NOTE 1: NOTES TO ACCOUNTS

Please refer to page 97 for notes to accounts

Note:

a) During the year an amount of ‘ Nil (previous year Rs. 2.58 lakhs final dividend for the year 2008-09) was transferred to Investor Education and Protection Fund (IEPF).

b) Term Deposits are held as Margin money against Bank Guarntees and Letter of Credits.

Rights, preferences and restrictions attached to shares:

The Company has only one class of equity shares having a par value of Rs. 5/- each and the holder of the equity share is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to approval of the share holders in the Annual General Meeting except in the case of interim dividend. In the event of liquidation of the Company the holders of equity shares will be entitled to receive the remaining assets of the Company in proportion to the number of equity shares held.

During the year under review the Company has alloted 22,22,222 convertable warrants at a price of Rs. 90/- each to be converted into 22,22,222 equity shares of Rs. 5/- (including a premium of Rs. 85/- per share) to the persons belonging to Promoter / Promoter Group. The subscription amount of 25% of warrant price has been received and fully paid-up equity shares of the Company will be alloted on receipt of balance 75% warrant price within 18 months from 14th February, 2018.

Notes:

(a) Term loans received from State Bank of India is primarily secured by first charge by way of equitable mortgage of movable and immovable properties on the present and future fixed assets of the company and secured by a second charge on the present and future current assets of the company. Further these loans are collaterally secured by :

- Personal immovable properties of a Promoter and his relative (exclusive to SBI).

- Pledge of 20% of the promoters shares in the company (exclsive to SBI).

- Further these loans are guranteed by the Promoters of the company and their relative to the extent of secured property value. (Refer Note 14 C (a) point nos. (viii), (ix) and (x) for terms of repayment)

(b) (i) ECB Loan received from - DMG Mori Finance GmbH is secured by exclusive charge on the plant and machinery which are acquired on financial lease basis. The lease period is ranging from July 2017 to September 2022. (Refer Note 14 C (b) for terms of repayment)

(ii) Term loan (equipment finance) from others is secured by way of exclusive charge on the machinery purchased to the extent funded by the respective lenders. These loans are guaranteed by the promoters of the company. (Refer Note 14 C (a) point nos. (i to vii) and (xi to xiii) for terms of repayment)

(c) Secured against hypothecation of vehicles. (Refer Note 14 C (c) for terms of repayment)

(d) Represents 14 years interest free sales tax deferment loan received from State Government, which is repayable on annual basis based on the deferment availed in the respective years, commences from January, 2018 till November, 2020.

(e) IncludesRs. 1,470 lakhs (previous year Rs. 3,410 lakhs) brought in by the promoters and promoter group for the purpose of working capital and capital expenditure.

Note:

Working capital facilities from State Bank of India, Indian Overseas Bank and Kotak Mahindra Bank (at interest rate ranging from 7.95% to 11.20%) are secured on a pari passu first charge basis against hypothecation of Inventory (stocks), Trade Receivables and all other current assets both present and future. Further these are secured on a pari passu second charge on movable and immovables properties of the Company both present and future. Further Secured by way of Personal guaranty of the Promoters. Further these loans are guranteed by the Promoters of the company.

Note:

The information has been given in respect of such vendors to the extent they could be identified as Micro and Small enterprises on the basis of information available with the company on records. (Refer Note 2.19)

Notes:

a) Terms of repayment are given below:

(i) Loan taken from TATA Capital Financial Service Ltd., at interest rate of 14.25% is repayable in 13 monthly instalments of Rs. 11.36 lakhs each till March, 2017 and balance amount of Rs. 11.32 lakhs is repayble by April, 2017 and the loan has been repaid on 24 April, 2017 in full during the current year.

(ii) Loan taken from L & T Finance Ltd., at interest rate of 13.50% is repayable in 3 monthly instalments of Rs.12.41 lakh including interest each till June, 2016 and the loan has been cleared on 15 June, 2016 in full during the previous year.

(iii) Loan taken from TATA Capital Financial Service Ltd., at interest rate of 13.25% is repayable in 12 monthly instalments of Rs. 18.55 lakhs each till March 2019 (previous year 36 monthly instalments of Rs. 13.91 lakhs each) and 47 monthly instalments of Rs.0.44 lakhs each till March, 2020.

(iv) Loan taken from TATA Capital Financial Service Ltd., at interest rate of 12% is repayable in 3 monthly instalments of Rs. 100 lakhs each till July, 2016 and the loan has been cleared on 24 July, 2016 in full during the previous year.

(v) Loan taken from TATA Capital Financial Service Ltd., at interest rate of 12.75% is repayable in 27 monthly instalments of Rs. 13.82 lakhs (previous year 51 monthly instalments of Rs.0.72 lakhs) each till June, 2020 and against this loan Rs. 49.47 lakhs (previous year Rs. 321.64 lakhs) opened as Lien marked Fixed Deposits at interest rate of 7.25% for the purpose of repayment of this loan.

(vi) Loan taken from Hewlett Packard Financial Services India Pvt Ltd., at interest rate of 11.50% is repayable in 18 quarterly instalments of Rs. 8.75 lakhs including interest each till August, 2020.

(vii) Loan taken from Hewlett Packard Financial Services India Pvt Ltd., at interest rate of 11.50% is repayable in 19 quarterly instalments of Rs.0.88 lakhs including interest each till October, 2020.

(viii) Loan taken from State Bank of India., at interest rate of 12.50% is repayable in 6 quarterly instalments of Rs. 50.00 lakhs each till September, 2018.

(ix) Loan taken from State Bank of India., at interest rate of 12.50% is repayable in 20 quarterly instalments of Rs. 95.00 lakhs each from June, 2017 till March, 2022.

(x) Loan taken from State Bank of India., at interest rate of 12.50% is repayable in 20 quarterly instalments of Rs. 162.50 lakhs each from September, 2017 till June, 2022.

(xi) Loan taken from Hero Fincorp Ltd, at interest rate of 12.00% is repayable in 60 monthly instalments of Rs. 4.44 lakhs including interest each commences from April, 2018 till March, 2023.

(xii) Loan taken from Reliance Commercial Finance Ltd, at interest rate of 12.00% is repayable in 33 monthly instalments of Rs. 10.72 lakhs including interest each from March, 2018 till November, 2020.

(xiii) Loan taken from Tata Capital Financial Service Ltd, at interest rate of 12.00% is repayable in 60 monthly instalments of Rs. 9.42 lakhs each commences from May, 2018 till April, 2023.

(b) Terms of repayment are given below:

(i) ECB Loan taken from DMG Mori Finance GmbH, at interest rate of 2.50% is repayable in 61 monthly instalments including interest from September, 2017 till September, 2022, and the instalment amounts are as follows -

- 12 monthly equal instalments of Rs. 1.56 lakhs.

- 12 monthly equal instalments of Rs. 2.49 lakhs.

- 12 monthly equal instalments of Rs. 3.11 lakhs.

- 12 monthly equal instalments of Rs. 7.78 lakhs.

- 12 monthly equal instalments of Rs. 8.40 lakhs.

- Final month instalment of Rs. 47.37 lakhs.

(ii) ECB Loan taken from DMG Mori Finance GmbH, at interest rate of 2.50% is repayable in 61 monthly instalments including interest from September, 2017 till September, 2022, and the instalment amounts are as follows -

- 12 monthly equal instalments of Rs. 1.97 lakhs.

- 12 monthly equal instalments of Rs. 3.14 lakhs.

- 12 monthly equal instalments of Rs. 3.93 lakhs.

- 12 monthly equal instalments of Rs. 9.83 lakhs.

- 12 monthly equal instalments of Rs. 10.61 lakhs.

- Final month instalment of Rs. 59.82 lakhs.

(iii) ECB Loan taken from DMG Mori Finance GmbH, at interest rate of 2.50% is repayable in 59 monthly instalments including interest from November, 2017 till September, 2022, and the instalment amounts are as follows -

- 12 monthly equal instalments of Rs. 2.59 lakhs.

- 12 monthly equal instalments of Rs. 4.15 lakhs.

- 12 monthly equal instalments of Rs. 5.19 lakhs.

- 12 monthly equal instalments of Rs. 12.97 lakhs.

- 12 monthly equal instalments of Rs. 14.01 lakhs.

- Final month instalment of Rs. 106.98 lakhs.

(iv) ECB Loan taken from DMG Mori Finance GmbH, at interest rate of 2.50% is repayable in 52 monthly instalments including interest commences from June, 2018 till September, 2022, and the instalment amounts are as follows -

- 12 monthly equal instalments of Rs. 3.47 lakhs.

- 12 monthly equal instalments of Rs. 5.55 lakhs.

- 12 monthly equal instalments of Rs. 6.94 lakhs.

- 12 monthly equal instalments of Rs. 17.34 lakhs.

- 12 monthly equal instalments of Rs. 18.73 lakhs.

- Final month instalment of Rs. 270.27 lakhs.

(c) Terms of repayment are given below:

(i) Loan taken from Kotak Mahendra Prime Ltd., at interest rate of 9.39% is repayable by way of 50 monthly instalments of Rs. 3.36 lakhs including interest each till June, 2020.

(ii) Loan taken from Indian Overseas Bank., at interest rate of 8.90% is repayable by way of 60 monthly instalments of Rs.0.27 lakhs including interest each till October, 2022.

(iii) Loan taken from HDFC Bank Ltd., at interest rate of 8.51% is repayable by way of 60 monthly instalments of Rs. 2.71 lakhs including interest each till April, 2022.

(iv) Loan taken from HDFC Bank Ltd., at interest rate of 8.51% is repayable by way of 60 monthly instalments of Rs.0.88 lakhs including interest each till May, 2022.

Note : Other Misc. Receipts includes Rs. 57.02 lakhs for current year (Rs. 114.04 lakhs for previous year) towards Industrial Promotions Subsidy(IPS) for New Unit under Package Scheme of Incentive - 2013.

2.1. Disclosure as per Section 186 of the Companies Act, 2013 :

The details of loans, guarantees and investments under Section 186 of the Companies Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014 are as follows:

(i) Details of investment made are given in Note 4A & 2.13

(ii) Details of loans given by the Company are as follows:

(iii) There are no guarantees issued by your Company in accordance with section 186 of the Companies Act, 2013 read with rules issued there under

2.2. Segment Reporting:

a) Primary Segment Reporting

The Company has one business segment only, comprising of tooling, stampings and machining. Hence the reporting is done as a single segment.

b) Secondary Segment by Geographical Segment

Total carrying amount of segment assets by geographical location of assets, for each geographical segment whose assets are 10% or more of the total assets of all geographical segments and the additions to the same are as under

2.3. Fair values hierarchy

Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity specific estimates.

Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

2.4. Related party disclosures:

I) List of Related parties:

(a) Directors

i. Shri Sharad B Pitti

ii. Shri Akshay S Pitti

iii. Shri Y.B. Sahgal*

iv. Shri N.R. Ganti

v. Shri G. Vijay Kumar

vi. Shri M. Gopalakrishna

vii. Ms. Gayathri Ramachandran

viii. Shri S. Thiagarajan

(b) Relatives of Directors with whom transactions have taken place

i. Smt Madhuri S Pitti

ii. Smt Radhika A Pitti

* Shri Y.B. Sahgal, Executive Director has resigned with effect from 30th SeptemberRs.2016 from the Board of the Company.

II) Key Managerial Personnel

i. Shri N. K. Khandelwal

ii. Shri Satyabrata Padhi**

iii. Ms Mary Monica Braganza***

** Shri Satyabrata Padhi, Company Secretary has resigned as Company Secretary with effect from 16.11.2017.

*** Ms Mary Monica Braganza, has been appointed as Company Secretary with effect from 14.12.2017.

III) Entities in which Directors’ having interest

i. Pitti Castings Private Limited

ii. Pitti Electrical Equipment Pvt. Ltd.,

iii. Pitti Components Limited

iv. Pitti Holdings Private Limited

v. Badrivishal Pannalal Pitti Trust

2.5. The Company has provided for Cess as specified in section 441 A of the Companies Act, 1956 and in the absence of any notification by the Central Govt. the company could not deposit the same with the appropriate authority.

2.6. No asset is impaired during the year as the assets are having recoverable value which is more than the carrying amount.

2.7. Micro, Small and Medium Enterprises Development Act, 2006 (MSMED)

Disclosure required as per section 22 of the Micro, Small and Medium Enterprise Development Act 2006 (MSMED Act) is given below

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

2.8. Letters have been written for confirmation of debit and credit balances pertaining to debtors and creditors and reply from the parties is awaited.

2.9. Financial and derivative instruments:

2.10. First time adoption of Ind AS

These financial statements, for the year ended March 31, 2018, are the first set of financial statements, the Company has prepared in accordance with Ind AS. For periods up to and including the year ended March 31, 2017, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (“Indian GAAP” or “Previous GAAP”).

Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on March 31, 2018, together with the comparative period data as at and for the year ended March 31, 2017, as described in the summary of significant accounting policies. In preparing these financial statements, the Company’s opening balance sheet was prepared as at April, 1 2016, the Company’s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at April 1, 2016 and the financial statements as at and for the year ended March 31, 2017.

Exemptions applies

Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:

(a) As per Ind AS 20, benefit of a government loan at nil or below-market rate of interest (e.g. interest free sales tax deferral scheme) is treated as a government grant. A first time adopter can apply requirements in Ind AS 109 prospectively or retrospectively to government loans existing at the date of transition to Ind AS. Accordingly, the Company has chosen to use Indian GAAP carrying values as its carrying value under Ind AS and apply principles of Ind AS 109 prospectively.

(b) The Company has elected to regard carrying values for all of property, plant and equipment as deemed cost at the date of the transition.

(c) The Company has elected to avail Ind AS 101 exemption with regard to Long Term Foreign Currency Monetary Items and may continue to adopt for accounting for exchange differences arising from translation of long-term foreign currency monetary items to be recognized in financial statements.

(d) Under Ind AS 109, at initial recognition of a financial asset, an entity may take irrevocable election to present subsequent changes in the fair value of an investment in an equity instrument in other comprehensive income. Ind AS 101 allows such recognition of previously recognized financial asset as fair value through other comprehensive income on the basis of the facts and circumstances that existed at the date of transition to Ind AS. Accordingly, the Company has designated its investments in certain equity instruments at fair value through other comprehensive income on the basis of the facts and circumstances that existed at the date of transition to Ind AS.

(e) In the preparation of separate financial statements, Ind AS 27 Separate Financial Statements requires an entity to account for its investments in subsidiaries, jointly controlled entities and associates either:

a) At cost, or

b) In accordance with Ind AS 109.

Estimates

The estimates as at April 01,2016 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies) apart from impairment of financial assets bases on expected credit loss model where application of Indian GAAP did not require estimation. The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at April 01, 2016 (transition date), March 31, 2017 and March 31, 2018.

Reconciliation between Previous GAAP and Ind AS

Ind AS 101, First time adoption of Indian Accounting Standards, requires an entity to reconcile equity, total comprehensive income and cash flow for prior period. The following tables represent the reconciliations from previous GAAP to Ind AS.

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

Explanations for reconciliation of balance sheet previously reported under IGAAP to Ind AS A. Property, Plant and Equipment

Items such as spares ,tools has been capitalized as they satisfy the definition of PPE & measurement criteria.

Accordingly depreciation has been charged on same where as under IGAAP it was charged on consumption basis, the same has been reversed.

B. Investments

Investment in equity instruments are carried at fair value through P&L in Ind AS, as compared to being carried at cost under IGAAP

C. Measurement of Financials Assets/Liabilities at amortised cost

Under Ind AS, certain financial assets and financial liabilities are measured at amortised cost which involves the application of effective interest method. The effective interest rate is the rate that discounts estimated future cash payments or receipts through the expected life of the financial asset or financial liability to the gross carrying amount of the financial asset or financial liability. The interest unwinding is charged through profit and loss in subsequent period.

D. Investments

Investment in equity instruments are carried at fair value through OCI in Ind AS, as compared to being carried at cost under IGAAP

E. Other equity

a) Adjustments to retained earnings and other comprehensive income have been made in accordance with Ind AS for the above-mentioned line items.

b) In addition, as per Ind AS 19, actuarial gains and losses are recognized in other comprehensive income as compared to being recognized in the Statement of Profit and Loss under IGAAP.

F. Transaction Cost

(i) Transaction costs in respect of bank loans are included in the initial recognition amount of financial liability and charged to profit or loss using the effective interest method, as compared to charging to profit and loss in the initial year of loan when expense is incurred.

(ii) Such amortization of expense is being added to CWIP in accordance with Ind AS 23

G. Revenue From operations

Under Indian GAAP, sale of goods was presented as net of excise duty. However, under Ind AS, sale of goods includes excise duty. Excise duty on sale of goods is separately presented in notes to the statement of profit and loss.”

H. Employee Benefit Expense

Under the Previous GAAP, these remeasurements were forming part of the profit or loss for the year.

Under Ind AS, remeasurements i.e. actuarial gains and losses, are recognised in other comprehensive income instead of the statement of profit and loss.

Cash Flow Statements

There were no significant reconciliation items between cash flows prepared under IGAAP and those prepared under Ind AS

2.11. Disclosure on Specified Bank Notes.

During the previous year, the Company had Specified Bank Notes (SBNs) or other denomination notes as defined in the MCA notification, G.S.R. 308(E), dated March 30, 2017. The details of SBNs held and transacted during the previous year period from November 8, 2016 to December 30, 2016, the denomination-wise SBNs and other notes as per the notification are as follows:

* For the purpose of this clause, the term ‘Specified Bank Notes’ (SBN) shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated November 8, 2016.