1 Corporate Information

National Fittings Limited (referred to as “the Company”) manufacture and sells SG Iron Grooved and Screwed Pipe Fittings, Stainless Pipe Fittings and Ball Valves for industrial and non-industrial applications.

The Company is a Public limited company incorporated and domiciled in India.

(i) Terms / rights attached to shares

(a) The company has only one class of equity shares having at par value of Rs.10/- per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividend in Indian rupees. No dividend has been proposed by the Board of Directors for the year.

(b) 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 proportion to the number of equity shares held by the shareholders.

The company has only one class of Preference shares having at par value of Rs.100/- per share which is non-convertible and non-cumulative. The preference shares are entitled to a dividend of 9% and will be redeemable at par subject to the provision of the Companies Act, 2013 after the expiry of the sixth year but before the expiry of the twelfth year from the date of allotment of the shares by one or more installments at the option of the company by giving 3 month’s notice.

b) The above credit facilities availed by the company are primarily secured by mortgage of Plant and Machinery and collaterally secured on charge of property situated at SF No.426/2A1,2A2, 426/2B, 2C, Door No. 20/027, Gandhi Nagar, Vadugapalayam Road, Thekkalur Village, Avinashi Taluk, Tiruppur- 641603.

c) There are no defaults in the repayment of loan and interest during the year.

(a) The above credit facilities availed by the company are primarily secured by Hypothecation by way of First and exclusive charges on all Stocks and Book Debts. and collaterally secured on charge of property situated at SF No.426/2A1,2A2, 426/2B, 2C, Door No. 20/027, Gandhi Nagar, Vadugapalayam Road, Thekkalur Village, Avinashi Taluk, Tiruppur - 641603.

From BANK OF INDIA:

# Working capital loans comprising of cash credit Export Packing Credit and other non fund based limits are secured by hypothecation of stocks and book debts and collaterally secured by Hypothecation of Machinery and equitable mortgage of property situate at Kaniyur Village.

Further the above are guaranteed personally by the Managing Director and a relative of the Managing Director of the company. During the year the company has not defaulted in repayment of loan and interest.

@ Demand Loan availed is secured by lien on Fixed Deposits with Bank of India.

(ii) Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006

As per the information available with the company till date, none of the suppliers have informed the company about their having registered themselves under the “Micro, Small and Medium enterprises development Act, 2006. As such information required under the Act can not be complied and therefore not disclosed for the year.

Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management. This has been relied upon by the auditors.

Note: Figures / percentages in brackets relates to the previous year.

2.1 Employee benefit plans

2.1 a Defined contribution plans

The Company makes Provident Fund and Superannuation Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs. 19,88,631 (Year ended 31 March, 2017 Rs.9,75,811) towards Provident Fund contribution and Rs.19,55,850 (Year ended 31 March, 2017 Rs.8,93,271) towards Employees State Insurance contribution in the Statement of Profit and Loss. The contributions payable are at the rates specified in the rules of the schemes.

2.1 b Defined benefit plans

The Company offers the following employee benefit schemes to its employees:

i. Gratuity

ii. Leave Encashment

The following table sets out the funded status of the defined benefit schemes and the amount recognised in the financial statements:

In accordance with Accounting Standard 22, the deferred tax Asset of ‘ 50.28 lacs for the year have been recognised in Profit and Loss Statement.

2.2 Note on Scheme of Amalgamation:

The scheme of amalgamation under the Companies Act between Interfit India Limited (“IIL”) and Merit Industries Limited (“MIL”) with the Company has been approved by the NCLT, Chennai vide their order dated March 25, 2019 with April 1, 2017 as the appointed date. Upon necessary filing with the Registrar of Companies (ROC) on 29.03.2019, the scheme has become effective and the effect thereof has been given in these accounts. Consequently, in respect of the merger of Interfit India Limited (“IIL”) and Merit Industries Limited (“MIL”) with the Company -

a. In terms of the Scheme, the entire business and the whole of the undertaking of IIL and MIL, as a going concern stands transferred to and vested in the Company with effect from April 1, 2017, being the Appointed Date.

b. I n terms of the Scheme, 46,97,010 equity shares of the company held by IIL shall cancelled automatically and Equity Shares of MIL is held by the company shall also stand cancelled.

c In consideration of the amalgamation of IIL with the Company, the Company proposes to issue 54,60,192 equity shares of Rs 10/- each aggregating to Rs. 5,46,01,920/- in the ratio of 3 (three) fully paid up Equity shares of the face value of Rs 10/- each of the Company for every 2 (two) fully paid up equity shares of Rs 10/- each held in IIL. The additional Equity share issued pursuant to the scheme by the company to IIL has been adjusted in capital reserves of the company as per the Accounting Standard (AS) -14 read with IND AS 103- Accounting for Business Combinations.

d. Accounting for Amalgamation:

The amalgamation of IIL and MIL with the Company is accounted for on the basis of the Pooling of Interest Method as envisaged in the Accounting Standard (AS) -14 read with IND AS 103-Accounting for Business Combinations issued by the Institute of Chartered Accountants of India.

The Order is effective from 29.03.2019 with the appointed date of April 1, 2017. The transactions accounted in the books of the Transferor Company during the intervening period has now been incorporated in the books of the Transferee Company with effect from the appointed date. Accordingly the company has prepared the financial statements including cash flow for the year ended March 2018 with the comparatives of the previous year standalone figures of National Fittings Ltd.,

As regards the position on transfer and vesting of all the assets and liabilities of the Transferor Company to Transferee Company as on the appointed date, the exercise is carried out now taking the base as the appointed date from the audited accounts of both Transferor and Transferee Company.

All asset and liabilities of the IIL and MIL were recorded at their respective book values under the respective accounting heads of the Company. The resultant difference on account of transfer of net assets of both IIL and MIL of Rs. 188.23 lakhs has been adjusted to Capital Reserve of the Company.

Pursuant to amalgamation, the bank accounts, agreements, licences and immovable properties of the Transferor Companies are in the process of being transferred in the name of the Company.

2.3 In respect of actuarial valuation, the actuarial valuation as at 31.3.2018 of transferor companies & transferee companies adopted as it is.

2.4 Previous year figures

Previous year’s figures have been restated, rearranged and regrouped, wherever necessary, including providing comparative figures of standalone figures of National Fittings Ltd., as at 31.03.2017.