Previous GAAP'').
The accounting policies set out in Note 3 have been applied in preparing these financial statements for the year ended 31 March
2018 including comparative information for the year ended 31 March 2017 and the opening Ind AS Balance Sheet on the date of transition i.e. 1 April 2016.
In preparing its Ind AS Balance Sheet as at 1 April 2016 and in presenting the comparative information for the year ended 31 March 2017, the Company has adjusted amounts reported previously in financial statements prepared in accordance with previous GAAP. This note explains the principal adjustments made by the Company in restating its financial statements prepared in accordance with previous GAAP, and how transition from previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows.
Optional exemptions availed and mandatory exceptions
In preparing these financial statements, the Company has applied the below mentioned optional exemptions and mandatory exceptions.
A Optional exemptions availed 1 Business Combinations:
As per Ind AS 101, at the date of transition, an entity may not elect to restate business combinations that occurred before the date of transition. If the entity restates any business combinations that occurred before the date of transition, then it restates all the later business combinations, and also applies Ind AS 110, Consolidated Financial Statements, from that same date.
The Company has opted not to restate business combinations that occurred before the date of transition.
6 Property, plant and equipment, Intangible assets and investment properties:
As per Ind AS 101, an entity may elect to:
(i) measure an item of property, plant and equipment at the date of transition at its fair value and may use that fair value as its deemed cost at that date
* The previous GAAP figures have been reclassified to conform to Ind AS presentation requirements for the purpose of this note.
# Refer Note 37 for details of merger. Effect of merger also includes intercompany eliminations.
** Effect of Ind AS adjustments is after giving effect to the scheme of amalgamation as stated in Note 37.
c Explanatory notes to the Balance Sheet and Statement of Profit and Loss Reconciliation i Excise duty
Under previous GAAP, revenue from sale of goods was presented net of the excise duty on sales. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. Excise duty is presented in the Statement of Profit and Loss as an expense. This has resulted in an increase in the revenue from operations and expenses for the year ended 31 March 2017 by '' 571.51 lakhs. The total comprehensive income for the year ended and equity as on 31 March 2017 has remained unchanged.
ii Remeasurement of defined benefit plans
In the financial statements prepared under Previous GAAP, measurement of defined benefit plans (gratuity), arising primarily due to change in actuarial assumptions was recognized as employee benefits expense in the Statement of Profit and Loss. Under Ind AS, such remeasurement benefits relating to defined benefit plans is recognized in other comprehensive income (OCI) as per the requirements of Ind AS 19- Employee benefits. Consequently, the related tax effect of the same has also been recognized in OCI.
For the year ended 31 March, 2017, remeasurement of gratuity liability resulted in a net loss of '' 23.09 lakhs which has now been removed from employee benefits expense in the Statement of Profit and Loss and recognized separately in Other Comprehensive Income. This has resulted in decrease in Employee benefits expense by '' 23.09 lakhs and loss in Other Comprehensive income by '' 23.09 lakhs for the year ended 31 March, 2017. Consequently, tax effect of the same amounting to '' 7.99 lakhs is also recognized separately in Other Comprehensive Income.
iii Provisions
In accordance with Ind AS 10, Events after the Reporting Period, provision for proposed final dividend and tax on dividend has been derecognized by the Company, as dividend was declared by the company and approved by shareholders in the annual general meeting which was after the end of the reporting period. The impact arising from the change is summarized below:
7. Employee benefits
Defined contributions plans
The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund, Labour Welfare Fund and Superannuation Scheme , which are the defined contribution plans. The Company has no obligations other than to make the specified contributions. The contributions are charged to the Statement of Profit and Loss as they accrue. The amount recognized as an expense towards defined contribution plans for the year for provident fund and superannuation scheme aggregated to INR 85.87 Lakhs (31 March 2017: INR 76.95 Lakhs).
Defined benefit plans
Gratuity
The Company operates post-employment defined benefit plans that provide gratuity benefit. The gratuity plan entitles an employee, who has rendered at least five years of continuous service, to receive 15 days salary for each year of completed service at the time of retirement / exit. The scheme is funded by plan assets.
Although, the analysis does not take account of full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions shown.
8. Managerial Remuneration
During an earlier year, the Company had paid managerial remuneration to Late Hitesh Saiwal- Managing Director amounting to Rs, 102.07 lakhs which was in excess of the limits specified in section 197 read with Schedule V of the Act by Rs, 73.01 lakhs. The Company had made an application to the Central Government for waiver of such excess remuneration paid. During the year ended 31 March 2018, the Central Government has rejected the said application by its Order dated 11 August 2017. Further, based on the management''s evaluation of the response received from legal heirs of Late Hitesh Saiwal to the notice sent for recovery of such excess remuneration, the Company has filed the application with the Central Government to reconsider its aforesaid Order.
9. Transfer Pricing
The Company has developed a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under section 92-92F of the Income Tax Act, 1961. The management is of the opinion that its international transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.
During the previous year the Company has applied for Advance Pricing Agreement (APA) before the Central Board of Direct Tax (CBDT) and Government of India for International Inter-company related party transactions with associated Enterprises (AE). The APA is an arrangement between the taxpayer and the tax authority covering future transactions, with a view to avoid the potential transfer pricing disputes in a cooperative manner. Once APA agreement is completed, the Company will have certainty with respect to tax outcome of international transactions, by agreeing in advance the arm''s length pricing, or pricing methodology which is to be applied. Under APA specific rollback provisions enable to attain certainty in transfer prices of international transactions for up to 9 years (including 4 years rollback provisions) in total. The company has applied for Advanced Pricing Agreement (APA) in FY 2015-16, the period covered under rollback is from FY 2012-13 to FY 2015-16 and five year down the line i.e. from FY 2016-17 to 2020-21. Besides this the APA has a persuasive value on all open Transfer pricing litigations of past years. During the year, the Company received questionnaire from the CBDT and the Company has replied to the questionnaire.
The Domestic Transfer Pricing Regulations as prescribed under section 92BA of the Income Tax Act, 1961 was introduced from April 1, 2012. The Company has been consistently transacting with related parties on an Arm''s Length basis in accordance with Group Transfer Pricing Policy. The Company is of the opinion that there will be no significant changes to Arm''s length price under determination in order to comply with the requirement of section 92BA of Income Tax Act. Hence, there will no material impact on the financial statements.
10. The previous year''s figures were audited by a firm other than B S R & Associates LLP
11. Figures for the previous year have been regrouped / rearranged wherever necessary to confirm with the current year''s classification.
Mar 31, 2016
1. Managerial Remuneration
During the year Mr. Hitesh Saiwal resigned as Managing Director with effect from 30 April 2015. The Company has paid an additional remuneration of Rs. 7,214,160 to him, which has been approved by a special resolution in the General Meeting dated 22 September 2015. If the limits prescribed under section 197 read with Schedule V of the Act are pro-rated for one month, then the total remuneration paid to him of Rs. 10,207,067 (which includes superannuation fund, gratuity and leave encashment aggregating Rs. 2,206,504) is more than the prorated permissible limit by Rs. 7,300,563. The Company has made an application to the Central Government for excess remuneration paid and pending approval has treated the excess remuneration paid as a recoverable.
2. Operating lease as lessee
The Company has entered into leases for cars for a period of 3 years. Total lease payments for non-cancellable leases recognized in the books for the year is Rs. 640,800 (2015 : Rs. 574,095)
3. Dues to Micro and Small Enterprises
Under Micro, Small, and Medium Enterprises Development Act, 2006 (MSMED) which came in to force from 2 October, 2006, certain disclosures are required to be made relating to micro and small enterprises. On the basis of the information and records available with the management, the following disclosures are made for the amounts due to the Micro, small and medium enterprises:
4. In accordance with AS-29 (Provisions, Contingent Liabilities and Contingent Assets), the movement in provision for warranty is as follows:
A provision is estimated for expected warranty claims in respect of products sold during the year on the basis of past experience regarding failure trends of products and costs of rectification or replacement. It is expected that most of this cost will be incurred over the next 12 months as per management estimate.
As per provisions of section 135 of Companies Act 2013, the Company was required to spend Rs. 2,556,520 (2015: Rs 2,791,425) being 2% of average net profits made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy on the activities specified in Schedule VII of the Act. However, the Company has spent Rs. 434,205 (2015: Nil) towards Corporate Social Responsibility activities. The Company is in process of exploring various options specified in Schedule VII on which it could do its spending of CSR for the benefit of society.
a) Gross amount required to be spent by the Company during the year - Rs. 2,556,520
b) Amount spent during the year on :
5 Transfer Pricing
The Company has developed a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under section 92-92F of the Income Tax Act, 1961. The management is of the opinion that its international transactions are at armâs length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.
During the financial year the company has applied for Advance Pricing Agreement (APA) before the Central Board of Direct Tax (CBDT) and Government of India (GOI) for International Inter-company related party transactions with associated Enterprises (AE). The APA is an arrangement between the taxpayer and the tax authority covering future transactions, with a view to avoid the potential transfer pricing disputes in a cooperative manner. Once APA agreement is completed, the company will have certainty with respect to tax outcome of international transactions, by agreeing in advance the armâs length pricing, or pricing methodology which is to be applied. Under APA specific rollback provisions enable to attain certainty in transfer prices of international transactions for up to 9 years (including 4 years rollback provisions) in total. The company has applied for Advanced Pricing Agreement (APA) in FY 2015-16, the period covered under rollback is from FY 2012-13 to FY 2015-16 and five year down the line i.e. from FY 2016-17 to 2020-21. Besides this the APA has a persuasive value on all open Transfer pricing litigations of past years.
The Domestic Transfer Pricing Regulations as prescribed under section 92BA of the Income Tax Act, 1961 was introduced from April 1, 2012. The Company has been consistently transacting with related parties on an Armâs Length basis in accordance with Group Transfer Pricing Policy. The Company is of the opinion that there will be no significant changes to Armâs length price under determination in order to comply with the requirement of section 92BA of Income Tax Act. Hence, there will no material impact on the financial statements.
Mar 31, 2015
1. Employee benefits  Post employment benefit plans
Effective 1 January 2007, the Company adopted Accounting Standard 15
(revised 2005) on "Employee Benefits".
Defined contributions plans
The Company makes contributions, determined as specified percentage of
employee salaries, in respect of qualifying employees towards Provident
Fund and Superannuation Scheme, which is a defined contribution plan.
The Company has no obligations other than to make the specified
contributions. The contributions are charged to the Statement of Profit
and Loss as they accrue. The amount as an expense towards contribution
to Provident Fund and Superannuation Scheme for the year aggregated to
Rs. 5,375,735 (2014: Rs. 4,964,801).
Defined benefit plans Gratuity
The Company operates post employment defined benefit plans that provide
gratuity benefit. The gratuity plan entitles an employee, who has
rendered at least five years of continuous service, to receive 15 days
salary for each year of completed service at the time of retirement /
exit. The scheme is funded by plan assets.
a) Gratuity is payable to all eligible employees of the Company on
superannuation, death, and permanent disablement, in terms of the
provisions of the Payment of Gratuity Act, 1972.
b) The discount rate is based on the prevailing market yields Indian
Government securities as at the Balance Sheet date for the estimated
term of the obligations.
c) Estimates of future salary increases, considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors such as supply and demand in the employment market.
d) The Company's gratuity fund is managed by Life Insurance Corporation
of India. The plan assets under the fund are invested under approved
securities.
2. Operating lease as lessee
The Company has entered into leases for cars for a period of 3 years.
Total lease payments for non-cancellable leases recognized in the books
for the year is Rs. 574,095 (2014 : Rs. 786,421)
3. Unhedged foreign currency exposures
The Company has entered into derivative contracts to hedge its risk
associated with foreign currency fluctuations. However, none of these
contracts can be co-related on one to one basis against the underlying
exposure. As at the year end, the Company has outstanding foreign
exchange forward contracts of GBP Nil, EURO Nil and USD Nil (2014: GBP
210,000), (2014: EURO 150,000), (2014: USD Nil) equivalent to Rs Nil
(2014: Rs. 33,932,436). The Company has revalued these forward
contracts as at the yearend by marking the same to market and
recognized a loss of Rs.Nil (2014: Nil) by debiting the statement of
profit and loss in compliance with the announcement dated 29 March 2008
made by the Institute of Chartered Accountants of India ('ICAI')
regarding accounting for derivatives.
4. In accordance with AS-29 (Provisions, Contingent Liabilities and
Contingent Assets), the movement in provision for warranty is as
follows:
A provision is estimated for expected warranty claims in respect of
products sold during the year on the basis of past experience regarding
failure trends of products and costs of rectification or replacement.
It is expected that most of this cost will be incurred over the next 12
months as per management estimate.
5. Corporate social responsibility
As per provisions of section 135 of Companies Act 2013, the Company was
required to spend Rs. 2,791,425 (2014: Rs Nil) being 2% of average net
profits made during the three immediately preceding financial years, in
pursuance of its Corporate Social Responsibility Policy on the
activities specified in Schedule VII of the Act. However, the Company
has spent Rs Nil (2014: Nil) towards Corporate Social Responsibility
activities. The Company is in process of exploring various options
specified in Schedule VII on which it could do its spending of CSR for
the benefit of society.
6. Transfer Pricing The Company has developed a comprehensive system of
maintenance of information and documents as required by the transfer
pricing legislation under section 92-92F of the Income Tax Act, 1961.
The management is of the opinion that its international transactions
are at arm's length so that the aforesaid legislation will not have any
impact on the financial statements, particularly on the amount of tax
expense and that of provision for taxation.
The Domestic Transfer Pricing Regulations as prescribed under section
92BA of the Income Tax Act, 1961 was introduced from April 1, 2012. The
Company has been consistently transacting with related parties on an
Arm's Length basis in accordance with Group Transfer Pricing Policy.
The Company is of the opinion that there will be no significant changes
to Arm's length price under determination in order to comply with the
requirement of section 92BA of Income Tax Act. Hence, there will no
material impact on the financial statements.
Mar 31, 2014
1. Background
Morganite Crucible (India) Limited (''the Company'') was incorporated on
13 January 1986 under the Companies Act, 1956 and its shares are listed
on the Bombay Stock Exchange (BSE). The Company is engaged in the
business of manufacturing and selling of silicon carbide and clay
graphite crucibles, its accessories and die lubes.
2. Rights, preferences and restrictions attached to equity shares The
Company has only one class of equity shares having a par value of Rs.10
per share. Each holder of equity shares is entitled to one vote per
share. The Company declares and pays dividends in Indian rupees. The
dividend proposed by the Board of Directors is subject to the approval
of the shareholders in the ensuing Annual General Meeting.
The Company has proposed dividend per share of Re. 1 (2013: Re.1) for
distribution to equity shareholders.
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the Company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
shareholders.
3. Contingent liabilities and commitments
31 March 2014 31 March 2013
Contingent Liabilities:
a. Bonds in favour of the President 10,000,000 10,000,000
of India endorsed through Deputy
Commissioner of Customs for
import of goods.
b. Claims by employees towards unfair
labour practices under Section 28
read with items 1(a), (b), (c), 2
(b), 3, 4(a), (e) and (f) of
Schedule II and items 5, 6, 9 and - -
10 of Schedule IV of the
Maharashtra Recognition of Trade
Unions and Prevention of Unfair
Labour Practices Act, 1971 for which
amounts are not ascertainable.
c. Disputed employees'' state insurance
demand aggregating Rs.52,498 (2013: 52 498 52 498
Rs.52,498) against which the Company
has preferred appeals.
Commitments:
a. Estimated amount of contracts
remaining to be executed on capital
account and not 558,701 3,791,851
provided for
1 Employee benefits - Post employment benefit plans Effective 1
January 2007, the Company adopted Accounting Standard 15 (revised 2005)
on "Employee Benefits".
Defined contributions plans
The Company makes contributions, determined as specified percentage of
employee salaries, in respect of qualifying employees towards Provident
Fund and Superannuation Scheme, which is a defined contribution plan.
The Company has no obligations other than to make the specified
contributions. The contributions are charged to the statement of profit
and loss as they accrue. The amount as an expense towards contribution
to Provident Fund and Superannuation Scheme for the year aggregated to
Rs. 4,964,801 (2013: Rs. 4,775,021).
Defined benefit plans
Leave encashment
Amount of Rs. 835,756 (2013: Rs. 2,766,334) is recognised as an expense
and included in "Employee costs" in the statement of profit and loss.
Gratuity
The Company operates post employment defined benefit plans that provide
gratuity benefit. The gratuity plan entitles an employee, who has
rendered at least five years of continuous service, to receive 15 days
salary for each year of completed service at the time of retirement /
exit. The scheme is funded by plan assets.
a) Gratuity is payable to all eligible employees of the Company on
superannuation, death, and permanent disablement, in terms of the
provisions of the Payment of Gratuity Act, 1972.
b) The discount rate is based on the prevailing market yields Indian
Government securities as at the balance sheet date for the estimated
term of the obligations.
c) Estimates of future salary increases, considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors such as supply and demand in the employment market.
d) The Company''s gratuity fund is managed by Life Insurance Corporation
of India. The plan assets under the fund are invested under approved
securities.
4 Related party disclosures A. Names of related parties
a. Parties (where controls exists) Morgan Advanced Materials Plc (
formerly known as The Morgan Crucible Company Plc UK) - Ultimate
Holding Company
b. Investing Associates
Morganite Crucible Limited (holds 38.50% of issues, subscribed and paid
up capital)
Morgan Terreassen BV (holds 36.50% of issues, subscribed and paid up
capital)
c. Other related parties with whom transactions have taken place
during the year
i. Subsidiary company Diamond Crucible Company Limited
ii. Fellow subsidiary companies Morganite Crucible Inc., USA
Morgan Molten Metal System GMBH Germany Morgan Molten Metal System
(Suzhou) Co Ltd., China Morgan Karbon Grafit Sanayi Turkey Thermal
Ceramics UK
Murugappa Morganite Thermal Ceramics Ltd.
Thermal Ceramics South Africa
d. Key Management Person Mr. Hitesh Saiwal - Managing Director
5 Operating lease as lessee
The Company has entered into leases for cars for a period of 3 years.
Total lease payments for non-cancellable leases recognised in the books
for the year is Rs. 786,422 (2013 : Rs. 1,299,650)
6 Unhedged foreign currency exposures
The Company has entered into derivative contracts to hedge its risk
associated with foreign currency fluctuations. However, none of these
contracts can be co-related on one to one basis against the underlying
exposure. As at the year end, the Company has outstanding foreign
exchange forward contracts of GBP 210,000, EURO 150,000 and USD Nil
(2013: GBP Nil), (2013: EURO 900,000), (2013: USD 900,000) equivalent
to Rs.33,932,436 (2013: Rs. 111,501,000). The Company has revalued
these forward contracts as at the year end by marking the same to
market and recognised a loss of Rs.NIL (2013: Nil) by debiting the
statement of profit and loss in compliance with the announcement dated
29 March 2008 made by the Institute of Chartered Accountants of India
(''ICAI'') regarding accounting for derivatives.
7 Transfer Pricing
The Company has developed a comprehensive system of maintenance of
information and documents as required by the transfer pricing
legislation under section 92-92F of the Income Tax Act, 1961. The
management is of the opinion that its international transactions are at
arm''s length so that the aforesaid legislation will not have any impact
on the financial statements, particularly on the amount of tax expense
and that of provision for taxation.
The Domestic Transfer Pricing Regulations as prescribed under section
92BA of the Income Tax Act, 1961 was introduced from April 1, 2012. The
Company has been consistently transacting with related parties on an
Arm''s Length basis in accordance with Group Transfer Pricing Policy.
The Company is of the opinion that there will be no significant changes
to Arm''s length price under determination in order to comply with the
requirement of section 92BA of Income Tax Act. Hence, there will no
material impact on the financial statements.
Mar 31, 2013
1. Background
Morganite Crucible (India) Limited (''the Company'') was incorporated on
13 January 1986 under the Companies Act, 1956 and its shares are listed
on the Bombay Stock Exchange (BSE). The Company is engaged in the
business of manufacturing and selling of silicon carbide and clay
graphite crucibles, its accessories and die lubes.
2. Employee benefits  Post employment benefit plans
I. Effective 1 January 2007, the Company adopted Accounting Standard
15 (revised 2005) on "Employee Benefits".
II. Defined contributions plans The Company makes contributions,
determined as specified percentage of employee salaries, in respect of
qualifying employees towards Provident Fund and Superannuation Scheme,
which is a defined contribution plan. The Company has no obligations
other than to make the specified contributions. The contributions are
charged to the statement of profit and loss as they accrue. The amount
as an expense towards contribution to Provident Fund and Superannuation
Scheme for the year aggregated to Rs. 4,775021 (2012: Rs. 4,922,963).
Leave Encashment
Amount of Rs.2,766,334 (2012: Rs. 2,237,647) is recognised as an
expense and included in "Employee costs" in the statement of profit and
loss.
Gratuity
The Company operates post employment defined benefit plans that provide
gratuity benefit. The gratuity plan entitles an employee, who has
rendered at least five years of continuous service, to receive 15 days
salary for each year of completed service at the time of retirement /
exit. The scheme is funded by plan assets.
3. Segment reporting
The Company recognizes its sale of crucibles activity as its only
primary business segment since its operations predominantly consist of
manufacture and sale of crucibles to its customers. Accordingly, income
from sale of crucibles comprises the primary basis of segmental
information set out in these financial statements. Geographical segment
will be the secondary segment for the purpose of AS-17 (Segment
reporting). All the assets of the Company are located in India except
for Trade receivables and advance to suppliers aggregating
Rs.87,145,522 (2012: Rs. 104,807,237). The Company caters to the needs
of the domestic and foreign market.
4. Related party disclosures
A. Names of related parties
Parties (where controls exists)
The Morgan Crucible Company Plc, U.K - Ultimate Holding Company b.
Investing Associates
- Morganite Crucible Limited (holds 38.50% of issues, subscribed and
paid up capital)
- Morgan Terreassen BV (holds 36.50% of issues, subscribed and paid up
capital) Other related parties with whom transactions have taken place
during the year
- Subsidiary company Limited Diamond Crucible Company
- Fellow subsidiary companies Morganite Crucible Inc., USA
Morgan Molten Metal System GMBH Germany Morgan Molten Metal System
(Suzhou) Co Ltd., China Morgan Karbon Grafit Sanayi Turkey Thermal
Ceramics UK
Murugappa Morganite Thermal Ceramics Ltd. Thermal Ceramics South Africa
d. Key Management Person
Mr. Hitesh Saiwal - Managing Director
5. Operating leases as lessee
The Company ha s entered into operating leases for cars for a period of
3 years. Total lease payments for non - cancellable leases recognised
in books for the year is Rs.1,299,650 (2012 : Rs.1,447,836).
6. Dues to Micro and Small Enterprises
Under Micro, Small, and medium Enterprises Development Act, 2006
(MSMED) which came in to force from 2 October, 2006, certain
disclosures are required to be made relating to micro and small
enterprises. On the basis of the information and records available with
the management, the following disclosures are made for the amounts due
to the Micro, small and medium enterprises:
On the basis of information and records available with the Company, the
above disclosures are made in respect of amounts due to the micro,
small and medium enterprises, who have registered with the relevant
competent authorities. This has been relied upon by the auditors.
7. Unhedged foreign currency exposures
The Company has entered into derivative contracts to hedge its risk
associated with foreign currency fluctuations. However, none of these
contracts can be co-related on one to one basis against the underlying
exposure. As at the year end, the Company has outstanding foreign
exchange forward contracts of GBP Nil, EURO 900,000 and USD 900,000
(2012: GBP 725,000), (2012: EURO 825,000), (2012: USD 639,073)
equivalent to Rs.111,501,000 (2012: Rs. 148,226,427). The Company has
revalued these forward contracts as at the year end by marking the same
to market and recognised a loss of Rs.NIL (2012: Rs.4,976,182) by
debiting the statement of profit and loss in compliance with the
announcement dated 29 March 2008 made by the Institute of Chartered
Accountants of India (''ICAI'') regarding accounting for derivatives.
8. Transfer Pricing
The Company''s management is of the opinion that its international
transactions are at arm''s length as per the independent accountants
report for the year ended 31 March 2012. Further, the Indian Finance
Bill, 2012 had sought to bring in certain class of domestic
transactions in the ambit of the transfer pricing regulations with
effect from 1st April 2012. The management is yet to carry out a
detailed domestic / international transfer pricing study/ analysis for
the year ending 31 March 2013 in accordance with these regulations and
expects to commission and complete the same by the specified due date.
Management continues to believe that its international transactions
post March 2012 and the specified domestic transactions covered by the
new regulations are at arm''s length and that the transfer pricing
legislation will not have any impact on these financial statements,
particularly on amount of tax expense and that of provision of
taxation.
9. Change in Accounting Policy
With effect from 1 April 2012 the Company has changed its accounting
policy for valuation of inventories from First in First Out (FIFO)
method to Weighted Average Cost (WAC) method. This has resulted in
figures for the year ended 31 March 2013, for ''Cost of materials
consumed being lower by Rs. 1,256,485, ''Changes in inventories of
finished goods, work in progress and stock-in-trade being lower by Rs.
1,157,275 and ''Net Profit for the year'' being higher by Rs.1,630,614.
If the FIFO method of valuation of inventories would have been
followed, the figures for the year ended 31 March 2013 for ''Cost of
materials consumed would have been Rs.328,500,586, ''Changes in
inventories of finished goods, work-in-progress and stock-in-trade''
would have been Rs.24,714,611 and ''Net Profit for the year'' would have
been Rs.83,890,007.
10. Previous year figures
Previous year''s figure have been regrouped / reclassified as follows:
- Provision for tax aggregating to Rs. 1,753,847 has been reclassified
from "Long-term provisions" to "Short-term provision (net of advance
tax and tax deducted at source)".
Provision for tax aggregating to Rs. 1,553,663 has been reclassified
from "Short-term provisions" to "Long-term loans and advances (net of
provisions)".
Mar 31, 2012
1. Background
Morganite Crucible (India) Limited ('the Company') was incorporated
on 13 January 1986. The Company is engaged in the business of
manufacturing and selling of silicon carbide and clay graphite
crucibles and its accessories.
Terms / rights attached to equity shares
The Company has only one class of equity shares having a par value of
Rs.10 per share. Each holder of equity shares is entitled to one vote
per share. The Company declares and pays dividends in Indian rupees.
The dividend proposed by the Board of Directors is subject to the
approval of the shareholders in the ensuing Annual General Meeting.
The Company has proposed per share dividend of Re.1 (2011: Rs.Nil) for
distribution to equity shareholders.
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the Company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
shareholders.
Details of shares held by shareholders holding more than 5% of the
aggregate shares in the Company.
The only shareholders holding more than 5 percent shares as on the date
of the balance sheet are Morganite Crucible Limited and Morgan
Treason BV (as disclosed above), both of which are subsidiaries of
The Morgan Crucible Company Plc.
"Management charges for the current year includes charges pertaining to
previous year amounting to Rs.15,185,332.
2. Capital commitments
Estimated amount of contracts remaining to be executed on capital
account and not provided for Rs.9,712,297 (2011: Rs. 4,025,000).
3. Contingent liabilities
i) Bonds aggregating Rs.10,000,000 (2011: Rs.10,000,000) in favor of
the President of India endorsed through Deputy Commissioner of Customs
for import of goods.
ii) Claims by employees towards unfair labour practices under Section
28 read with items 1(a), (b), (c), 2 (b), 3, 4(a), (e) and (f) of
Schedule II and items 5, 6, 9 and 10 of Schedule IV of the Maharashtra
Recognition of Trade Unions and Prevention of Unfair Labour Practices
Act, 1971 for which amounts are not ascertainable.
iii) Disputed employees' state insurance demand aggregating Rs.52,498
(2011: Rs.52,498) against which the Company has preferred appeals.
4. The Company's operations consist of manufacturing and selling of
crucibles and hence the information with regards to sales effected by
the Company and the information with regard to opening and closing
stock of finished goods as disclosed in the financial statements
pertains to crucibles only.
**The value of consumption of raw materials has been arrived at on the
basis of opening stock plus purchases less closing stock. The
consumption, therefore, includes adjustments for raw materials
write-off, shortage / excess, etc.
5. Employee benefits
I. Effective 1 January 2007, the Company adopted Accounting Standard
15 (revised 2005) on "Employee Benefits".
II. Contribution to Provident fund
Amount of Rs.3,167,663 (2011: Rs.2,638,039) is recognized as an expense
and included in "Employee costs" in the statement of profit and loss.
Experience adjustment is on account of attrition in the number of
employees as compared to the previous year and change in actuarial
assumptions.
The estimates of future salary increases, considered in actuarial
valuation, take into account inflation, seniority, promotion and other
relevant factors, such as supply and demand and the employment market.
G Percentage of each category of Plan Assets to total Fair Value of
Plan Assets as at 31 March 2012.
The Plan Assets are administered by Life Insurance Corporation of India
("LIC") as per Investment Pattern stipulated for Pension and Group
Schemes Fund by Insurance and Regulatory Development Authority
regulations.
The discount rate is based on the prevailing market yields on Indian
government securities as at the balance sheet date for the estimated
term of obligation.
6. Segment reporting
The Company recognizes its sale of crucibles activity as its only
primary business segment since its operations predominantly consist of
manufacture and sale of crucibles to its customers. Accordingly, income
from sale of crucibles comprises the primary basis of segmental
information set out in these financial statements. Geographical segment
will be the secondary segment for the purpose of AS-17 (Segment
reporting). All the assets of the Company are located in India except
for Trade receivables aggregating Rs.104,807,237 (2011: Rs.68,049,633).
The Company caters to the needs of the domestic and foreign market.
7. Related party disclosure
List of related parties
i. Parties (where control exists)
The Morgan Crucible Company Plc., U.K. - Ultimate holding company
ii. Investing associates
- Morganite Crucible Limited (holds 38.50% of issued, subscribed and
paid up capital)
- Morgan Treason BV (holds 36.50% of issued, subscribed and paid
up capital)
iii. Other related Parties where transactions have taken place during
the year
Subsidiary company
- Diamond Crucible Company Limited Fellow subsidiary companies
- Morganite Crucible Inc., USA
- Morgan Molten Metal Systems GMBG Germany
- Morgan Molten Metal System (Suzhou) Co. Ltd., China
- Morgan Karbon Grafit Sanayi AS Turkey
- Thermal Ceramics UK
- Murugappa Morganite Thermal Ceramics Limited
- Morgan Thermal Ceramics - Shanghai
iv. Key Management Personnel
- Mr. Vijay Sabarwal - CEO and Whole time Director (upto 29 January
2011)
- Mr. Ashish Mehrotra - Director sales and marketing
- Mr. Vinod Mhalsekar - Director operations
- Mr.Hitesh Saiwal - Wholetime Director / Country Manager (from 17
May 2010)
8. The Company has entered into operating leases for cars for a
period of 3 years. Total lease payments for non-cancellable leases
recognised in books for the year is Rs.1,447,836 (2011: Rs.747,799).
9. Dues to Micro, Small and Medium Enterprises
Under Micro, Small, and Medium Enterprises Development Act, 2006
(MSMED) which came in to force from 2 October, 2006, certain
disclosures are required to be made relating to Micro, Small and Medium
enterprises.
On the basis of the information and records available with the
management, the following disclosures are made for the amounts due to
the Micro, small and medium enterprises:
10. Receivables and payables denominated in foreign currency
The Company has entered into derivative contracts to hedge its risk
associated with foreign currency fluctuations. However, none of these
contracts can be co-related on one to one basis against the underlying
exposure. As at the year end, the Company has outstanding foreign
exchange forward contracts of GBP 725,000, EURO 825,000 and USD 639,073
(2011: GBP 500,000) equivalent to Rs.148,226,427 (2011: Rs.36,075,000).
The Company has revalued these forward contracts as at the yearend by
marking the same to market and recognized a loss of Rs.4,976,182 (2011:
Rs.107,000) by debiting the statement of profit and loss in compliance
with the announcement dated 29 March 2008 made by the Institute of
Chartered Accountants of India ('ICAI') regarding accounting for
derivatives.
11. Transfer Pricing
Transactions with overseas related parties are governed by transfer
pricing regulations of the Indian Income tax Act, 1961. The Company's
international transactions with associated enterprises are at arm's
length as per the independent accountants' report for the year ended
31 March 2011. Management believes that the Company's international
transactions with related parties post 31 March 2011 continue to be at
arm's length and that the transfer pricing legislation will not have
any impact on the financial statements particularly on the amount of
the tax expense for the year and the amount of the provision for
taxation at the year end.
12. Previous year figures
The financial statements for the year ended 31 March 2011 had been
prepared as per the then applicable, pre-revised Schedule VI to the
Act. Consequent to the notification of Revised Schedule VI under the
Act, the financial statements for the year ended 31 March 2012 are
prepared as per Revised Schedule VI. Accordingly, the previous year
figures have also been reclassified to conform to this year
classification. The adoption of Revised Schedule VI for previous year
figures does not impact recognition and measurement principles followed
for preparation of financial statements.
Mar 31, 2011
1. Background
Morganite Crucible (India) Limited ('the Company') was incorporated on
13 January 1986. The Company is engaged in the business of
manufacturing and selling of silicon carbide and clay graphite
crucibles and its accessories.
2. Capital commitments
Estimated amount of contracts remaining to be executed on capital
account and not provided for Rs.4,025,000 (2010: Rs.6,176,056).
3. Contingent liabilities
i) Bank guarantee aggregating Rs. Nil (2010:Rs. 200,000) issued by the
bank on behalf of the Company in favour of the Panalpina World
Transport Private Limited for purchase of Material from Thermal Ceramic
U.K. Limited.
ii) Bonds aggregating Rs.10,000,000 (2010: Rs.10,000,000) in favour of
the President of India endorsed through Deputy Commissioner of Customs
for import of goods.
iii) A suit has been filed by Mr. Suresh Borade, past employee of the
Company, on account of his disputed resignation from the Company. The
Honourable Gujarat High Court has ordered to pay Rs.540 per month till
the final disposal of appeal pending for reinstatement with back wages.
The Company is presently paying the above mentioned Rs.540 per month to
the said employee. The amount of liability that may arise in future on
account of reinstatement with back wages is not ascertainable.
iv) Claims by employees towards unfair labour practices under Section
28 read with items 1(a), (b), (c), 2 (b), 3, 4(a), (e) and (f) of
Schedule II and items 5, 6, 9 and 10 of Schedule IV of the Maharashtra
Recognition of Trade Unions and Prevention of Unfair Labour Practices
Act, 1971 for which amounts are not ascertainable.
v) Disputed employees' state insurance demand aggregating Rs. 52,498
against which the Company has preferred appeals.
Experience adjustment is on account of attrition in the number of
employees as compared to the previous year and change in actuarial
assumptions.
The estimates of future salary increases, considered in actuarial
valuation, take into account inflation, seniority, promotion and other
relevant factors, such as supply and demand and the employment market.
G. Percentage of each category of Plan Assets to total Fair Value of
Plan Assets as at 31 March 2011.
The Plan Assets are administered by Life Insurance Corporation of India
(ÃLICÃ) as per Investment Pattern stipulated for Pension and Group
Schemes Fund by Insurance and Regulatory Development Authority
regulations.
The discount rate is based on the prevailing market yields on Indian
government securities as at the balance sheet date for the estimated
term of obligation.
4. Segment reporting
Primary segment:
In accordance with the requirements of Accounting Standard 17 Ã
ÃSegment ReportingÃ, the Company has determined its business segment as
crucibles. Since 100% of the Company's business is from crucibles,
there are no other primary reportable segments. Thus the segment
revenue, segment result, total carrying amount of segment assets, total
carrying amount of segment liabilities, total cost incurred to acquire
segments assets, the total amount of charge for depreciation and
amortisation during the year are all as reflected in the financial
statements for the year ended 31 March 2011 and as on that date.
5. Related party disclosure
List of related parties
i. Parties (where control exists)
The Morgan Crucible Company Plc, U.K. - Ultimate holding company
ii. Investing associates
Morganite Crucible Limited (holds 38.50% of issued, subscribed and paid
up capital) Morgan Terreassen BV (holds 36.50% of issued, subscribed
and paid up capital)
iii. Other related Parties where transactions have taken place during
the year
Subsidiary company
Diamond Crucible Company Limited Fellow subsidiary companies
Morganite Crucible Inc., USA
Morgan Molten Metal Systems GMBG Germany
Morgan Thermic SAS, France
Morgan Molten Metal System (Suzhou) Co. Ltd., China
Morgan Karbon Grafit Sanayi AS Turkey
Thermal Ceramics UK
Morganite Brazil LtdA
Morgan Thermal Ceramics - Shanghai
iv. Key Management Personnel
- Mr. Vijay Sabarwal à CEO and Wholetime director (upto 29 January
2011)
- Mr. Ashish Mehrotra à Director sales and marketing
- Mr. Vinod Mhalsekar à Director operations
- Mr.Hitesh Saiwal à Country head and Wholetime director (from 17 May
2010)
6. Dues to Micro, Small and Medium Enterprises
Under Micro, Small, and Medium Enterprises Development Act, 2006
(MSMED) which came in to force from 2 October, 2006, certain
disclosures are required to be made relating to Micro, Small and Medium
enterprises.
7. Receivables and payables denominated in foreign currency
The Company has entered into derivative contracts to hedge its risk
associated with foreign currency fluctuations. However, none of these
contracts can be co-related on one to one basis against the underlying
exposure. The Company has outstanding foreign exchange forward
contracts of GBP 500,000 equivalent to Rs.36,075,000 as at 31 March
2011. The Company has revalued these forward contracts as at the year
end by marking the same to market and recognised a loss of Rs.107,000
by debiting profit and loss account in compliance with the announcement
dated 29 March 2008 made by the Institute of Chartered Accountants of
India ('ICAI') regarding accounting for derivatives.
8. Transfer Pricing
The Company's management is of the opinion that its international
transactions with related parties are at arms length and that the
Company is in compliance with the transfer pricing legislation. Based
on the above, the Company's management believes that the aforesaid
legislation will not have any impact on the financial statements,
particularly on the amount of tax expense and that of the provision for
taxation.
9. The Company has availed exemption as applicable to Export Oriented
companies, granted by notification no. S.O. 301 (E) dated 8 February
2011 issued by Ministry of Corporate Affairs, Government of India. The
Board of Directors have given their consent to avail the said exemption
in their meeting held on 30 March 2011. Hence, the disclosures required
by paragraphs 3(i)(a), 3(ii)(a), 3(ii)(b) and 3(ii)(d) of Part-II of
Schedule VI to the Companies Act, 1956 have not been made.
10. Prior year figures which were audited by a firm of Chartered
Accountants other than B S R & Co. have been regrouped / rearranged
wherever necessary to conform to current year's presentation.
Mar 31, 2010
1. Capital commitments
Estimated amount of contracts remaining to be executed on capital
account and not provided for Rs. 6,176,056 (Previous Year Rs.
1,800,000).
2. Contingent liabilities
i) Bank guarantee aggregating Rs. Nil (Previous Year Rs. 10,000) issued
by the bank on behalf of the Company in favour of Maharashtra Pollution
Control Board for compliance of the Supreme Court Monitoring Committee
directions regarding Common Effluent Treatment Plant at Waluj MIDC.
ii) Bank guarantee aggregating Rs. 200,000 (Previous Year Rs. 200,000)
issued by the bank on behalf of the Company in favour of the Panalpina
World Transport Private Limited for purchase of Material from Thermal
Ceramic U.K. Limited.
iii) Bonds aggregating Rs. 10,000,000 (Previous Year Rs. 10,000,000) in
favour of the President of India endorsed through Deputy Commissioner
of Customs for import of goods.
iv) Disputed income tax demands aggregating Rs. Nil (Previous Year Rs.
431,291) against which the Company has preferred appeals.
v) Claims by employees towards unfair labour practices under Section 28
read with items 1(a), (b), (c), 2 (b), 3, 4(a), (e) and (f) of Schedule
II and items 5, 6, 9 and 10 of Schedule IV of the Maharashtra
Recognition of Trade Unions and Prevention of Unfair Labour Practices
Act, 1971 for which amounts are not ascertainable.
vi) A suit has been filed by a past employee of the Company, on account
of his disputed resignation from the Company. The amount of liability
that may arise in future on account of reinstatement with back wages is
approximately Rs. 880,000.
vii) Disputed employees state insurance demand aggregating Rs. 52,498
against which the Company has preferred appeals.
a) Vide letter No. 4097/SIA/IMO/96 dated October 24, 1996 received from
Government of India, Ministry of Industry à Secretariat for Industrial
Approvals Entrepreneurial Assistance Unit. In June 2010, the Company
has filed an application for submission to the Central Government in
the Secretariat for Industrial Assistance to increase the annual
licensed capacity from 3,600 M.T. to 5,100 M.T for silicon carbide
crucibles for which approval is awaited.
b) Vide letter No. CIL 54(2000) dated August 31, 2000 received from
Government of India, Ministry of Commerce & Industry à Department of
Industrial Policy & Promotion, Secretariat for Industrial Assistance
(PAB Ã IL Section).
c) Installed capacity is as certified by the Management on which
auditors have placed reliance without verification, this being a
technical matter.
3. Components and spare parts referred to in paragraph 4D(a) and (c) of
part II of Schedule VI to the Companies Act, 1956, are assumed to be
those incorporated in the goods purchased and not those used for
maintenance of plant and machinery.
G. Percentage of each category of Plan Assets to total Fair Value of
Plan Assets as at March 31, 2010.
The Plan Assets are administered by Life Insurance Corporation of India
("LIC") as per Investment Pattern stipulated for Pension and Group
Schemes Fund by Insurance and Regulatory Development Authority
regulations.
H. Expected gratuity contribution for the next year is aggregating Rs.
588,966 (Previous Year Rs. 612,526). III The liability for leave
encashment (Net) as at the year end is Rs. 441,087 (Previous Year Rs.
1,090,027).
4. Segment reporting Primary segment:
In accordance with the requirements of Accounting Standard 17 Ã
"Segment Reporting" issued by the Institute of Chartered Accountants of
India, the Company has determined its business segment as crucibles.
Since 100% of the Companys business is from crucibles, there are no
other primary reportable segments. Thus the segment revenue, segment
result, total carrying amount of segment assets, total carrying amount
of segment liabilities, total cost incurred to acquire segments assets,
the total amount of charge for depreciation and amortisation during the
year are all as reflected in the financial statements for the year
ended March 31, 2010 and as on that date.
5. Related party disclosure
Related party disclosure as required by Accounting Standard - 18,
"Related Party Disclosures" issued by the Institute of Chartered
Accountants of India is given below:
i. Shareholders in the company
Morganite Crucible Limited holds 38.50% and Morgan Terreassen BV holds
36.50% equity shares of the Company.
ii. Other related Parties where common control exists and transactions
have taken place during the year Subsidiary Company
- Diamond Crucible Company Limited Fellow subsidiary Companies
- Morganite Crucible Inc., USA
- Carl Nolte Sohne GmbH, Germany
- Morgan Thermic SAS, France
- Morgan Molten Metal System (Suzhou) Co. Ltd., China
- Mkgs. Morgan Carbon, Turkey
- Thermal Ceramics South Africa (PTY) Ltd.
- Morganite Brazil LtdA Ultimate Holding Company
- The Morgan Crucible Company Plc, U.K.
iii. Key Management Personnel
- Mr. Vijay Sabarwal (Executive Director)
- Mr. Ashish Mehrotra
- Mr. Basant Agrawal
- Mr. Vinod Mhalsekar (with effect from January 15, 2009)
- Mr. Md. Abdul Nadeem (upto May 31, 2009)
- Mr. O. S. Joshi (upto September 6, 2008)
- Mr. H. K. Bajpayee (upto April 6, 2008)
- Mr. Ghanshyam Rathi (with effect from April 1, 2009)
- Mr. Laxmi Ganesh (with effect from April 1, 2009)
- Mr. Sonalsing Gujar (with effect from April 1, 2009)
6. Sundry Creditors
i) Disclosure has been made as per the definition given in the Micro,
Small and Medium Enterprises Development Act, 2006.
The Company has not received any information from the "suppliers"
regarding their status under the Micro, Small and Medium Enterprises
Development Act, 2006 and hence disclosures, if any, relating to the
amounts as at year end together with interest paid / payable as
required under the said Act have not been given.
7. The amount of excise duty disclosed as deduction from turnover is
the total excise duty for the year except the excise duty related to
the difference between the closing stock and opening stock and excise
duty paid but not recovered, which has been disclosed as excise duty
expense in "Cost of materials - Increase / (Decrease) in excise duty on
finished goods" under Schedule 9 forming part of the Profit and Loss
Account.
8. As at the year end the Company -
i) has no loans and advances in the nature of loans to associates.
ii) has no loans and advances in the nature of loans, wherein there is
no repayment schedule or repayment is beyond seven years and
iii) has no loans and advances in the nature of loans to firms /
companies in which directors are interested.
9. Previous years figures have been regrouped / rearranged wherever
necessary to confirm to the current years classification.
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