1. CORPORATE INFORMATION
Orient Refractories Limited (The Company''), incorporated on November
26, 2010 is engaged in manufacturing, production and distribution of
Refractories, Monolithics and Ceramic Paper and have manufacturing
facilities in Bhiwadi (Rajasthan), (also refer note 25).
2. BASIS OF PREPARATION
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in India
(Indian GAAP). The Company has prepared these financial statements to
comply in all material respects with the accounting standards notified
under the Companies (Accounting Standards) Rules, 2006, (as amended)
and the relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on an accrual basis and under the
historical cost convention.
The accounting policies adopted in the preparation of financial
statements are consistent with those of previous year, except for the
change in accounting policy explained below.
a Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of Rs.
1.00 per share. The holder of each fully paid equity share is entitled
to one vote. 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.
During the year ended March 31, 2012, the amount of per share dividend
recognized as distributions to equity shareholders is Rs. 1.00 (Previous
period: Rs. Nil)
*The cash credit loan is taken from bank are secured by first pari pasu
charge on the current assets of the Company and second pari passu
charge on movable fixed assets of the Company both present and future.
Mr. S. G. Rajgarhia has also given personal guarantee for this facility
to the bank. These are payable on demand and carries interest rate of
bank base rate plus 305 basis points (currently 13.05% p.a.).
3. SEGMENT INFORMATION BUSINESS SEGMENTS
Since the Company''s business activity falls within a single business
segment, there are no additional disclosures to be provided under
Accounting Standard-17 ''Segment Reporting'' other than those already
provided in the Financial Statements.
The analysis of geographical segment is based on the geographical
location of the customers. The Company operates primarily in India and
has presence in international markets as well. Its business is
accordingly aligned geographically, catering to two markets i.e. India
and Outside India. For customers located outside India, the Company has
assessed that they carry same risk and rewards. The Company has
considered domestic and exports markets as geographical segments and
accordingly disclosed these as separate segments. The geographical
segments considered for disclosure are as follows:
- Sales within India include sales to customers located within India.
- Sales outside India include sales to customers located outside India.
SECONDARY SEGMENT REPORTING (BY GEOGRAPHICAL SEGMENTS)
The following is the distribution of the Company''s consolidated revenue
of operations by geographical market, regardless of where the goods
were produced (Amount in Rs. Lacs)
For the year ended
March 31, 2012
Outside India 4,612.16
The following table shows the carrying amount of trade receivable by
March 31, 2012
Outside India 1,185.90
All other assets (other than trade receivables) used in the Company''s
business are located in India and are used to cater both the customers
(within India and outside India), accordingly the total cost incurred
during the period to acquire tangible and intangible fixed assets has
not been disclosed.
4. Pursuant to the scheme of arrangement between Orient Abrasives
Limited (transferor company) and the Company, the Refractory business
of the transferor company carried at its manufacturing unit at Bhiwadi
(demerged undertaking), was transferred to the Company with effect from
April 01, 2011 (the Appointed Date). The said scheme under Section 391
to 394 of the Companies Act, 1956 has been approved by the Hon''ble High
Court of Delhi vide its order dated September 19, 2011 and has been
effective from October 31, 2011 (the effective date), i.e. date of
filing the above order with the Registrar of Companies.
The said scheme provides, inter alia, the transfer of demerged
undertaking on a going concern basis to the Company in consideration of
which, each shareholder of Orient Abrasives Limited whose name appeared
in the register of members of Orient Abrasives Limited on the record
date i.e. November 14, 2011, received one fully paid equity share of
face value of Rs. 1.00 each in the Company.
The scheme provides for its basis of transfer of certain specific
assets and liabilities and where not specifically provided in the
scheme, has authorized the ''Board of Directors'' of both the companies
to mutually decide through a resolution. In terms of above, following
have been done
(i) The book value of assets, liabilities, reserves and surplus (as
agreed) of the demerged undertaking as on the Appointed Date has been
accounted for as assets and liabilities and reserves in the books of
the Company as on the Appointed Date. Following is the amount of such
assets, liabilities and reserves:
(ii) Loans as identified for the demerged undertaking and transferred
from OAL have been recorded in the books. Later on, the company has
obtained its own credit facility and loans transferred from the
transferor company have been repaid.
(iii) Aggregate face value of the new equity shares (1,196.39 lacs
shares of Rs. 1.00 each amounting to Rs. 1,196.39 lacs) to be issued by the
Company to the members of the transferor Company was credited to the
share capital account on the Appointed Date. The Company in its board
meeting dated November 15, 2011 had allotted these shares. In view of
the allotment of shares, the transferor company is no longer the
holding company of the Company.
(iv) The employees of the demerged undertaking have been transferred to
the Company on their existing terms of employment with the transferor
(v) All contingent liabilities relating to demerged undertaking have
been transferred to the Company on the Appointed Date.
(vi) Deferred Tax Liability (Net) pertaining to the demerged
undertaking and as agreed by the Board of directors has been
transferred to the Company.
The transferor company was carrying on business of demerged undertaking
in trust on behalf of the Company for the period from the Appointed
Date till the Effective Date.
5. During the year, a fire occurred at the warehouse in the Company''s
factory at Bhiwadi on September 25, 2011. As a result, the Company has
estimated a loss of Rs. 149.76 lacs (including raw material, packing
material, repair and maintenance and other expenses). The Company has
filed a claim with the insurance company for the equivalent amount and
recognized the claim. The surveyor appointed by the insurance company
has already completed the inspection. In view of the same, the
management is confident that claim receivable shall not be lower than
the above amount. Expenses incurred in this regard have also been
6. GRATUITY AND OTHER POST-EMPLOYMENT BENEFIT PLANS
The Company has a defined benefit gratuity plan. Gratuity is computed
as 15 days salary, for every completed year of service or part thereof
in excess of 6 months and is payable on
retirement/termination/resignation. The benefit vests on the employees
after completion of 5 years of service. The scheme is funded with an
insurance company in the form of a qualifying insurance policy. At the
end of accounting period actuarial valuation is done as per the
projected unit credit method and any shortfall in the funding claims is
further provided for.
The estimates of future salary increases, considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
The overall expected rate of return on assets is determined based on
the market prices prevailing on that date, applicable to the period
over which the obligation is to be settled.
Operating Lease: Company as Lessee
The Company has taken various residential, office and warehouse
premises under operating lease agreements. These are cancellable by
giving notice and are renewable by mutual consent on mutually agreed
terms. The lease payment recognized in the statement of profit and loss
account for the year is Rs. 26.91 Lacs (previous period: Rs. Nil).
8. RELATED PARTY DISCLOSURES
Names of related parties and related party relationship
A. Parties where control exists
Orient Abrasives Limited (upto November 15, 2011), (also refer note 25)
B. Individuals having significant influence over the company through
their voting rights of 20% or more
Mr. S.G. Rajgarhia, Managing Director
C. Key Managerial Personnel
Mr. S.C. Sarin (w.e.f. October 18,2011)
D. Relatives of the persons having significant Influence over the
Company (as covered in B above)
1. Mrs. Usha Rajgarhia Wife
2. Mr. R.K. Rajgarhia Brother
3. Ms. Bhawna Rajgarhia Daughter
E. The Enterprises controlled, owned or significantly influenced by
individuals having significant influence over the Company or their
relatives (as covered in B and C above)
1. Orient Abrasives Limited (from November 15, 2011), (also refer note
2. APM Industries Limited -
3. Hindustan General Industries Ltd.
4. Madhushree Properties Pvt. Ltd.
5. Perfectpac Ltd. ''
9. CAPITAL AND OTHER COMMITMENTS
a. At March 31, 2012, the company has Rs. 36.53 Lacs (Previous period: -
nil) as amount of contracts remaining to be executed on capital account
(Net of advances).
b. For Commitments relating to lease arrangements, please refer note