annual report 2012-13.c0194d75... · shri ramakant dixit general manager (information technology)...

Annual Report2012-13

VISIONTo be a leader in manufacturing of currency, coins and security products through process excellence and innovation.

MISSIONAchieve market leadership by:

• Developing state-of-the-art currency, coins and diversified security products in a transparent, cost-effective and efficient manner by leveraging core competency and building design capabilities;

• Constantly focusing on benchmarking, process automation, applied R&D, indigenization and the triple bottom line of people, planet and profit; and

• Ensuring Employees, Customers and Stakeholders delight.

CONTENTS

1. Board of Directors 1

2. Senior Management 2

3. Statement to Shareholders by CMD 3

4. Notice of AGM 10

5. Directors Report 11

6. Independent Auditor’s Report 63

7. Balance Sheet 76

8. Profit and Loss Account 77

9. Cash Flow Statement 78


1

BOARD OF DIRECTORS(As on 13th November, 2013)

Shri M.S. Rana Chairman and Managing Director

Dr. Manoranjan Dash Director (HR)

Shri P.N. Radkar Director (Technical)

Shri K. Skandan Additional Secretary,Ministry of Home Affairs

Shri H. Pradeep Rao Joint Secretary and Financial Adviser,Ministry of Finance

Shri P.K. Mishra Joint Secretary (DoC),Department of Economic Affairs,Ministry of Finance

Shri Muktesh K. Pardeshi Joint Secretary (PSP) & Chief Passport Officer, Ministry of External Affairs

Shri T.S. Sinha Deputy Director General (Philately), Department of Posts

Shri B.P. Vijayendra Principal Chief General Manager, Department of Currency Management,Reserve Bank of India

2

SENIOR MANAGEMENT (As on 13th November, 2013)

Shri Sudhir Sahu General Manager,Security Paper Mill, Hoshangabad &Bank Note Press, Dewas

Shri T.R. Gowda General Manager,Currency Note Press, Nashik Road &India Security Press, Nashik Road

Shri A.K. Srivastava General Manager,India Government Mint, Mumbai

Shri M.C. Bylappa General Manager,India Government Mint, Kolkata &India Government Mint, Noida

Shri S.P. Verma General Manager,Indian Government Mint, Hyderabad & Security Printing Press, Hyderabad

Shri Ramakant Dixit General Manager (Information Technology)

Shri A.K. Ray CVO (In-charge)

Shri Sanjai Maheshwari Additional General Manager (F&A)

STATUTORY AUDITORSM/s. Serva AssociatesChartered Accountants

New Delhi

ASSTT. COMPANY SECRETARYShri Sachin Agarwal (FCS)


3

STATEMENT TO SHAREHOLDERS BYM.S. RANA, CHAIRMAN AND MANAGING DIRECTOR

DURING THE 8th AGM HELD ON 13th NOVEMBER, 2013

Ladies and Gentlemen,

On behalf of the Board of Directors and on my behalf, I would like to extend a very warm welcome to all of you to the 8th Annual General Meeting of the Security Printing and Minting Corporation of India Limited (SPMCIL). The notice of AGM, Directors Report and Audited Accounts for the year ended 31st March, 2013 are already with you and with your permission, I take them as read.

OPERATIONAL PERFORMANCE

Your Company has achieved nearly all targets in production of Bank Notes, Coins, Security Products and production of the Raw Materials (Security Inks and Security Paper) during the year 2012-13. It has not only met with the original targets but it also has surpassed the revised targets. While achieving the ever highest targets, SPMCIL has also increased productivity per employee considerably.

Your Company has produced 7421 million pieces of the Bank Notes and supplied 7391 million pieces. This is 13.50% higher than the production of 6539 million pieces of the Bank Notes during the previous year. Production of the Bank Notes per employee has increased to 1.84 million pieces as against 1.63 million pieces achieved during the previous year.

Your Company has produced 6708 million pieces of the Circulating Coins and supplied 6878 million pieces of the Coins, including stock of last year, during the year 2012-13. This is 6.75% higher than the production of 6282.40 million pieces achieved during the previous year. Production of Coins per employee has increased to 1.88 million pieces in 2012-13 as against 1.69 million pieces achieved during the previous year.

Your Company has produced 52856 million pieces of Standard Product Unit (SPU) for Security Products during the year 2012-13 as against 51449 million pieces of SPUs produced during the previous year. The production of the Security Products in terms of SPUs per employee has increased to 14.39 million pieces in 2012-13 as against 13.10 million pieces achieved during the previous year.

Your Company has produced 484 Metric Tonnes (MT) of the Security Inks in 2012-13 from the Ink Factory, Dewas against 273 MT of Inks produced during 2011-12. This is 77.28% higher than the production of the previous year. The Security Paper Mill in Hoshangabad has achieved the target for 2012-13 by producing 2925 MT of Security Paper and has supplied 3021 MT Security Paper to the presses. This is the third year in succession that the Paper Mill has met with the target despite machinery being about 40 years old.

M.S. Rana, CMD

4

FINANCIAL PERFORMANCEThe sales turnover of your Company has increased to `3625.17 crores in 2012-13 from `3422.68 crores in 2011-12 registering a growth of 5.92% over the previous year. The Sales per employee during 2012-13 has increased by 8% to `28.76 lacs from `26.70lacs during the year 2011-12 primarily due to increase in the production during 2012-13.Despite the increase in overall production and productivity per employee, the Net Profit of your Company during the year 2012-13 is down by `159 crores to `423.48 crore as compared to previous year 2011-12. This is mainly because Revenue from Operations during 2012-13 has been reduced by making provision for rate difference for an amount of `445.49 crores being the difference between Board approved billing rates and adhoc MoU rates of Coins and Bank Notes for 2012-13 as a matter of prudence. However, the MoU rates of Coins and Bank Notes are provisional and final rates for Coins and Bank Notes are still to be finalised by DEA, MoF. Due to delay in finalising remunerative prices of Coins, Bank Notes and Postal stationery the excellent physical performance is not being reflected in the financial performance.

PRICING OF THE PRODUCTS OF THE COMPANYThe delay in fixing the remunerative sale price of the Coins, Bank Notes and Postal products continues to be an area of concern to the Company. Due to abnormal delay in fixing of the price of the Coins the billing for 2012-13, which was done on the rates approved by the Board was adjusted to the adhoc MoU rates approved by the Ministry for the MoU 2012-13 as prudence. The Ministry has been requested to expedite finalising the pricing of the Coins.

The billing for the Bank Notes for 2012-13 was done as per the rates approved by the Board. However, RBI has paid even lesser rates than the earlier approved rates of 2007-08.As a matter of prudence, the provision for `197 crores for the rate difference has been made for the financial year 2012-13 because of the difference in the Board approved rates and the adhoc MoU approved rates for 2012-13. MoF has entrusted the study of Bank Note pricing to ICWAI. Similarly, the prices of postal products have not been revised since last 6-7 years. Now, Department of Posts has constituted a Committee to finalise the prices of Postal products. As per MoU with the administrative Ministry the prices of the Coins, Bank Notes and Postal products for 2014-15 are to be finalised by November 2013.

MoU PERFORMANCEYour Company has been granted the ‘Excellent’ rating by the Department of Public Enterprises (DPE) for its MoU evaluation of 2011-12. This is the third year in succession your company has been adjudged Excellent in its MoU evaluation. For the year 2012-13,the self evaluation report of MoU duly approved by Board and Ministry has been sent to DPE. As per self evaluation, Company is poised for ‘Excellent’ rating for the fourth time. The self-evaluation score of 1.035 is the best ever score since incorporation of SPMCIL.


5

DIVIDEND

The directors have recommended a final dividend @20% of post tax profits of the Company for the year 2012-13 aggregating to `84.70 crore. This is the third year in succession your Company has paid dividend since its inception.

AWARDS

Your company has been awarded ‘Engineering Excellence Awards-2013’ by Engineering Watch. Modernisation of Ink Factory at Bank Note Press, Dewas was honoured with Second Best Engineering Marvel for ‘Project Innovativeness’. Indigenisation of Bank Note Paper Production at SPM, Hoshangabad and Modernisation of Bank Note Press, Dewas have received Special Mention Awards.

Your Company has been awarded Performance Excellence Award-2012 in Golden Enterprise category by Indian Institution of Industrial Engineering (IIIE), Mumbai for its financial and operational performance. Bank Note Press, Dewas has been awarded the National Safety Award during September 2012 by Hon’ble Minister of Labour & Employment. Bank Note Press, Dewas is continuously getting this award since 1996 as a winner/runner-up based on Lowest Average Frequency Rate or Accident Free Year.

India Security Press, Nashik has been declared winner in Maharashtra Safety Awards competition-2011 for longest accident free period. Currency Note Press (CNP), Nashik has been awarded by Maharashtra Safety Award-2011 for the Lowest Accident Frequency Rate in Light Engineering Industry Group, Mumbai. Project Paardaksh of your company has won SAP ACE Award 2013 in “Special Recognition in Procurement” category for Public services.

MODERNISATION / INDIGENISATION

Continuing its momentum of modernisation and indigenisation your Company has spent an amount of `382 crores during the year on capital works and investment in the Joint Venture Company.

One Computer to offset Plate making (CToP) machine has been installed at Currency Note Press, Nashik and another CToP machine is in progress at Bank Note Press, Dewas. Two nos. of Bank Note Processing System (BPS-2000) have been installed one each at CNP, Nashik and BNP, Dewas. Two nos. of Mini Finishing Machines for Bank Note Processing have been installed in Currency Note Press, Nashik.

The phase two modernisation of the Ink Factory at Dewas has been taken up. At present, SPMCIL is self-sufficient in production of the offset, intaglio and numbering inks. The work of new paper line at Hoshangabaad is going on as per schedule and the Paper Mill is targeted to be commissioned by March, 2014 and after trials will go on full production by June, 2014. The new pulping plant has been commissioned during the year.

6

Three Nos. of Multi-stroke Medal Presses one each at India Government Mint at Cherlapally, Mumbai & Kolkata have been commissioned. One Gold Refining Plant has been commissioned at India Government Mint, Mumbai and one Silver Refining Plant at India Government Mint, Cherlapally. One No. of PVD coating machine for coining Dies is being commissioned at India Government Mint, Noida. The installation of the Blank sorting machines in the Mints is under progress. These Blank sorting machines will improve the quality of the Coin blanks thereby improving the quality of the Coins.

CORPORATE SOCIAL RESPONSIBILITYSPMCIL has spent `3.55 crore during the year on various CSR projects as against the MoU target of `3.50 crore. SPMCIL has taken up various CSR projects in the areas of education, family welfare, health, rain-water harvesting, sanitation, renewable energy, roads, water supply and skill enhancement of the MSME personnel etc. All the CSR projects mentioned above have gone through the process of baseline survey and were duly monitored and evaluated by independent consultants.

STRENGTHENING OF VIGILANACE SET UPDue to systematic institutional improvements carried out as part of strengthening of the vigilance set-up, there has been a discernible improvement in following rules, procedures and guidelines relating to procurement. Training of officials and vigilance staff has been taken-up to enhance their capacity in implementation of CVC guidelines. The net result of preventive vigilance initiatives has been reduction in complaints, increased follow up of systematic procedures thus bringing in more transparency, economy and efficiency in SPMCIL’s operations. With the approval of the CVC, Integrity Monitors have been appointed in SPMCIL. Three meetings of the integrity panel have been held.

SUSTAINABLE DEVELOPMENTAll the targets fixed in the MoU signed between SPMCIL and MoF for the year 2012-13for Sustainable Development have been achieved. An expenditure of `3.13 crores was incurred by the Company inconformity with the MoU commitment. Both the Security Presses under SPMCIL have reduced the wastage of paper to appreciable limits, thus leading to cost savings and in addition contributing to Sustainable Development in production of the Security products.

In India Security Press, Nashik, the ozone depleting R-11 Gas has been replaced with environment friendly refrigerant gas for the Air-conditioning plant installed and commissioned during the year. In order to conserve water, Rain Water Harvesting covering 1/3rd area of the plant area in Bank Note Press, Dewas has been converted for Rain Water Harvesting to increase the ground water table in that area where water table had considerably gone down.

CUSTOMER SATISFACTIONContinuing its pursuit of achieving excellence in the delivery of quality products and services, your Company has conducted Customer Satisfaction Survey through an


7

independent consultant for the year. As per the independent report, Customer Satisfaction Index in ‘Excellent’ category has been achieved. To imbibe the findings of the Customer Satisfaction Survey and feed back received and measures to be taken for improving the customer satisfaction index, a workshop was held at India Security Press, Nashik in August 2013. Officials from the Chief Passport Office, Delhi, Regional Passport Office, Mumbai were invited in the above workshop and valuable suggestions given by them have been taken up for implementation.

ECO-FRIENDLY OPERATIONSSPMCIL’s all units are ISO 9001:2000 certified and seven units have also got ISO 14001:2004 certification for better environment management of their operations. These seven Units have implemented Environment Management System (EMS) in their operations. Re-utilization of treated effluent water in SPM, Hoshangabad has been taken up, as the project reduced consumption of the additional water to the zero level as per the norms set up by the MPPCB. SPM, Hoshangabad has engaged a Consultant for development of a modern sewage treatment plant for the Paper Mill and the colony. BNP Dewas has taken up the work of Rain Water Harvesting Project covering its additional 1/3rd plant area for efficient utilisation of rain water. Currency Note Press, Nashik has also provided Rain Water Harvesting system at its new Administrative Building premises. CNP, Nashik has replaced High Electrical power consuming light sources with Low LED fittings for general lighting purpose on perimeter and along the road.

CORPORATE GOVERNANCEAll the information as required to be placed as per DPE guidelines on Corporate Governance were placed before the Board. Your Company has duly constituted Audit Committee, Remuneration Committee and CSR & SD Committee. Being a security sensitive organisation Government has constituted SPMCIL Board consisting of four functional Directors, three Government nominees and three Customer nominees from Ministry of External Affairs, RBI and Department of Posts who have been treated as Independent Directors. The compliance certificate has been obtained from the practicing Company Secretary regarding compliance of the guidelines on Corporate Governance by SPMCIL for the year 2012-13, which is annexed to the Directors Report. For fourth year in succession, CAG has issued NIL comments after review of the Annual Accounts of the Company.

NEW PRODUCTSDuring the current year, ISP successfully printed and supplied various new products, viz. University Degree Certificates for Central University of Kerala, Paper Strip Seal and Address Tag for Election Commission of India, “My Stamp” for Department of Post, Security Certificates for Wild Life Crime Control Board, New Delhi, CTS-2010 Standard MICR Cheques, new design International VISA stickers and New Design L-Series-2012 Passport Booklets for Ministry of External Affairs. During the current year, SPP Hyderabad has successfully printed and supplied various new products viz. PF Authorisation Form and Advocate Welfare Fund Stamps.

8

R&DDuring the year the Company has spent `3.07 crore on R&D activities against the MoU target of `1.18 crore. Your Company has taken up applied R&D project in the field of security paper, security printing, Bank Note printing & Coin metallurgy. The Company is setting up R&D centres across all production verticals. It will help the Company to bring more indigenisation in its operations and efficiency in the production processes.

ERP BASED INTEGRATED INFORMATION SYSTEMThe SAP-ERP has been implemented across all Units of SPMCIL and is in the stabilization phase. So far, SAP-ERP core modules i.e. Material Management, Production and Planning, Quality Management, Sales & Distribution, Financial, Plant Maintenance, Employee Self-Service and Human Resource have been implemented and the remaining modules i.e. Project System and BI etc. are under implementation. A fully functional Tier-3, ISO/IEC 27001:2005 certified Data Center (DC) is operating at IGM, Noida. SPMCIL has also set up a Disaster Recovery Center (DRC) at IGM, Hyderabad to ensure complete data safety and security. The implementation ofSAP-ERP will bring greater transparency and synergy in the operations of the Company and ensure better services to its customers.

HUMAN RESOURCEThe overall industrial relations scenario during the year was cordial and peaceful. Training of the workmen, supervisors & executives has been taken as a thrust area. Six Nos. of Management Personnel were trained on “Leadership for 21st Century” in IIM, Ahmedabad. The IDA pay-scale to executives and non-unionised supervisors were introduced during the year. About 29 executives were recruited in various disciplines during the year. Employee strength as on 31st March, 2013 has come down to 12606 as against about 18000 at the time of corporatisation in February, 2006.

BUSINESS SCENARIODuring September/October 2012 RBI has substantially raised the indents of Coins for 2012-13, 2013-14 and the forecast for the next three years substantially ranging from about 9 billion pieces in 2013 to more than 13 billion pieces in 2016-17. This is more than double the average production of the Coins during the last three years of about 6 billion pieces. Your Company has got the study done to establish the feasibility of increasing capacity in existing Mints by utilising the existing land and buildings thereby economise on the cost and shorten the project implementation time. The project estimates are being firmed up and will be brought to SPMCIL Board for sanction.

Similarly during September/October 2012, RBI has given the indents of Bank Notes for 2012-13, 2013-14 and the forecast indents for 2014-15, 2015-16 and 2016-17 which are about 40% to 50% higher. It will require investments in replacement of the old Printing Lines and creation of additional capacity both in Bank Note Press, Dewas and Currency Note Press, Nashik. Board had already sanctioned two Printing Lines during the year


9

and for the additional capacity the investment proposal is being brought to Board for approval.

In the case of passports after the issue of the New series of passport booklet by Ministry of External Affairs in October 2012, indent for this year also increased to about 75 lakhs which is likely to go about 85 lakhs. SPMCIL is geared up to enhance the additional indents. Once e-passport project is implemented, there is likely to be substantial increase in the indents of the passports due to replacement of the old booklets with the new e-passport booklets.

There has been a substantial increase in the indents for the Non-Judicial Stamp Papers (NJSP) during the last two years and this trend is continuing despite few of the States shifting to the e-stamping. SPMCIL is geared up to meet this enhanced indent from the States.

The proposal for capital restructuring of SPMCIL has been taken up by the Administrative Ministry. It is expected that this capital restructuring is likely to be approved by the competent authority shortly. The proposal in this regard has been submitted to the Ministry.

ACKNOWLEDGEMENTSI would like to acknowledge with deep sense of appreciation the cooperation received from the Government of India, particularly from the Ministry of Finance, Reserve Bank of India, Ministry of External Affairs, Ministry of Home Affairs, Department of Posts, Department of Public Enterprises, Ministry of Labour, Department of Pension and Family Welfare and various State Governments. I am also thankful to my colleague Directors for their valuable inputs and support. I would also like to acknowledge with thanks the constructive suggestions received from Comptroller & Auditor General of India and the Statutory Auditors. Lastly, I would also like to place on record the sincere appreciation of the devotion and commitment of all executives and employees of the Company.

Jai Hind.

Place: New Delhi (M.S. Rana)Date: 13th November, 2013 Chairman & Managing Director

10

SECURITY PRINTING AND MINTING CORPORATION OF INDIA LIMITEDRegd. Office: 16th Floor, Jawahar Vyapar Bhawan, Janpath, New Delhi – 110 001

NOTICENotice is hereby given that the 8th (Eighth) ANNUAL GENERAL MEETING of the Members of Security Printing and Minting Corporation of India Limited will be held on Wednesday, the 13th day of November, 2013 at 1:30 pm at Registered Office of the Company situated at 16th Floor, Jawahar Vyapar Bhawan, Janpath, New Delhi– 110 001to transact the following business:

ORDINARY BUSINESS1. To receive, consider and adopt the Audited Balance Sheet as at March 31, 2013

and the Profit & Loss Account for the year ended on that date together with the Reports of the Directors’ and the Auditors’ thereon.

2. To approve the payment of Dividend @ 20% of Post Tax Profits of the Company for the financial year 2012-13.

3. To fix the remuneration of the Auditors of the Company appointed by the Comptroller and Auditor General of India for the year 2013-14.

By Order of the Board of Directors

(SACHIN AGARWAL)Asstt. Company Secretary

Date: 13th November, 2013Place: New Delhi

NOTES:1. A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A

PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF. SUCH PROXY NEED NOT BE A MEMBER OF THE COMPANY. THE PROXY FORM IS ENCLOSED.

2. Member/Proxy holder must bring the attendance slip to the meeting and hand it over, at the entrance of Meeting Hall, duly signed.


11

DIRECTORS REPORT

TO THE MEMBERSOn behalf of the Board of Directors, it is my privilege to present the 8th Annual Report of the Company and Audited Annual Accounts for the financial year ended 31st March, 2013 together with the report of the Statutory Auditors and Review of the Comptroller & Auditor General of India thereon.

PHYSICAL PERFORMANCEYour Company has achieved all targets in production of Bank Notes, Coins, Security Products (Passports, NJSPs, Postal Products and other Security Products) and production of the Raw Materials (Security Inks and Security Paper) during the year 2012-13. It has not only met with the original targets but it also has surpassed the revised targets. While achieving the ever highest targets SPMCIL has also increased productivity per employee considerably.

Your Company has produced 7421 million pieces of the Bank Notes and supplied 7391 million pieces. This is 13.50% higher than the production of 6539 million pieces of the Bank Notes during the last year. Production of the Bank Notes per employee has increased to 1.84 million pieces as against 1.63 million pieces achieved during the previous year.

Your Company has produced 6708 million pieces of the Circulating Coins and supplied 6878 million pieces of the Coins including last year’s stock in hand during the year 2012-13. This is 6.75% higher than the production of 6282.40 million pieces achieved during the previous year. Production of Coins per employee has increased to 1.88 million pieces in 2012-13 as against 1.69 million pieces achieved during the previous year.

Your Company has produced 52856 million pieces of Standard Product Unit (SPU) for Security Products during the year 2012-13 as against 51449 million pieces of SPUs produced during the last year. The production of the Security Products in terms of SPUs per employee has increased to 14.39 million pieces in 2012-13 as against 13.10 million pieces achieved during the previous year.

Your Company has produced 484 Metric Tonnes (MT) of the Security Inks in 2012-13 from the Ink Factory, Dewas against 273 MT of Inks produced during 2011-12. This is 77.28% higher than the production of the previous year. The Security Paper Mill in Hoshangabad has achieved the target for 2012-13 by producing 2925 MT of Security Paper and has supplied 3021 MT Security Paper to the presses. This is the third year in succession that the Paper Mill has met with the target despite machinery being about 40 years old.

FINANCIAL RESULTSThe sales turnover of your Company has increased to ̀ 3625.17 crores in 2012-13 from `3422.68 crores in 2011-12 registering a growth of 5.92% over the previous year. The

12

Sales per employee during 2012-13 has increased by 8% to `28.76 lacs from `26.70 lacs during the year 2011-12 primarily due to increase in the production during 2012-13. Despite the increase in overall production and productivity per employee, the Net Profit of your Company during the year 2012-13 is down by `159 crores to `423.49 crores as compared to previous year 2011-12 due to the reason that Revenue from Operations during 2012-13 has been reduced by making provision for rate difference for an amount of `445.49 crores being the difference between Board approved billing rates and adhoc MoU rates of Coins and Bank Notes for 2012-13 as a matter of prudence. However, the MoU rates of Coins and Bank Notes are provisional and final rates for Coins and Bank Notes are still to be finalised by DEA, MoF.

(` in crores)

Particulars 2012-13 2011-12

Sales Turnover 3625.17 3422.68Revenue from Operations 3712.94 3494.67Other Income 143.10 167.65Expenditure 3282.26 2787.94Profit Before Extraordinary Items & Taxation 573.78 874.38

Less: Prior Period Items / Extraordinary Items (NET) (4.94) (0.49)Profit after Extraordinary Items & Prior Period Item, before Taxation

578.72 874.87

Less: Tax ExpenseProvision for Current Tax 340.84 268.65Provision for Deferred Tax (185.90) 20.07Taxes of Earlier Year 0.29 3.69

Profit After Taxation 423.49 582.46

Proposed Dividend & Tax 98.44 135.39

Transferred to General Reserve 42.35 58.25

Balance transferred to P& L A/c 282.70 388.82


13

PRICING OF PRODUCTS OF THE COMPANY

The pricing of multi products of the Company is an area of concern. The selling price of the products of the Company is based on the cost of the products plus reasonable rate of return on capital employed. According to DEA, MoF the fair prices for coins for 2011-12 & 2012-13 can be finalised only after detailed study of cost data of SPMCIL and in the meantime, SPMCIL has been advised to raise bills for 2013-14 as per the rates agreed to in the MoU for 2013-14. According to DEA, MoF, the payment will be adjusted once the fair prices for 2013-14 are finalised. As a matter of prudence the Company has made a provision of `248.49 crores towards difference between billed rate & MoU Rate for financial year 2012-13.

The billing rate for supply of Bank Notes to RBI was weighted cost of production of units of SPMCIL for the year 2011-12 after taking 15% return (post tax) on capital employed as per the approval of the Board. However RBI is paying even lesser than the rates of 2007-08. The adhoc rates of Bank Notes approved by DEA, MoF for the purpose of MoU 2012-13 are same since 2007-08 and the difference between MoU rates for 2012-13and billing rate of Bank Notes comes to `197 crores for which provision for rate difference has been made in financial year 2012-13. The Ministry has now appointed a consultant to do study for fixing price of Bank Notes.

Similarly billing for supply of Postal Stationery to Department of Posts has been done in financial year 2012-13 on earlier approved rates however the Department of Post is releasing payment on rates calculated by them which is even not fetching the cost of production of postal stationery. The issue of pricing of the postal items has also been raised by COPU and need to be addressed on priority by the Ministry of Finance and Department of Post. The Department of Posts has now constituted a Committee for fixing prices of Postal products.

In the MoU 2013-14, Ministry has agreed to assist in finalization of pricing of Coins, Bank Notes and Postal Stationery for F.Y. 2014-15 by 30.11.2013. It is expected that pricing for earlier years should also be finalised within this time frame. After the pricing of coins, bank notes & postal stationery is finalised, a clear picture of profitability of Company will emerge in future. Moreover company is making payment of income tax and dividend to Government on profitability based on provisional price of its products.

MOU PERFORMANCE

Your Company has been granted the Excellent rating by the Department of Public Enterprises (DPE) for its MoU evaluation of 2011-12. This is the third year in succession your Company has been adjudged Excellent in its MoU evaluation. For the year 2012-13,the self-evaluation report of MoU duly approved by Board and Ministry has been sent to DPE. As per self-evaluation, Company is poised for Excellent rating for the fourth time. The self-evaluation score of 1.035 is the best ever score in the last four years.

14

ACTIVITIES AT A GLANCEYour Company is a Miniratna Category-I CPSE wholly owned Schedule ‘A’ Company of Government of India, incorporated on 13th January, 2006 with its Registered Office at New Delhi. Broadly, your company is operating through nine units of five production verticals i.e. India Government Mints, Currency Printing Presses, Ink Factory, Security Printing Presses and Security Paper Mill. A brief introduction of these verticals along with review of operational activity during 2012-13 is as follows:

1. CURRENCY PRINTING PRESSESThere are two Currency Printing Presses i.e. Currency Note Press, Nashik and Bank Note Press, Dewas which are engaged in production of Bank Notes. More than 40% of Currency Notes circulated in India are printed by your Company. CNP, Nashik has produced 4859.54 million pieces of Bank Notes in 2012-13 as against the 4428.44 mpcs in the year 2011-12. CNP has supplied 4820 million pieces of banknotes to RBI during the year 2012-13 as against 4481.40 million pieces of banknotes during the last financial year 2011-12.The production per employee of CNP during the year 2012-13 has increased to 1.82 mpcs from 1.65 mpcs during the previous financial year, i.e. 2011-12. Bank Note Press, Dewas has produced 2561.38 mpcs of Bank Notes in 2012-13 as against the production of 2110.98 mpcs in the previous year. BNP has supplied 2571 million pieces of bank notes during the year 2012-13 as against 2121 million pieces during the previous year. The production per employee during the year has increased to 1.85 mpcs from 1.60 mpcs during the previous year.

2. INK FACTORY AT DEWASPhase-I modernisation of Ink factory, Dewas has been completed and Phase-II modernisation is in progress. Ink factory is manufacturing Quickset Intaglio Inks departmentally for use on Super Orlof Intaglio printing machines. During the current year, Ink Factory has manufactured ever highest 484 MT Inks as against 272.60 MT Inks during


15

the previous year. Thus the production has increased by 77.55% over the previous year. The production of inks per Employee has increased to 6.45 MT in the current year as against 4.96 MT in previous year. During the year SPMCIL presses have been by and large self-sufficient in Inks through Ink Factory, Dewas.

3. SECURITY PRINTING PRESSESThere are two Security Presses, i.e. India Security Press, Nashik and Security Printing Press, Hyderabad for printing of various security products like Non-judicial stamp papers, passports, VISA stickers, postal stamps & stationery and other security documents.

During the year, ISP successfully printed and supplied various new products, viz. University Degree Certificates for Central University of Kerala, Paper Strip Seal and Address Tag for Election Commission of India, “My Stamp” for Department of Post, Security Certificates for Wild Life Crime Control Board, New Delhi, CTS-2010 Standard MICR Cheques, new design International VISA stickers and L-Series-2012 Passport Booklets for Ministry of External Affairs.

During the year 2012-13, ISP has produced 2368.60 mpcs of NJSP as against 1681.40 mpcs last year. During the year ISP produced 56.90 lacs of passports as against 77.50 lacs last year. The less production is due to decreased indent by Ministry of External Affairs.

During the year, SPP Hyderabad has successfully printed and supplied various new products viz PF Authorisation Form and Advocate Welfare Funds Stamp. During the year, SPP Hyderabad has printed 170.54 mpcs of NJSP as against 161.84 mpcs in the previous year. During the year, SPP has printed 1.40 mpcs of commemorative postage stamps as against 0.67 mpcs in the previous year. Overall there has been 21% increase in the Standard Production Units (SPU) over the previous year.

4. SECURITY PAPER MILLS(a) Security Paper Mill, Hoshangabad

The new CWBN paper line project is going on as per schedule and is targeted to be operational by June, 2014. In order to improve the quality of pulp, a new

16

BIVIS Pulp Plant having pulping capacity of 25 MT per day has been commissioned and trial runs have been conducted.

Though the Paper Mill at SPM, Hoshangabad is more than 40 years old, it has been able to meet its target for the third year in succession. During the year, it has produced 2925 MT of Security Paper.

(b) Bank Note Paper Mill India Private Limited (BNPMIPL)

SPMCIL has setup a 50:50 JV in October, 2010 in association with Bhartiya Reserve Bank Note Mudran Pvt. Ltd. (BRBNMPL). The new JV Company is called ‘Bank Note Paper Mill India Private Limited’ (BNPMIPL). The Bank Note Paper Mill will have a capacity of 12000 MT per year to be commissioned in two phases. Major packages have been awarded and some are under process. The project at this stage is about six months behind schedule and likely to be commissioned by March, 2015.

5. MINTS

Your Company’s four Mints are located at Mumbai, Cherlapally (Hyderabad), Kolkata and Noida.

During the year 2012-13, the four mints have produced ever highest no. of 6708 mpcs of circulating coins as against 6282 mpcs produced during the previous year. The production per employee during the year has increased to 1.88 mpcs from 1.69 mpcs during the previous year. During the year the Mints produced 5740.34 mpcs coin blanks as against 5765.11 mpcs during the previous year.

During the year 2012-13, the following commemorative coins were released by the Mints:-

1. 60 years of Parliament of India

2. 150th Birth Anniversary of Motilal Nehru

3. 150th year of Kuka Movement


17

4. 150th Birth Anniversary of Madan Mohan Malviya

5. 150th Birth Anniversary of Swami Vivekananda

6. Silver Jubilee of Shri Mata Vaishno Devi Shrine Board.During the year, IGM, Noida has produced circulating coins of 2242.78 mpcs as against 1872.97 mpcs in the previous year thus increasing the production by 19.75%. During the year, IGM, Mumbai has produced 1653.09 mpcs of circulating coins as against 1640.04 mpcs in the previous year. IGM, Mumbai has also produced1900.05 mpcs of coin blanks during 2012-13 as against 1905.49 mpcs in the previous year. IGM, Cherlapally has produced 1212.37 mpcs of circulating coins in the current year vis-à-vis 1224.80 mpcs produced during the previous year. It has also produced 1945.41 mpcs of coin blanks in 2012-13 vis-à-vis 1948.12 mpcs produced during the previous year. During the current year, IGM, Kolkata has produced 1599.56 mpcs of circulating coins as against 1544.55 mpcs produced in the previous year. IGM, Kolkata has also produced coin blanks of 1894.89 mpcs in current year as against 1911.51 mpcs in the previous year.

MODERNISATION AND CAPACITY AUGMENTATION SPMCIL had approved a capital investment plan of `2474 crore w.e.f. 2009-10. This will enhance capacity, capability in production of raw materials like Bank Note Paper, Security Inks, etc. for printing of state of the art currency notes and minting of coins of advanced designs. As on 31.03.2013, SPMCIL has done investment of ̀ 1243 crore in capital works and joint venture investment. Details of the works vertical wise are given below:

Currency Presses� Installation and commissioning of the one new latest state of the art Banknote

Printing line has already been successfully completed at BNP, Dewas during the last year and production has also started on the same.

� One Bank Note Printing Line each at Currency Note Press, Nashik & Bank Note Press, Dewas on replacement basis has been sanctioned by SPMCIL Board recently at a total cost of about ̀ 400 crores. After installation of above two new lines, Currency Production capacity of SPMCIL would increase by 800 million pieces. These two machines will take about two and half years to commission.

� One Computer to offset Plate making (CToP) machine has been installed at Currency Note Press, Nashik. Installation of one no. of Computer to Off-set Plate making (CToP) machine is in progress at Bank Note Press, Dewas. This will eliminate a number of intermediate processes and will improve the quality of printing plate.

� Scotchbrite for wiping system in lieu of wiping brush has been introduced by BNP, Dewas & CNP, Nashik. This has brought economy in the operations.

� BNP, Dewas completed processing of insertion of new design of ‘`’ symbol without one up master (hard copy) and CToP system.

� Two number of Bank Note Processing System (BPS 2000) has been installed each at CNP, Nashik and BNP, Dewas costing about `33 crores. This machine has a

18

facility of Single Note Examination, spoil rejection, shredding of the spoil notes, banding & shrink wrapping of good banknotes automatically in one pass.

� Two Mini Finishing Machines for banknote processing have been installed and commissioned at CNP, Nashik. The machine is equipped with banknote counting, 100 banding, stacking with turning alternate packets, 1000 Banding, 1000 Counting, Scanning of Top Numbered Note, Shrink wrapping, Printing and Pasting the labels.

Ink Factory

� SPMCIL printing presses are self-sufficient for Quickset Intaglio, Dry Offset Ink and Letter Press Ink. Approval has been accorded for procuring 2 nos. of Gravimetric Filling System, Heavy Duty Twin Shaft mixer, Automatic Tub & drums cleaning System as well as building up of state of the art new ink factory building with centralized air conditioning.

Security Presses During the year, ISP, Nashik has installed 2 × 700 TR Centralised Environmental eco-friendly Air Conditioning Plant. One State of the art Six Colour Sheet Fed Offset Printing machine is also being procured for ISP, Nashik at a cost of about `23 crores for printing of various security documents.

During the year, SPP, Hyderabad has installed Fire Hydrant System for safety of the plant at the cost of `25.92 lacs. SPP, Hyderabad has also installed SAP-LAN system for implementation of SAP/ERP at the total cost of `68.91 Lacs.

Security Paper MillIn order to modernise SPM, Hoshangabad and to reduce dependency on import of Bank Note Paper following capacity expansion projects have been initiated:

� New Paper Machine at Hoshangabad: Out of the totalcost of about `495 crores, `295 crore expenditure has been incurred as on 31.03.2013. All packages have been awarded. The Civil, Electrical and other related works pertaining to newpaper machine project are nearlycomplete. The major auxiliarypackages like electricity supply,steam generation, water supply, etc. are expected to be ready before commissioning. The erection work of the installation of the paper machine has started. The machine is likely to be commissioned by March, 2014 and after trial production targeted to go on full production by June, 2014.


19

� New Pulping PlantIn order to meet demand of quality pulp, a new BIVIS Pulp Plant having a pulping capacity of 25 MT per day has been installed. It is a continuous cotton comber processing pulping plant supplied by M/s. Clextral, France. The Performance trial and acceptance test has been completed on11th May, 2013.

� A full-fledged R&D centre for Paper, Pulp etc. has been established at the unit. Latest testing equipments & machinery has been procured and installed successfully in the R&D Centre. During the current year, following instruments have been commissioned in R&D centre:

� Video Spectral Comparator (VSC) for examination of security features in Bank Note Paper and Non-Judicial Stamp Paper.

� Quality Control Device (QCD) 200 MAG for detection and measurement of magnetic properties of security thread.

� M/s. NEERI, Nagpur has been engaged for providing consultancy services for modernisation & upgradation of existing yellow/black liquor plant at SPM Hoshangabad to meet the proposed capacity expansion and also fulfil the environmental compliance of Pollution Control Board. Final report has been submitted by NEERI and the same is under consideration.

After modernisation the capacity of SPM, Hoshangabad shall increase to about 9000 MT from 3000 MT at present.

MintsPhase-I modernisation of the Mints consisting of eighteen coining presses, three blanking lines, three multi stroke medal presses, three fully automatic centrifugal finishing lines and four semi automatic centrifugal finishing lines and four fully automatic sachet packing lines have already been completed. This has resulted in enhanced capacity increment in coining and coin blank and quality of the coin blanks, coins and medals being produced.

Recently in September/October 2012 RBI has raised the indent of circulating coins for 2012-13 & 2013-14 and projection for 2014-15, 2015-16 & 2016-17 ranging from 9 billion pieces to about 13 billion pieces. This will require nearly doubling the present Mint Capacity. The exercise for investment approval has been initiated and will be put up to Board. Once approved by Board the capacity expansion is likely to take about three to four years.

Three numbers Multi-stroke Medal Press, one each for Mints at Cherlapally, Mumbai & Kolkata has been procured and commissioned for production of various Medals &

20

Commemorative Coins. One number of Gold Refining Plant at a cost of `3.20 crores has been installed and commissioned in India Government Mumbai and one number of Silver Refining Plant at a cost of `3.25 crores has been installed and commissioned at India Government Mint, Cherlapally. One no. of PVD coating machine for coining Dies has been received and is being commissioned. Inspection for Blank sorting machines is over and the delivery to IG Mints will be made soon. These machines will improve the coin blanks quality thereby improving quality of coins.

HUMAN RESOURCE MANAGEMENT

Manpower Plan and Productivity:� The Employees strength has come down to 12,606 nos. as on 31.03.2013 as

against the figure of 12818 nos. as on 31.03.2012.

� Company has recruited 29 Executives during the year 2012-13 to multifarious functional areas.

� SPP Hyderabad was authorized by the Corporate Office to recruit 125 industrial workers & staff members and 18 Supervisors because 286 number of Govt. optees of the Unit are waiting for redeployment. IGM Noida was authorized to recruit 42 number of industrial workers and 03 Supervisors and IGM Kolkata was authorized to recruit 18 Office Staff.

� Level of attrition of Employees during the year 2012-13 was as low as 0.07% in your Company.

Policies and Practices

Following HR initiatives during 2012-13 have given momentum to the corporatised ways of working in SPMCIL as a PSU.

� A comprehensive Recruitment Policy was notified by SPMCIL making it uniformly applicable to the Mints, Presses, Paper Mill and Corporate Office.

� The IDA pattern of pay scale for Executives and non-Unionised Supervisors in line with the Department of Public Enterprises has been implemented during the year 2012-13. Out of 459 nos. of executives & non-unionised supervisors, 405 nos. have migrated from CDA to IDA pay scale.

� During the year, Mentor-Mentees Development Scheme, Suggestion Scheme and Grievance Redressal Mechanism was introduced. The Compassionate Appointment Scheme and Quality Circle was also introduced during the year.

Training & Development � Training and Development of Employees in SPMCIL has emerged as key tool

for capacity building and enhancing operational efficiency. More than 15% of the Employees were trained during the year.

� 108 number of Executives were trained in various modules of SAP application. This training in computer application helped in ownership of ERP-SAP by SPMCIL

� 6 numbers of Managerial Personnel were trained on “Leadership for 21st Century” at IIM-Ahmedabad during the year. 2.35% of total strength of supervisors were


21

trained in Advanced / New Technology during the year. Nearly, 11.93% of industrial workers were trained with the objective to upgrade their skills.

� Approx. `1.81 crores which is about 0.16% of Employees’ cost was spent on training and development during the year.

� A Scheme for sponsoring Senior Executives for Advanced Management Programme was introduced during the year. The objective of the Scheme is to enable them to shoulder multifarious job responsibilities at leadership positions.

Industrial Relations � Two meetings of the Apex Bipartite Forum were successfully conducted during the

year. The focus in these two bipartite forum meetings was more on the Promotion Policy of Non-Executives.

� Despite multiple trade unions having allegiance to various Central trade union organisations, the industrial relations remain peaceful during the year.

� The SPMCIL EPF Trust formed under 1952 Act for pro-rata optees and Company appointed Employees and the GPF Trust formed under 1925 Act and Pension Trust under Rule 37A of CCS (Pension) Rules, 1972 for combined pension optees in SPMCIL have become fully operational.

Connecting with Employees� Inter Unit Cricket tournament in ISP, Nashik was an important event to connect

with the Employees. BNP Dewas was the ultimate winner of the Inter-Unit Cricket Tournament of SPMCIL.

� SPMCIL Foundation Day-2013 was celebrated at Nashik with full zeal whereinShri Namo Narain Meena, Hon’ble Union Minister of State for Finance was present as the Chief Guest.

� The best performing Units were awarded for meritorious work in categories of Environment & Safety, Energy Conservation, Productivity, Training & Development, Rajbhasha and Vigilance. Individual employees were awarded cash prize and certificate for their meritorious services during the year.

CORPORATE SOCIAL RESPONSIBILITY The following are the contributions of SPMCIL towards the cause of Corporate Social Responsibility during the year 2012-13 for which an expenditure to the tune of ` 3.55 crore was incurred by the Company in conformity with the MoU commitment:-

� SPMCIL has incurred an expenditure of `102.25 lacs during the current year in Satyabharti Schools. As on date about 1309 students are studying in these schools in Pre-Primary, Class I, II & III comprising of 51.19% girls and 48.81% boys.

� SPMCIL has provided Ultra Sound Scanner to Rama Krishna Mission Rajahmundry, East Godavari District of (AP) at a cost of `27.00 lacs.

� SPMCIL has provided Mobile VAN for rendering health services in the rural area through Indian Red Cross Society Mumbai at a cost of `15.00 lacs. Out of `15 lacs a sum of `7.50 lacs has been released during the current year.

22

� SPMCIL has undertaken road connectivity works in Dewas and Nashik alongwith road side amenities at an approximate cost of `79 lacs.

� SPMCIL has provided a Bus for the visually impaired children to Sahyog Vishesh Aawasiya Vidyalaya Hoshangabad (MP) at a cost of `9.15 lacs.

� SPMCIL has provided drinking water facility to Six villages in Dewas, Nashik and Hoshangabad districts.

� SPMCIL has provided Solar Lamps in various villages of Hoshangabad and Dewas districts.

� Project of Plantation of trees near Narmada belt for Environment protection at Hoshangabad (MP) has been taken up at a total cost of `1.19 crore, out of which `50.00 lacs have been spent during the current year.

� SPMCIL has also constructed ten nos. girls toilet in Sagar and Gosaba and one toilet in girls hostel at Kakdwip, West Bengal at a total cost of ̀ 23.00 lacs during this year.

� SPMCIL conducted training programme for the development of MSME personnel in coordination with Ni-MSME, Hyderabad. 55 MSME employees attended the programme.

All the projects mentioned above undertaken by the Company during 2012-13 had gone through the process of baseline survey. The projects were duly monitored and evaluated by independent consultants.

SUSTAINABLE DEVELOPMENT PERFORMANCE REPORTAll the targets fixed in the MoU signed between SPMCIL and MoF for the year 2012-13 for Sustainable Development have been achieved. An expenditure of `3.13 crores was incurred by the Company in conformity with the MoU commitment. The details of works undertaken as part of Sustainable Development Plan are given below:

� Both the Security Presses namely, India Security Press (ISP), Nashik and Security Printing Press (SPP), Hyderabad reduced the waste paper rejection to appreciable limit. The percentage of waste paper rejection at ISP, Nashik has been reduced by 13.90% during the year vis-à-vis the previous year. Further, SPP Hyderabad took the initiative of introducing printing inserts of 23” that shall be used in Grapha-machines due to which, 2” of paper for each revolution of printing shall be saved. Accordingly, an administrative approval has been accorded for the procurement of the inserts at the cost of `2.44 crores and purchase order for the same has been placed.

� The AC plants in ISP, Nashik were running on R-11 gas which is an ozone depleting substance causing damage to ozone layer. To reduce the ozone depleting substance and conversion to environment friendly refrigerant gas for Air-conditioning plant, an Eco-friendly & CFC free refrigerant (R134) has been installed and commissioned during the year.

� SPMCIL has purchased 667 Non-Solar non-transferable certificates from Indian Energy Exchange Ltd during the year at a total cost of `10.22 lacs.


23

� In order to make the efficient utilisation of rain water, an expenditure of `19.67lakhsfor rain water harvesting covering 1/3rd of the plant area at BNP, Dewas has been incurred.

IMPLEMENTATION OF OFFICIAL LANGUAGE Your Company has made remarkable efforts for the use of Official Language in official work during the current year. Following activities / achievements are worth mentioning:-

� Hindi correspondence recorded a significant growth of 13%, 15% & 16% in all the three regions i.e. Region ‘A’, ‘B’ and ‘C’ respectively and the position of Hindi correspondence remained better in all Units. Annual Conference was organized in IGM, Mumbai in respect of Officers (Official Language) and Translators during 30th

-31st May, 2012. Two joint Hindi Workshops were organized in respect of employees of all the Units. Second edition of ‘Rajbhasha Ready Reckoner’, a compilation of Official Language Policy and rules, was published for use of all Executives and Employees.

� Recruitment Policy applicable to all executives and employees of the Company was made bilingual and notified. Translation of SPMCIL Leave Rules and SPMCIL Medical Policy was also done. Minutes of most of the High Level Meetings were issued bilingually. Hindi translation of information uploaded on website of the Company, was also provided simultaneously. Nine employees were nominated for Hindi Typing training from Corporate Office to the training programme organized by Department of Official Language, Ministry of Home Affairs.

� The inspection of three Units i.e. IGM, Noida, SPP Hyderabad and IGM, Hyderabad was done by Corporate Office and inspection of ISP, Nashik and CNP, Nashik was done by Ministry of Finance. During the inspection, the status of working in official language in these Units was monitored and recommendations in the inspection reports were duly complied with by the Units.

� IGM, Mumbai was conferred second award by the Mumbai Town Official Language Implementation Committee for excellent work in Hindi. The Unit was also awarded with ‘Shri Shankar Dayal Singh Shield’ by Corporate Office for Best performance in implementation of official language on the occasion of SPMCIL Foundation Day. Smt Jayshree A. Sathey, AM (OL), CNP was awarded for her excellent contribution in Official Language.

� The compliance of Official Language Policy, Act & Rules was ensured strictly in Corporate Office and all the nine Units during the year. All the documents covered under Section 3(3) of O.L. Act, 1963 were invariably issued bilingually. Celebration of Hindi Day, Hindi Week, Hindi Fort-night and Hindi Month was done with full dignity. Quarterly Meetings of Official Languages implementation Committee were held regularly in all Units.

� Inspection of IGM, Noida was carried out on 28.05.2012 by the third Sub-Committee of the Parliamentary Committee on Official Language. The activation of Unicode Software in the computer systems was started immediately after this inspection in Corporate Office and all the Nine Units for facilitating Hindi Work resulting into maximum use of Hindi by executives & employees in their official work regularly.

24

SPMCIL is proactively committed for implementation of Government Policy and various Orders issued by the Department of Official Language from time to time.

VIGILANCE ACTIVITIES

� As against the sanctioned strength of 25 posts, 18 officers/staff are working in corporate office as well as in the units to look after Vigilance Work. Other posts are under filling up.

� The work of Preventive Vigilance has been given primary importance. Vigilance Department has been doing the important work of Annual Physical Verification of security items in the units. CTE type inspections are being conducted regularly. An initiative to conduct Process Audit of commemorative coins in the Mints has been started. There is a substantial improvement in online payment to the suppliers. Various initiatives have been made in this period to undertake effective Vigilance work as summarized below.

� Impact/Achievement of Vigilance functions: i) There has been a discernible improvement in following of rules, procedures and

guidelines relating to procurement, tendering and other vigilance activities.

ii) There has been significant capacity building amongst staff working in vigilance, procurement work and finance functions.

iii) Leveraging of information technology has been extensively used by putting up of tenders and post award details on web sites, increasing e-payment and providing Vigilance Department with the facility of registering complaints online.

iv) The New Procurement Manual has brought significant improvements in procurement practices.

v) On the basis of observations made by Vigilance Department in CTE type inspections, recoveries have been made in some cases from suppliers.

� Amongst others, information on monthly basis is collected on the subject of negotiations with L-1 in tenders, where samples are called along with tenders, uploading of tenders in downloadable form in websites, publishing of post award details on websites, implementation of e-payments, status of receipt of complaints in Corporate Office and in units etc. This has the desired effect and yielded good results due to closer monitoring & supervision and also improving transparency in decision making.

� Integrity Pact has been introduced in SPMCIL for all tenders above the threshold value of `20 crores. Two meetings with IEMs had been held at Corporate Office.

� Senior vigilance officials have often taken interaction meeting with the procurement staff/ officers of the units to clarify the procurement issues including related CVC guidelines.

� During the year about 19 mandays of Training was imparted to various vigilance officials in various areas like Preventive, Punitive vigilance & Departmental Enquiries etc.


25

� Thirteen CTE type inspections were conducted in line with CVC directives. Based on the observations of the CTE type inspection reports, guidelines were issued for future compliance to remove deficiencies where ever noticed in the system.

� The Vigilance Awareness Week was celebrated from 29th October to 3rd November 2012. During the Vigilance Awareness Week, in addition to other activities like Interactive sessions with the executives, Workshops, Lectures/Seminars by prominent faculty, vendors/suppliers meet, slogan writing/debate/painting/ drawing/quiz competitions etc were conducted for increasing awareness in the company. A book on ‘Case Studies’ containing shortcomings/mistakes noted in various units to avoid such mistakes in future with a motto to educate the officials for enhancing the transparency in the company was also released during the week.

� As per the decision of DEA, MoF, Annual Physical Verification (APV) work is now being done by the Vigilance Department of SPMCIL w.e.f. 01.04.2010. During the year 2012-13, 12 such APVs were conducted in various units of SPMCIL.

� In compliance of the Instructions of CVC, the sensitive posts in the company have been identified and informed to CVC. During the year, 32 such transfer orders were issued by the management. Preparation of Agreed list and the list of officers of Doubtful Integrity were complied with intimation to CVC.

� As a surveillance measure, Annual Property Returns (APRs) of the officials were subject to scrutiny and clarifications were sought wherever necessary. During the year, 70 numbers of APRs have been scrutinized. Advisory warnings were issued to six executives for non-compliance of intimation of acquisition/ disposal of movable/ immovable properties in their respective APRs.

� Upto 31st March 2013, 145 complaints have been received in the Vigilance Department since its inception and 123 numbers of complaints have been disposed off/closed and remaining 22 complaints are in process and under various stages of investigation. The following are some of the few important actions taken on the complaints during the year:-

i) A Major Penalty to a supervisor has been advised for submitting fake certificate.

ii) A Major Penalty charge to an employee has been advised based on the findings of an investigation done by Vigilance Department.

iii) Disciplinary Authority imposed a Minor Penalty of censure to an Assistant based on the investigation done by Vigilance Department.

iv) A Minor Penalty to an employee has been advised by CVO as a first stage advice based on the Preliminary Enquiry Report.

v) A Minor Penalty was issued to an executive & an employee along with issuance of displeasure of Government to two retired officers based on the first stage advice of the Commission.

26

vi) Advisory warning has been issued to ten executives along with a supervisor and unrecorded warning to five executives based on the findings of the investigation done by the Vigilance Department in four different cases.

Performance of Vigilance Department was reviewed regularly by the CMD & Board of Directors of SPMCIL in addition to constant reviews undertaken by the CVO, SPMCIL as per prescribed norms.

ERP BASED INTEGRATED INFORMATION SYSTEMThe SAP-ERP has been implemented across all units of SPMCIL and is in the stabilization phase. So far SAP-ERP core modules i.e. Material Management, Production and Planning, Quality Management, Sales & Distribution, Financial, Plant Maintenance, Employee Self-Service and Human Resource have been implemented and the remaining modules i.e. Project System and Business Intelligence etc., shall be implemented in the Phase-IV. A fully functional Tier 3, ISO/IEC 27001:2005 certified Data Center (DC) is operating at IGM Noida. SPMCIL has also set up a Disaster Recovery Center (DRC) at IGM, Hyderabad to ensure complete data safety and security. With the implementation of SAP-ERP the objectives are to bring greater transparency and synergy in the operations of the Company and ensure better services to the customer and ultimately to citizens of India.

CUSTOMER ORIENTATION An independent consultant was appointed for Customer Satisfaction Survey as per DPE MoU commitment. The consultant has submitted its report in March, 2013, after completing Customer Survey for customers of different product categories. As per report, SPMCIL has achieved Customer Satisfaction Index of 8.27 on 10 point scale and poised to achieve excellent category in the respective MoU target parameter.

To communicate the salient features of customer survey, feedback received during the survey and measures to be taken for maintaining and improving the customer satisfaction index, a workshop was held at ISP Nashik in August 2013.

EVENTS

� SPMCIL has paid a dividend of `116.49 crores to Govt. of India for the financial year 2011-12. Shri M.S. Rana, CMD, SPMCIL presented the dividend cheque to the Hon’ble Union Minister of Finance, Shri P. Chidambaram on 05.10.2012 at Delhi. On this occasion, Shri Arvind Mayaram, Secretary, Department of Economic Affairs and Directors of SPMCIL were also present.

CMD, SPMCIL, Shri M.S. Rana presenting the dividend cheque of `116.49 crores to Hon’ble Union Minister of Finance

Shri P. Chidambaram


27

� Hon’ble Minister of State for Finance, Govt. of India Shri Namo Narain Meena inaugurated the BPS 2000 Machine at CNP, Nashik on 10th February, 2013. The Bank Note Processing System (BPS 2000) is a high speed currency processor used for sorting fit and unfit notes. BPS 2000 Machine is incorporated with latest inspection system OBIS-3 and sensors consisting of colour cameras for checking printing errors on numbering and paper thickness etc. BPS 2000 Machine also checks various high end security features and watermarks at a very high speed of 40 notes/sec. The output is in non-sequential form as the online and Bank Notes classified as fit are counted, stacked in packets of 100 bank notes and finally shrink wrapped with the bundle containing 1000 notes. These bundles are labelled on line with system generated number of first and last bank notes in the bundle. The system generates the database for each and every note.

� Foundation for Six Colour Offset Printing Machine at ISP, Nashik was laid by the Shri Namo Narain Meena, Hon’ble Minister of State for Finance on 10th

February, 2013. Six colour sheet fed wet and dry offset printing machine has the provision to print six colour front (straight printing) and perfecting unit after second printing tower to provide option for 2 + 4 colour back and front printing. It also has additional online registration system, Remote colour control unit to control colour, online print inspection system, IR, UV and hot air drying along with anti set-off powder spraying unit.

� SPMCIL Foundation Day was celebrated on 10th February, 2013 at a function held at India Security Press, Nashik. Shri Namo Narain Meena, Hon’ble Minister of State for Finance, Govt. of India was the chief Guest of the programme. Shri Sameer Magan Bhujbal, Member of Parliament (Lok Sabha), Nashik Constituency, graced the occasion as distinguished guest. On this occasion, Shri Meena felicitated the

Inauguration of BPS 2000 Machine at CNP, Nashik by Hon’ble Minister of State for Finance, Shri Namo Narain Meena

Laying of Foundation Stone of Six Colour Offset Printing Machine at ISP, Nashik by Hon’ble Minister of

State for Finance, Shri Namo Narain Meena

Snapshot during SPMCIL Foundation Day Celebration at ISP, Nashik

28

individual employees for their outstanding performance during 2011-12. He also felicitated the SPMCIL units for their excellent contribution in the year 2011-12. He felicitated CNP Nashik with CMD Cup for the best performing SPMCIL unit and BNP Dewas and CNP Nashik as winner and runner up team respectively of inter unit cricket tournament held at ISP, Nashik.

� Your company has signed a Memorandum of Understanding (MoU) with the Department of Economic Affairs (DEA), Ministry of Finance, setting an ambitious sales target of ̀ 3407 crores for the fiscal 2013-14. The MoU has been signed based on the targets and the parameters negotiated by a Department of Public Enterprises (DPE)

appointed Task Force (TF). The MoU is based on the premise of a growth charter in a globally competitive environment and forward looking approach of SPMCIL and incorporates various parameters and weightages for evaluation of performance with focus on Profitability, Increase in Efficiency, Quality / Safety, Growth/Sustainability, Project Implementation, Human Resource Management (HRM), Research & Development (R&D), CSR & Sustainable Development etc.

AWARDS

� The Company has been awarded Engineering Excellence Awards-2013 by Engineering Watch for its three state of art projects i.e. Modernization of Ink Factory at Bank Note Press, Dewas was honoured with Second Best Engineering Marvel for Project Innovativeness and Indigenizationof Banknote Paper Production and Modernization of Bank Note Press had received Special Mention Awards.

� Your company has been awarded Performance Excellence Award-2012 in Golden Enterprise Category by Indian Institution of Industrial Engineering (IIIE), Mumbai for its financial and operational strength. This award recognises the growth and performance excellence achieved by the Company during 2011-12.

� Institute of Public Enterprises (IPE), Hyderabad, conferred IPE CSR Corporate Governance Award to SPMCIL on 24.11.2012 at Hotel Taj Land End Mumbai. Shri Ajai Kumar Srivastava, GM, IGM, Mumbai received the CSR award on behalf of the Company on 24.11.2012.

Exchanging of MoU 2013-14 between Shri M.S. Rana, CMD, SPMCIL and Shri Shaktikanta Das, Addl. Secretary,

DEA, MoF on 25.03.2013


29

� Bank Note Press, Dewas, a unit of SPMCIL has been awarded a prestigious National Safety Award on 17th September, 2012 at Vigyan Bhawan, New Delhi. This award was presented by the Hon’ble Minister of Labour & Employement, Shri Mallikarjun Kharge to Shri B. Burman, the then General Manager, Bank Note

Press, Dewas in the category of industries engaged in manufacturing of Paper & Paper Products, publishing, printing, production of recorded media. This award is based on the accident free year for the performance year 2010. It is also worth mentioning that BNP, Dewas is continuously achieving this award since 1996 as a winner/runner-up based on Lowest Average Frequency Rate or Accident Free year.

� Currency Note Press (CNP), Nashik had participated in the Maharashtra Safety Award Competition-2011 conducted by the National Safety Council (NSC), Maharashtra Chapter, Mumbai. CNP had won the Lowest Accident Frequency Rate award in Light Engineering Industry Group, Mumbai.

� India Security Press, Nashik has also been declared winner in Maharashtra Safety Awards competition - 2011 for longest accident free period in the group of light engineering industries (Factories working over one million man-hours), by National Safety Council, Maharashtra Chapter, Mumbai. The award was given by Shri Arvind R Doshi, Chairman, National Safety Council, Maharashtra Chapter.

� Project Paardaksh of your company has won SAP ACE Award 2013 in “Special Recognition in Procurement” category of for Public Services. A trophy and certificate was presented to Shri Ramakant Dixit, GM (IT), SPMCIL during the ceremony held on 8th March, 2013 in Delhi. The award was given in recognition of SPMCIL’s customized SAP procurement module catering to its procurement and based on government procurement guidelines.

30

HIGH SECURITY MANAGEMENT SYSTEMS

Security is the heart and soul of any organisation. This is achieved through a network of highly sophisticated system of monitored logistics, check and control mechanisms at different areas, physical control barriers, security procedures and processes.

Our security experts ensure that this sophisticated vigilant security system works perfectly round-the-clock to make sure that the products we produce for our customers are always under vigilant eyes. At present CISF is looking after security arrangements of 6 units and security of remaining three units is entrusted to State Police Guards/ Departmental Security. Induction of CISF in these units is also under process. State of Art IP based security surveillance system has been installed in six units. Intelligence Bureau (IB) personnel under Ministry of Home Affairs are posted in the currency / security presses.

ECO FRIENDLY OPERATIONS AND ENERGY CONSERVATION

� Re-utilization of treated effluents and reduction in water consumption in Security Paper Mill, Hoshangabad was taken as a project for research studies as MPPCB Bhopal has been emphasizing to bring down the consumption of additional water to zero level as per the norms set by the MPPCB. The erection and commissioning work of the above plant has been completed. Overhead tank has been constructed and pipelines have been laid from the overhead tank to different sections of the mill for distribution and reuse of recycled water in the mill for various production activities.

� The tree plantation is being carried out regularly by the units of your Company for protection and conservation of environment. During the year under review, SPM, Hoshangabad, IGM, Noida, CNP, Nashik planted 300, 300 & 440 trees respectively.

� The units of your Company have been complying with all the environmental obligations pertaining to pollution control. SPM, Hoshangabad has been granted authorization under Hazardous Waste (Management, Handling and Trans-boundary movements) Rule, 2008 for five years from 24.09.2008 to 02.03.2013 from MPPCB, Bhopal. Also the Consent under Section 25/26 of the Water (Prevention & Control of Pollution) Act, 1974 for Water and Consent under Section 21 of Air (Prevention & Control of Pollution) Act, 1981 for Air have been provided to SPM, Hoshanagabad by MPPCB, Bhopal for a period of three years from 01.01.2011 to 31.12.2013.

� SPM, Hoshangabad has engaged NEERI, Nagpur as a consultant for development of a modern sewage treatment plant for the mill and the colony. The studies by NEERI are under process.


31

� BNP, Dewas has taken up the work of Rain Water Harvesting Project covering its additional 1/3rd plant area for efficient utilisation of rain water. CNP, Nashik has also provided Rain Water harvesting system at its new Administrative Building premises.

� CNP, Nashik has replaced/ replacing High Electrical power consuming light sources like HPSV/HPMV/Twin tube light fittings with Low electrical power consuming LED fittings being used for general lighting purpose on perimeter/inside perimeter along the road and also low voltage lamps incandescent lamps/twin tube light fittings are being used as and when required.

� Seven units of your Company i.e. BNP, CNP, ISP, SPP, SPM, IGM-Noida & IGM- Kolkata have implemented Environment Management System (EMS) in compliance of the International Standards ISO 14001:2004 for better environmental management.

COMMITMENT TO QUALITY MANAGEMENT SYSTEMS

Retaining its commitment to produce cost effective quality products, all nine units had got ISO 9001:2000 Certification and seven units have also got ISO 14001:2004 Certification.

DIVIDENDThe Directors have recommended a Final Dividend @ 20% of post-tax profits of the Company for the year 2012-13 aggregating to `84.70 crores plus Dividend Distribution Tax of `13.74 crores in compliance of DPE’s O.M. No. 15(10)/2004-DPE(GM) dated18th October, 2004 read with O.M. No.7(5)E-Coord/2004 dated the 24th September, 2004 of Department of Expenditure, Ministry of Finance bearing the subject–‘Guidelines on Expenditure Management-Fiscal Prudence and Austerity’ for compliance by the public enterprises. This final dividend for the financial year 2012-13 shall be paid by the Company after approval of shareholders in the forthcoming 8th Annual General Meeting of the Company.

PARTICULARS OF EMPLOYEESThere was no employee of the Company who received remuneration in excess of the limits prescribed under Section 217(2A) of the Companies Act, 1956.

ENERGY CONSERVATIONThe Company is not required to furnish information in Form ‘A’ of Annexure to Rule 2A of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 pertaining to disclosure of particulars with respect to Conservation of Energy as it falls outside the list of Industries prescribed for furnishing said information.

32

RESEARCH & DEVELOPMENTThe information as required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 with respect to R&D and technology absorption is given in Annexure-I to this Report.

FOREIGN EXCHANGE EARNINGS & OUTGO

Sl.No.

Foreign Exchange Earnings/Outgo 2012-13(` in Cr)

2011-12(` in Cr)

1. Foreign Exchange Earnings 0.00 7.96

2.. Expenditure on Payment basis incurred on Foreign Travel, Material Supply, Capital Goods and Spares & Stores

0.38 0.38

3. Value of imports based on CIF basis (on Accrual basis)

639.58 457.65

BOARD OF DIRECTORS

� Pursuant to Article 13(3)(a) of Articles of Association of the Company, Shri P.K. Mishra, JS (DoC), Department of Economic Affairs, Ministry of Finance has been appointed as part-time Director on the Board of SPMCIL w.e.f. 2nd January, 2013 in place of Shri Bimal Julka, Ex-AS & DG, DoC, Dept. of Economic Affairs, Ministry of Finance.

� Pursuant to Article 13(3)(a) of Articles of Association of the Company, Shri B.P. Vijayendra, Principal Chief General Manager, Department of Currency Management, Reserve Bank of India has been appointed as part-time Director on the Board of SPMCIL w.e.f. 20th June, 2013 in place of Smt. K.J. Udeshi.

� Shri Ashwini Kumar ceased to be Director (Technical) of the Company with effect from 31th January, 2013 consequent upon his superannuation. Pursuant to Article 13(3)(a) of Articles of Association of the Company, President of India has appointed Shri P.N. Radkar as Director (Technical) on 15th July, 2013.

� Pursuant to Article 13(3)(a) of Articles of Association of the Company, Shri T.S. Sinha, DDG (Philately), Department of Posts has been appointed as part-time Director on the Board of SPMCIL w.e.f. 25th October, 2013 in place of Smt. Meera Handa.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 217(2AA) of the Companies Act, 1956, with respect to Directors’ Responsibility Statement, it is hereby confirmed:


33

(a) That in the preparation of the Accounts, all the applicable Accounting Standards have been followed along with proper explanation relating to material departures.

(b) That the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at 31st

March, 2013 and of profit and loss account for the year ended 31st March, 2013.(c) That the directors have taken proper and sufficient care for the maintenance of

adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.

(d) That the directors have prepared the Accounts on a going concern basis.

STATUTORY AUDITORSM/s. Serva Associates, Chartered Accountants, New Delhi were appointed as Statutory Auditors of your company for the financial year 2012-13 by the Comptroller and Auditor General of India (C&AG of India) in terms of Section 619 (2) of the Companies Act, 1956. Further 9 Branch Auditors were appointed by Comptroller and Auditor General of India for auditing the accounts of nine units of the Company for the financial year 2012-13. The Statutory Auditors have audited the annual accounts of the Company for the year ended 31st March, 2013.

AUDITORS’ REPORTThe Auditors’ Report on the annual accounts of the Company for the financial year ended 31st March, 2013 and the Management’s Replies thereon and the Review on annual accounts for the year ended 31st March, 2013 by the Comptroller & Auditor General of India under Section 619(4) of the Companies Act, 1956 are enclosed to the Directors’ Report as Annexure II and III.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report forms part of this Directors’ Report as per the requirements of Corporate Governance as stipulated in the Guidelines on Corporate Governance notified by the Department of Public Enterprises, Government of India in this regard. The Management Discussion and Analysis Report is enclosed as Annexure-IV to this Report.

CORPORATE GOVERNANCE

Your Company has been complying with the requirements of Corporate Governance as stipulated in the Guidelines on Corporate Governance notified by the Department of Public Enterprises, Government of India in this regard. The Corporate Governance Report is enclosed as Annexure-V to this Report. The Company has obtained a Certificate from the Shri Nitin Rawat, Practicing Company Secretary regarding compliance of conditions of Corporate Governance.

34

ACKNOWLEDGEMENTS

The Board of Directors acknowledges with deep sense of appreciation the cooperation received from the Govt. of India, particularly the Ministry of Finance, Reserve Bank of India, Ministry of External Affairs, Department of Posts, Department of Public Enterprises, Ministry of Home Affairs, Ministry of Labour & Employment, Department of Pension and Family Welfare, various State Governments and also from Banks. The Board of Directors acknowledge with thanks the constructive suggestions received from C&AG and the Statutory Auditors. The Board of Directors also place on record their sincere appreciation of the devotion and commitment of all employees of the Company.

For and on behalf of the Board of Directors

(M.S. Rana)Chairman and Managing Director

Date: 13th November, 2013Place: New Delhi


35

ANNEXURE-I

FORM-B(Pursuant to section 217 of the Companies Act, 1956 and the Rules

framed there under)

RESEARCH AND DEVELOPMENT (R & D)

1. Specific areas in which R & D carried out by the Company During the year under review, the Company has taken-up R&D projects in the fields of

security paper, security printing, currency printing and coin metallurgy. The Company is setting-up R&D centres across all production verticals.

2. Benefits derived as a result of the above R & D The Company would be able to produce critical raw materials indigenously and thus bring more indigenisation in its operations resulting in saving in Foreign Exchange and increase in local manufacturing of raw materials.

3. Future plan of action To enhance content of indigenisation, increase operational efficiencies, reduction in use of raw materials per unit of output, process re-engineering etc.

4. Expenditure on R & D as a percentage of total turnovers During the financial year 2012-13, the Company has incurred an expenditure of ` 3.07 crores towards Research & Development activities. The percentage of R&D Expenditure over total turnover is 0.08%.

TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

1. Efforts, in brief, made towards technology absorption, adaptation and innovation

The major efforts made towards technology absorption, adaptation and innovation are as follows:

a) Setting-up of new Bank Note Paper Line at Security Paper Mill, Hoshangabad including stock preparation plant.

b) Commissioning of one line of Bank Note Printing at Bank Note Press, Dewas.

c) Joint Venture in the name of Bank Note Paper Mill India Pvt. Ltd. for production of Bank Note Paper setup at Banglore/Mysore.

d) Implementation of SAP/ERP across all the units.

e) Indigenous production of Quick Set Intaglio (QSI) Inks.

2. Benefits derived as a result of the above efforts e.g. product improvement, cost reduction, product development, import substitution etc. Technology absorption, adaptation and innovation have resulted in indigenisation, capacity enhancement and bringing increased operational efficiency, cost savings synergy in the operations and also import substitution of critical raw materials.

36

3. In case of imported technology (imported during the last 5 years reckoned from the beginning of the financial year) following information may be furnished:

(a) Technology imported : Bank Note Paper Line, Minting Machinery

(b) Year of import : 2009-10 to 2011-12

(c) Has technology been fully absorbed? : Yes

(d) If not fully absorbed, areas where this has not taken place, reasons therefore and future plant action. : N.A.


(M.S. Rana)

Chairman and Managing DirectorDate: 13th November, 2013Place: New Delhi


37

ANNEXURE-II

MANAGEMENT REPLIES TO AUDITOR’S REPORT

The auditors have given the Audit Report and as per the report the following salient points emerged:-

1. The proper books of accounts as required by law have been kept by company so far as appears from audit examination of those books the branches audited financial received from branches not visited by us. The Financial Statements subject to the impact of the qualified opinions given below give the information required by the Act in the manner so required and give a true and fair view and are in conformity with the accounting principles generally accepted in India.

2. The Para-wise comments on the Audit Report are as follows:

Para 1.1, 1.2 & 1.3As per Ministry of Finance O.M. dated 10th February, 2006, all assets and liabilities have been taken at the book value. Proforma Accounts of all these units are still under finalisation and audit stage and therefore “Funds from Government of India (adjustable)” and capital structure of the Company are being reflected on provisional basis in the books of Accounts of the SPMCIL The company is in final stage of adjustment/ settlement with regard to capital structure of the company wherein all information asked by Ministry/ Controller of Accounts (CGA)have already been furnished to them. The Ministry is in the process of finalizing the capital structure and it is likely to be finalized in Financial year 2013-14.

The adjustment/ settlement entries passed between 10.02.2006 till finalization of structure will be adjusted with the capital reserve to be created at the time of structuring and there will not be any balance in the account “Funds from Govt of India( Adjustable)” after structuring.

Para 2.1 During the year under audit the ERP implementation was under stabilization stage and there were few reconciliations which were in progress. Pending handover of the agreed deliverables from implementation partner, the company has capitalized only the portion of expenses agreed up to 31st March, 2013 by the Project Management team of the company.

Para 2.2 Due to switch over from legacy system to ERP (SAP) re-grouping/reclassifications have been done during financial year 2012-13. The same has been disclosed appropriately by way of Note 67 to financial statement.

Para 2.3 & 2.4As the ERP System was in stabilization stage as on 31.03.2013, closing stock of inventory at few units was also supplemented and cross verified by way of physical verification at year end so as to ensure its accuracy and reliability. Some information obtained from various modules of SAP are also under process of reconciliation at year ended 31.03.2013.

38

Para 3.1 & 3.2

The fact that Balance of trade payables, Trade receivables, loans & advances & other liabilities including balance in funds from Government of India (Adjustable) Account are subject to confirmations has been disclosed by way of Note to the Financial Statements. The company has identified venders registered under MSMEDA, 2006 at two units and is in the process of identification of vendor registered under MSMED Act, 2006 at other units. Note 43 to Financial Statements reflects the complete status in this regard.

Para 4

As per classification prescribed by revised schedule VI and in compliance of Company Accounting Policy (XXI) Assets and Liabilities have been shown as current assets and current liabilities.

Para 5.1

The contingent liability which may arise on account of pending employee claims & indirect tax matter related to period prior to incorporation of the company as well thereafter has been shown adequately by way of Note 37 to the financial statements.

Para 6.1

Company is following laid down accounting policies as well generally accepted accounting Principles (GAAP) applicable in India in the preparation of financial statements and there are no major deviation except non-compliance of AS2 for valuation of inventories at few units.

Para 6.2

The company is generally following the Accrual System of Accounting however in few cases pertaining to employees, insurance & income from forgery detection charges entries are being made on cash basis. Amount is nominal and not material. The same has been duly disclosed by way of notes 1 to financial statements.

Para 6.3

During the year company changed the valuation method of inventory & treatment of security expenses on account of purchase of security equipments for CISF. The same has been appropriately disclosed by Note 80 to Financial Statements.

Para 7.1

The company values its inventories on budgeted cost and makes it reconciliation with actual cost on completion of statutory audit for costing purpose.

Para 7.2

The inter unit transfers of material at budgeted cost will have no impact on the profit & loss of the company as a whole as company reflects both its sales & purchases net of inter unit transfers, however the same will have some marginal impact on inventories valuation in the shape of unrealized profit which is not material. This fact has been disclosed by Note1 (IX) to Financial Statements.


39

Para 7.3Letter has been written to RBI for balance confirmation. Unit is awaiting response from RBI. Note 54 to Financial Statements furnish the complete information of the Gold lying with RBI.

Para 7.4As the net realizable value of imported paper is more than carrying cost and pending decision on replacement or refund from vendors, no provision for Non moving/ obsolete paper inventory has been made in financial year 2012-13. Presently the matter is under consideration of Director General, Department of Currency, Govt. of India, Department of Economic Affairs, Ministry of Finance. This fact has been disclosed by Note 64 to Financial Statements.

Para 7.5The necessary provision for non moving / obsolete inventory to the tune of `11.86 Lacs has already been made in the financial year 2012-13.

Para 8.1In earlier years all units were under Government control and accounting entries are being made on cash basis. After corporatisation, SPMCIL adopted accrual system of accounting, however in initial period after corporatisation there were few entries which have not been accounted on accrual basis due to late understanding of concept of accrual by old departmental staff. However, company overcame this problem due to induction of qualified accounting professionals in the company

Para 9.1As per the Ministry of Finance OM dated 10th February, 2006 all assets and liabilities have been taken at the book value. Being commercial entity, the units have been maintaining the assets register based on the gross block and the life of the asset was fixed accordingly. Therefore, the assets have been taken in the books of company at net block (gross block less depreciation). However, for the depreciation purpose the value is being shown at gross block so that same technical life could be continued. This will facilitate easy calculation of depreciation without re- fixation of the life of the asset.

Para 9.2Fixed Assets found during physical verification but not appearing in FAR have been reflected at `1 value so as to keep a permanent record of these assets in company books.

Para 9.3At SPM, Hoshangabad some of the machine have worked on triple shift basis during the year 2012.13, however there is no authentic records of shift wise working at unit and in the absence of the same, depreciation has been charged on single shift basis during year 2012-13. However, depreciation amount on machineries worked on triple shift basis is nominal and not material. This has been disclosed by Note 69 to Financial Statements.

Para 10.1The sales price charged against the sale of currency notes, coins and postal stationery has not been confirmed by The Ministry of Finance, Reserve Bank of India and the Postal Authorities respectively.

40

The impact of any change in rates of currency notes, coins & postal stationery will be accounted for in subsequent years when final rate of postal items will be crystalised. The impact of provisional price on profitability of the company has been duly disclosed by way of a note 42 to financial statements.

Para 10.2The company has sent Balance confirmation letters to all customers. However confirmation letters from customers have been received only in few cases.

Para 10.3In case of coins, passports and postal stationery the risk & reward is transferred to customers at the time of sale as customers take delivery at the time of sale. However in case of sale of currency note the risk & reward is passed to customers only at the time of receipt and acceptance of the same by RBI. Company is initiating necessary steps to recognize revenue in the books of accounts only at the time of passing risk to the customers under its revised ERP (SAP) system.

Para 11.1As per Revised Schedule VI now, Companies are required to show only net block of fixed assets in the Balance sheet and therefore question of overstatement of gross value of fixed assets is not relevant.

Para 11.2Any liability arising on account of stamp duty payable on title deeds of immovable properties shall be recoverable from Govt. of India and therefore no provision for the same has been made in the books of accounts. The company has already made representation to Ministry of Finance in this regard which is under their consideration.

Para 11.3The spare, tools and dies are fully charged to profit & loss account following prudent accounting policies as it is not feasible to identify / co-relate thousands of spare, tools and dies separately with machine and capitalize along with machine value.

Para 11.4Fixed assets found in excess during physically verification at some units have been reflected at `1/- value so as to keep a permanent record of these assets in company books.

Para 11.5The company is in the process of disposal of “Assets held for sale” after following prescribed procedures as per its Procurement Manual. The necessary steps have already been initiated and disposal is likely to take place in financial year 2013-14.

Para 11.6The matter is Sub-judice and necessary accounting entry will be made on final Judgment of court and actual crystalisation of liabilities. As per Income tax Rules company is not entitled to take benefit of expenses at the time of provision for contingent liabilities, however the same is admissible at the time of pronouncement of judgment by judicial Authorities and its actual payment.


41

Para 11.7At present company is having policy of taking only marine and transit insurance. The company is evaluating the proposal of some insurance companies for taking insurance cover for all of its assets and inventories at various units.

Para 11.8As the ERP implementation was under stabilization stage as on 31.03.2013 and there were some functional gaps as on that date it was considered prudent to capitalize ERP implementation cost not as per agreement with vendors but as per internal assessment confirmed by company’s own project Management. It is expected that total amount of capitalization would be finalized during financial year 2013-14 when all the modules of ERP will be made fully implemented and integrated.

Para 12.1The land at sector 1 & 23 held by IGM, Noida are taken on long term lease, however in initial years of lease no amortization was done. Now in term of AS-19 the basic premium paid for acquiring the lease is written off over the balance period of lease starting from 10.02.2006 i.e. date on which all assets and liabilities transferred to corporation and ending on the date of termination of lease as per lease deed. The factual position in this regard has been disclosed by Note 45 to Financial Statements.

Para 13.1At SPM, Hoshangabad during the year the assets have been identified for impairment by an outside agency, however necessary provision for impairment could not be made in accounts due to difference in valuation of realizable value of some machine due to intricate nature of machine..

At IGM, Hyderabad, the fixed assets at Saifabad location is not in usable condition, but their realizable value is more than book value and therefore no provision for impairment is required in books of accounts in year 2012-13.

Para 14Provisions are made in books of accounts for all known liabilities and any liabilities which may arise in future on happening of an event.

Annexure to the Auditor’s Report

Para IThe Company is maintaining quantitative details and situation of all fixed assets acquired except to those assets where particulars were not available at the time of Corporatisation i.e. 10.02.2006. In case of assets acquired after corporatisation full quantitative details and situation are available. During the year identification of fixed assets has been at some Units and in case of other units it is in the process of allocation of identification marks. The Company is also strengthening the system of physical verification of fixed assets and its reconciliation with books of accounts. During the year physical verification of fixed assets was done at six units and in respect of four units it will be done in next year i.e. 2013-14.

42

Para IIThe Company is strengthening the procedure of physical verification of inventory including stores & packing materials at all units.

Para IVThe Company is strengthening its internal control system with respect to material movements in the ERP system, adherence to Standard operating procedures under ERP environment, reconciliation of debtors, creditors & advances, identification and valuation of in-house developed dies, fixed assets & material procurement, spares replacement procedures & guidelines with regard to perquisites and business promotion expenses and staff advance settlement including interest thereon.

Para VIIDuring financial year 2012-13, internal audit at corporate office and all units has been carried out on quarterly basis through firm of practising Chartered Accountants, Audit Committee of the Board of Directors requires the reports and as per its recommendations, internal audit is being improved. Internal audit set up of company is also getting revamped and necessary follow up measures have been initiated.

Para VIIIThe Company has started maintaining cost records at all units as required by Central Govt. under Section 209(1)(b) of Companies Act, 1956 for the financial year 2012-13 on ERP (SAP) however faced some initial problems which have been settled now & SPMCIL is hopeful to meet necessary compliance in this regard.

Para IX(a)Necessary provision has been made for a sum of `137.34 lacs towards leave salary contribution & pensionery charges relating to IGM, Noida, and pensionery charges of `1172.42 lacs relating to SPM, Hoshangabad which have not been paid as on Balance Sheet date.

The liabilities on account of disputed Sale Tax, Income Tax, Wealth Tax, Service Tax, Custom Duty, Commercial Tax, Excise Duty & Cess etc as at 31.03.2013 have been shown as contingent liabilities by way of note 37 to Financial Statements.


Date: 13th November, 2013 (M.S. RANA)Place: New Delhi Chairman and Managing Director


43

ANNEXURE-III

Comments of the Comptroller and Auditor General of India UnderSection 619(4) of the Companies Act, 1956 on the Accounts of SecurityPrinting and Minting Corporation of India Limited for the year ended31st March, 2013

The preparation of financial statements of Security Printing and Minting Corporation of India Limited for the year ended 31st March, 2013 in accordance with the financial reporting framework prescribed under the Companies Act, 1956 is the responsibility of the management of the company. The statutory auditor appointed by the Comptroller and Auditor General of India under Section 619(2) of the Companies Act, 1956 is responsible for expressing opinion on these financial statements under Section 227 of the Companies Act, 1956 based on independent audit in accordance with the standards of auditing prescribed by their professional body, the Institute of Chartered Accountants of India. This is stated to have been done by them vide their Audit Report dated 30th August, 2013.

I, on the behalf of the Comptroller and Auditor General of India, have conducted a supplementary audit under Section 619(3)(b) of the Companies Act, 1956 of the financial statements of Security Printing and Minting Corporation of India Limited for the year ended 31st March, 2013. This supplementary audit has been carried out independently without access to the working papers of the statutory auditor and is limited primarily to inquiries of the statutory auditor and company personnel and a selective examination of some of the accounting records. On the basis of my audit nothing significant has come to my knowledge which would give rise to any comment upon or supplement to the Statutory Auditor’s Report under section 619(4) of the Companies Act, 1956.

For and on behalf of the Comptroller and Auditor General of India

Sd/-(Naina A. Kumar)

Principal Director of Commercial Audit & Ex-Officio Member, Audit Board-II, New Delhi

Place: New Delhi Dated: 15.10.2013

44

ANNEXURE-IV

MANAGEMENT DISCUSSION AND ANALYSIS

HISTORY

Security Printing and Minting Corporation of India Limited (SPMCIL) is a Miniratna Category-I Central Public Sector Enterprise wholly owned by Government of India. SPMCIL is engaged in the manufacturing / production of Bank Notes, Security Paper, Non-judicial Stamp Papers, Postal Stamps & Stationery, Travel Documents viz. Passport and Visa, Security Certificates, Cheques, Bonds, Warrants, Special Certificates with Security Features, Security Inks, Circulation & Commemorative Coins, Medallions, Refining of Gold, Silver and Assay of Precious Metals, etc. The Company has nine units, i.e. two Security Presses at Nashik and Hyderabad, two Currency Presses at Dewas and Nashik, four Mints at Mumbai, Kolkata, Hyderabad and Noida and one Security Paper Mill at Hoshangabad. All the 9 units headed by General Managers are industrial organizations and are regulated in accordance with the labour laws and directions of Government of India issued from time to time.

GLOBAL ECONOMIC CONDITION

During the financial year 2012-13, the overall global activity was subdued. Global economic growth decelerated to 3.1% in 2012 from 3.9% recorded in 2011.

The situation in advanced economies was mixed, while US and Japan experienced acceleration in growth of output, albeit meagre, the EU witnessed a decline in output by an estimated 0.6%. Unemployment rate in EU continued to be high and rose to 10.5% while in the US, there was a rebound in job creation with unemployment rate falling to 8.1% from 9% in 2011. Risks of a financial shock from the EU Sovereign Debt Crisis and a fiscal shock from the US ‘fiscal cliff’ were imminent during the year. Fortunately, these risks were contained with the last minute resolution in the US and the large-scale rescue efforts by EU Authorities and IMF. As regards, emerging economies, broad-based deceleration was experienced for a second year in a row.

Looking ahead, consolidation is expected in the advanced economies and in the emerging economies the trend of deceleration is projected to be arrested. As per IMF, World output growth is forecasted to remain unchanged at 3.1% in 2013 and accelerate to 3.8% in 2014. During the first quarter of 2013, while growth in US & Japan accelerated, in EU output continued to contract. Moreover, many major Emerging Economies have underperformed on account of domestic issues and weak external demand. Matters such as the US fiscal issues, the EU periphery still being stuck in the crisis coupled with the weakening of growth in Core economies and the timing and pace of the anticipated unwinding of Quantitative Easing in the US need to be tackled pragmatically.

OVERVIEW OF THE INDIAN ECONOMY

The financial year 2012-13 was challenging for Indian economy. Gross Domestic Product (GDP) of Indian economy deviated from its high growth trajectory of last two financial years.


45

Deceleration in GDP growth, which started in FY’12, continued in FY’13 as well because of moderation in all the three sectors namely Agriculture, Industry and Services.

Industrial growth continued to remain sluggish in FY’13, driven by both domestic and global factors. Tardy recovery in developed countries of the world continued political and economic turmoil in EU and low growth in developing countries hampered Indian exports. High price levels in domestic and global markets kept demand subtle. It is expected that industrial activity may improve gradually. Subdued growth in Agricultural and Industrial sectors and weak external demand pulled down the growth of Services Sector. Slowdown in Services sector is mainly on account of fall in the Hospitality industry, Transport industry, Banking, Finance and Insurance sector. High inflation is another problem that has haunted the economy for last two financial years. In FY’13, inflation measured by Wholesale Price Index (WPI) remained stubbornly high at around 8% limiting the scope for reduction in interest rate. Similarly, inflation measured by Consumer Price Index (CPI) also remained mostly above 10% in FY’13. Unabated high price level throughout the financial year dampened overall demand condition in the economy.

Economic growth in FY’13 was also plagued by Twin deficits - Fiscal deficit and Current Account Deficit. Low growth and uncertainty in advanced economies as well as emerging market economies adversely affected exports in FY’13. This, combined with continuing large imports of oil and gold, resulted in an adverse trade balance during the FY’13.

INDUSTRY OVERVIEW

SPMCIL is in niche segment of economy and caters to the security printing and minting requirements of Government of India. The customers of the Company include Reserve Bank of India for Currency Notes, Department of Economic Affairs, Ministry of Finance for coins, Ministry of External Affairs for Passports, Ministry of Home Affairs for Visa stickers, Department of Posts for Postal Stationary, State Governments for Non-Judicial Stamp Papers, other CPSEs and autonomous bodies, etc.

SPMCIL though a wholly owned CPSE is primarily dealing with the sovereign functions. The indent forecasts for the Coins and Currency are made by RBI and approved by Ministry of Finance with production planning meeting before SPMCIL takes up production. For passports the indent are placed by MEA which have been varying year to year. For Non-judicial stamp papers indents are placed by the various State Governments. These indents also vary from year to year. For postal stationery and postage stamps the indents are placed by Postal Department. These also vary from year to year. SPMCIL capacity is in the form of committed capacity for the use of its Govt. customers.

SWOT ANALYSIS

Strength

� SPMCIL has capability to successfully undertake orders related to production of security products.

� The Company has expertise in printing of Banknotes, minting of Coins, production of CWBN Paper, Ink and printing of all types of security documents.

46

� Formed a Joint Venture Company for setting up 12000 MT capacity Bank Paper Mill.

� Debt free Company.

� All mints under CISF/State Police protection.

� Created reserves of ` 2695.39 crores.

� Has completed Phase-I modernisation of Mints.

� Commissioned state of the art printing line in BNP, Dewas.

� In-house Ink Factory for SPMCIL requirements.

� All the units of the Company are ISO 9001 certified & Seven Units are ISO 14001 certified.

� SPMCIL is sole provider of circulating and commemorative coins, NJSP, Postal Stationary, Passport & Travel documents, etc.

Weaknesses

� Legacy issues of corporatisation.

� High Manpower Cost & Large Unskilled Manpower. Shortfall in critical Supervisor/Officers category.

� Old Machinery & Inefficient layouts at some Units due to historical legacy.

� Job security as commitments given to employees as part of the Memorandum of Settlement.

� Abnormal delays in fixing remunerative prices for Coins, Bank Notes, Postal Stationery.

� High Cost of Working Capital due to Govt. Debtors.

� Abnormal delay in Security clearances affecting adversely meeting the targets.

� No flexibility to regulate supplies to defaulting customers.

Opportunities

� Export potential for coins and currency particularly in SAARC region.

� Increased potential in bullion products / commemorative coins and other diversified security products.

� Diversification in customers in the form of increased requirement of various Ministries, PSUs and Independent bodies for security products.

Threats

� Reduction in indent of Postal Stationary, Non-Judicial Stamp Papers.


47

� High security costs due to deployment of CISF personnel due to sovereign nature of the organisation.

� High inventory due to lifting of finished products by customers as per their convenience.

� Uncertainty in indent forecast by the customers so committed capacity and inflexibility to use spare capacity elsewhere.

� Increased competition from other players in retail bullion items.

� Uncertainty in getting security clearance for Raw Materials which in turn adversely affects Production/Turnover & meeting the targets.

FUTURE OUTLOOK

RBI in its indent of September/October 2012 has more than doubled the indent of Coins for five years. Similarly, RBI has more than 50% raised the indent of Bank Notes for next five years. The MEA has increased the indents for passports for 2013-14 to 76 lakhs. With the new series of passport booklets it is likely to be further higher in near future. Non-Judicial Stamp Paper indent from States have increased considerably. These above increased demands need substantial investments by SPMCIL in coming 3-4 years. SPMCIL is geared to meet the increased indents of Coins, Bank Notes, Passport & NJSP etc.

RISKS AND CONCERNS

SPMCIL sells its products mostly to Government of India, State Governments, other Governmental Authorities and Public Sector Undertakings. As far as core business of the Company is concerned, RBI’s subsidiary, M/s. BRBNMPL has spare capacity for printing of banknotes thus creating a business risk. The other areas of concern are local inferences like strikes/bands, contractor’s reluctance to fulfil statutory obligations and risk of abnormal increase in cost of metals and other inputs, which may adversely affect revenue of SPMCIL. In order to mitigate these risks, strong relations with local project staff/ unions and local administration are being developed and maintained. The costing of the products includes latest raw material prices.

To strengthen security surveillance latest state of the art security system has been installed in units. The Company has Central Industrial Securities Force (CISF) and State Para-Military forces deployed to take care of the security of the units. CISF is being deployed gradually in all the units as per the directions of MHA and DEA. Intelligence Bureau (IB) officials are posted in the Security Presses and Security Paper Mill.

The Company’s Management is committed to further strengthen its risk management capabilities in order to protect and enhance shareholders value. Considering the planned efforts, monitoring by top management and participation of all employees in the decision making process, the identified risks are well within the appetite of the Company.

48

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has a comprehensive system of internal control to safeguard the assets against loss from unauthorized use and ensure proper authorization of financial transactions. The system covering all financial and operating functions in the Company is designed to provide a high degree of assurance regarding the effectiveness and efficiency of operations, the reliability of financial controls and compliance with laws and regulations as applicable in the various fields in which the Company operates. To make the internal control more effective and project specific, comprehensive internal audit manuals and accounting manuals are being continuously updated. The Company has also implemented suitable control measures to ensure that all resources are utilized optimally, financial transactions are reported with accuracy and all applicable laws and regulations are strictly complied with.

The management of the Company duly considers and takes appropriate action on the recommendations made by the Statutory Auditors, Internal Auditors and the Audit Committee of the Board of Directors. The Company has continued its efforts to align its process and controls with global best practices. To make the internal control more effective and transparent, the Company has adopted the new Procurement Manual w.e.f. June, 2011 to enhance transparency in the operations of the Company. SAP/ERP has been operationalised thus bringing in transparency, efficiencies and economy in the operations. The CTE Type inspections are done randomly by the vigilance wing in all the Units. Annual physical verification is done of security items.

Some significant features of internal control system are:

� Preparation and monitoring of annual budgets for all major activities.

� A well-established internal audit team reviews and reports to management and Audit Committee and corrective measures are taken in time for continuous improvement.

DISCUSSION ON FINANCIAL PERFORMANCESales of the company increased by 5.92% to `3625.17 crores during financial year 2012-13 from 3422.68 crores in financial year 2011-12. Other incomes of the Company decreased by 14.64 % to `143.10 crore during financial year 2012-13 from `167.65 crores in financial year 2011-12 primarily due to reduction in interest rates on deposits by the banks.

The operating profit (PBDIT) of the Company decreased by 30% to `689.02 in 2012-13 from `984.43 crores in previous financial year. Net profit after tax decreased by 27.29% to `423.49 crores in 2012-13 from `582.46 crores in 2011-12. The primary reason for reduction in profits during 2012-13 is that the Company had created a provision for Rate Differences in the accounts of 2012-13 for an amount of ̀ 445.49 crores being the difference between billing rates and MoU 2012-13 rates of Coins and Bank Notes as a matter of prudence. The Reserves of the Company as on 31.03.2013 are `2695.39 crores. Your Board feels happy to propose a final dividend for F.Y. 2012-13 of 20% of post-tax profits of the Company aggregating to `84.70 crores plus Dividend Distribution Tax of `13.74 crores.


49

HUMAN RESOURCE DEVELOPMENTIt is the Human Resource which is an invaluable asset during the phase of transition in our Company and various measures are being taken for welfare of the Employees including Socialization programmes, Community activities, Cultural functions, Games and Sports which are slowly getting momentum in the corporate life.

During the year 2012-13, the manpower plan of Company was aligned with business deliverables which was predominantly printing of Bank Notes and minting of circulating Coins of various denominations as per the indent commitment to Reserve Bank of India. In comparison to the preceding year, i.e. 2011-12, the Employees strength has come down from 12,818 to 12,606 as on 31.03.2013.

In the area of Training and Development of Employees in SPMCIL has emerged to play a pivotal role for capacity building and enhancing the operational efficiency. More than 15% of total strength of Employees was trained in your Company during the year 2012-13.

Introduction of IDA pattern of pay scale for Executives and non-Unionised Supervisors in line with the Department of Public Enterprises norms was a significant development in the year 2012-13.

So far HR challenges in SPMCIL are concerned, the Company is continuously switching over from the era of General Administration to Human Resource Management as per the best practices prevalent in Central Public Sector Enterprises.

ENVIRONMENT PROTECTION AND CONSERVATIONEnvironment Protection and conservation has commanded due attention as a result environment management system has been developed as integral part of Company’s activities and built the necessary steps in the manual of procedures. The specific steps taken at the various work sites in compliance with such procedural requirements covers:

� Re–orientation and modification of layout of industrial plants, structures.

� Tree plantation at factory sites & measures for restricting cutting of trees.

� Avoidance of fire hazards by adopting fire prevention system and mock/drill exercises of fire fighting to assess preparedness to fight fire disaster.

� Factory specific emergency preparedness.

� Installation of necessary safety measures at factory premises.

The Company has continued its efforts to conserve the energy to highest possible level. The Company has formulated a long-term vision for embracing new technologies covering use of renewable form of energy. The Company is also developing the concept of environment friendly green building in all its upcoming projects.

REPORT ON CORPORATE SOCIAL RESPONSIBILITYThe Company has been discharging its social responsibility by participating in various social welfare schemes. In order to provide a complete framework and platform for greater

50

participation and to align it to DPE guidelines and other International standards such as United Nations Global Compact Principle, the Corporate Social Responsibility policy and plans have been framed and designed.

SPMCIL has been taking up projects as per the CSR Policy approved in the areas of education, health, drinking water, lighting, village roads, water conservations, rain water harvesting, SPMCIL has provided schools, hospitals, stadia, parks in its colonies for the use of these facilities also by outsiders. CSR has been engrained in the day to day operations of the Company.

CAUTIONARY STATEMENTStatements in this Management Discussion and Analysis Report describing the company’s objectives, projections and expectations may be ‘forward looking statements’ within the meaning of applicable laws and regulations. Actual results might differ substantially or materially from those express or implied. Important developments that could affect Company’s operations include significant changes in economic environment in India, exchange rate fluctuations, tax laws, litigations and labour relations.


51

ANNEXURE-V

REPORT ON CORPORATE GOVERNANCE

1. THE COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCE

Corporate Governance refers to the application of best management practices, compliances of law in letter & spirit and adherence to ethical standards for effective management and distribution of wealth and discharge of social responsibility for sustainable development of all stakeholders.

SPMCIL believes that good Corporate Governance practices ensure ethical and efficient conduct of the affairs of the Company and also help in maximizing value for its stakeholders like, employees, shareholders, customers and society at large in order to build an environment of trust and confidence among all the constituents. The Company endeavours to uphold the principles and practices of Corporate Governance to ensure transparency, integrity and accountability in its functioning which are very important to achieve its objectives.

SPMCIL recognizes that good Corporate Governance is a continuous exercise and reiterates its commitment to pursue highest standards of Corporate Governance in the overall interest of all its stakeholders. Keeping in view the philosophy, the Corporate Governance at SPMCIL is based on following main key principles & practices

� Proper composition of Board of Directors, size, varied experience and commitment to discharge their responsibilities.

� Full adherence & compliances of laws, rules, regulations.

� Timely and balanced disclosure of all material information on functional and financial matters to stakeholders.

� Well developed internal control, systems and processes, risk management & financial reporting.

� To enhance accuracy and transparency in business operation, performance & risk.

2. BOARD OF DIRECTORSComposition of BOD: As per the provisions of Articles of Association of SPMCIL, the Board consists of ten Directors of whom four are Functional Directors including Chairman and Managing Director, three are Govt. Nominee Directors including two from Ministry of Finance and one from Ministry of Home Affairs and three are End-User representative Directors each from Reserve Bank of India, Ministry of External Affairs and Department of Post. According to the Ministry of Finance, in accordance with the cabinet approval in case of SPMCIL due to security sensitive nature of the organisation a decision was taken to nominate directors from the user departments (RBI, Dept. of Post and Ministry of External Affairs) who may be considered as Independent Directors and Government Directors have been nominated from other Government Departments i.e. Ministry of Home Affairs and Ministry of Finance. The power to appoint Directors vests in the President of India. In terms of the Articles of Association, the strength of Board shall not be less than three Directors and not more than ten Directors.

52

Category, attendance at Board Meeting, AGM & number of other Boards or Board Committees in which directors hold position as a member or chairperson during the year 2012-13 are as under:-

Name Meetingheld during respectivetenures of Directors

No. of Board

Meetingsattended

Attendanceat the last

AGM (held on 27.09.2012)

No. of other directorshipheld as on 31.03.2013

(a) Functional Directors

Shri M. S. RanaChairman & Managing DirectorDIN – 01174242

8 8 Yes 1

Shri Ashwini Kumar*Director (Technical)DIN – 01488057

7 6 No N.A.

Dr. Manoranjan DashDirector (HR)DIN – 02071641

8 8 Yes 1

(b) Govt. Nominees

Shri Bimal Julka**Director General, Directorate of Currency, Ministry of Finance, DIN – 03172733

2 2 Yes N.A.

Shri H. Pradeep RaoJoint Secretary & FA,Ministry of Finance, DIN – 03042828

8 7 Yes 1

Shri K. SkandanAdditional Secretary, Ministry of Home Affairs, DIN – 01945013

8 3 Yes 1

Shri P.K. Mishra***Joint Secretary (DoC), Dept. of Economic Affairs,Ministry of Finance DIN – 06515815

3 3 N.A. NIL

(c) Independent Directors

Smt. K.J. UdeshiChairman, Banking Codes & Standards Board of IndiaDIN – 01344073

8 7 Yes 4


53

Name Meetingheld during respectivetenures of Directors

No. of Board

Meetingsattended

Attendanceat the last

AGM (held on 27.09.2012)

No. of other directorshipheld as on 31.03.2013

Shri Muktesh K. PardeshiJoint Secretary (PSP) & CPO, Ministry of External Affairs, DIN – 03366751

8 5 Yes NIL

Smt. Meera HandaDDG (Philately),Department of Posts,DIN – 03623187

8 4 No NIL

*Shri Ashwini Kumar has vacated the office on 31.01.2013 due to his retirement.**Shri Bimal Julka has vacated the office on 21.09.2012.

***Shri P.K. Mishra has been appointed on 02.01.2013 by DEA, MoF.

Number of Board Meetings & Dates: The Board of Directors met (8) eight times during the year 2012-13 (29.06.2012, 30.07.2012, 27.09.2012, 29.10.2012, 10.12.2012, 11.01.2013, 18.01.2013 & 20.03.2013) and all the information as required to be placed as per the DPE Guidelines was placed before the Board.

Appointment / re-appointment in the Board: During the year 2012-13, Shri Bimal Julka (Govt. Nominee) vacated the office of Director of SPMCIL on 21.09.2012 due to relinquishment of charge of Director General, Directorate of Currency, Deptt. of Economic Affairs, Ministry of Finance. Shri Ashwini Kumar, Director (Technical) also vacated the office as a Functional Director due to his superannuation on 31.01.2013. Shri P.K. Mishra, Joint Secretary (DoC), Dept. of Economic Affairs, Ministry of Finance joined the Board of SPMCIL in place of Shri Bimal Julka on 02.01.2013.

A brief profile of the Directors on Board of SPMCIL as on date of this report is furnished hereunder:

� Shri M. S. Rana, Chairman & Managing Director

Shri Rana aged 54 years is a graduate in Civil Engineering from Thapar Institute of Engineering and Technology, Patiala, being overall topper and gold medalist. He has also been awarded the Chancellor’s Medal of Excellence for the best student of the University. Shri Rana has also done Post graduation in Project Planning and Management from The University of Bradford, UK in 1999-2000 with scholarship from the World Bank. Shri Rana has been awarded the outstanding Alumni award by Thapar institute of Engg. and Technology Patiala in 2006.

Shri Rana has worked in Engineers India Ltd. from July 1981 to March 1984. Thereafter, he served in Indian Railways in various capacities from Asstt. Engineer to Chief Engineer (SAG) for 21 years. He has completed a number of mega projects on Indian Railways. From August 2005 to March 2009, Shri Rana worked as Director/Works,

54

Konkan Railway, wherein he was instrumental in carrying out geo safety works in tunnels & cuttings for safe train operations. He was also in charge of J&K Rail Project. Shri Rana took over as CMD, SPMCIL in March 2009. Shri Rana is also Chairman of Bank Note Paper Mill India Pvt. Ltd. (BNPMIPL). Shri Rana has published a number of articles on infrastructure.

� Dr. Manoranjan Dash, Director (HR)

Dr. Dash has a Master’s degree in Labour Welfare from Utkal University and Ph.D. in Manpower Policy and Practices in Petroleum Industry of India. He was deputed by Department of Public Enterprises, Government of India and VSNL for one year Executive MBA in Europe conducted by International Centre for Public Enterprises (ICPE) located in Ljubljana (Slovania). Prior to joining in the Board of SPMCIL,Dr. Dash was the Executive Director (HR) for 15 months in HMT Limited, Bangalore. He was the Senior General Manager (HR) in Videsh Sanchar Nigam Limited (VSNL) Corporate Office, Mumbai prior to strategic disinvestment of the Telecom giant which was a Navratna PSU. Dr. Dash has worked in VSNL for more than a decade including one and half years with Tata Group owned VSNL. He was also teaching as a Professor in ICFAI Business School, Mumbai and had immensely contributed towards the human resource aspect of business to multifarious Industries as a HR Professional. Started his career nearly 30 years back as a Labour Administrator in the Ministry of Labour, Government of India and was holding important positions in Delhi & Mumbai as Assistant Commissioner, he also served as a regular Faculty Member of V.V.Giri National Labour Institute in Delhi. Industrial Relations in Indian States with specific coverage of Maharashtra State published by Global Business Press is one of the important publications of Dr. Dash.

Dr. Dash was conferred with the honour and distinction of “Most powerful HR professionals in India” by Employer Branding Institute in Singapore on 23rd July, 2010. Dr. Dash is also a Director on the Board of BNPMIPL, Bangalore, which is a 50:50 JV Company of SPMCIL and BRBNMPL (Subsidiary of RBI).

� Shri P.N. Radkar, Director (Technical)

Shri P.N. Radkar, Director (Tech.) in SPMCIL, aged 57 years is a graduate in Mechanical Engineering from College of Engineering, Karad, Maharastra with Post Graduate qualification in Management, MBA (Finance). He has taken professional training under Colombo Plan, UK in security printing and documents and under US AID programme in Project Evaluation and Management from Duke University Durham NC (USA).

Shri Radkar was engaged with multi-national private company from 1979 to 1983. He joined India Security Press, Nashik in 1983 and worked in various capacities there till 2003. From 2003-2006 he worked with Security Printing Press, Hyderabad. Shri Radkar served Bhartiya Reserve Bank Note Mudran Private Limited from 2006 till taking charge of Director (Technical), SPMCIL in July, 2013. Shri Radkar is also a Director on the Board of BNPMIPL, Bangalore, which is a 50:50 JV Company of SPMCIL and BRBNMPL (Subsidiary of RBI).

� Shri P.K. Mishra (Govt. Nominee, Ministry of Finance)

Born in January 1967, Shri P.K. Mishra has done B.Tech in Electrical Engineering. He has joined Indian Administrative Services (IAS) in 1993 from West Bengal Cadre. He


55

has held several senior positions in the State of West Bengal. Presently, Shri Mishra is Joint Secretary (DoC), Department of Economic Affairs, Ministry of Finance and is Govt. nominee Director from Ministry of Finance on the Board of SPMCIL w.e.f. 02.01.2013.

� Shri H. Pradeep Rao, (Govt. Nominee, Ministry of Finance)

Shri H. Pradeep Rao has been appointed as Government Nominee Director on the Board of SPMCIL by the Government of India w.e.f. 9th March, 2010. Presently,Shri H Pradeep Rao is the Joint Secretary and Financial advisor to Goverment of India, Ministry of Finance, New Delhi. He is MBA, MA and CIA (Certified Internal Auditor). He is an Indian Audit & Accounts Service (IA&AS) Officer of the 1981 batch. He has held key positions, including Accountant General of the State of Jammu & Kashmir, Principal Director (Reports, Central), Office of the Comptroller & Auditor General of India, New Delhi, Director of External Audit, World Health Organisation (WHO), Geneva, Switzerland, Member Audit Board and Principal Director of Commercial Audit, Chenai, Principal Accountant General West Bengal and Director General of Audit (Central Expenditure), New Delhi. He is also a Director on the Board of Syndicate Bank.

� Shri K. Skandan, (Govt. Nominee, Ministry of Home Affairs)

Born in December 1956, Shri K. Skandan has done Masters in Political Science, B.L. from Madras University and Post Graduation in Rural Development Planning from University of East Anglia, United Kingdom. Joined IAS in 1982 and allotted to Tamil Nadu Cadre, he has held several senior positions in the State, including that of Collector, Nagapattinam, Director-Agriculture, Commissioner-Industries, Registrar, MGR Medical University, Principal Secretary-Industries, Government of Tamil Nadu; CMD, Tamil Nadu Newsprint Ltd., Chairman, Tamil Nadu Electricity Board, Ex. Officio Chairman Titan Ltd., MD-Women Development Corporation, etc. PresentlyShri Skandan is Additional Secretary in Ministry of Home Affairs and is Govt. nominee Director from MHA on the Board of SPMCIL.

� Shri B.P. Vijayendra (Independent Director)

Shri B. P. Vijayendra, born on 21st October, 1956 is RBI Nominee Director on the Board of SPMCIL. Shri B. P. Vijayendra has done his Masters in Economics and is a CAIIB. He has put in more than 30 years of service in Reserve Bank of India. He held important posts in various centres of RBI like Mumbai, Hyderabad, Lucknow, Jaipur. He worked as Regional Director-Rajasthan, CGM of Rural Planning & Credit, CGM of Department of Banking Supervision before taking over his present charge as CGM of Department of Currency Management at Central Office, RBI. He was Member of (a) the High Level Committee to review Lead Bank Scheme, (b) the Task Force to suggest framework for EBT to State Govts, (c) the Financial Inclusion Task Force for Rajasthan, (d) RBI’s Working Group on Currency Management. Shri Vijayendra is also Nominee Director of RBI on the Board of UCO Bank since 6th September, 2012.

Shri Vijayendra has travelled widely across the world to attend high-level management programmes and represented RBI in various international forums and seminars. Shri Vijayendra was appointed as the Nominee Director of RBI on the Board of Security

56

Printing and Minting Corporation of India Limited (SPMCIL) w.e.f. 20th June, 2013 in place of Smt. K.J. Udeshi.

� Shri Muktesh K. Pardeshi (Independent Director)

Shri Muktesh K. Pardeshi has been appointed as customer nominee Director on the Board of SPMCIL by the Ministry of External Affairs w.e.f. 3rd November, 2010. Born in 1966, Shri Pardeshi holds a Master of Arts degree in Sociology from the Delhi School of Economics and a Diploma in Spanish Language from the National Autonomous University of Mexico. He joined Indian Foreign Services in 1991. Presently, he is Joint Secretary (Passport Seva Project) and Chief Passport Officer in the Ministry of External Affairs, Government of India. Earlier, He served as Minister/Deputy Head of Mission at the Embassy of India in Jakarta (2007-10) and Counselor at the Permanent Mission of India to the Conference on Disarmament in Geneva (2004-07). During 1993-2001, he worked with Indian Missions in Mexico, Colombia and Nepal (where he also held the position of the Secretary of B. P. Koirala India-Nepal Foundation). In 2001-04, he was Deputy Secretary (South East Asia and Pacific) in the Ministry of External Affairs, New Delhi.

� Shri T.S. Sinha (Independent Director)

Shri T.S. Sinha belongs to the 1991 Batch of the Indian Postal Service. During the course of his career he has worked in Thane, Mumbai, Kanpur, New Delhi and Thailand. He has worked at the Asia Pacific Postal Union Bureau at Bangkok for 5 years. He has also worked as Regional Project Manager of the Universal Postal Union (a Specialized UN Agency) for Asia Pacific Region till 31st December, 2012. Shri Sinha has carried out more than 75 international missions in about 35 countries, pertaining to Quality of Service, International Mail, Track & Trace and other training assignments. Prior to joining his present position as Deputy Director General (Philately), he worked as Additional General Manager for Speed Post and Marketing. As Deputy Director General (Philately), he has responsibility for printing and supply of stamps, stationery, etc., major responsibility for Commemorative Postage Stamps. He also head the Official Language Division. He has been appointed as a Customer Nominee Director from the Department of Posts and acting as an Independent Director on the Board of SPMCIL w.e.f. 25th October, 2013.

3. AUDIT COMMITTEE

Brief description of Terms of Reference

1. Discussion with Auditors periodically about internal control systems and the scope of audit including observations of the auditors.

2. Reviewing, with the management, the quarterly financial statements before submission to the Board for approval.

3. Ensure Compliance of Internal Control Systems.

4. Oversight of the company’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible.

5. Noting appointment and removal of external auditors. Recommending the fixation of audit fee of external auditors and also approval for payment for any other services.


57

6. Reviewing, with the management, the annual financial statements before submission to the board for approval, with particular reference to:

a. Matters required being included in the Director’s Responsibility Statement to be included in the Board’s report in terms of clause (2AA) of section 217 of the Companies Act, 1956;

b. Changes, if any, in accounting policies and practices and reasons for the same;

c. Major accounting entries involving estimates based on the exercise of judgment by management;

d. Significant adjustments made in the financial statements arising out of audit findings;

e. Compliance with legal requirements relating to financial statements;

f. Disclosure of any related party transactions;

g. Qualifications in the draft audit report.

7. Reviewing, with the management, performance of statutory and internal auditors, the adequacy of internal control systems and suggestion for improvement of the same.

8. Reviewing the adequacy of internal audit function, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit.

9. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board.

10. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as have post-audit discussion to ascertain any area of concern.

11. Review of Observations of C&AG including status of Government Audit paras.

12. Investigation into any matter in relation to the items specified above or referred to it by the Board.

13. To review the follow up action taken on the recommendations of Committee on Public Undertakings (COPU) of the Parliament.

14. Provide an open avenue of communication between the independent auditors, internal auditors and the Board of Directors.

Composition as on 31.03.2013: The Audit Committee was constituted in accordance with the Guidelines on Corporate Governance issued by Deptt. of Public Enterprises in the 24th

meeting of Board of Directors held on 15th September, 2009. The terms, reference, role & power are in accordance with prescribed Guidelines.

58

Name, category & attendance:

Name Designation Category Meeting attended

Smt. K.J. Udeshi Chairperson Independent 5/5

Shri H. Pradeep Rao Member Nominee, JS & FA, Ministry of Finance

4/5

Shri Muktesh K. Pardeshi Member Independent 4/5

Smt. Meera Handa Member Independent 3/5

Shri Ashwini Kumar* Member Executive 3/4

Dr. Manoranjan Dash** Member Executive 1/1

*Shri Ashwini Kumar, Director (Tech) has vacated the office on 31.01.2013 due to his retirement.**Dr. Manoranjan Dash, Director (HR) nominated in place of Shri Ashwini Kumar on 21.02.2013.

Meetings and Date of Meetings:- The five meetings of the Audit Committee in the financial year 2012-13 have been held on 19.07.2012, 30.07.2012, 27.09.2012, 10.12.2012 & 19.03.2013.

4. REMUNERATION COMMITTEE

Brief Description & Composition: The constitution, tenure, remuneration of the functional directors is decided by the President of India. In compliance of the guidelines on Corporate Governance issued by DPE, a Remuneration Committee of the Board of Directors of the Company has been constituted by the Board in its 21st meeting held on 15th May, 2009 for Performance Related Pay (PRP) of the Executives of the Company. Further, the Remuneration Committee has been reconstituted from time to time. The composition of Reconstitution committee on 31st March, 2013 is as follows:

Name Designation Category

Smt. K.J. Udeshi Chairperson Independent

Shri Muktesh K. Pardeshi Member Independent

Smt. Meera Handa Member Independent

Shri H. Pradeep Rao Member Nominee, JS & FA, MoF

Meetings and Attendance: During the year 2012-13, no meeting of Remuneration Committee was held.

The details of gross remuneration paid to the Functional Directors of the Company during the year 2012-13 and 2011-12 are as follows:


59

(Amount in `)


Salary and Allowances 5,332,411 10,484,910

Contribution to PF/ Pensionery Charges 592,531 441,062

Leave Encashment 3,616,330 1,471,913

Lease Rent & Other Perks 4,113,737 4,167,635

Gratuity 1,498,506 553,555

Total 15,153,515 17,119,075

No remuneration is paid to the non-functional Directors of the Company except payment of sitting fees to Smt. K.J. Udeshi for `85,000/- during the year 2012-13 for attending meetings of Board / Committees of Board @ `15,000/- per meeting (`10,000/- for subsequent meeting on same day).

5. GENERAL BODY MEETINGSVenue, Date and Time of Company’s AGM of last 3 years with Details of Special Resolutions passed:

Particulars 2009-10 2010-11 2011-12

Date August 25, 2010 August 10, 2011 September 27, 2012

Time 12:30 PM 1:00 PM 1:00 PM

Venue 16th Floor, Jawahar Vyapar Bhawan,

Janpath,New Delhi-110 001

16th Floor, Jawahar Vyapar Bhawan,


16th Floor, Jawahar Vyapar Bhawan,


Details of Special Resolutions passed in the AGM

None None None

Details of Annual General Meeting in the current year:

Year Date and Time of AGM Venue

2012-13 November 13, 2013 at 1:30 PM

16th Floor, Jawahar Vyapar Bhawan, Janpath, New Delhi-110 001

6. DISCLOSURES(i) The Company does not have any material related party transactions, which have

potential conflict with the company at large. Disclosures regarding transactions with the related parties are given in the Notes to Accounts of the Financial Statements for the year ended 31st March, 2013.

(ii) There were also no instances of non-compliance on any matter during the last three years. It is reaffirmed that no penalties imposed or strictures passed against the Company by the statutory authorities except the cases mentioned in notes to accounts

60

forming part of the financial statements and disposal of the same are still pending with the judicial and quasi – judicial authorities.

(iii) Company has reiterated the Whistle Blower Policy of CVC and no person has been denied access to the Audit Committee.

(iv) The company is complying with all the requirement of the Guidelines on Corporate Governance for CPSEs issued by the DPE to the extent reflected herein.

(v) No Presidential Directives issued during the year and last three years.

(vi) During the year, no expenditure is debited to the books of accounts which are not for the purpose of business expenditure.

(vii) During the year, no expenses which are of personal nature have been incurred for the Board of Directors and Top Management.

(viii) The percentage of Administrative and office expenses as a percentage of total expenses is 4.91% and financial expenses as a percentage of total expenses is nil as there is no financial cost.

7. MEANS OF COMMUNICATIONQuarterly Results / Annual Results: The Company intimates audited financial results, immediately after these are taken on record /approved. These financial results are published in the leading English and vernacular dailies having wide circulation.

News Release, Presentation etc.: The official news releases, presentations, financial results etc. are displayed on the Company website www.spmcil.com

Website: The Company’s financial information, code of conduct and other related information is also available on the website, www.spmcil.com.

8. AUDIT QUALIFICATIONSThe comments on accounts for the year ended on 31st March, 2013 by the Comptroller & Auditors General of India under Section 619(4) of the Companies Act, 1956 and Statutory Auditors of the Company are given in the addendum to the Directors Report along with the comments of the company.

9. TRAINING OF BOARD MEMBERSThe Company has applied informal training of Board members by way of providing regular updates about the performance of the company, Governments directions, Corporate Governance guidelines from time to time.

During the year, Shri M.S. Rana, CMD and Shri P.K. Mishra, JS (DoC), DEA, MoF and Smt. Meera Handa, the then DDG, (Philately) were nominated for attending training programme on Corporate Governance organised by SCOPE.

10. WHISTLE BLOWER POLICYThe Company is committed to conduct its business in accordance with highest standards of business ethics and ensure compliances of all applicable laws, rules and regulations.


61

The Board of Director has laid down the Code of Business Conduct and Ethics for the Board members and Senior Management of the Company. The copy of the Code has been displayed on the Company’s website www.spmcil.com. All members of the Board and Senior Management have confirmed compliance of Code of Conduct for the year 2012-13. SPMCIL has reiterated the Whistle Blower Policy of the CVC vide letter No. SPMCIL/Vig/3/09/07/5175 dated 16.03.2010.

11. COMPLIANCE CERTIFICATEThis Report duly complies and covers all the suggested items as mentioned in Annexure–VII of the Guidelines. The Certificate obtained from the practicing Company Secretary regarding compliance of conditions of Guidelines of Corporate Governance for CPSEs has been annexed to the Report.

DECLARATION BY CHAIRMAN AND MANAGING DIRECTOR REGARDING COMPLIANCE WITH THE CODE OF CONDUCT BY BOARD MEMBERS AND SENIOR MANAGEMENT DURING THE FINANCIAL YEAR 2012-13.

‘I, M S Rana, Chairman and Managing Director of Security Printing and Minting Corporation of India Limited hereby confirm that the Company has obtained from the members of the Board and Senior Management an affirmation that they have complied with the Code of Conduct for Directors and Senior Management in respect of the financial year 2012-13.’

Date: 13th November, 2013 (M. S. Rana)Place: New Delhi Chairman & Managing Director

DIN – 01174242

62

CORPORATE GOVERNANCE CERTIFICATE

To

The Members,Security Printing and Minting Corporation of India Limited 16th Floor, Jawahar Vyapar Bhawan,Janpath, New Delhi-110 001

We have examined the compliance of the conditions of Corporate Governance by Security Printingand Minting Corporation of India Limited, (hereinafter referred as ‘the Company’) for the year ended on 31st March, 2013 as stipulated in ‘Guidelines on Corporate Governance for Central Public Sector Enterprises, 2010’ vide Notification No. 1 No. 18(8)/2005-GM originally issued on 22.06.2007 and revised guidelines vide office memorandum dated 14th May, 2010 by the Department of Public Enterprises, Ministry of Heavy Industries and Public Enterprises, Government of India and annexures mentioned there under (hereinafter referred as ‘Guidelines’).

The compliance of conditions of corporate governance is the responsibility of the Management. Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of corporate governance as stipulated in abovementioned guidelines. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we hereby certify that the Company has complied with the conditions of corporate governance as stipulated in the abovementioned Guidelines.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency of the effectiveness with which the Management has conducted the affairs of the Company.

Place: New DelhiDate: 15/10/2013

Sd/-(Nitin Rawat)

Company SecretaryACS: 28809; CP: 10554

NITIN RAWAT Head Office:-C-92, Budh Vihar,Company Secretary Badarpur, New Delhi-110044, Email ID:- [email protected] Mobile::- 9953753054


63

INDEPENDENT AUDITOR’S REPORT

To,The Members ofSecurity Printing and Minting Corporation of India Limited16th Floor, Jawahar Vyapar Bhawan,Janpath, New Delhi-110001.

Report on the Financial Statements

We have audited the accompanying financial statements of Security Printing and Minting Corporation of India Limited (“the Company”), which comprise the Balance Sheet as at March 31, 2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 (“the Act”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting

Head Office: 8/28, 3rd Floor, W.E.A, Abdul Aziz Marg, Karol Bagh, Delhi 110005 Ph: 011-42502244, 3562 Email: [email protected] Website: www.serva.in

SERVA ASSOCIATESCHARTERED ACCOUNTANTS

64

estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

Basis of qualified Opinion

1. Business Takeover w.e.f. 10th February, 20061.1 That as per the Takeover Agreement dt. 10-02-2006, all the assets & liabilities of

9 Government Units were taken over by the company at their Book Value subject to Finalization of the Transfer Value within 6 Months, however even after more than 7 Years, the same have not been Finalized resulting into the uncertainty in the value of the business transferred to the Company appearing under the Head “Funds from Government of India (Adjustable)” amounting to `28,794,928,171thus the Performa Account reflecting the amount payable to government of India and the figures of Assets and Liabilities relating to the acquisition from the Government of India are subject to Finalization and Audit.

1.2 That, the “Fund’s from Government of India (Adjustable) Account” figure taken initially as on 9th February, 2006 has changed significantly due to adjustments entries passed during the last 7 years. The slow process of physical verification of inventory as well as Fixed Assets apart from verification of other assets & liabilities for the period prior to 10th February, 2006 and also due to unclear demarcation as to the liability arising for the earlier period not provided for and short/excess provision made in earlier years etc. has resulted into number of adjustment entries been passed since takeover. The adjustment/settlement of the Final Account will also affect the Capital Structure of the Company.

1.3 In the absence of the determination of the nature of the amount (Share Capital/Loan/Grant) due to The Government of India, the “Funds from Government of India (Adjustable)” Account has been shown as a separate line item on the face of the Balance Sheet between the Share Holders Funds & Non-Current Liabilities.

2. Switchover to the Enterprise Resource Planning System, “SAP” & inconsistencies in the data extracted from the same2.1 During the Financial Year under audit the Company has migrated from conventional

accounting software to SAP ERP system w.e.f. 15th June, 2012 except some MIS related modules, but as informed to us due to ERP implementation being still in stabilization stage & reconciliations are in process. Pending handover of agreed deliverables from the Implementation partner, the company has capitalized only the portion of Expenses agreed as payable up to 31st March, 2013 by the Project Management Team of the Company although the project monitoring expenses and other incidental expenses incurred post 15th June, 2012 have been charged off to profit & loss account. Pending any confirmations/reconciliation with the Implementation Partner, we are unable to comment on the actual cost capitalized up to 31st March, 2013.


65

2.2 That on account of migration to this advanced system of accounting, lot of regroupings had happened especially within the material accounts but corresponding changes were not taken effect in some cases of Previous Year figures. To that effect the previous year figures of such items are not comparable. In case of Inventory accounts the impact, if any on the profit & loss account on account of regrouping and thus valuation of the same has not been quantified.

2.3 It is represented that pending final reconciliations & handover, in case of some of the units the inventory was physically verified and such physical stock was taken as the closing stock of inventory.

2.4 Similarly, it was observed that the information being fetched from various modules of SAP are yet to be fully reconciled with the Financial Data & to that extent the information system from various modules needs to be streamlined.

3. Confirmation of Party Balances3.1 That the Balance of Trade Payables, Trade Receivables, Loans & Advances and

other Liabilities including Balance in Funds from Government of India (Adjustable) Account are subject to confirmations and reconciliations with the respective parties.

3.2 The trade payable comprising of vendors registered under MSMEDA Act, 2006 have been identified only at 2 units. Hence the amount due to such vendors and interest liability if any, on delayed payments to same has not been quantified.

4. Balance Sheet groupings, absence of comparative figures4.1 The Current Assets (including some of the receivables from Government of India

such as leave encashment receivables from GOI) & likewise the current liabilities (including some old payables such as pensionary charges which have remained outstanding since past years) have been considered as recoverable/payable within next 12 Months and hence shown as current in Nature.

5. That, in respect of liabilities and provisions not disclosed or accounted for5.1 Cases relating to the employee claims as well as Indirect Taxation matters are

pending in different courts relating to the period prior to the incorporation of the company (10th February, 2006) as well as thereafter also. In the absence of complete details, the liability including contingent liability in some of the cases relating to the company as well as Government account could not be ascertained.

6. That, in respect of Disclosure of Accounting Policies (Accounting Standard 1)6.1 Based on the reports received from the Branches, we are of the opinion that there

is a need for greater uniformity in the Accounting Policies as well as financial disclosure patterns followed by the Branches.

6.2 The Company is generally following the Accrual System of Accounting except for Accounting for income from forgery detection charges, ex-gratia, recoveries from employees for use of amenities, insurance, other claims and last pay of employees and additional incentive which are accounted for in the year in which the same is declared for payment. Similarly in case of recovery of Liquidity damages, the

66

same are accrued at the time of completion of the contract and not at the time of accounting for inventories in the books of accounts. Such charges are treated as Other Income.

6.3 Changes in Accounting Policies6.3.1During the year the company has changed the Valuation Methods of

Inventory at some of the Units, but the effect of the change in the accounting policy has not been quantified.

6.3.2Security Equipments purchased for the Security Forces deployed by CISF, were initially capitalized as Tangible Fixed Assets, but with effect from current financial year, the same were charged off to profit & loss account. However, the said amount has not been disclosed separately but grouped with yearly security expenses only.

7. That, in respect of Accounting for Inventory (Accounting Standard 2)7.1 It was observed that various branches engaged in similar business activities as

referred in Note no. 1(viii) of significant accounting policies are following different modes of valuation in relation to items dealt with by them. An analysis of the same represents clear deviation from the provisions of valuation contained in the accounting standard. The impact of the change in valuation could not be ascertained.

7.2 All the Inter Unit transfers are made at the Budgeted Cost only & hence valuation of inventory pertaining to same has also been made at Budgeted Value.

7.3 The Gold held in safe custody of RBI is subject to confirmation from the Ministry and RBI.

7.4 In the case of CNP Nashik Unit, the Inventory of High Security CWBN Paper has been stated at `239,393,161 & at BNP Dewas of `285,778,081 which due to quality issues could not be used & neither the same have been replaced by the Vendor till date. It has been represented by the Management that the net realizable value of such paper is more than the carrying cost and pending any decision on replacement or refund from vendor, no provision for Non Moving/obsolete inventory has been made for the same.

7.5 In the case of SPM Hoshangabad Unit, the Non moving/obsolete inventory was identified to the tune of `55,273,084 by an external agency however the unit has reviewed the same & worked out such inventory only to the tune of `1,185,855out of the above & made a provision accordingly.

8. That, in respect of Accounting Standard 5 on Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies8.1 Provision towards accrued income/ expenditure is not being made properly resulting

into amount being shown over the years as prior period income/expenditure. As per the provisions of income tax unless it is proved that the liabilities crystallized in the subsequent year, the same cannot be allowed as expenditure. Similarly any income pertaining to previous Year, results into reopening of the case for the related previous year. Since proper adjustment have not been made in the


67

computation of income in the previous income tax returns the same may result into additional income tax & penalties for which no provision is made.

9. That, in respect of Accounting for Depreciation (Accounting Standard 6)9.1 The Gross Block & Accumulated Depreciation of Fixed Assets has been shown

at the historical Cost of Purchase and accumulated Depreciation up to the date of transfer from the Government of India as appearing in the Books of the Vendor as against cost to the company. Since the Depreciation is being claimed on Straight Line Method on the Gross cost of the Asset to the previous vendor instead of cost to the company meaning thereby that the remaining life of the asset was not disturbed. In the absence of determination of the useful life the amount of depreciation claimed short/excess could not be quantified.

9.2 The assets physically available but not appearing in the FAR as per the takeover list, were capitalized at `1/- and hence no depreciation being charged on the same.

9.3 The unit at SPM Hoshangabad is working on triple shifts but charging depreciation as per the rates given for single shifts operations under the Companies Act 1956. This has resulted in understatement of depreciation & overstatement of the Fixed Assets to the extent of difference in the rates of depreciation. In the absence of the details the amount of shortfall in the depreciationcharged could not be ascertained.

10. That, in respect of Accounting for Revenue Recognition (Accounting Standard 9) Sales Price of Currency Notes, Coins & Postal Stationary10.1 The sales price charged against the sale of currency notes, coins & postal

stationery has not yet been confirmed by the Ministry of Finance, Reserve Bank of India & the Postal Authorities respectively resulting into uncertainty of the revenue recognized in this regard.

Following is for further information:

10.1.1 That pending finalization of the rates with the Ministry of Finance in case of coins, the company has made a provision to the tune of ̀ 2,482,049,425being the difference between the Sales Value billed during the current financial year as per the billing rates vis-a-vis the provisional rates as per the MOU with the Ministry of Finance. The same has been reduced from sales as per Note 22 of the financial statements and as computed as per Note 42 to the notes to accounts. Even against the receivables calculated as per the MOU rates, the actual payments realized are further short by `2,738,600,749.

10.1.2 That pending finalization of the rates by Reserve Bank of India in case of currency notes, the company has made a provision to the tune of `1,972,818,000 being the difference between the Sales Value billed during the current financial year as per the billing rates vis-a-vis the provisional rates as per the MOU with the Ministry of Finance. The same has been reduced from sales as per Note 22 of the financial statements and as computed as per Note 42 to the notes to accounts. Even against

68

the receivables calculated as per the MOU rates, the actual payments realized are further short by `249,309,000.

10.1.3 That during the year the company has also made provision of ̀ 214,377,604as rate difference taken on sales of coins up to Financial Year 2009-10. The same has been shown under the head other expenses at note no. 27-28. However, no provision for rate difference on the sale of coins of `1,309,222,474 pertaining to Financial Year ended 31st March, 2011 & of `180,704,480 pertaining to Financial Year ended 31st March, 2012 has been made. Similarly no provision with regard to excess rate difference of `1,214,501,000 on sale of bank notes raised during the financial year ended 31st March, 2012 has been made.

10.1.4 In case of Postal Stationary, the sales price being billed is not as per the rates determined by the Cost Accounting Branch in 2006-07. To that extent, the Sales as well the balance of trade receivables are subject to acceptance by the Trade customers.

10.2 In majority of cases, the customers have not taken a cognizance of the confirmation statement sent by the respective units.

10.3 That in the case of sale of currency notes, the sales in the case of CNP Nasik unit to the tune of `287,415,000 was recognized as Sales at the time of dispatch even though the terms of sales were delivery based and subject to confirmation of receipts by Reserve Bank of India. Accordingly to that extent the above stated Sales as well as profit estimated to be `92,809,035 have been overstated during he current year.

11. That, in respect of Accounting for Fixed Assets (Accounting Standard 10)11.1 The Gross Block & Accumulated Depreciation on Fixed Assets has been shown

at the Historical Cost of Purchase and Accumulated Depreciation up to the date of transfer from the Government of India as appearing in the Books of the Vendor as against cost to the company. To that extent the Gross Value of Fixed Assets are overstated.

11.2 The Title Deeds of the Immovable Properties taken over are yet to be transferred in the Name of the Company. The Liability on account of Stamp Papers etc has been estimated at `600 crores, but since it is represented that the company is expected to get financial support from the Government of India for the same, this amount has not provided for or considered as a contingent liability in the Financial Statements.

11.3 The spares, tools & dies are fully charged to profit and loss account.

11.4 The assets physically available but not appearing in the FAR as per the takeover list, were capitalized at `1/-.

11.5 That the Plant & Equipment at IGM, Mumbai includes Assets having Gross Value of `57,171,802 (Written Down Value as at 31st March, 2013 as `5,118,606) though held for sale but shown in the Tangible Assets head. To that extent the Tangible Assets are overstated.


69

11.6 Land at ISP, Nashik acquired from PP Sanitorium Trust in the year 1988 at cost of `29.08 Lacs has not till date been disclosed in the Financials. Further, amount payable of `4.82 crores towards enhanced compensation along with interest has been shown as contingent liability.

11.7 None of the Assets have been insured.

11.8 That, as already stated above, the ERP implementation is under stabilization stage and hence, though the company has migrated to the New System, yet in the absence of any ascertainable amount, only the amount of bills approved by the company project manager have been capitalized in the books of accounts. Hence the SAP Implementation cost capitalized as Intangible Assets is not as per the Actual Cost as per the agreement but only as per internal assessment confirmed by the company’s own project Management. As represented, it is likely that the total amount would be finalized during the financial year 2013-14 once all the modules have been fully implemented and integrated.

12. That, in respect of Accounting Standard 19 on Accounting for Leases12.1 The Land at Sector 1 & Sector 23 held by IGM Noida on long term lease of

99 years w.e.f 3rd May, 1985 & 90 years w.e.f.12th May, 1993 respectively from Noida Authority has been amortized over the remaining period of lease starting from 10.02.2006, instead from the date of commencement of lease. Further the Lease premium prior to 10.02.2006 has not been adjusted from the “Fund from Government of India (Adjustable) Account.”

13. That, in respect of Accounting Standard 28 on Accounting for Impairment of Assets13.1 That, the Fixed Assets have been identified and impaired over the years in all

the units except for SPM Hoshangabad & that IGM Hyderabad has discontinued operations at Saifabad Unit w.e.f 01.11.2009. However, the identification & impairment of the Fixed Asset at the above unit is still pending.

14. That, in respect of Accounting Standard 29 on Accounting for Provision, Contingent liabilities & Contingent Assets14.1 That the company has quantified the contingent liability in respect of disputed

cases to the tune of `9,763,656,844. However no amount has been provided for/apportioned against such a huge sum in the books of accounts. Even in cases where a legal opinion has been taken by the company wherein the liabilities have been confirmed or cases where the authorities have confirmed the cases against the company no such provision has been made in lieu of a petition being filed by the company before higher authority.

In our opinion and to the best of our information and according to the explanations given to us, the financial statements subject to the impact of the qualified opinions given above, give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;

70

b) In the case of the Profit and Loss Account, of the profit for the year ended on that date; and

c) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

1. As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”) issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, we report that:

a. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit except forinformation from various modules in SAP relating to Inventory, Human Resource etc. which could not be reconciled with the Financial Data and hence reliance was placed on the Financial Data only and in case of inventory on the Physical verification or Management Certification;

b. In our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books and the branches audited financials received from branch not visited by us.

c. The Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d. In our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956 except for cases mentioned in para 6 to 13 above.

e. On the basis of written representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f. Since the Central Government has not issued any notification as to the date at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

For Serva AssociatesChartered AccountantsFirm’s Registration Number: 000272N

Sd/-Nitin Jain Place of Signature: DelhiPartner Date : 30.08.2013Membership Number- 506898


71

ANNEXURE TO THE AUDITORS REPORTReferred to in paragraph “c” of our report of even date

I. (a) Full particulars including quantitative details and situation of fixed assets acquired as on 10.02.2006 have been maintained properly except at ISP Nasik unit and that the Fixed Assets purchased /acquired subsequently have generally been recorded but identification of the same has not been done at some units.

(b) The fixed assets have only been physically verified and reconciled except at four units namely corporate office, CNP Nasik, IGM Hyderabad & SPM Hoshangabad. Physical Verification was also done at IGM Kolkata but was not reconciled with the books of accounts. Physical Verification in case of SPM Hoshangabad was done by an external agency but we have been informed that the report submitted by them was not found to be satisfactory & hence not accepted by the management. Hence in our opinion, it shall be deemed that no physical verification was done in such unit. The unit which have been physically verified by the management during the year no material discrepancies were stated to be noticed on such verification.

(c) The Assets disposed off during the year are not substantial to effect the going concern.

II. (a) The Inventory has been physically verified by the management at regular intervals, except in case of IGM Mumbai, for gold lying with Reserve Bank of India, the possession of which have not been given to the company & with regard to Commemorative Coins & Metals lying in case of IGM Kolkata. In case of IGM Noida physical verification of inventory of coins was done by the vigilance department of the company. However physical verification in respect of stores and packaging material was not done. No verification of inventory are conducted by the Management. In our opinion, the Management should conduct the verification at periodic intervals.

(b) The procedure of physical verification of inventory followed by the management is not adequate considering the size of the company and the nature of its business. There is a need to formalize the process of physical verification in respect of all items of inventory including Stores & packing Materials.

(c) On the basis of our examination of the record of inventory, we are of the opinion that company is not maintaining proper records of inventory in some of the units. It has been observed that material adjustments have been posted in the books based on physical verification which indicates immediate need to control & stabilize the material movements happening in the ERP System.

72

Further, there is a need to strengthen & standardize the inventory valuation methods and procedures & that the budgeted cost needs to be periodically reviewed and updated as per actual.

III. As per information and explanation given to us and audit procedures carried out by us, the company has neither granted nor taken any loans to/ from companies or other parties to be covered in the register to be maintained under Section 301 of the Companies Act, 1956.

IV. In our opinion and according to information & explanation given to us, the internal control system is not commensurate with the size of the company and the nature of its business w.r.t. material movements in the ERP system, adherence to standard operating procedures under an ERP environment, reconciliation of debtors, creditors and advances, staff advance settlement including interest thereon, identification and valuation of in house developed dies, material & fixed assets procurement, & spares replacement procedures, guidelines with regard to perquisites and business promotion expenses etc.

V. (a) Based on the Audit procedure applied by us and according to Information & Explanation provided by the management, we are of the opinion that the company have not entered into any contract or arrangement referred to in section 301 of the Companies Act, 1956.

(b) Since no transactions have happened till date, the clause is not applicable.

VI. In our opinion and according to the information and explanation given to us, the Company has not accepted any deposit from public during the period and hence the directive issued by the Reserve Bank of India and provisions of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under are not applicable.

VII. Although, the company has the system of Internal Audit by external agencies at all the units, yet the same is not commensurate with the nature and size of the business. There is a need to redefine the scope of work so as to cover the grey areas as well as to verify the statutory compliance apart from ensuring timely submission of reports & to streamline the follow-up procedures to all the objections raised during the internal audits.

VIII. That the company has not maintained the cost recordat few of the units as required under Cost Accounting Record Rules prescribed by the Central Government u/s 209(1) (d) of the Companies Act, 1956. In our opinion besides maintenance of cost records at all manufacturing units, the Cost Compliance/Cost Audit requirements needs to be addressed by the management.


73

IX. (a) According to the records of the company and the information & explanations given to us, the company is regular in depositing with the appropriate Authority undisputed Statutory dues including Provident Fund, Employee State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other Statutory dues applicable to it with appropriate Authorities except the under mentioned:

Sl.No. Nature of Statute

Nature of Dues Unit Name O/s Amount Period to which it relates

1 For Employees on Deputation

Leave Salary Contribution & Pensionery Charges

IGM Noida 137,33,604 01.10.2008to

31.03.2011

2 For Employees on Deputation

Pensionery Charges SPMHoshangabad

11,72,42,161 01.10.2008to

31.03.2011

(b) According to the records of the company and information & explanation given to us, the particulars of dues of Sales Tax, Income Tax, Wealth Tax, Service Tax, Custom Duty, commercial tax, Excise Duty & cess as at 31.03.2013 which have not been deposited on account of dispute are as follows:-

Sl.No.

Nature of Liability

Unit Name Assess-ment Year

Amount in Dispute

Authority with whom the Dispute

is Pending

1 Sales Tax ISP Nashik Up to 31.03.05

967,041,016 At various forum

2 Sales Tax ISP Nashik 01.04.05 to 09.02.06

21,135,641 –do–

3 Sales Tax ISP Nashik 10.02.06 to 31.03.13

1,381,496,631 Sales Tax Officer, Nashik

4 Sales Tax / Entry Tax / Commercial Tax

BNP Dewas 2006-072007-08

231,782,061 High Court of MP

5 Sales Tax IGM Hyderabad Dec 09 to Jan 10

807,201,016 –

6 Octroi Penalty CNP Nashik 2,387,951,690 –

7 Central Sales Tax IGM Mumbai 2004-05 624,349 Jt. Comm of Sales Tax (Appls)

8 Bombay Sales Tax

IGM Mumbai 2004-05 216,543 Jt. Comm of Sales Tax (Appls)

74

Sl.No.

Nature of Liability

Unit Name Assess-ment Year

Amount in Dispute

Authority with whom the Dispute

is Pending

9 Bombay Sales Tax

IGM Mumbai 2003-04 420,824 Jt. Comm of Sales Tax (Appls)

10 Tax Deducted at Source

IGM Noida 2007-08 19,000 ACIT





13 Service Tax SPM Hoshana-gabad

178,499 Assistant Commis-sioner of Central Excise, Bhopal

14 Value Added Tax IGM Hyderabad 2006-07 to November

2009

550,332,623 C o m m i s s i o n e r Commercial Taxes, Govt of A.P.

15 Income Tax Corporate Office, Delhi

2009-10 164,020,770 CIT(A), New Delhi

X. The company has no accumulated losses and has not incurred cash losses during the financial year covered by the audit and the immediately preceding financial year.

XI. Based on our audit procedures and on the basis of information & explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to the financial institution and bank. There are no debentures in the company.

XII. In our opinion and on the basis of information & explanations given by the management, the company has not granted loan or advances on the basis of security by way of pledge of shares, debentures and other securities.

XIII. In our opinion and on the basis of information and explanations given by the management, the company is not chit fund/nidhi/mutual fund/society to which the provisions of special statute relating to chit fund are applicable.

XIV. In our opinion the company is not dealing in or trading in shares/securities, debentures and other investment. Accordingly the provision of clause (xiv) of the companies (Auditors Report) order, 2003 are not applicable to the company.

XV. As explained by the management of the company. The company has not given guarantee for loans taken by other from banks or financial institutions.


75

XVI. According to information and explanations given to us and records of the company examined by us the company has not taken any term loan.

XVII.According to information and explanations given to us and on an overall examination of the Balance Sheet of the company, we report that pending the decision on the nature of funds from Government of India we are unable to comment on the applicability of this clause and the fact that whether any short term funds have been used for long term investment.

XVIII. The company has not made any preferential allotment of share during the year.

XIX. The company has not issued any debentures during the year.

XX. The company has not raised money by way of public issue during the year.

XXI. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the course of our audit for the year ending 31st March, 2013.

For Serva AssociatesChartered AccountantsFirm’s Registration Number: 000272N

Sd/-Nitin JainPartner Membership Number- 506898Date: 30.08.2013

76

SECURITY PRINTING AND MINTING CORPORATION OF INDIA LIMITED

Balance Sheet as at 31.03.2013Amount in `

Sl.No. Particulars Note

No.Figures as at the end of 31.03.2013

Figures as at the end of 31.03.2012

I. EQUITY AND LIABILITIES1. Shareholders’ funds

(a) Share capital Note 2 500,000 500,000(b) Reserves and surplus Note 6 26,953,866,501 23,703,374,095

2. Funds from Govt. of India (Adjustable) Note 3 28,794,928,171 28,796,699,3423. Non-current liabilities

(a) Other Long term liabilities Note 7 249,653,125 252,977,697(b) Long-term provisions Note 8 2,779,417,007 2,599,051,544

4. Current liabilities(a) Trade payables Note 9 2,311,549,337 1,802,588,763(b) Other current liabilities Note 10 1,770,037,748 2,356,527,416(c) Short-term provisions Note 11 5,224,393,774 10,490,235,238

TOTAL 68,084,345,663 70,001,954,095II. ASSETS1. Non-current assets

(a) Fixed assets Note 12(i) Tangible Assets 10,323,321,629 9,008,651,078(ii) Intangible Assets 143,050,292 15,514,574(iii) Capital Work in Progress 1,057,888,082 1,660,199,426

(b) Non-current investments Note 13 3,000,000,000 1,000,000,000(c) Deferred tax assets (net) Note 52 2,592,960,429 733,939,055(d) Long-term loans and advances Note 14 2,531,329,863 2,297,558,701(e) Other non-current assets Note 15 1,952,328,942 1,990,768,353

2. Current assets(a) Current investments Note 16 1,000,621,058 1,001,034,916(b) Inventories Note 17 8,351,497,259 9,798,393,828(c) Trade receivables Note 18 17,477,940,983 12,658,671,922(d) Cash and Bank Balances Note 19 13,148,528,547 17,905,615,101(e) Short-term loans and advances Note 20 6,250,402,956 11,280,383,185(f) Other current assets Note 21 254,475,623 651,223,956

TOTAL 68,084,345,663 70,001,954,095

Significant Accounting Policies Note 1Notes 1 to 89 referred to above form an integral part of the Financial Statements.As per our report of even date annexed.

For M/s. SERVA ASSOCIATES On behalf of Security Printing and Minting CHARTERED ACCOUNTANTS Corporation of India Ltd.Firm Registration No. 000272N Sd/- Sd/- Sd/-CA. Nitin Jain M.S Rana P. N. Radkar(M.No 506898) Chairman & Managing Director Director (Technical)Partner & Incharge Director (Finance)

Sd/-Date: 30.08.2013 Sachin AgarwalPlace:New Delhi (Asstt Company Secretary)


77

SECURITY PRINTING AND MINTING CORPORATION OF INDIA LIMITEDStatement of Profit and Loss for the year ended 31.03.2013

Amount in `

Sl.No. Particulars Note

No.Figures for the year ending on

31.03.2013

Figures for the year ending on

31.03.2012I. Revenue from operations Note 22 37,129,421,516 34,946,741,757II. Other income Note 23 1,430,997,960 1,676,507,132III. Total Revenue (I + II) 38,560,419,476 36,623,248,889IV. Expenses:

Cost of Raw Material Note 24 18,833,407,329 16,522,274,181Changes in inventories of finished goods, work-in-progress

Note 25 1,009,848,037 (202,463,502)

Employee benefits expense Note 26 8,136,355,806 7,621,422,060Finance costs - -Depreciation and amortization expense Note 12 1,152,374,073 1,100,527,741Other expenses Note 27 & 28 3,690,628,533 2,837,710,254Total expenses 32,822,613,778 27,879,470,733

V. Profit before Prior Period, exceptional and extraordinary items and tax (III-IV)

5,737,805,698 8,743,778,156

VI. Prior Period Income / (Expenses) Note 29 49,427,037 4,946,793VII. Profit before exceptional and

extraordinary items and tax (V-VI)5,787,232,735 8,748,724,949

VIII. Exceptional Items 0 0IX. Profit before extraordinary items and

tax (VII - VIII)5,787,232,735 8,748,724,949

X. Extraordinary Items 0 0XI. Profit before tax (IX-X) 5,787,232,735 8,748,724,949XII. Tax expense:

(1) Current tax (3,408,421,652) (2,686,476,050)(2) Deferred tax 1,859,021,374 (200,721,157)(3) Taxes of Earlier Years (2,966,675) (36,868,159)

XIII. Profit (Loss) for the period from continuing operations (XI-XII)

4,234,865,782 5,824,659,582

XIV. Profit/(loss) from discontinuing operations 0 0XV. Tax expense of discontinuing operations 0 0XVI. Profit/(loss) from Discontinuing

operations (after tax) (XIV-XV)0 0

XVII. Profit (Loss) for the period (XIII + XVI) 4,234,865,782 5,824,659,582XVIII. Earnings per equity share:

(1) Basic Note 51 84,697 116,493(2) Diluted 84,697 116,493

Significant Accounting Policies Note 1Notes 1 to 89 referred to above form an integral part of the Financial Statements.As per our report of even date annexed.

For M/s. SERVA ASSOCIATES On behalf of Security Printing and Minting CHARTERED ACCOUNTANTS Corporation of India Ltd.Firm Registration No. 000272N

Sd/- Sd/- Sd/-CA. Nitin Jain M.S Rana P. N. Radkar(M.No 506898) Chairman & Managing Director Director (Technical)Partner & Incharge Director (Finance)


78

SECURITY PRINTING AND MINTING CORPORATION OF INDIA LIMITEDCash Flow Statement for the year ended 31st March, 2013

Amount in `


A. Cash Flow from Operating Activities

Net profit before tax (a) 5,787,232,735 8,748,724,948

Add: Adjustment for

Depreciation and Amortisations 1,152,374,073 1,100,527,740

Loss on sale/discard of Fixed Assets 11,268,199 117,593,312

(Profit)/ Loss on Sale of Fixed Assets (4,060,657) (516,993)

Other Income - -

Interest Income (1,187,596,857) (1,230,841,434)

Dividend Income (31,809,489) (63,212,729)

Total (b) (59,824,732) (76,450,104)

Operating Profit Before Working Capital Changes (c=a+b) 5,727,408,003 8,672,274,844

Adjustment for

(Increase)/ Decrease in Current Investments 413,858 16,787,271

(Increase)/ Decrease in Trade Receivables (4,819,269,062) (3,201,999,584)

(Increase)/ Decrease in Inventories 1,446,896,570 (302,407,804)

(Increase)/ Decrease in Loans & Advances 7,831,030,706 (953,139,043)

(Increase)/ Decrease in Other Assets 396,748,333 (253,914,020)

Increase/ (Decrease) in Trade Payable 508,960,573 805,766,636

Increase/ (Decrease) in Other Current Liabilities (586,489,668 (374,946,604)

Increase/(Decrease) in Long term Provisions 180,365,463 73,693,646

Increase/ (Decrease) in Short Term Provisions (8,304,723,496) 480,357,987

Total (d) (3,346,066,723) (3,709,801,515)

Cash Generated From Operations (e=c+d) 2,381,341,279 4,962,473,329

Less Tax paid (f) (2,804,017,148) (2,013,499,108)

Net Cash Flow from Operating activities (g=e-f) (422,675,869) 2,948,974,221


79


B Cash Flow from Investing Activities

Interest Income 1,187,596,857 1,230,841,434

Dividend Income 31,809,489 63,212,729

Sale of Fixed Assets 621,796 83,672,393

Payment towards Capital Expenditure incl CWIP (2,822,891,520) (1,172,980,021)

Adjustment in Fixed Assets 822,793,183 449,775,139

(Increase)/ Decrease in Investments (2,000,000,000) (999,500,000)

(Increase)/ Decrease in Long Term Advances (233,771,162) (222,961,067)

(Increase)/ Decrease in Long Term Assets 38,439,410 (146,905,486)

Increase/ (Decrease) in Fund From Govt of India (1,771,171) (1,121,767)

Increase/ (Decrease) in Long Term Liabilities (3,324,571) 10,917,093

Net Cash Flow From Investing Activities (j) (2,980,497,689) (705,049,553)

C Cash Flow from Financing Activities

Dividend Payment (1,164,931,916) (1,154,384,708)

Dividend Distribution Tax (188,981,080) (191,743,300)

Repayment of Loan to Ministry of Finance 0 (1,750,000,000)

Net Cash Flow From Financing Activities (k) (1,353,912,996) (3,096,128,008)

Increase/ (Decrease) in Cash or Cash Equivalent (i=j+k) (4,757,086,554) (852,203,340)

Cash & Cash Equivalent at the beginning of the year 17,905,615,101 18,757,818,441

Cash & Cash Equivalent at the end of the year 13,148,528,547 17,905,615,101

Increase/ (Decrease) in Cash or Cash Equivalent (4,757,086,554) (852,203,340)

Notes 1 to 89 referred to above form an integral part of the Financial Statements.

As per our report of even date annexed.


Sd/- Sd/- Sd/-CA. Nitin Jain M.S Rana P. N. Radkar(M.No 506898) Chairman & Managing Director Director (Technical)Partner & Incharge Director (Finance)


80

Note 1: Significant accounting policies(i) Basis of preparation

The financial statements are prepared under the historical cost convention on the accrual basis of accounting, in accordance with the Indian Generally Accepted Accounting Principles (GAAP) and comply with the accounting standards, as prescribed by the Companies (Accounting Standards) Rules, 2006, to the extent applicable, as adopted consistently by the Company. The financial statements have been prepared in Indian rupees. Forgery Detection Charges, Recoveries from employees for use of amenities, insurance and railway claims, tax and duties and last pay of employees are accounted for on cash basis.

(ii) Use of estimatesThe preparation of financial statements in conformity with the Indian GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Examples of such estimates include provision for future obligations under employee benefit plans, provisions for doubtful recoveries, estimated useful life of fixed assets etc. Actual results could differ from these estimates. Any change in the accounting estimates is adjusted prospectively in the current and future periods.

(iii) Revenue recognitionRevenue is recognized on delivery of goods to the customer. Gross sales are stated inclusive of excise.

Job work income is recognized at the time of completion of task as per terms agreed.

Interest on the deployment of surplus funds is recognised using the time-proportion method, based on interest rates contracted in the transaction.

Dividend Income is recognized in the year of receipt by the company.

Liquidated Damages recovered from the Vendors is appropriated towards the Income after completion of the Contract.

Expenditure is recognised on accrual basis.

(iv) Fixed assetsFixed assets acquired (post acquisition1) have been stated at cost less accumulated depreciation. Cost is inclusive of freight, non recoverable duties, taxes and other directly attributable cost of bringing the assets to the working condition for intended use.

As per the Ministry of Finance O.M Dt. 10.2.2006, all assets and liabilities have been taken at the Book value, Pre acquisition, the units, being commercial entity has been maintaining the Assets details at Gross Value and Useful life of Assets were fixed accordingly. Accumulated Depreciation on same as appearing in the books of

1 For Assets acquired from Government of India (Vendor), the same have been disclosed at the Gross Cost as appearing in the Books of the Vendor less Accumulated Depreciation up to the date of transfer as against the Cost of Acquisition of such assets.


81

vendor has been carried forward in the books of SPMCIL, Further for the purpose of Depreciation the same technical life is being continued.

Fixed assets under construction are disclosed separately as capital work in progress.

Leasehold assets are stated at the amount of lease premium paid at the time of grant of Lease, less amount amortized.

Dies/ Moulds are fully charged to Profit and Loss Account. Inhouse developed dies are not separately valued or accounted for in the books of accounts. Used/ Defaced dies, being high security items are shown at nil value.

Mobile Phone Instruments purchased by the staff entitled as per the policy of the company and reimbursed by the company, have not been capitalized but charged to the revenue

(v) DepreciationDepreciation on fixed assets is provided on the straight-line method at the rates and in the manner specified under Schedule XIV to the Companies Act, 1956 as applicable for Single and Double Shift Basis. Assets costing less than `5,000 per unit are fully depreciated in the year of purchase.

Sl.No. Nature of Assets Depreciation

Policy

Rate of Depreciation

followed

Rate Prescribedunder

Companies Act

1 Factory Building SLM 3.34% 3.34%

2 Otherthan Factory Building SLM 1.63% 1.63%

3 Electrical Installation SLM 4.75% 4.75%

4 Electrical Installation(LED lights with 5 years life)

SLM 20% 20.00%

5 Railway Sidings SLM 4.75% 4.75%

6 Office Equipments SLM 4.75% 4.75%

7 Motor Vehicles, Car SLM 9.50% 9.50%

8 Lorries SLM 11.31% 11.31%

9 Furniture SLM 6.33% 6.33%

10 Minor Equipments SLM 4.75% 4.75%

11 Factory Equipments SLM 4.75% 4.75%

12 Computers SLM 16.21% 16.21%

13 Software (less than ` 1 lakh) SLM 100% 100.00%

Software (more than ` 1 lakh and life below 1 year)

SLM 100% 100.00%

Software (more than ` 1 lakh and life above 1 year)

SLM 33.33% 33.33%

14 Plant Machineries

(a) Single Shifts SLM 4.75% 4.75%

(a) Double Shifts SLM 7.42% 7.42%

82

(vi) ImpairmentThe carrying values of assets are reviewed at each reporting date to determine if there is indication of any impairment. If any indication exists, the asset’s recoverable amount is estimated. For assets that are not yet available for use, the recoverable amount is estimated at each reporting date. An impairment loss is recognized whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognised in the profit and loss account. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined net of depreciation or amortisation, if no impairment loss had been recognised.

(vii) Amortizationa. Amortization of Lease Assets

Lease hold rights are amortized over the period of Lease.b. Amortization of Expenditure on Computer Software

Computer Software Purchased, individual value of which is below `1 Lac are fully amortized in the year of Purchase and those exceeding ̀ 1 Lac are amortized over the useful life but subject to a maximum period of 3 years.

(viii) InventoriesManufacturing of Coins

Particular IGM, Hyderabad IGM, Noida IGM, Kolkata IGM, Mumbai

Raw Materials At Cost, FIFO Basis

At Cost, FIFO Basis FIFO Lower of Cost or NRV, Weighted Average Basis

Consumables & Spares

At Cost, FIFO Basis

At Cost, Moving Average Basis

FIFO

Work in Progress At Cost, FIFO Basis

At cost of raw material on FIFO

basis

Lower of Cost or NRV

Cost (Overheads Loaded based on Normal Operating

Capacity)

Finished Goods Lower of Cost or or NRV



Lower of Costor NRV

Scrap NRV NRV NRV NRV

Manufacturing of Currency Notes

Particular CNP, Nashik BNP, DewasRaw Materials Moving average basis FIFO

Stores & Spares - FIFO

Work in Progress Standard Rate based on Overhead Rate and Activity Rate

FIFO

Finished Goods Valued at Cost of Production NRV or Cost(whichever is less)

Scrap - NRV


83

Manufacturing of Security & Currency Papers

Particular SPM, Hoshangabad ISP, Nashik SPP, Hyderabad

Raw Materials Weighted Average Cost on FIFO

FIFO FIFO

Stores & Spares - FIFO FIFO

Work in Progress Budgeted Cost Valued at Estimated Realisable Value less estimated GP Margin

Valued at Cost

Finished Goods Budgeted Cost Valued at Estimated Realisable Value less estimated GP Margin

NRV or Cost (whichever is less)

Scrap NRV or Cost - NRV

With the implementation of SAP (ERP Software), the corporation has switched the basis of calculation of cost for the purpose of valuation of inventory from FIFO to Moving Average, the financial impact due to change in method of computing of cost is not ascertainable.

(ix) Inter Unit Transfers and Valuation of such Inventory

The units are transferring ink, paper, blank and dies at budgeted cost. Other items of consumables etc. are transferred at cost of purchase. Such items of inventory are valued at budgeted cost in the financial statements.

(x) Operating leases

Lease payments under an operating lease are recognised as an expense in the Profit and Loss Account on accrual basis.

(xi) Investments

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. Investments other than current are classified as long-term investments. Investments held primarily to protect, facilitate or further extension of business or trading relations are sub classified as Long Term Trading Investments and others as non trading investments. Current investments are carried at lower of cost or fair value determined on an individual investments basis. Long-term investments are carried at cost. Provision for diminution in value is made to recognize a decline other than temporary in the value of the investments.

(xii) Foreign currency transactions

Foreign currency transactions are recorded at the exchange rates prevailing on the date of the respective transactions. Realised gains and losses on foreign currency transactions during the year are recognised in the Profit and Loss Account. Monetary foreign currency assets and liabilities remaining unsettled at the balance sheet date are translated at year end rates and resultant gains/losses on foreign currency transactions are recognised in the Profit and Loss Account.

84

Exchange gains or losses pertaining to acquisition of Capital Assets are capitalized to the Cost of such assets.

(xiii) Retirement and other employee benefits

Defined contribution plans: The Company’s provident fund scheme is a defined contribution plan. A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions and will have no obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognised as an employee benefit expense in the Profit and Loss Account when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.

Defined benefit plans: The Company’s gratuity scheme is a defined benefit plan. A defined benefit plan is a post-employment benefit plan. The Company’s net obligation in respect of defined benefit plans is calculated by estimating the amount of future benefit that employee have earned in return for their service in the current and prior periods. As per the order of the GOI transferring the Assets and Liabilities of Units to SPMCIL, most of the employees of the units were transferred on deemed deputation for a period of 2 years from the date of transfer i.e. 10/02/2006 which was further extended for another 12 months. A notification was issued by the Government to get absorbed in the company. Options were exercised and Government accepted absorption of employees in the company on 29th May, 2009 but w.e.f. 01/11/2008.

Those employees who decided to remain with Government continue to work in the company till they are redeployed by Government. Company has to bear their salary and wages. The provisions for pensionary charges (which includes Gratuity) and Leave Salary Contribution in respect of these employees and for those holding ex-cadre/ in-cadre posts have been made in accordance with the Government Rules.

Those employees who decided to join the company had two options. They have opted either for “Combined Pension” or “Pro-rata Pension”. Combined pension optees are eligible to get their pension a Pension Trust constituted by Government at the time of their superannuation from Company. Government shall contribute for the past services rendered and company shall contribute for the period they will serve the company. Manner and amount of contribution shall be governed by rule 37-A of CCS (Pension) Rules. Provision for pensionary charges of these employees has been made accordingly. This provisions includes Gratuity also.

Other Long Term Benefits: As per the Company’s policy eligible leaves can be accumulated by the employees and carried forward to future periods to either be utilised during the service, or en-cashed. Encashment can be made during the service, on early retirement, on withdrawal of scheme, at resignation by employee and upon death of employee. The scale of benefits is determined based on the seniority and the respective employee’s salary.

Liability in respect of Gratuity, a defined benefit plan, is being provided as per actuarial valuation. The difference between liability balance and accrued liability at the end of the year based on actuarial valuation is charged to profit & Loss account.


85

Liability in respect of Other Long term/terminal employee benefits, being defined benefit plan is recognised on the basis of actuarial valuation.

Contribution with respect to the provident fund, a defined contribution plan, are made to the trust setup by the company for the purpose.

(xiv) Prior Period & Extra Ordinary ItemsPrior Period Items are incomes and expenses which arise in the current period as a result of errors and omissions in the preparation of Financial Statements of one or more prior periods.

Extra Ordinary Items are incomes and expenses that arise from events or transactions that are clearly distinct from the ordinary activities of the enterprise and therefore not expected to recur frequently or regularly.

Both Prior Period and extra ordinary items are separately disclosed in the financial statements.

(xv) Research & Development Capital Expenditure pertaining to Research and development are Capitalized as Fixed Assets and those revenue in nature are charged to profit and loss account.

(xvi) Earnings per shareBasic earning per share is computed using the weighted average number of equity shares outstanding during the year. Diluted earning per share is computed using the weighted average number of equity and dilutive equity equivalent shares outstanding during the year end, except where the results would be anti-dilutive.

(xvii) TaxationCurrent and deferred taxIncome tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with the income tax law) and deferred tax charge or credit (reflecting the tax effect of timing differences between accounting income and taxable income for the period). The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in the future. Deferred tax assets are reviewed at each balance sheet date and written down or written up to reflect the amount that is reasonably/virtually certain (as the case may be) to be realised. Deferred tax assets or liabilities arising due to timing differences, originating during the tax holiday period and reversing after the tax holiday period are recognized in the period in which the timing difference originates.

(xviii) Provisions and contingent liabilitiesA provision arising from claims, litigation, assessment, fines, penalties, etc. is recognised when the Company has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. These are reviewed at each balance sheet date and adjusted to reflect current management estimates. Contingent liabilities are disclosed in respect

86

of possible obligations that have risen from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the enterprise, or is a present obligation that arises from past events but is not recognized because either it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation, or a reliable estimate of the amount of the obligation cannot be made. When there is a possible obligation or present obligation where the likelihood of an outflow is remote, no disclosure or provision is made.

(xix) Provision for Doubtful Debts:

100% Provision is created for Debts outstanding for a period more than 3 Years.

(xx) Operating Cycle

Operating cycle is defined as the time between acquisition of assets for processing and their realization in cash and cash equivalents. Where the normal operating cycle cannot be identified, it is assumed to have duration of 12 Months.

In case of BNP and CNP- Normal operating cycle is 8 Months.

In case of Mints- Normal operating cycle is 8 Months for circulation coins and 12 months for other products of mints.

In case of Paper Mill- Normal operating cycle is 4 Months.

In case of Security Presses- As there is no certainty regarding realization of Debtors in case of Products of these units as most of the customers are Government organization, normal operating cycle cannot be identified. Therefore it is assumed that operating cycle in case of products of these units of SPMCIL is 12 Months.

(xxi) Classification as per Revised Schedule VI of Companies Act.

As per Revised Schedule VI:

(1) An asset shall be classified as current when it satisfies any of the following criteria:

1. It is expected to be realized in, or is intended for sale or consumption in, the company’s normal operating cycle.

2. It is held primarily for the purpose of being traded.

3. It is expected to be realized within twelve months after the reporting date.

4. It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.

All other assets shall be classified as non current.

(2) A. Liability shall be classified as current when it satisfies any of the following criteria:

1. It is expected to be settled in the company’s normal operating cycle.

2. It is held primarily for the purpose of being traded.

3. It is due to be settled within twelve months after the reporting date.


87

4. The company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

All other Liabilities shall be classified as non current.

B. Raw Materials, stores and components, scrap which are intended for consumption or sale in the course of the company’s operating cycle shall be classified as current.

C. Non Moving inventory shall be classified as Non-current unless it is estimated that the same shall be consumed or sold within 12 months after the reporting date.

D. W.I.P shall be classified as Current ONLY.

E. Finished Goods inventory which is being held primarily for purpose of being traded shall be classified as current. These may be held for any period of time. That time period has no relevance here so far as it is held primarily for trade.

F. Trade receivables which are expected to be realized within 12 months from the reporting date shall be classified as Current.

G. Trade receivables which are outstanding for more than 1 years as on 31.03.2013 shall be shown as Non Current only unless efforts for its recovery have been made and it is likely that payment shall be received within 12 months from the reporting date. A Judicious decision shall be taken be unit in this regard. For Example: In case payment is pending due to non finalization of prices due to costing and it is likely that costing shall be finalized and payment shall be realized within 1 year then same shall be treated as current.

H. Trade Payables which are expected to be settled within 12 months from the reporting date shall be shown as current

Note 2

Share Capital As at 31st March, 2013 As at 31st March, 2012

Number Amount (`) Number Amount (`)

Authorised

Equity Shares of `10 each

2,500,000,000 25,000,000,000 2,500,000,000 25,000,000,000

Issued, Subscribed and Paid Up

Equity Shares of ` 10 each

50,000 500,000 50,000 500,000

Total 50,000 500,000 50,000 500,000

88

Note 3

Funds from Govt of India (Adjustable) As at 31st March, 2013(`)

As at 31st March, 2012(`)

Opening Balance of Funds from GOI 28,796,699,342 28,797,821,108

Adjustments during the Year (if any) (1,771,171) (1,121,767)

Total 28,794,928,171 28,796,699,342

Note 4

Reconciliation of number of shares outstanding at the beginning and at the end of the year

As at 31st March, 2013 As at 31st March, 2012

Number Amount (`) Number Amount (`)

Shares outstanding at the beginning of the year 50,000 500,000 50,000 500,000

Shares Issued during the year - - - -Shares bought back during the year - - - -Shares outstanding at the end of the year 50,000 500,000 50,000 500,000

Note 5

Name of Shareholder holding more than 5% Shares

As at 31st March, 2013 As at 31st March, 2012No. of Shares

held% of Holding No. of Shares

held% of

HoldingPresident of India through Shri P.K. Mishra (Last year Shri Bimal Julka)Disclosure pursuant to Note no. 6(A)(k) of Part I of ScheduleVI to the Companies Act, 1956

49,994 99.99 49,994 99.99

Unpaid CallsBy Directors - - - -By Officers - - - -

Total 49,994 99.99 49,994 99.99

Note 6

Reserves & Surplus As at 31st March, 2013 (`)

Asat 31st March, 2012(`)

a. Capital ReservesOpening Balance 41,994,800 41,994,800Closing Balance (a) 41,994,800 41,994,800

b. General ReserveOpening Balance 1,159,658,312 577,192,354(+) Current Year Transfer 423,486,578 582,465,958Closing Balance (b) 1,583,144,890 1,159,658,312

c. SurplusOpening Balance 22,501,720,983 18,613,440,356

(+) Net Profit/(Net Loss) For the current year 4,234,865,782 5,824,659,581(+) Transfer from Reserves 0 0


89

Reserves & Surplus As at 31st March, 2013 (`)

Asat 31st March, 2012(`)

(-) Transfer to Reserves 423,486,578 582,465,958(-) Proposed Dividends 846,973,156 1,164,931,916(-) Dividend Distribution Tax 137,400,220 188,981,080Closing Balance (c) 25,328,726,811 22,501,720,983

Total (a+b+c) 26,953,866,501 23,703,374,095

Note 7

Other Long Term Liabilities As at 31st March, 2013 (`)


(a) Trade Payables- Non Current 13,401,520 16,726,091(b) Retention against Sales Tax liability 202,228,399 202,228,399(c) Taxes/Duties Payable 31,075,181 31,075,181(d) Others- Non Current 2,948,025 2,948,025

Total 249,653,125 252,977,697

Note 8

Long Term Provisions As at 31st March, 2013 (`)


(a) Provision for employee benefitsProvision for Gratuity 455,307,003 330,665,820

Provision for Leave Encashment 1,588,122,265 1,476,618,184Provision for Pensionary Charges Contribution 385,192,886 433,381,083

Provision for Leave Salary Contribution 345,133,853 352,741,475Provision for Ex-Gratia 5,661,000 5,644,982

(b) Others Long Term Provisions 0 0Total 2,779,417,007 2,599,051,544

Note 9

Trade Payables As at 31st March, 2013(`)


Trade Payables other than MSMED 2,107,834,744 1,659,695,496Trade Payables Principal -MSMED 203,714,593 142,893,268Total 2,311,549,337 1,802,588,763

Note 10

Other Current Liabilities As at 31st March, 2013 (`)


Advance from Customers 345,395,507 443,010,521

Earnest Money Deposit (EMD) 34,407,390 26,573,702

Security Deposits of Supplier/Vendor 338,305,361 307,263,217

Payable to PAO 5,315,205 7,586,458

TDS Payable 70,962,032 18,667,724

90

Other Current Liabilities As at 31st March, 2013 (`)


Sales Tax Payable 11,175,385 11,508,807

Excise Duty Payable 0 1,133

Service Tax payable 5,967,298 451,306

Octroi Payable 3,165,786 6,002,348

Salaries and Wages and other employees benefits Payable

221,866,608 463,872,412

Recovery from Salaries Payable to concerned authorities

47,325,560 80,194,161

EPF/GPF Payable 8,859,205 119,107,095

Expenses payable 190,797,332 166,426,624

Contribution to SPMCIL Pension Trust Payable 14,314,837 55,634,013

Pensionary Charges Payable 304,909,151 332,332,205

Bank Book Overdraft 14,520,188 23,696,295

Capital Goods Creditors 4,946,517 333,836

Others current Liabilities 147,804,387 293,865,559

Total 1,770,037,747 2,356,527,416

Note 11

Short Term Provisions As at 31st March, 2013 (`)


(a) Provision for employee benefits Provision for Leave Salary and Pensionary Charges 502,951,341 525,109,845

Provision for Gratuity 3,294,925 18,135,647

Provision for Ex-Gratia 158,965 266,300

Provision for Leave Encashment 245,323,516 195,040,431

Provision for Compensation in Lieu of Compassionate Appointment

42,380,537 27,392,874

Provision for ACP Arrear Payable 23,055,320 5,132,234

Other Employees Benefits Short Term Provisions 9,614,193 57,398,418

(b) Other Short Term ProvisionsProposed Dividend 846,973,156 1,164,931,916Dividend Distribution Tax 137,400,220 188,981,080Provision for Taxation A.Y 2013-14 3,408,421,652 0Provision for Taxation A.Y 2012-13 0 2,686,476,050

Provision for Taxation A.Y 2011-12 0 2,670,383,980

Provision for Taxation A.Y 2010-11 0 2,941,429,199

Other Short Term Provisions 4,819,949 9,557,264Total 5,224,393,775 10,490,235,238


91

Not

e 12

- Fi

xed

Ass

ets

Sl. No.

Fixed

Asse

ts

Gros

s Bl

ock

Accu

mul

ated

Depr

ecia

tion

Impa

irmen

tNe

t Blo

ck

Balan

ce as

at

1st Apri

l 201

2Ad

dition

sDe

letion

sAd

justm

ents

Balan

ce as

at 31

Ma

rch 20

13Ba

lance

as at

1st Ap

ril 20

12De

precia

tion

charg

e for

the

year

Adjus

tmen

ts(O

n disp

os-

als)

Balan

ce as

at

31st M

arch 2

013

Balan

ce as

at

1st Ap

ril 20

12

Durin

g the

Ye

arBa

lance

as

at 31

Marc

h 20

13

Balan

ce as

at

1st April

2012

Balan

ce as

at

31st M

arch 2

013

``

``

``

``

``

``

``

`

1Ta

ngib

leAs

sets

Land

43,44

7,819

00

(4,12

1,909

)47

,569,7

280

00

00

00

043

,447,8

1947

,569,7

28

Leas

e Hold

Land

21,58

3,673

00

021

,583,6

731,7

03,47

427

7,576

00

1,981

,050

00

019

,880,1

9919

,602,6

23

Build

ings

952,8

65,40

914

,289,6

200

096

7,155

,029

336,6

02,67

016

,872,0

250

035

3,474

,695

00

061

6,262

,739

613,6

80,33

4

Facto

ry Bu

ilding

1,251

,211,0

13

20,89

5,602

04,1

21,90

91,2

67,98

4,706

580,2

56,82

938

,726,3

650

061

8,983

,194

00

067

0,954

,184

649,0

01,51

2

Plant

and E

quipm

ent

17,02

0,205

,180

2,145

,680,5

3210

,305,3

55(6,

772,1

66)

19,16

2,352

,523

9,786

,614,2

3696

2,178

,163

3,320

,204

1,731

,709

10,74

3,740

,486

119,3

99,31

2 40

3,896

119,8

03,20

8 7,1

14,19

1,631

8,2

98,80

8,829

Furni

ture a

nd Fi

xtures

102,7

30,82

96,9

30,55

060

,381

213,4

2310

9,387

,575

55,84

9,131

5,948

,395

5,636

,977

16,36

656

,144,1

830

00

46,88

1,698

53,24

3,392

Vehic

les86

,862,3

296,0

64,83

154

0,213

092

,386,9

4763

,066,3

524,9

72,75

854

0,151

067

,498,9

590

00

23,79

5,977

24,88

7,988

Offic

e Equ

ipmen

t96

,216,5

804,7

58,00

817

4,943

3,901

,489

96,89

8,156

45,61

4,375

3,552

,017

(127,7

72)

1,606

,184

47,68

7,981

394,8

313,1

8439

8,015

50,20

7,373

48,81

2,160

Comp

uters

and

Print

ers36

0,721

,018

81,31

8,205

247,4

70(10

5,024

)44

1,896

,777

139,8

44,32

254

,912,4

77(5,

683,1

11)

144,7

6620

0,295

,144

3,348

20,89

724

,245

220,8

73,34

924

1,577

,388

Railw

ay Si

ding

4,682

,817

00

3,368

,231

1,314

,586

2,326

,477

01,0

11,89

1 0

1,314

,586

00

02,3

56,34

00

Electr

ical In

stalla

tions

464,9

27,81

712

3,497

,015

00

588,4

24,83

229

2,571

,285

13,30

9,184

00

305,8

80,46

80

00

172,3

56,53

228

2,544

,364

R&D A

ssets

28,34

5,772

17,68

1,473

00

46,02

7,245

902,5

371,5

31,39

60

02,4

33,93

40

00

27,44

3,235

43,59

3,311

Total

20,43

3,800

,256

2,421

,115,8

36

11,32

8,362

60

5,953

22,84

2,981

,777

11,30

5,351

,687

1,102

,280,3

584,6

98,34

03,4

99,02

512

,399,4

34,68

011

9,797

,491

427,9

7712

0,225

,468

9,008

,651,0

7810

,323,3

21,62

9

Prev

iousY

ear

19,37

1,444

,006

1,288

,378,9

6822

5,923

,663

99,05

620

,433,8

00,25

510

,421,5

98,53

697

6,483

,292

67,53

2,792

25,19

7,347

11,30

5,351

,689

5,625

,179

114,1

72,31

2 11

9,797

,491

8,944

,220,2

909,0

08,65

1,075

2In

tang

ible

Asse

ts

Comp

uter s

oftwa

re45

,636,7

3217

7,190

,380

0(11

,077)

222,8

38,18

930

,122,1

5949

,665,7

380

079

,787,8

970

00

15,51

4,574

143,0

50,29

2

Tota

l45

,636

,732

177,

190,

380

0(1

1,07

7)22

2,83

8,18

930

,122

,159

49,6

65,7

380

079

,787

,897

00

015

,514

,574

143,

050,

292

Prev

ious

Year

29,2

89,3

0116

,983

,309

635,

878

045

,636

,733

20,8

99,3

689,

872,

136

35,8

6261

3,48

330

,122

,160

00

08,

389,

933

15,5

14,5

73

3Ca

pita

l Wor

k In

Prog

ress

1,660

,199,4

2655

4,36

1,92

232

9,776

,619

826,8

96,64

81,

057,

888,

082

00

00

00

00

1,660

,199,4

261,0

57,88

8,082

Tota

l1,6

60,19

9,426

554,

361,

922

329,7

76,61

982

6,896

,648

1,05

7,88

8,08

20

00

00

00

01,6

60,19

9,426

1,057

,888,0

82

Prev

ious

Year

2,309

,826,4

1975

3,00

8,86

688

5,391

,122

517,2

44,73

71,

660,

199,

426

00

00

00

00

2,309

,826,4

191,6

60,19

9,426

92

Note 13

Non-Current Investments (Trade Investments) As at 31st March, 2013 (`)


Unquoted-Equity Shares of Bank Note Paper Mill India Pvt Ltd. (JV of Security Printing and Minting Corporation of India Ltd and Bhartiya Reserve Bank Note Mudran Pvt. Ltd. [3,00,00,000 Shares @`100 each (F.Y 2011-12, 1,00,00,000 Shares @`100 each)]

3,000,000,000 1,000,000,000

Total 3,000,000,000 1,000,000,000

Note 14

Long Term Loans and Advances As at 31st March 2013 (`)

As at 31st March 2012(`)

a. Capital Advances

Secured, considered good 2,153,777,705 996,948,552

Share Application Money Pending Allotment- Bank Note Paper Mill India Pvt. Ltd. (Shares is allotted on 30.05.2012)

0 1,000,000,000

Unsecured, considered good 11,439,202 4,291,006

Unsecured, considered Doubtful 21,539 21,539

2,165,238,446 2,001,261,097

Less: Provision for doubtful advances 21,539 21,539

Total (A) 2,165,216,907 2,001,239,558

b. Security Deposits

Unsecured, considered good 23,423,291 22,489,955

23,423,291 22,489,955

Less: Provision for doubtful deposits 0 0

Total (B) 23,423,291 22,489,955

c. Employees loans and advances

Secured 102,057,771 116,179,952

Unsecured 240,631,894 157,649,236

342,689,665 273,829,188

Less: Provision 0 0

Total (C) 342,689,665 273,829,188

Total (A+B+C) 2,531,329,863 2,297,558,701


93

Note 15

Other Non-current Assets As at 31st March, 2013 (`)


Long term trade receivables

Unsecured, Considered Good 1,402,969 1,402,969

Doubtful 1,566,765,859 1,274,930,061

1,568,168,828 1,276,333,030

Less: Provision for Trade Receivable 1,566,765,859 1,274,930,061

Total (A) 1,402,969 1,402,969

Non Moving Inventory 1,900,388,066 1,957,486,546

Less: Provision for Non-moving Inventory 48,146,350 50,276,368

Total (B) 1,852,241,716 1,907,210,178

Deposit with CISF 6,396,600 6,396,600

Deposit with Electricity Board 51,461,390 50,947,686

Deposit with Tax Authorities/other Departments 39,155,612 24,694,920

Advances (others) 1,670,655 116,000

Total (C) 98,684,257 82,155,206

Total (A+B+C) 1,952,328,942 1,990,768,353

Note 16

Current Investments (Non-Trade)As at 31st March, 2013

(`)As at 31st March, 2012

(`)

UTI Liquid Cash Plan(Short Term, Valued at Cost)977838.72 units @ `1019.45[Market Value and Value at Cost on 31.03.2012 `99,68,53,474/-])

0 996,853,474

UTI Treasury Advantages Fund(Short Term, Valued at Cost)1000406.871 units @ `1000.2141[Market Value and Value at Cost as on 31.03.2012 `41,81,441])

1,000,621,058 4,181,442

Total 1,000,621,058 1,001,034,916

94

Note 17

Inventories As at 31st March, 2013 (`) As at 31st March, 2012(`)

Raw Materials and components 4,206,389,608 4,196,712,652

Raw Material in transit 160,950,947 983,752,911

Goods in Transit 165,795,650 87,597,431

Work-in-progress 2,467,427,898 2,562,766,616

Finished goods 460,588,879 1,225,529,257

Stores and spares 488,572,463 337,678,181

Scrap 387,781,623 397,611,139

Other Inventory 13,990,191 6,745,641

Total 8,351,497,259 9,798,393,828

Note 18

Trade Receivables As at 31st March, 2013(`)


Trade receivables outstanding for a period less than six months from the date they are due for payment

Unsecured, Considered Good 13,417,038,335 5,418,961,594

Unsecured, Considered Doubtful 882,332 0

13,417,920,667 5,418,961,594

Less: Provision for Trade Receivable 882,332 0

Less: Provision for Rate Differences 2,625,969,125 0

Total (A) 10,791,069,210 5,418,961,594

Trade receivables outstanding for a period exceeding six months from the date they are due for payment

Secured, Considered Good 0 296,170

Unsecured, Considered Good 8,730,147,675 7,239,414,158

Unsecured, Considered Doubtful 516,916,452 451,174,337

9,247,064,127 7,690,884,665

Less: Provision for Trade Receivable 516,916,454 451,174,337


Total (B) 6,686,871,773 7,239,710,328

Total (A+B) 17,477,940,983 12,658,671,922


95

Note 19

Cash and Bank Balances As at 31st March, 2013 (`)


a. Cash and Cash equivalents

Balances with banks 388,652,903 710,122,573

FDR with Banks (Excluding pledged FDRs) with maturity less than 12 Months from the Balance sheet date

12,759,200,000 17,160,477,120

Cheques, drafts on hand 34,854 44,038

Cash in hand 444,972 694,327

Postage in Hand 195,818 1,277,042

b. Other Bank Balances

FDR pledged with Bank 0 33,000,000

Total 13,148,528,547 17,905,615,101

Note 20

Short-term Loans and Advances As at 31st March, 2013(`)


Unsecured Considered Good

Loan and Advances to Employees 94,230,901 51,796,172

Deposits with other Departments 732,238 772,971

Amount Receivable from EPF Trust 74,877,684 331,804,514

Amount Receivable from Pension Trust 113,619,989 93,857,972

Leave Encashment Receivable from Govt of India 1,198,290,046 1,198,236,515

Advances to Supplier 1,549,196,020 1,515,932,372

Advances to PAO 20,411,705 4,062,268

Advances to CPWD 33,209,220 64,477,433

Advances to BSNL (Civil Work) 6,720,018 8,092,964

Advances (Others) 7,420,293 216,501

Excise Duty PLA Balance 170,045 241,136

Excise Duty CENVAT 2,511,115 5,167,703

CST Refund Receivable 18,429,157 18,432,232

VAT/Sales Tax Receivable 50,999,745 49,099,097

96

Short-term Loans and Advances As at 31st March, 2013(`)


MVAT Refund Receivable 45,167,614 38,610,503

Advance Income Tax A.Y 2013-14 2,800,000,000 0

Advance Income Tax A.Y 2012-13 0 2,210,000,000



TDS A.Y 2013-14 1,050,474 0

TDS A.Y 2012-13 0 884,579

TDS A.Y 2011-12 0 55,359,593

TDS A.Y 2010-11 0 205,233,703

Income Tax Refund Receivable AY 2009-10 195,369,005 195,369,005

Income Tax Refund Receivable AY 2011-12 701,250 0

Income Tax Refund Receivable AY 2012-13 160 0

Prepaid Expenses 6,360,206 7,757,648

Others short term loans and advances 30,944,396 43,790,487

Total 6,250,411,279 11,280,391,508

Less: Provision for Doubtful Advances 8,323 8,323

Total 6,250,402,956 11,280,383,185

Note 21

Other Current Assets As at 31st March, 2013 (`)


Interest Receivable on FDR 28,043,488 306,633,736

Asset Held for Disposal 13,601,459 13,601,459

PAO/C&C DEA Ministry of Finance (EPF) 90,197,572 93,180,787

PAO/C&C DEA Ministry of Finance (GPF) 81,194,533 223,669,980

Commemorative Coins 154,890 0

Other receivables 41,283,681 14,137,994

Total 254,475,623 651,223,956


97

Note 22

Revenue from Operations As at 31st March, 2013 (`)


Sale of products (Gross)

Sale of Notes 15,364,708,000 13,359,511,000

Sale (Export) 0 77,687,735

Sale of Coins 18,063,965,735 13,669,126,465

Sale of Medals and Commemorative Coins 482,885,225 622,635,285

Sale of Security Paper 5,253,852,908 5,206,948,124

Sales-Others 1,524,686,004 1,259,460,661

Total 40,690,097,873 34,195,369,270


Total (A) 36,235,230,448 34,195,369,270

Sale of services

Job Work 8,378,769 4,549,230

Other Services 8,100,868 26,853,923

Total (B) 16,479,637 31,403,153

Other operating revenues

Sale of Scrap 906,246,079 761,694,995

Other operating Activities 16,631,598 9,496,528

Total (C) 922,877,677 771,191,523

Gross Total D (A+B+C) 37,174,587,762 34,997,963,946

Less: Excise Duty (E) 45,166,246 51,222,189

Total (D-E) 37,129,421,516 34,946,741,757

Revenue from Operations 37,129,421,516 34,946,741,757

98

Note 23

Other Income As at 31st March, 2013 (`)


Interest Income (Net) 1,187,596,857 1,230,841,434

Dividend Income 31,809,489 63,212,729

Foreign Exchange Fluctuation Gains 29,927,143 48,630,699

Profit on Sale of Fixed Assets 4,060,657 516,993

Other non-operating income (net of expenses directly attributable to such income)

170,429,518 87,761,659

Provisions/Liabilities written Back 7,174,295 245,543,617

Total 1,430,997,960 1,676,507,132

Note 24

Manufacturing Cost As at 31st March, 2013 (`)


Cost of Raw Materials Consumed 18,833,407,329 16,522,274,181

Total 18,833,407,329 16,522,274,181

Note 25

Changes in Inventories of Finished Goods, Work in Progress and Scrap

As at 31st March, 2013 (`)


Closing Stock

Finished Goods 460,633,495 1,229,210,646

Work in Progress 2,484,797,385 2,698,129,944

Scrap 389,151,014 417,089,341

Total (A) 3,334,581,894 4,344,429,931

Opening Stock

Finished Goods 1,229,210,646 1,119,250,609

Work in Progress 2,698,129,944 2,812,659,917

Scrap 417,089,341 210,055,902

Total (B) 4,344,429,931 4,141,966,428

Changes in Inventories of Finished Goods and Work in Progress (A-B)

1,009,848,037 -202,463,502


99

Note 26

Employee Benefits Expense As at 31st March, 2013 (`)


Salaries, Wages and allowances 4,734,569,095 4,403,859,382

Overtime 1,051,587,785 1,042,562,678

Incentive 1,110,545,314 936,169,365

LTC 42,454,216 23,126,620

Medical 135,608,734 123,192,189

Employer Contribution to EPF 290,658,968 300,672,139

Leave Salary & Pensionary Charges contribution 68,918,164 246,766,671

Contribution to SPMCIL Pension Trust 58,111,156 42,151,879

Leave Encashment 387,408,438 176,246,740

Gratuity 102,178,756 137,161,520

Staff welfare expenses 3,732,956 21,375,633

Other employee benefits 150,582,225 168,137,244

Total 8,136,355,806 7,621,422,060

Note 27

Other Expenses As at 31st March, 2013 (`)


Other Manufacturing Expenses

Consumption of stores, spare parts and components 575,757,678 390,961,809

Power, Fuel and Water 525,431,026 444,549,545

Repairs & Maintenance to Machinery 54,486,966 71,629,005

Repairs & Maintenance to Factory Building 68,970,649 25,878,068

Packing Expenses 133,852,786 105,991,364

Other Manufacturing Cost 138,082,570 34,706,071

Total (A) 1,496,581,676 1,073,715,861

Administrative Expenses

Advertising Expenses 31,763,605 51,993,446

Commission (Auction & Other) 24,217,768 25,376,285

Audit Fees 2,655,294 2,629,112

100



Bank Charges 787,438 423,425

Canteen Expenses (Net of Receipts) 13,911,804 14,153,399

Dispensary Expenses 29,473,898 30,499,311

Environmental Charges 3,697,757 9,840,949

Fees & Honorarium 6,422,840 5,100,900

Freight Outwards 104,264,104 66,353,581

Foreign Exchanges Fluctuation Losses 11,268,199 11,386,747

Grants in Aid Expenses 433,451 275,930

Loss on Sale/Discard of Assets 180,935 117,593,312

Guest House Expenses (Net of Receipts) 6,000,644 22,249,421

Hiring of Staff 25,376,908 19,674,424

Horticulture Expenses 7,548,252 5,789,158

Hospitality & Entertainment 9,682,712 13,971,555

Legal & Professional Charges 64,460,341 54,100,218

Meeting Expenses 593,403 280,652

Misc. Expenses 3,383,313 2,747,979

Office Expenses 8,040,796 3,987,093

Postage & Courier Expenses 14,888,230 8,007,913

Printing & Stationery Expenses 13,070,260 7,384,114

Research & Development Expenses 13,010,819 23,493,947

Repair & Maintenance- Building 87,085,766 141,184,617

Repair & Maintenance- Computers 3,544,820 6,418,490

Repair & Maintenance- Others 42,724,595 28,841,984

Rent 54,466,520 47,741,163

Insurance 2,790,947 2,439,227

Rates & Taxes 14,722,204 15,108,665

Security Charges 749,415,521 604,218,101

Seminar & Training Expenses 42,959,361 12,325,344

Service Tax Paid/ Sales Tax 1,003,978 0


101



Subscription, Newspaper, Books & Periodicals 1,094,572 1,591,489

Sustainable Development 3,137,983 0

Telephones & Internet Charges 12,406,792 17,822,520

Travelling & Conveyance Expenses 59,396,887 58,573,830

Travelling Expenses Foreign 8,301,588 5,523,910

Uniform & Liveries 1,390,672 3,370,752

Corporate Social Responsibility Exp (CSR) 35,543,004 43,640,497

Vehicle Hiring/ Maintenance Charges 19,864,190 18,400,449

Water & Electricity Charges 48,117,248 47,291,505

Others Expenditure 28,696,430 54,508,821

Total (B) 1,611,795,848 1,606,314,234

Note 28

Provision Movement Analysis As at 31st March 2013 (`)

As at 31st March 2012(`)

Provision for Trade Receivable/Advances

Opening Balance 1,726,081,555 1,844,039,678

Provision Made during the Year (C) 365,944,163 153,390,839

Provision reversed during the Year 0 761,439,539

Adjustment During the Year (Due to diff in Opening and Closing Balance)

(8,366,251) 490,090,577

Closing Balance 2,083,659,468 1,726,081,555

Provision for Obsolete/Non Moving Inventory/Shortage

Opening Balance 51,123,023 49,284,232

Provision Made during the Year (D) 1,929,245 4,289,319

Provision reversed during the Year 5,245,117 2,450,528

Closing Balance 47,807,151 51,123,023

Provision for Rate Differences

Opening Balance 0 0

Provision of Differences of Coins in Earlier Years (E) 214,377,600 0

Closing Balance 214,377,600 0

Total (A+B+C+D+E) 3,690,628,533 2,837,710,254

102

Note 29

Prior Period Expenditure As at 31st March, 2013(`)


VAT Liability 0 1,001,000

Bonus to Employees 1,451,054 0

Prior period Exp. (Units) 0 29,734,726

Expenses of Earlier Years 2,512,857 0

Insurance Expenses 0 6,609,536

Other Prior Period Expenditures 23,450,169 12,013,933

Total 27,414,080 49,359,195

Prior Period Income

Disputed Legal case 6,901,282 1,937,706

Refund of Excess payment made to PAO 33,805,233 1,216,992

Purchase Blanks 0 18,807,329

Opening WIP Adjustment 0 18,884,708

LME difference of NB Coils transferred by IGM,Mumbai 0 3,067,929

Provision for Depreciation Written Back 0 136,880

Reversal of excess provision for Trade Receivable 8,366,251 0

Prior Period Income (Units) 0 3,783,394

Other Prior Period Incomes 27,768,351 6,471,050

Total 76,841,117 54,305,988

Note 30

Payments to the Auditor as As at 31st March, 2013 (`)


a. Auditor 1,460,680 1,460,680

b. For Taxation Matters 789,329 672,369

c. For other Services 174,158 531,855

d. For Reimbursement of Expenses 62,749 75,311

Total 2,486,916 2,740,215


103

Note 31

Consumption of Raw Material under Broad Heads As at 31st March, 2013(`)


CWBN Paper 5,134,177,434 4,810,170,986

Security Paper 1,923,422,268 1,620,378,498

Ink 1,853,043,878 1,736,272,859

FSS Coil 3,272,713,011 3,133,320,718

NiBR Coil 2,427,855,306 3,333,084,542

FSS Blanks 1,806,305,793 1,717,749,970

NiBR Blanks 178,811,610 236,399,096

Bi-Metallic `10 Blanks 5,678,022,619 2,843,375,829

Chemicals 34,876,799 61,690,830

Security Fibre 24,007,992 18,369,050

Security Thread 125,520,706 168,485,912

M-Feature 4,304,809 32,732,776

Furnace Oil 198,638,639 156,550,223

Bleached Cotton Linter 16,277,685 62,638,268

Comber 343,233,121 312,526,143

Other 424,761,141 169,895,735

Less: Inter Unit Transfer 4,612,565,482 3,891,367,255

Total 18,833,407,329 16,522,274,181

Note 32

Work in Progress under Broad Heads As at 31st March, 2013 (`)


W.I.P of Notes & Inks 1,424,759,703 1,147,231,309

W.I.P of Coins/Blanks 684,024,015 1,029,764,950

W.I.P of Ink 0 23,563,535

W.I.P of Security Paper 111,009,575 37,720,405

W.I.P of Postal Items 17,148,586 3,791,957

W.I.P of Non-Postal Items 167,292,287 268,087,135

W.I.P of Travel Documents 47,272,419 2,930,111

WIP Others 33,290,800 185,040,542

Total 2,484,797,385 2,698,129,944

104

Note 33

Value of imports calculated on C.I.F basis by the company during the financial year in respect of : (On Accrual Basis)



1. Raw Materials 5,976,077,370 4,032,371,722

2. Stores, Components and spare parts 178,871,714 156,920,994

3. Capital Goods 240,880,769 387,230,362

Total 6,395,829,853 4,576,523,079

Note 34

Expenditure in foreign currency during the financial year on account of : (On Accrual Basis)



1. Royalty, Know-how, Professional and consultation fee

0 655,109

2. Conferences 0 516,031

3. Foreign Travel 3,769,780 2,601,316

Total 3,769,780 3,772,456

Note 35

Consumption of Imported raw material, stores, spare parts and components as compared to Indigenous raw material, Stores, spare Parts and components (Including Consumption on Account of Inter Unit Transfers)



Total Value of all imported raw material consumed (A) 8,434,987,299 4,877,809,146

Total Value of all indigenous raw material consumed (B) 15,010,985,513 15,535,832,290

Total (A+B)* 23,445,972,812 20,413,641,436

% of A to total (A+B) 36 24

% of B to total (A+B) 64 76

Total Value of all imported Stores, Spare parts & compo-nents consumed (c)

72,448,294 133,664,168

Total Value of all indigenous Stores, Spare parts & com-ponents consumed (D)

503,309,384 257,297,641

Total (C+D) 575,757,678 390,961,809

% of C to total (C+D) 13 34

% of D to total (C+D) 87 66


105

Note 36

Earnings in foreign exchange classified under the following heads, namely:-

As at 31 March 2013 As at 31 March 2012

1. Exports of goods calculated on F.O.B Basis 0 79,557,000

Total 0 79,557,000

Note 37 Contingent liabilities and Commitments:

(Amount in `)

Contingent liabilities and commitments (to the extent not provided for)

As at 31st

March, 2013As at 31st

March, 2012

(I) Contingent Liabilities

(i) Claims against the company not acknowledged as debt (Excluding legal cases where amounts are unascertainable)

Cases filed by employees/workers(a) 2,337,467,150 2,252,447,630

(b) Cases filed by Suppliers 53,458,382 6,854,970

(c) Octroi Penalty

(d) Demand of VAT Currency Coins, Misc Sales & Misc

2,387,951,690

1,357,533,649

2,387,951,690

807,201,016

(e) Sales Tax Dispute 2,635,888,591 2,236,278,771

(f) Custom Duty

(g) Service Tax

40,250,000

178,499

-

-

(ii) Commercial Tax (Entry Tax) 14,266,768 -

(iii) Bank Guarantees - 3,865,000

(iv) Letter of credit issued by Banks 579,142,366 247,803,931

(v) Income Tax 164,619,770 5,712,718

(vi) Others 192,900,000 194,310,688

Total 9,763,656,844 8,142,426,414

(II) Commitments

(i) Estimated amount of contracts remaining to be executed on capital account and not provided for

1,320,944,218 3,714,069,425

Total 1,320,944,218 3,714,069,425

Grand Total (`) (I+II) 11,084,601,062 11,856,495,839

106

Note 38 Deposit against Contingent Sales Tax Liability

Sales Tax was collected under account head named “Deposit against Contingent Sales Tax Liability” up to F.Y 2007-08 due to old practice. During the F.Y 2008-09 decision was taken that as sales tax is not payable on sales of security items to State and Union Territory government and therefore the same may not be collected and sales tax collected between 10.02.2006 to 31.03.2008 was credited back to customers Sales tax collected up to 10.02.2006 amounting to `202,228,399 is being shown as liability under the head other long term liabilities.

Note 39 Inter Unit Transferal

Inter Unit Transfer are made at Budgeted value.

Note 40 Assets & Liabilities taken over

a) As per the Govt. decision, all the assets and liabilities of above mentioned nine units as on 10.02.2006 has been transferred to SPMCIL. Assets and liabilities prevailing as on 09.02.2006 were taken over on 10.2.2006 in the books of SPMCIL on historic cost basis as per books of the Government Units.

b) The proforma accounts were prepared by the units before their corporatizations as a subsidiary account. It was in addition to the Govt. Accounts prepared by Ministry of Finance. In the units, proforma account was not up to date as on 09.02.2006 i.e. the date of corporatizations. It has now been prepared by all units and due for audit by C&AG in some cases. Finalization/Audit of Proforma Accounts up to 09.02.2006 as well as physical verification of assets of all units may affect the amount payable to the government as well as assets and liabilities of the Company.

c) After the transfer of assets & liabilities from government to company, it is required to take necessary steps to get the title deed changed in the name of the company. Efforts are being made to consolidate the revenue records pertaining to ownership, thereafter process will be initiated to transfer the title of immovable properties as per the guidelines of Department of Public Enterprises.

Note 41 Withdrawn Coins

Withdrawn coins are received in the mints for melting. These are received by Mints from Government and Mints act as custodian to it. After melting, metal is auctioned on behalf of Government. Metal value of the stock is given cognizance as credit to government after levying processing charges of melting etc. Practice being followed in the unit has been formalized through detailed guidelines.

Note 42 Pricing of Coins/Notes/Postal Items

Coins: The selling price of different denomination of coin for the F.Y. 2012-13 has been worked out based on the actual production cost for the year 2010-11 as calculated by WIRC of Institute of Cost Accountants of India with adjustment in metal price for the F.Y. 2011-12. The rates at which billing is being made to the Ministry of Finance is subject to settlement with the Ministry of Finance.


107

As a matter of prudence, a provision of `2,482,049,425 has been made towards rate difference between billed rate & MoU rate of coins as per details given here below:

Denomi-nation

QuantitySupplied (No.)

Billing Rate MOU Rate 12-13 Payment made by MoFRate ` Amount in ` Rate ` Amount in ` Rate ` Amount in `

(Col-1) (Col-2) (Col-3) (Col-4) (Col-5) (Col-6) (Col-7) (Col-8)50 paise 5,930,000.00 1.24 7,353,200.00 1.24 7,353,200.00 1.06 6,286,986.00

`1 FSS 1,571,912,500.00 1.05 1,650,508,125.00 0.98 1,540,474,250.00 1.04 1,634,946,191.25

`2 FSS 3,744,420,000.00 1.43 5,354,520,600.00 1.34 5,017,522,800.00 1.28 4,801,095,324.00

`5 Ni-BR 612,502,500.00 5.10 3,123,762,750.00 4.24 2,597,010,600.00 3.43 2,099,413,569.00

`10 Bi Metallic 942,666,000.00 8.41 7,927,821,060.00 6.81 6,419,555,460.00 4.56 4,301,573,491.20

Total 6,877,431,000.00 18,063,965,735.00 15,581,916,310.00 12,843,315,561.45Difference between billed amount & MoU amount (Col 4–Col-6) 2,482,049,425.00

Difference between MoU amount and Payment made by MoF (Col 6- Col 8) 2,738,600,749.00

Bank Notes: The selling price of bank note for the year is based on the weighted average cost of bank notes for the year 2011-12 with 15% (post tax) return on capital employed subject to acceptance by RBI.

As a matter of prudence, a provision of `1,972,818,000 has been made towards rate difference between billed rate & MoU rate of bank note as per details given here below:

Denomi-nation

Quantity Sup-plied (No.)

Billing Rate MOU Rate 12-13 Payment made by RBIRate ` Amount in ` Rate ` Amount in ` Rate ` Amount in `

(Col-1) (Col-2) (Col-3) (Col-4) (Col-5) (Col-6) (Col-7) (Col-8)`10 2,482,000.00 1,318 3,271,276,000.00 920 2,283,440,000.00 837 2,077,434,000.00

`20 278,000.00 1,490 414,220,000.00 1,150 319,700,000.00 1,226 340,828,000.00

`50 634,000.00 2,273 1,441,082,000.00 1,550 982,700,000.00 1,430 906,620,000.00

`100 2,408,000.00 1,898 4,570,384,000.00 1,890 4,551,120,000.00 1,784 4,295,872,000.00

`500 1,145,000.00 3,250 3,721,250,000.00 3,050 3,492,250,000.00 3,375 3,864,375,000.00

`1,000 444,000.00 4,384 1,946,496,000.00 3,970 1,762,680,000.00 3,733 1,657,452,000.00

Total 7,391,000.00 15,364,708,000.00 13,391,890,000.00 13,142,581,000.00

Difference between billed amount & MoU amount (Col 4–Col 6) 1,972,818,000.00

Difference between MoU amount and Payment made by RBI (Col 6 - Col 8) 249,309,000.00

Postal Items: The rates at which billing is being made to the postal authorities is subject to settlement with the authority. The revenue from transaction with the postal authorities as well as receivable from the same is subject to settlement/ reconciliation. An outside professional body has been appointed to carry out the costing of the products and costing report is likely to be received shortly.

Note 43 Disclosure pertaining to Micro, Small & Medium Enterprises:

The identification of the Micro, Small & Medium enterprise in terms of the Micro, Small & Medium Enterprises Development Act, 2006 could not be made as the Unit has not received any information from the Creditors as on 31st March, 2013 regarding their status of being Micro, Small & Medium Enterprise except to the extent information received by IGM Noida and CNP Nashik.

108

The management has initiated the process of identifying enterprises which have provided goods & services to the Unit & which qualify under the definition of Micro, Small & Medium Enterprises, as define under Micro, Small & Medium Enterprises Development Act, 2006. Accordingly the disclosure in respect of amount payable to such enterprises as at 31st March,2013 has been made in the financial statements on the basis of information received& available with the company. Further in view of the management, the impact of interest if any that may be payable in accordance with provision of the Act is not expected to be material, therefore provision for the same has not been made in books of accounts.

Note 44 Fixed Assets

a) As per the Ministry of Finance O.M. dated 10th February, 2006 all assets and liabilities have been taken at the book value. Pre-Acquisition, the units, being commercial entity, has been maintaining the assets details at Gross Value and useful life of assets were fixed accordingly. Accumulated depreciation on the same as appearing in the books of vendor has been carried forward in the books of SPMCIL. Further for the purpose of depreciation the same technical life is being continued.

b) The title for the immovable properties namely Land and Building is yet to be transferred in the name of the company. Efforts are being made to get the title deed/ lease deed transferred in the name of the company.

c) Physical verification of Fixed Assets during the financial year 2012-13 has not been carried out at CNP Nasik, IGM Hyderabad and ISP Nasik.

d) In case of SPM, Hoshangabad, the unit had appointed a CA firm to carry out physical verification of Fixed Assets and for determining impaired assets during F.Y 2011-12. The Firm has submitted its revised report during current financial year determining Impaired Assets amounting to `1,550,500, however the report submitted by the firm is under review for making necessary adjustment in SAP Asset Module. Therefore assets which are impaired in accordance with Accounting Standard 28 are not segregated and not shown as decommissioned assets. No provision as yet has, therefore, been made for the net carrying cost and net realizable value of the assets.

e) In case of IGM, Mumbai, Plant & Machinery includes machineries having gross block value `57,171,802 and WDV worth `5,118,606 as held for disposal as on 31.03.2013.

Note 45 Lease Premium (IGM Noida)

The land at Sector 1 and sector 23 held by IGM NOIDA are taken on long term lease of 99 year w.e.f 03rd May,1985 and 90 years w.e.f, 12th May,1993 respectively from NOIDA Authority which continued to be reflected at the premium paid for lease in the Government Account and was not amortized over the period of lease. Now in term of AS-19 regarding accounting of leases, the basic premium paid for acquiring the lease is written off over the balance period of the lease starting from 10.02.2006 i.e. date on which all assets and liabilities transferred to the Corporation, and ending on the date of termination of lease as per the lease deeds.

Note 46 Precious Metals at Mints

Mints at Mumbai, Kolkata and Hyderabad have limited stocks of gold, silver and other precious metals. As normal business of the company, small quantity of these metals is


109

accumulated every year. Metals are required in the medallion/ medal business depending upon the type of medal to be manufactured. There is a sound system of maintaining records and ensuring physical safety of the metals. Detailed break-up of each category of metal with fineness details are available in the units. Value of these metals has been taken as per book value which is lower than the market value of the same.

Note 47 Employee Benefits

Most of the Employees of the company were on deemed deputation from Government of India. On 15.09.2008 a tripartite agreement was signed between the government, SPMCIL and the representatives of the various unions. Option was given to employees who were on deemed deputation to opt SPMCIL or Govt. as per Rule 37-A of Central Civil Services (Pension) Rules, 1972. Permanent absorption has been notified by Govt. vide order No. 10/1/2009-SPMC dated 29.05.2009 w.e.f 01.11.2008. Option to join SPMCIL was exercised by 14256 employees.

Defined Contribution Plans

(a) Employee Provident Fund (EPF): For EPF, a trust has been established and exemption has been granted by Employees Provident Fund Organization in the month of December, 2009. This trust became operational w.e.f. April, 2010 and now all cases pertaining to employees provident fund matter are being looked after by Trust. Company pays fixed contribution to provident fund at predetermined rates to this trust, which invests the funds in permitted securities. Contribution to family pension scheme is paid to the EPFO. The contribution is recognized as expense and is charged to profit and loss account.

(b) General Provident Fund (GPF): For GPF, a trust has been established in the month of March, 2011. This trust became operational w.e.f. April, 2011. From1st April, 2011 employee’s contribution is being made to the Trust. There is only employee contribution in this fund therefore, no amount is recognized as expenses in profit and loss account.

Defined Benefits Plans

a) Pension: Pension will be paid to Combined Pension Optees from SPMCIL Employees Pension Fund Trust constituted by Government of India. Provisions for pensionary contribution to the trust in respect of the Combined Optees have been made as per Government Rules.

b) Leave Travel Concession: Leave Travel Concession (LTC) benefits have been dealt with as per norms of Government of India adopted by the company.

c) Gratuity: The company has a defined benefit gratuity plan. Every employee who has rendered continuous service of five years or more is entitled to get gratuity at 15 days salary (15/26 X last drawn basic salary plus dearness allowance) for each completed year of service subject to a maximum of `10 lacs on superannuation, resignation, termination, disablement or on death. The liability for the same is recognized on the basis of actuarial valuation.

d) Leave: The company provides for earned leave benefit and half pay leave to the employees of the company which accrue Six monthly at 15 days and 10 days respectively.

110

Earned leaves are encashable up to a maximum of 300 days on separation. Half pay leave is encashable only on separation but subject to maximum of 300 days for both earned leave and half pay leave. The liability for the same is recognized on the basis of actuarial valuation.

Disclosure pursuant to AS-15(` in Crores)

Sl.No.

Particulars Gratuity Leave

A Net liability recognized in the Balance Sheetat 31st March, 2013Present value of unfunded obligation 45.86 216.17

Net Liability 45.86 216.17

B Expense recognized in the statement of profit and loss for the yearCurrent Service Cost 12.09 7.94

Interest on obligation 2.96 16.85

Net actuarial losses (gains) recognized in the year

(3.89) 6.49

Total included in employee benefit expense 11.16 31.28

C Changes in the present value of defined benefit obligation representing reconciliation of opening and closing balance thereof:Opening defined benefit obligation 34.84 198.23

Service Cost 12.09 7.94

Interest Cost 2.96 16.85

Actuarial losses/(gains) (3.89) 6.49

Benefits paid (0.14) (13.34)

Closing defined benefit obligation 45.86 216.17

D Changes in the fair value of plan assets representing reconciliation of opening and closing balances thereof:

Opening fair value of plan assets – –

Expected return – –

Actuarial gains/((losses) – –

Contribution by Employer – –

Benefits paid – –

Closing balance of fair value of plan assets (0.14) (13.34)


111

Sl.No.

Particulars Gratuity Leave

E Principal actuarial assumptions at the balance sheet date (expressed as weighted averages)Discount Rate 8.00% 8.00%

Expected return on plan assets – –

Attrition Rate 1.00% 1.00%

Annual increase in salary costs 6.50% 6.50%

Note: The estimates of future salary increase, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in employment market.

Note 48 Segment Reporting

In the opinion of management segment reporting as envisaged in AS-17 is not applicable as risks and returns associated with product categories are not different. Most of the products are manufactured for and supplied to Government organizations on cost plus basis. Further SPMCIL is engaged in sovereign function of manufacturing of security products.

Note 49 Provisions

A provision is recognized when the company has obligation as a result of past event and it is probable that an outflow of the resources will be required to settle the obligation, in respect of which a reliable estimate can be made based on technical valuation and past experience. Provisions are not discounted to its present value and are determined based on management estimates required to settle the obligation at the balance sheet date. No provision is recognized for liabilities whose future outcome cannot be ascertained with reasonable certainties. Such contingent liabilities are not recognized but are disclosed on the basis of the judgment of the management. These are reviewed at each balance sheet date and adjusted to reflect the current management estimate.

In case of IGM Mumbai, The unit has made a provision for arrears of Salary payable to commissioner of Police, Mumbai of ̀ 37,604,810 due to implementation of 6th pay commission by Govt of Maharashtra.

Note 50 Related Party Transaction

List and Transactions of related parties as per Accounting Standards – 18 ‘Related Party Disclosure’ issued by the Institute of Chartered Accountants of India:

Name of the Party RelationshipBank Note Paper Mill India Private Ltd. Joint Venture

112

Joint Venture: The company has entered into a Joint Venture Agreement with Bhartiya Reserve Bank Note Mudran Private Limited (BRBNMPL), a wholly owned subsidiary of Reserve Bank of India to set up a security paper mill at Mysore with 50% participation in equity by each Joint Venture partners by forming a company under Indian Companies Act, 1956 on 13/10/2010. The project is under implementation as on 31st March, 2013. The company has contributed a sum of ̀ 300 Crores towards 50% capital contribution. Company has been allotted 3,00,00,000 equity shares of `100 each aggregating to `300 Crore till 31.03.2013.

(` in Crore)Transaction 2012-13 2011-12Capital Contribution 200.00 99.95Conversion of Share ApplicationMoney to Capital

(100.00) (99.95)

Share Application Money (Pending Allotment)

NIL 100.00

Proportion of ownership in Joint Venture as per audited accounts for the Financial Year 2012-13 is as under (50%):

Particulars As on 31.03.2013(Audited)

As on 31.03.2012(Audited)

(` in Crores) (` in Crores)Contribution towards Equitya) 300.00 100.00Deputation of Employee Costb) 0.00 0.00

Aggregate amount of Company’s interest in Joint Venture as per audited accounts for the F.Y. 2012-13 is as under (50%):

Particulars As on 31.03.2013 (Audited)

(` in Crores)

As on 31.03.2012(Audited)

(` in Crores)Equity (Share Holders Fund) 298.38 98.59Share Application Money - 100.00Non-Current Liabilities 1.46 0.46Current Liabilities 2.65 1.99Non-Current Assets 150.32 16.64Current Assets 152.17 184.40Revenue - -Cost of Material Consumed - -Depreciation of Plant and Machinery - -Employee Benefit Expenses - -Other Expenses -0.21 -0.008Profit Before Tax -.021 -0.008Income Tax Expenses - -Profit After Tax -0.21 -0.008


113

Estimated value of Contracts remaining to be executed on Capital account and not provided for(50% Liability):

(Amount in `Crore)

Particulars Opening Balance Additions Payments Closing Balance

Current Year - 2012-13 438.74 22.54 135.24 326.06

Contingent Liability in Joint Venture Company (50%) - Nil

Key Management Personnel

� Shri M.S. Rana, Chairman and Managing Director, � Shri Ashwini Kumar, Director (Technical) up to 31.01.2013� Dr. Manoranjan Dash, Director (HR).

There are no transactions with key Management Personnel during the year, except as given below. There are no other transactions with related parties as defined in AS-18.

The gross remuneration to Key Management Personnel who have been the full-time Directors of the Company is as under:

(Amount in `)

Particulars 2012-13 2011-12Salary and Allowances 5,332,411 10,484,910Contribution to PF/ Pensionary Charges 592,531 546,063Leave Encashment 3,616,330 1,471,913Lease Rent & Other Perks 4,113,737 4,062,634Gratuity 1,498,506 553,555

Total 15,153,515 17,119,075

Note 51 Earnings Per Share

Particulars 2012-13 2011-12Profit After Tax (`) 4,23,48,65,783 5,82,46,59,581No. of Shares outstanding 50,000 50,000Basic/Diluted Earnings per share (`) 84,697 1,16,493

Note 52 Deferred TaxThe significant components and classification of deferred tax asset and liabilities on account of temporary difference during the financial year 2012-13 are:Particulars (Amount in `)Opening Balance of Deferred Tax Assets 733,939,055Add: Deferred Tax Assets (Net) created during the year 1,859,021,374Closing Balance of Deferred Tax Assets 2,592,960,429

114

In the opinion of Board of Directors Current assets, Loan & advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated.

Note 53 Transactions in Foreign currencies

Transactions in Foreign currencies are accounted for at prevailing rates on the date of transaction. All exchange rate differences in respect of foreign currency transactions are dealt with in the Profit & Loss account except those relating to acquisition of Fixed Assets, which are adjusted in the cost of the assets.

Note 54 Gold lying with RBI

85,555 Gms of gold lying with RBI. (Comment of CAG to the financial accounts for 2006-07).Out of the above, gold weighing 10,336 gms was already accounted for in 2006-07, under the head Gold with RBI, the possession of which is with RBI. IG Mint Mumbai will be arranging to take over possession of the same. As regards the balance 75,219 gms, IGM Mumbai, has received a letter from RBI dated 06.06.2008, Ref No By. Cy. No. 5047/01.11.044/2007-08. that the gold is held by them on behalf of Public Debt Office, RBI Mumbai. Therefore this gold does not belong to the unit, and hence the same has not been considered in the accounts.

Note 55 Security Deposit Paid

Security Deposits have been made with various Electricity Departments/Boards and companies by the units to get electricity connections and supply. Most of these deposits have been made prior to corporatization.

Note 56 Funds from Govt. of India (adjustable)

As per the Government of India decision, all the assets and liabilities of Govt. of India Presses, Mints and Mills working under Department of Economic Affairs, Ministry of Finance as on 10.2.2006 has been transferred to the SPMCIL. Assets and liabilities have been taken on book value. Assets and liabilities prevailing as on 09.2.2006 were taken over on 10.2.2006 in the books of SPMCIL on the basis of available information. The difference between value of all assets and liabilities as on 10.02.2006 represents the amount of funds from Government arising out of such transfer of assets and liabilities. As finalization/audit of Profoma Accounts up to 09.02.2006 as well as physical verification of assets of all units and subsequent developments may affect the amount payable to the government as well as assets and liabilities of the Company, the amount of Fund from Government is adjustable to such an extent. There is a net decrease of `1,771,171 over previous year.

Note 57 Impairment of Assets

(a) As per AS-28, the carrying amounts of assets are reviewed at each balance sheet date if there are impairment indication. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset’s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the Weighted Average Cost of Capital.


115

(i) After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

(ii) A previously recognized impairment loss is increased or decreased based on reassessment of recoverable amount, which is carried out if the change is significant. However the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

(b) In the opinion of Management, assets which are impaired by disuse or obsolescence have not been segregated from the concerned assets category and are not shown as decommissioned assets.

(c) SPM Hoshangabad had appointed a CA firm to carry out physical verification of Fixed Assets and for determining Impaired assets during F.Y 2011-12. The Firm has submitted its revised report during current financial year determining Impaired Assets amounting to `1,550,500, however the report submitted by the firm is under review for making necessary adjustment in SAP Asset Module. Therefore assets which are impaired in accordance with Accounting Standard 28 are not segregated and not shown as decommissioned assets. No provision as yet has, therefore, been made for the net carrying cost and net realizable value of the assets.

(d) In case of IGM Hyderabad, As per AS 28 the company has identified the assets to be impaired due to change in production methodology and due to technical obsolescence of the machinery. The amount of the assets to be impaired are reviewed at the balance sheet date and provision for an impairment loss `77,467,757 has been made where ever the carrying amount of an asset exceeds its recoverable value.

Note 58 Slow Moving/ Non Moving Inventory:

Company is holding stock of slow and non -moving items like stock of CN Coils, P N cathodes, stock of pure nickel etc aggregating to ` 147.46 Crores. Provision of `0.19Crores (Previous Year `5.03 Crores) has been created against those obsolete/non- moving items where market value is less than the book value.

In case of BNP Dewas the Unit has initiated the process of identification of slow moving & obsolete stores items. Till 31.03.2012 unit has Identified 29 Items as Non Moving at `2,325,375. The unit has made 100 % provision against the identified items. During the year 2012-13 no slow moving & absolute item are determined. As such additional provision required, if any, cannot be ascertained.

In case of SPM Hoshangabad, The identification of non-moving / obsolete inventories was assigned to an external agency in the F.Y 2011-12. The said agency has worked out such inventory to the tune of `55,273,084. SPM management has reviewed the said inventory and worked out non-moving / obsolete inventories to the tune of `1,185,855. Thereafter no identification of non-moving of obsolete items has been carried out.

Note 59 House Building Advance

Interest on House Building Advance outstanding as on 31.03.2011 has not been charged for the period from 01.08.2009 to 31.03.2011 except for few HBA Loans as amount has not been worked out and accounted for as the settlement of House Building Loan is still not

116

concluded with Ministry of Finance. The company has repaid housing loan to Government on behalf of the employees which has been granted before corporatization but the mortgage deed has not been transferred in the name of the company.

Note 60 Discontinued operations at Saifabad Unit (Discontinued IG Mint)

IG Mint, Hyderabad has discontinued Minting Operations of its Saifabad Unit, Hyderabad with effect form 01.11.2009. Net Block of Fixed Assets with the Unit as on 31.03.2013 is stated to be `849,731 after making Provision for Depreciation of ̀ 932,403 (Previous Year ̀ 1,782,133and the provision for Depreciation was ̀ 1,966,463) for the Current Financial Year. However, it is difficult to ascertain the impact of discontinuing its operations, as separate books of accounts are not being maintained relating to the said Unit.

Note 61 Liability for property tax

The property tax liability on the Land & Building owned by the units and taken over along with assets and liabilities as on 10/02/2006 is a matter of dispute on which the company intends to seek legal opinion. Whereas provision/ payments towards the same has been made at some units, in other units the same has not been considered in the financial accounts.

In SPP, Hyderabad with regard to the amount of `122.31 lakhs recoverable from Municipal Corporation of Hyderabad, being the amount paid by the Unit during the period 2001-06 as property tax/service tax which in the view of C&AG was not in line with Article No. 285 of Constitution of India read with Supreme Court Judgment, as observed during the audit in the year 2004-05. The matters for getting the amount refund from GHMC are being persuaded by SPP, Hyderabad.

During recent C&AG transaction audit it was observed that the title to the property is not transferred to SPMCIL, hence there is no need to pay any municipal taxes by SPP.

The GHMC has raised a claim for `146.87 Lakh as Service Charges upto the Year 2012-13 including arrears. On security it was found that there were some errors in the calculation sheet of 2010-11 & 2011-12 which was furnished by GHMC. The amounts of service charges are fixed at 75% of property tax as per GHMC D.O.Lr No. 780/CTS/MCH/2000,Dated 14.03.2000. In the year 2010-11 & 2011-12 the amount of property tax was `3,263,988 and hence the service charges shall be `2,447,991 for the years. So total service charges of `12,239,954 are liable up to the year 2012-13 including arrears. As there was an existing provision of `7,343,973, the balance amount of `4,895,981 has been provided during the Financial Year 2012-13.

Meanwhile Unit has also taken legal advice and accordingly requested GHMC to adjust the present claim of `122,399,541 from refund due of `122.31 lacs made as stated above by mistake to GHMC during the period 2001-2006.

In case of ISP Nashik, as there is no demand from NMC, the unit has made provision towards property tax as per the ready reckoner rates for NA tax within the limits of Nashik city, which are `2.33 per sqmtr per annum approximately. The amount of tax payable for the FY 12-13 as per above rates is ` 35.17 lakhs (`2.33 per sqmtr for 1,509,158 sqmtrs). The liability provided in the books for the period upto FY 12-13 is `2.81 crores.


117

Note 62 ERP:

During the year Company has incurred `114,667,537/- on ERP out of which `77,837,054was shown under the head “Work in Progress-ERP” and a sum of `36,830,483 has been charged to revenue towards training to staff. On 15.06.2012 the ERP has been capitalized in the books of corporate office after successful Go Live of Third Phase and completion of Stabilization Period. The Capital WIP has been categorized into two heads ‘SAP Hardware’ and ‘SAP Software’ depending upon the nature of expenses. Initially the ERP has been capitalized in the books of Corporate Office. The amount of Hardware purchased in this regards is pending to be transferred to the respective units.

Note 63 Research and Development

The details of R&D expenses are given below:

Sr. No. Particulars Amount in `

1. Capital Expenditure 17,681,473.00

2. Revenue Expenditure 13,010,819.00

Total 30,692,292.00

Note 64 Treatment for Non Moving Paper

Inventory Includes stock of paper (Imported) at ` 285,778,081 (430.00MT) (BNP) and `239,393,161 (13376 Reams) (CNP) procured from foreign company. Due to Quality Issue the same is not being used by the company. As the matter is under consideration of Director General, Directorate of Currency, Govt of India, Department of Economic Affairs, Ministry of Finance. The management is of the opinion that the net realizable value of the paper is equivalent to its carrying cost in books hence no adjustment is required to be made in books on this account.

Note 65 Accounting Treatment for Shop floor Inventory

As per the prevalent practice the imported spare parts/stores issued from main stores to security stores situated at Shop floor are accounted as consumed irrespective of its actual consumption in the process of production. The imported spare parts not actually consumed at the year-end and lying at the Shop floor have not been returned to the stores and consequently not reversed to stores inventory. Hence the value of unused / unconsumed spares at Shop floor at the year-end is incorporated in the Work in Progress.

Note 66 Expenditure incurred towards Corporate Social Responsibility

During the year the company has incurred an amount of `35,543,004 on CSR. CSR activities include expenses incurred for the purpose of construction of new school building work related to Repair of road, Plantation of trees, Drinking Water, health equipment and other basicamenities.

Note 67 The previous year’s figures have been recast / restated/reclassified, wherever necessary, to confirm to current year’s classification.

118

Note 68 Revenue is recognized net of applicable taxes and levies in respect of: (a) sale of currency note coins passport & postal Items, weights,& measures, medals etc. is recognized on dispatch. (c) Job work charges are recognized upon approval of the job by client and dispatch thereof.

Note 69 Depreciation is provided on eligible assets of Plants & Machinery as per the rates specified in Schedule XIV to the Companies Act 1956 except at SPM, Hoshangabad where depreciation on single shift basis has been provided even for assets used for triple shift basis.

Note 70 For the purpose of salary payment, companywas following financial year, a period comprising from March to February as followed in erstwhilegovernment regime and tax was deducted accordingly, but the same practice has been changed in Current Year. In current year theSalary for March, 2013 have also been disbursed in the Financial Year, a period comprising from March 2012 to March 2013. From 2013 onwards the salary period will be April to March.

Note 71 In ISP Nashik as against Unpaid Land Revenue Taxes for the past several years; provision of ` 285.00 lakhs has been made in the books against payment of land revenue taxes in respect of immovable properties proposed to be acquired in the name of corporation. However, in the absence of adequate information, the exact quantum of liability could not be determined.

Note 72 In IGM Kolkata Physical Verification of store item was carried out towards the end of the Financial Year 2012-13. Reconciliation of book stock with that of the physical stock is still in process. Adjustment(s), if any, will be made once the said reconciliation process is complete.

Note 73 In SPM Hoshangabad, Security Deposit amounting to `4,983,424 was placed with MPEB as on 31.03.2008. The MPEB has started paying interest on the said amount since July, 2008. Interest on the said security deposit has not been paid for almost a decade previous to July, 2008 by MPEB. The matter has been taken up with MPEB for payment of interest. Since then deposit of `7,992,882 in 2008-09,`4,854,455 in 2009-10, `51,708 in 2010-11, ̀ 10,824,600 in 2011-12 and `113,831 in 2012-13 was made. The Security Deposit lying with MPSEB is Subject to reconciliation/confirmation.

Note 74 In case of IGM Noida during the last year, the unit has identified the unserviceable plant & machinery of ̀ 6.01 lacs and the provision for discardedfixed assets of ̀ 6.01lacs is shown under provision for impairment. The total provision for impairment loss at the end of the year stood at `66.54 lacs (PY 62.26lacs).

Note 75 In IGM Noida during the last year, the unit has installed and commissioned fully automatic integrated sachet packaging machine at a total cost of 570.56 lacs. A sum of `30.92 lacs incurred on repair of parts which were damaged during transit has been charged to Profit & loss account. The insurance claim lodged by the unit is pending for settlement, which shall be accounted for on receipt basis.

Note 76 In IGM Noida Gain/ loss due to weight variations was accounted for by the unit by adjusting the cost of production.


119

Note 77 Expenditure incurred towards Sustainable Development

During the year the company has incurred `3,13,20,787/towards Sustainable Development as a balance approach to achieve economic development, Social Progress and responsible environment management

Sr. No. Particulars Amount in `1. Capital Expenditure 28,182,804.00

2. Revenue Expenditure 3,137,983.00

Total 31,320,787.00

Note 78 In case of CNP Nashik, During the F.Y. 2009-10 & onwards, any outstanding long term loans on account of HBA, Scooter, Computer Loans of Pro-rata opted employee whose pension cases have been finalized and settled by PAO, CNP were transferred to SPMCIL Account taking cutoff date as on 01.08.2009. Thereafter deduction from employee’s salary & wages on account of principal and interest are credited to individual employee’s account as per HO Guidelines No. SPMCIL/FIN/152/09/2764 dt 11/09/2009. Interest accrued but not due on principal outstanding has not been recognized for all long term loans outstanding in the books of accounts for the F.Y. 2012-13.

Note 79 In case of SPM Hoshangabad, the overtime policy is as per Factories Act 1948. However at some occasion overtime hours worked and paid are exceeding the maximum limit fixed as per Factories Act,1948.

Note 80 In SPM Hoshangabad, During the year opening Gross Block and Accumulated Depreciation on CISF Equipment has been expensed out to CISF expenditure as per Guidelines issued by Corporate Office.

Note 81 In case of SPM Hoshangabad, the unit has obtained EMD from various person in the shape of a fixed deposit in the name of SPM, Hoshangabad in lieu of cash deposit. These FDR are kept by the finance department of the unit. These FDR’s have not been accounted for in the financial accounts of Units.

Note 82 In case of IGM Noida, the inventory of stores as on 31.03.2013 has been taken as per the SAP which differs from the stores ledger and the units is yet to reconcile the difference of the inventory.

Note 83 In case of IGM Noida, Inventory of coin as on 31.03.2013 has been taken as per the Bullion Ledger which differs from the MM Module of the SAP.

Note 84 In case of IGM Noida, the non–circulation coins lying in unit, received from other units is not valued as the same are not held for sale and were received from its sister units at NIL cost prior to corporatization.

Note 85 In case of IGM Noida, title deeds in respect of housing loan granted to employee are yet to be executed in 6 nos of cases. The advances in respect of these employees are shown under the Secured advances as the company is having the general lien

120

over gratuity.

Note 86 In case of ISP, Nashik, an adhoc provision of `2.00 lakhs was made in the books towards outstanding expenses as on 31-03-2012. The outstanding expenses aggregating ` 2.00 lakhs has been incurred out of this provision. Further, the similar provision has been made in FY 12-13 also.

Note 87 Reimbursement of Advertisement Expenses

During the year a sum of `4,857,470 received from ICICI Bank (for displaying their name on Dividend warrant issued by SPMCIL to Govt. of India) on account of reimbursement of Advertisement Expenses and the same has been adjusted from the total expenditure incurred on Advertisement.

Note 88 During the year 20112-13, interest aggregating `13,792,861 has been credited on account of interest receivable from PAO for provident fund in respect of combined optees and prorataoptees.

Note 89 In case of IGM Kolkata, Advance paid to Central Public Works Department (CPWD), Govt of India for various repairs and maintenance contracts include `1,774,291relating to years 2009-10 have not yet been adjusted although further advances have been given during the year.

As per our report of even date annexed.


Sd/ Sd/- Sd/-CA Nitin Jain (M.S. Rana) (P.N. Radkar)

(M. No. 506898) Chairman & Managing Director (Technical)PARTNER Director

Sd/- (Sachin Agarwal)

Asstt. Company Secretary

Dated: 30.08.2013Place: New Delhi