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Notes to Accounts of Apollo Tyres Ltd.

Mar 31, 2014

1. CORPORATE INFORMATION

The company''s principal business activity is manufacturing and sale of automotive tyres. The company has started its operations in 1972 with its first manufacturing plant at Perambra in Kerala.

The company''s largest operations are in India and comprise of four tyre manufacturing plants - located two in Cochin and one each at Vadodara & Chennai respectively and various sales & marketing offi ces spread across the country. The company''s European subsidiary Apollo Vredestein BV (AVBV) has a manufacturing plant in the Netherlands and sales & marketing subsidiaries all over Europe. The company''s South African subsidiary Apollo Durban (Pty) Ltd. (ADPL) has one manufacturing plant in Durban and sales operations all over Africa. The company also has sales and marketing subsidiaries in Middle East and ASEAN region.

2. CONTINGENT LIABILITIES

2013-14 2012-13 PARTICULARS Rs. Million Rs. Million

Sales Tax 111.92 204.94

Income Tax 180.46 -

Claims against the Company not acknowledged as debts – Employee Related 51.02 53.95

– Others 28.54 27.54

Provision of Security (Bank Deposits pledged with a Bank against which working capital loan has been availed by Apollo Finance Ltd, an Associate Company) 53.83 68.14

Excise Duty* 363.55 1,381.35

* Excludes demand of Rs. 532.12 Million (Rs. 532.12 Million) raised on one of the Company''s units relating to issues which have been decided by the Appellate Authority in Company''s favour in appeals pertaining to another unit of the Company. Show-cause notices received from various Government Agencies pending formal demand notices have not been considered as contingent liabilities.

In the opinion of the management, no provision is considered necessary for the disputes mentioned above on the ground that there are fair chances of successful outcome of appeals.

Certain legal proceedings continue in the Court of Chancery in the US in respect of uncrystallized demand towards break fee & damages. Based on the discussions with the US legal counsel, the management is of the view that such demands arising out of the ongoing litigation are without merit and will be vigorously defended by the Company.

3. MAT CREDIT ENTITLEMENT

The company has made provision for tax as per normal provisions of the Income tax Act, 1961 in the current year as well as previous year. In view of the consistent profi ts over the years and also considering the future profi t projections, the management believes that there is convincing evidence with regard to the earning of future taxable income and payment of tax under normal tax within the specifi ed period. Accordingly, MAT Credit Entitlement of Rs. 450.13 Million (Rs. 508.65 Million) has been carried forward for adjustment against normal tax liability in future years.

4. The Company has international transactions with related parties. For the current year, the management confi rms that it maintains documents as prescribed by the Income tax Act, 1961 to prove that these international transactions are at arm''s length and the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

5. INVESTMENT PROMOTION SUBSIDY FROM GOVERNMENT OF TAMILNADU

The Company has established radial tyre manufacturing facility in SIPCOT Industrial Park, Oragadam near Chennai and availed incentives from the State Government of Tamil Nadu for establishing such project. The construction of first phase of the new green fi eld radial tyre plant was completed as per project schedule, which commenced operations from March 11, 2010. The Truck/ Bus radial segment has commenced operations from May 11, 2010.

Pursuant to the Memorandum of Understanding (MoU) dated August 7, 2006 read along with a Supplementary MoU dated January 11, 2011, executed between the Government of Tamil Nadu (GoTN) and the Company, GoTN sanctioned a Structured Package of Assistance to the Company in terms of the New Industrial Policy, 2007. As per this Structured Package of Assistance, the Company is entitled, interalia, for refund of an amount equal to Net Output VAT CST paid by the Company to GoTN in the form of Investment Promotion Subsidy for a period of 14 years (which can be extended by another 4 years), from the date of commencement of commercial production or till the cumulative availment of the said subsidy reaches 50% of the investment made in eligible fi xed assets during the approved investment period as defi nd by the MoU, whichever is earlier. This eligiblity is subject to fulfilllment of certain obligations by the Company.

As the Company has fulfillled the relevant obligations during the year, the Company has recognized subsidy income of Rs. 939.14 Million as other operating income (refer note B11), being the eligible amount of refund of Net Output VAT CST paid by the Company to GoTN from the date of commencement of commercial production till March 31, 2014. Based on the legal opinion obtained by the Company, the said subsidy is considered non-taxable.

6. EXCEPTIONAL ITEMS

Exceptional item during the year represents expenses incurred in connection with the proposed acquisition of Cooper Tier & Rubber Company (Cooper) which was terminated by Cooper on December 30, 2013.

7. ISSUE OF SHARE WARRANTS

The company had alloted 5,000,000 warrants, convertible into 5,000,000 equity shares of Rs. 1 each to a promoter Group Company on 21st December 2012, on a preferential allotment basis, pursuant to Section 81 (1A) of the Compa- nies Act, 1956, at a conversion price of Rs. 86.20 per share determined in accordance with the SEBI (Issue of Capital and Disclusure Requirements) Regulations, 2009. An amount equivalent to 25% of the price aggregating to Rs. 107.75 Million was received on allotment of the warrants. The warrants may be converted to equivalent number of shares on payment of the balance amount at any time within a period of 18 Months from their date of allotment. In the event the warrants are not converted to shares within the said period, the company is eligible to forfeit the amounts received towards the warrants.

8. Excise duty relating to sales has been disclosed as a reduction from turnover. Excise duty related to difference between the closing stock and opening stock has been disclosed in Note B 14 "Changes in Inventories of Finished Goods, Work in Process & Bought Out Materials / Stock-in-Trade".

9. Borrowing costs capitalized / transferred to capital work in progress during the year is Nil (Rs. 74.57 Million). This includes Nil (Nil) towards loan processing fees.

10. Employee benefit Plans Defined Contribution Plans:

a. Superannuation Plan: The Company contributes a sum equivalent to 15% of the eligible employees salary to a superannuation fund administered and maintained by Life Insurance Corporation of India (LIC). The Company has no liability for future superannuation fund benefits other than its annual contribution and recognizes such contributions as an expense in the year incurred. The amount of contribution paid by the company to Superannuation Fund is Rs. 57.15 Million (Rs. 49.21 Million).

b. Provident Fund: Contributions are made to the Company''s Employees Provident Fund Trust / Regional Provident Fund in accordance with the fund rules. The interest rate payable to the beneficiaries every year is being notifi ed by the Government.

In the case of contribution to the Trust, the Company has an obligation to make good the shortfall, if any, between the return from the investments of the Trust and the notifi ed interest rate and recognizes such obligation as an expense.

The amount of contribution made by the Company to Employees Provident Fund Trust / Regional Provident Fund is Rs. 192.37 Million (Rs. 175.85 Million).

Defined Benefit Plans:

Gratuity

The Company has a defi ned benefit gratuity plan. Every employee who has completed fi ve years or more of service receives gratuity on leaving the Company at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with Life Insurance Corporation of India.

The following table summarizes the components of net benefit expense recognized in the statement of profit and loss and the funded status and amounts recognized in the balance sheet for the respective plan:

11. Employees Phantom Stock Plan 2010

a) During the year 2010-11, the company had announced Cash-settled Employee Share-based Payment Plan (Phantom Stock Plan) for the eligible employees of the company. Under the scheme, 1,200,000 phantom stock units have been granted on 1st April 2010, 900,000 Phantom stock units have been granted on 1st April 2011 and another 75,000 Units have been granted on 1st April 2012 by the board appointed committee. All three options have been vested as per the following schedule:

Pursuant to the above scheme, the eligible employees are entitled to get cash compensation upon exercise of the phantom stock unit within seven years of the vesting date

12. The Company''s operations comprise of only one business segment –Automobile Tyres, Automobile Tubes & Automobile Flaps in the context of reporting business/geographical segment as required under mandatory accounting standards AS -17 "Segment Reporting "

The geographical segments considered for disclosure are - India and Rest of the world. All the manufacturing facilities are located in India:

13. Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classifi -cation / disclosure.


Mar 31, 2013

1. CORPORATE INFORMATION

The Company''s principal business is manufacture of automobile tyres, tubes and tyre re-treading compound. The Company has four tyre manufacturing plants - two in Kerala, one in Vadodra and one in Chennai. The Company has started its operations since 1977 with its first plant at Perambra in Kerala.

The Company has two main overseas subsidiary companies - Apollo Tyres South Africa (Pty) Ltd. located in South Africa and Apollo Vredestein B.V. located in Netherlands. The first Company, previously known as Dunlop Tyres International (Pty) Ltd, was acquired on April 21, 2006. It has two tyre manufacturing plants in South Africa and its products are sold in Africa and Europe under the brand name of Dunlop. The second Company, previously known as Vredestein Banden B.V. was acquired on May 15, 2009. It has one manufacturing plant in Netherlands and sales and marketing offices all over Europe. Its products are sold primarily in Europe under the brand name of Vredestein.

2. CONTINGENT LIABILITIES

2012-13 2011-12 PARTICULARS Rs. Million Rs. Million

Sales Tax 204.94 153.37

Claims against the Company not acknowledged as debts - Employee Related 53.95 26.97

- Others 27.54 19.83

Provision of Security (Bank Deposits pledged with a Bank against which working capital loan has been availed by Apollo Finance Ltd, an Associate Company) 68.14 63.50

Excise Duty* 1,381.35 253.12

* Excludes demand of Rs. 532.12 Million (Rs. 532.12 Million) raised on one of the Company''s units relating to issues which have been decided by the Appellate Authority in Company''s favour in appeals pertaining to another unit of the Company. Show-cause notices received from various Government Agencies pending formal demand notices have not been considered as contingent liabilities.

In the opinion of the management, no provision is considered necessary for the disputes mentioned above on the grounds that there are fair chances of successful outcome of appeals.

3. MAT CREDIT ENTITLEMENT

In the current year the Company has made provision for tax as per normal provisions of the Income tax Act, 1961 unlike previous year when the provision for tax was made under MAT. In view of the consistent profits over the years including the current year and also considering the future profit projections, the management believes that there is convincing evidence with regard to the earning of future taxable income and payment of tax under normal tax within the specified period. Accordingly, MAT Credit Entitlement of Rs. 508.65 Million (Rs. 617.22 Million) has been carried forward during the current year.

4. The Company has international transactions with related parties. For the current year, the management confirms that it maintains documents as prescribed by the Income tax Act, 1961 to prove that these international transactions are at arm''s length and the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

5. ISSUE OF SHARE WARRANTS:

During the year, the Company alloted 5,000,000 warrants, convertible into 5,000,000 equity shares of Rs. 1 each to a promoter Group Company, on a preferential allotment basis, pursuant to Section 81 (1A) of the Companies Act, 1956, at a conversion price of Rs. 86.20 per share determined in accordance with the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009. An amout equivalent to 25% of the price aggregating to Rs. 107.75 Million was received on allotment of the warrants. The warrants may be converted in to equivalent number of shares on payment of the balance amount at any time within a period of 18 Months from their date of allotment. In the event the warrants are not converted into shares within the said period, the Company is eligible to forfeit the amounts received towards the warrants.

6. Excise duty relating to sales has been disclosed as a reduction from turnover. Excise duty related to difference between the closing stock and opening stock has been disclosed in Note B 13 "Changes in Inventories of Work in Process, Finished Goods & Stock in Trade".

7. Borrowing costs capitalized / transferred to capital work in progress during the year is Rs. 74.57 Million (Rs. 370.77 Million). This includes Nil (Rs. 48.36 Million) towards loan processing fees.

8. During the year, the Company noticed that certain employees had misappropriated cash in earlier years by booking fictitious expenses. The Company has recovered a substantial part of the amount from the concerned employees. The Net amount involved after recoveries made is Rs. 76.44 Million. Amounts recovered from these persons have been included in Other Income in the Statement of Profit & Loss.

9. Employee Benefit Plans Defined Contribution Plans:

a. Superannuation Plan: The Company contributes a sum equivalent to 15% of the eligible employees salary to a superannuation fund administered and maintained by Life Insurance Corporation of India (LIC). The Company has no liability for future superannuation fund benefits other than its annual contribution and recognizes such contributions as an expense in the year incurred.

b. Provident Fund: Contributions are made to the Company''s Employees Provident Fund Trust / Regional Provident Fund in accordance with the fund rules. The interest rate payable to the beneficiaries every year is being notified by the Government.

In the case of contribution to the Trust, the Company has an obligation to make good the shortfall, if any, between the return from the investments of the Trust and the notified interest rate and recognizes such obligation as an expense.

Defined Benefit Plans:

Gratuity

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service receives gratuity on leaving the Company at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with Life Insurance Corporation of India.

The following table summarizes the components of net benefit expense recognized in the statement of profit and loss and the funded status and amounts recognized in the balance sheet for the respective plan:

10. Employees Phantom Stock Plan 2010

a) During the year 2010-11, the Company had announced Cash-settled Employee Share-based Payment Plan (Phantom Stock Plan) for the eligible employees of the Company. Under the scheme, 1,200,000 phantom stock units have been granted on 1st April 2010, 900,000 Phantom stock units have been granted on 1st April 2011 and another 75,000 Units have been granted on 1st April 2012 by the board appointed committee. All three options will be vested as per the following schedule:

Pursuant to the above scheme, the eligible employees are entitled to get cash compensation upon exercise of the phantom stock unit within seven years of the vesting date

b) Details of the expense recognized during the year and outstanding phantom stock units of the Company under the Phantom Stock Plan 2010 are as under:

11. a) Following are the forward exchange contracts [being derivative instruments], which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables. The following forward exchange contracts entered into by the Company are outstanding as on March 31, 2013:

The mark to market losses of Nil (Rs. 0.03 Million) relating to undesignated / ineffective forward contracts / derivatives has been recognized in the Statement of Profit and Loss.

b) No. of Currency swaps (other than forward exchange contracts stated above) to hedge against fluctuations in changes in exchange rate are 20 (23).

12. The Company''s operations comprise of only one business segment -Automobile Tyres, Automobile Tubes & Automobile Flaps in the context of reporting business/geographical segment as required under mandatory accounting standards AS -17 "Segment Reporting "

The geographical segments considered for disclosure are - India and Rest of the world. All the manufacturing facilities are located in India:

13. Operating Lease

The Company has acquired assets under the operating lease agreements that are renewable on a periodic basis at the option of both the lessor and lessee. Rental expenses under those leases were Rs. 400 Million (Rs. 400 Million)

14. Finance Lease - Deferred Payment Credit

The Company has entered into finance lease arrangements for certain Assets. The schedule of future minimum lease payments in respect of non-cancelable Finance leases is set out below:

15. Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.


Mar 31, 2012

1 CORPORATE INFORMATION

The company's principal business is manufacture of automobile tyres, tubes and tyre re-treading compound. The company has four tyre manufacturing plants - two in Cochin, one in Vadodara and one in Chennai. The company has started its operations since 1977 with its first plant at Perambra in Cochin. The company has two main overseas subsidiary companies - Apollo Tyres South Africa (Pty) Ltd. located in South Africa and Apollo Vredestein B.V. located in Netherlands. The first company, previously known as Dunlop Tyres International (Pty) Ltd, was acquired on April 21, 2006. It has two tyre manufacturing plants in South Africa and its products are sold in Africa and Europe under the brand name of Dunlop. The second company, previously known as Vredestein Banden B.V. was acquired on May 15,2009. It has one manufacturing plant in Netherlands and sales and marketing offices all over Europe. Its products are sold primarily in Europe under the brand name of Vredestein.

DETAILS OF SECURITY OFFERED:

Note A1 A pari passu first charge along with other lenders created by way of mortgage on the Company's Land & Premises at Village Kodakara in Kerala, at Village Limda in Gujarat, at SIPCOT Industrial Growth Centre at Oragadam near Chennai, and at Head Office in Gurgaon, Haryana together with the factory buildings, Plant & machinery & Equipments, both present & future.

Note A2 A pari passu first charge along with other lenders created by way of mortgage on the Company's Land & Premises at Village Kodakara in Kerala and at Village Limda in Gujarat together with the factory buildings, Plant & machinery & Equipments, both present & future.

Note A3 A pari passu first charge along with other lenders created by way of mortgage on the Company's Land & Premises at SIPCOT Industrial Growth Centre at Oragadam near Chennai together with the factory buildings, Plant & machinery & Equipments, both present & future (under process)

NoteA4 A pari passu first charge along with other lenders created by way of mortgage on the Company's Land &

Premises at Village Kodakara in Kerala, atSIPCOT Industrial Growth Centre at Oragadam near Chennai, and at Head Office in Gurgaon, Haryana together with the factory buildings, Plant & machinery & Equipments, both present & future (under process)

Note B1 A pari passu first charge along with other lenders by way of hypothecation over the movable assets of the company, both present and future (except stocks & book debts).

Note B2 A pari passu first charge along with other lenders by way of hypothecation over the movable assets of the

company at Village Kodakara in Kerala and at Village Limda in Gujarat and pari passu second charge on the current assets of the company.

Note B3 A pari passu first charge on the movable assets and pari passu second charge on the current assets of the company.

Note B4 A pari passu first charge along with other lenders by way of hypothecation over the movable assets of the

company at SIPCOT Industrial Growth Centre at Oragadam near Chennai, both present and future (except stocks & book debts) - under process

NoteC A charge to be created by way of hypothecation on the assets at Village Limda in Gujarat acquired out of the proceeds of loan taken from BEML.

Note D Sales Tax Loan is secured by a pari passu charge on the entire fixed assets of the company, both present & future situated at Village Limda in Gujarat.

*Cash Credits and Secured Buyers Credit for Raw Materials are secured by a first charge on Raw materials, Work-in-Process, Stocks, Stores and Book Debts and by a second charge on the Company's land at Village Kodakara in Kerala, at Oragadam and Mathur Village in Tamil Nadu and at Head Office in Gurgaon, Haryana together with the Factory Buildings, Plant & Machinery and Equipments, both present and future.

** Employee Related Payables include commission on net profits payable to whole-time directors Rs.74 Million (Rs 75 Million) *** For Nature of Security on Current Maturities of Long Term Debts, Refer Note B 3(a).

* Interest Income of Rs. 58.51 Million (Rs. 26.38 Million) comprises of the following:

(a) Interest Earned on Deposits Rs.13.36 Million (Rs. 18.30 Million)

(b) Interest Earned on Trade Balances Rs. 2.32 Million (Rs. 2.77 Million)

(c) Interest on Income Tax Refund Rs. 39.64 Million (Rs.2.16 Million)

(d) Interest Earned - Others Rs. 3.19 Million (Rs. 3.15 Million)

2. CONTINGENT LIABILITIES As at As at PARTICULARS March31,2012 March31,2011 Rs. Million Rs. Million

Sales Tax 153.37 110.26

Claims against the company not acknowledged as debts

- Employee Related 26.97 23.90

- Property Disputes - 2.60

- Others 19.83 8.83

Provision of Security (Bank Deposits pledged with a Bank against which working capital loan has been availed by Apollo Finance Ltd, an Associate Company) 63.50 73.30

Guarantee given by Company For the loan taken by Sub- Subsidiary Companies - 2,570.40

Custom Duty - 23.50

Excise Duty* 253.12 199.83

*Excludes demand of Rs. 532.12 Million (Rs. 532.12 Million) raised on one of the Company's units relating to issues which have been decided by the Appellate Authority in Company's favour in appeals pertaining to another unit of the Company. Show-cause notices received from various Government Agencies pending formal demand notices have not been considered as contingent liabilities.

In the opinion of the management, no provision is considered necessary for the disputes mentioned above on the grounds that there are fair chances of successful outcome of appeals.

3. MAT CREDIT ENTITLEMENT

a. In view of the consistent profits over the years & also considering the future profit projections, the management believes that there is convincing evidence with regard to the earning of future taxable income and payment of tax under normal tax within the specified period. Accordingly, MAT Credit Entitlement of Rs. 301.29 Million (Rs. 315.93 Million) has been recognized during the year.

b. The Company has international transactions with related parties. For the current year, the management confirms that it maintains documents as prescribed by the Income tax Act, 1961 to prove that these international transactions are at arm's length and the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

4. Excise duty relating to sales has been disclosed as a reduction from turnover. Excise duty related to difference between the closing stock and opening stock has been disclosed in Note B13 "Changes in Inventories of Work in Process, Finished Goods & Stock in Trade".

5. Borrowing costs capitalized/transferred to capital work in progress during the year is Rs. 370.77 Million (Rs.251.28 Million). This includes Rs. 48.36 Million (Rs. 69.90 Million) towards loan processing fees and Nil (Rs. 14.71 Million) towards Bank Charges.

6. Employee Benefit Plans Defined Contribution Plans:

a. Superannuation Plan: The Company contributes a sum equivalent to 15% of the eligible employees salary to a superannuation fund administered and maintained by Life Insurance Corporation of India (LIC). The Company has no liability for future superannuation fund benefits other than its annual contribution and recognizes such contributions as an expense in the year incurred.

b. Provident Fund: Contributions are made to the Company's Employees Provident Fund Trust/ Regional Provident Fund in accordance with the fund rules. The interest rate payable to the beneficiaries every year is being notified by the Government.

In the case of contribution to the Trust, the Company has an obligation to make good the shortfall, if any, between the return from the investments of the Trust and the notified interest rate and recognizes such obligation as an expense.

Defined Benefit Plans:

Gratuity

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service receives gratuity on leaving the Company at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with Life Insurance Corporation of India.

The following table summarizes the components of net benefit expense recognized in the statement of profit and loss and the funded status and amounts recognized in the balance sheet for the respective plan:

b) Cross Currency swaps (other than forward exchange contracts stated above) to hedge against fluctuations in changes in exchange rate. No. of contracts: 23 (As at March 31,2011:9)

7. The Company's operations comprise of only one business segment -Automobile Tyres, Automobile Tubes & Automobile Flaps in the context of reporting business/geographical segment as required under mandatory accounting standards AS -17 "Segment Reporting "

Note: Related Parties and their Relationships are as identified by the management and relied upon by the Auditors.

Notes:

(a) The management had initiated the deregistration of Pollock and Aitken (Pty.) Ltd. during the last financial year. The deregistration process was completed during the year with effect from April 17,2011 after 2 months from the publication of notice of deregistration received on February 17,2011.

(b) The management had initiated the voluntary winding-up process for Apollo Tyres (Nigeria) Ltd. during the last financial year. Corporate Affairs Commission of Nigeria has registered the winding-up on March 26,2012 and the company shall be deemed to be dissolved after 3 months from this date.

(c) During the year, the company has incorporated a new subsidiary company named Apollo Tyres B.V, Netherlands.

(d) During the year, the company has incorporated a new subsidiary company named Apollo Tyres U.K (Pvt) Ltd., United Kingdom.

(e) During the year, the company has incorporated a new subsidiary company named Apollo Tyres (Brasil) LTDA., Brazil for trading of the tyres sourced from various group companies.

8. Operating Lease

The Company has acquired assets under the operating lease agreements that are renewable on a periodic basis at the option of both the lessor and lessee. Rental expenses under those leases were Rs. 400 Million (Rs. 400 Million)

9.The Revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements. This has significantly changed the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure.


Mar 31, 2010

1. CONTINGENT LIABILITIES



PARTICULARS 2009-10 2008-09



Rs/Million Rs/Million

Sales Tax 108,24 65.64

Income Tax-Disputed Demands under Appeal - 247.10

Claims not acknowledged as debts - Employee Related 21.54 28.22

- Property Disputes 2.60 2.60

-Others 5.83 16.53

Provision of Security (Bank Deposits pledged with a Bank against

which working capital loan has been availed by Apollo Finance Ltd.) 99.52 168.13

Guarantee given by Company for the loan taken by a group Company

(Apollo Tyres South Africa Pty. Ltd) 673.50 760.80

Guarantees given by bankers on behalf of the Company 497.66 588.18

Custom Duty 23.50 23.50

Excise Duty* 56.34 125.68

Irrevocable Letters of Credit 3,865.72 1,562.98

- Excludes demand of Rs 532.12 Million (Rs 533.31 Million) raised on one of the Companys units relating to issues which have been decided by the Appellate Authority in Companys favour in appeals pertaining to another unit of the Company. Show-cause notices received from various Government Agencies pending formal demand notices have not been considered as contingent liabilities.

In the opinion of the management, no provision is considered necessary for the disputes mentioned above on the grounds that there are fair chances of successful outcome of appeals.

2. Estimated amount of contracts remaining to be executed on capital account and not provided for as on March 31,2010 is Rs 8,323.09 Million (Rs 6,314.31 Million).

3. Buy Back of Shares :

The Board of Directors of the Company, at its meeting held on March 19, 2009 had approved the Buy Back of equity shares of the Company from open market through stock exchange route up to an amount not exceeding Rs 1,220 Million at a price not exceeding Rs 25 per share. This amount was within 10% of the Companys paid-up equity share capital and free reserves as per last audited accounts. The Company could not buy back any shares because of the run-up in the market price of Companys shares after the commencement of Buy Back. The Company, therefore, closed its Buy Back offer during the year on the due date of closure, i.e., March 18,2010.

4. Acquisition of Vredestein Banden B.V. :

The Company acquired 100% Shareholding of Vredestein Banden B.V. (VBBV), a Dutch Tyre manufacturing Company with a production capacity of 5.5 Million Tyres per annum on May 15, 2009 through a special purpose vehicle formed for this purpose. The acquisition was funded through internal accruals and external debt.

5. Status of Chennai Project:

The construction of first phase of the new green field radial tyre plant at Oragadam near Chennai has been completed as per project schedule. The first phase of passenger car vehicle segment of the project has commenced operations from March 11, 2010 and the Truck/Bus radial segment has commenced operations from May 11, 2010. The construction of the second phase of the project has also commenced from January 20.10 and is going on as per project schedule.

6. Excise duty relating to sales has been disclosed as a reduction from turnover. Excise duty related to difference between the closing stock and opening stock has been disclosed in Schedule 10 "(Increase)/Decrease in Work in Process and Finished Goods".

7. Borrowing costs capitalised/transferred to capital work in progress during the year is Rs 257.42 Million (Rs 215.48 Million). This includes Rs 31.57 Million towards Loan processing fees and Rs 15.44 Million towards Bank Charges.

8. Disclosure of Related Party Transactions in accordance with the mandatory Accounting Standard AS -18 "Related Party Disclosures"

Name of the Related Parties: PARTICULARS

Subsidiaries 2009-10 2008-09

Apollo (Mauritius) Holdings Apollo (Mauritius) Holdings Pvt. Ltd. (AMHPL) Pvt. Ltd. (AMHPL)

Apollo (South Africa) Apollo (South Africa) Holdings Pty Ltd. (ASHPL) (Subsidiary through AMHPL) Holdings Pty Ltd. (ASHPL)

(Subsidiary through AMHPL) Apollo Tyres South Africa Apollo Tyres South Africa (Pty) Ltd.(ATSA) (Previously Dunlop Tyres International (Pty) Ltd. (DTIPL)) (Subsidiary through ASHPL) (Pty) Ltd.(ATSA)

(Previously Dunlop Tyres International (Pty) Ltd.

(DTIPL)) (Subsidiary through Dunlop Africa Marketing (UK) Ltd. (DAMUK) (Subsidiary through ATSA) ASHPL)

Dunlop Africa Marketing (UK) Dunlop Zimbabwe (Pvt) Ltd. (DZL) (Subsidiary through DAMUK) Ltd.(DAMUK)

(Subsidiary through ATSA) Dunlop Zimbabwe (Pvt) Ltd. (DZL) (Subsidiary through DAMUK) Radun Investments (Pvt.) Radun Investments (Pvt.) Ltd. (Subsidiary through DAMUK) Ltd. (Subsidiary through DAMUK) AFS Mining (Pvt.) Ltd. AFS Mining (Pvt.) Ltd. (Subsidiary through DZL) (Subsidiary through DZL) Apollo Tyres (Cyprus) Pvt. Ltd ( ATCPL) (Subsidiary through AMHPL)



Subsidiaries Apollo Tyres AG (AT AG), Switzerland Apollo Tyres AG, (AT AG) Switzerland

(Subsidiary through ATCPL)

Apollo Tyres GmbH, (AT GmbH), Germany Apollo Tyres GmbH, (AT GmbH), Germany (Subsidiary through AT AG) (Subsidiary through AT AG) Apollo Tyres Zrt.(AT ZRT), Hungary Apollo Tyres Zrt.(AT ZRT), Hungary (Subsidiary through AT AG) (Subsidiary through AT AG)

Apollo Tyres Pte Ltd ( AT PL), Singapore Apollo Tyres Pte Ltd ( AT PL) Singapore (Subsidiary through AMHPL) (Subsidiary through AMHPL)

Apollo Tyres (Nigeria) Limited Apollo Tyres (Nigeria) Limited

(Subsidiary through AMHPL) (Subsidiary through AMHPL)

Apollo Tyres Co-Operatief UA (Apollo Coop), The Netherlands (Subsidiary through AMHPL)

Pollock & Aitken (Pty) Limited (Subsidiary through ATSA)

Apollo Vredestein BV-AVBV (Previously Vredestein Banden BV), The Netherlands (Subsidiary through Apollo Coop)

Subsidiaries of Apollo Vredestein BV:

Vredestein GmbH

Vredestein Norge A S

Vredestein UK Ltd

NV Vredestein SA

Vredestein GesmbH

Vredestein Schweiz AG

Vredestein Deck AB

Vredestein Italia Sri

Vredestein Iberica SA

Vredestein Tyres North America Inc

Vredestein Kft

Vredestein Polska Sp Z o.o

Vredestein Bekleding

Vredestein Consulting BV

Finlo BV

Vredestein Marketing BV

Vredestein Marketing Agentur BV & Co KG





Notes:

a) Apollo Tyres Co-operatief UA (Apollo Coop) and Apollo Tyres (Cyprus) Pvt. Ltd. (ATCPL) are incorporated during the year.

b) As a part of group restructuring exercise, entire share capital of AT AG has been transferred by Apollo Tyres Ltd (Parent Company) to Apollo Tyres (Cyprus) Pvt. Ltd., a subsidiary through AMHPL, on March 9, 2010.

c) During the year, the management decided to merge the German subsidiary AT, GmbH with another group entity Vredestein, GmbH which is a subsidiary of Apollo Vredestein BV (AVBV), Netherlands. The upstream merger has been registered by the Court of Registration, Germany on April 8, 2010 with an effective date of October 1, 2009

d) The Company acquired 100% Shareholding of Vredestein Banden BV (VBBV), a Dutch Tyre manufacturing company with a production capacity of 5.5 Million Tyres per annum along with various subsidiaries on May 15, 2009 through a special purpose vehicle, Apollo Cooperatief UA. The acquisition was funded through internal accruals and external debt.

e) Pollock & Aitken (Pty) Limited (Subsidiary through ATSA) has been Acquired by Apollo Tyres South Africa as a part of pension surplus.

Name of the Related Parties:



PARTICULARS 2009-10 2008-09

Associates Apollo International Ltd (AIL) Apollo International Ltd (AIL)

Encorp E Services Ltd Encorp - Services Ltd

UFO Moviez India Ltd UFO Moviez India Ltd

Landmark Farms & Housing (P) Ltd Landmark Farms & Housing (P) Ltd

Sunlife Tradelinks (P) Ltd Sunlife Tradelinks (P) Ltd

Travel Tracks Ltd Travel Tracks (P) Ltd

Classic Auto Tubes Ltd. (CATL) Classic Auto Tubes Ltd (CATL)

PTL Enterprises Ltd (PTL) PTL Enterprises Ltd (PTL)

National Tyre Services, Zimbabwe National Tyre Services, Zimbabwe

Pressurite (Pty) Ltd, South Africa Pressurite (Pty) Ltd, South Africa

Apollo Finance Ltd Apollo Finance Ltd

Artemis Medicare Services Ltd Artemis Medicare Services Pvt Ltd

Artemis Health Sciences Ltd Artemis Health Sciences Pvt Ltd

Apollo Automotive Tyres Ltd Apollo Automotive Tyres Ltd

Apollo Radial Tyres Ltd Apollo Radial Tyres Ltd

Key Management Mr 0 S Kanwar Mr 0 S Kanwar

Personnel Mr Neeraj Kanwar Mr Neeraj Kanwar

Mr U S Oberoi Mr U S Oberoi

Mr Sunam Sarkar Mr Sunam Sarkar

Relatives of Key Mr Raaja Kanwar Mr Raaja Kanwar

Managerial Personnel

9. The mark to market losses of Rs 3.89 Million (Nil) relating to undesignated / ineffective forward contracts / derivatives has been recognised in the Profit and Loss Account.

10, Previous Years figures have been regrouped or rearranged wherever considered necessary to conform to the classifications for the current year. Figures in brackets relate to previous year.

 
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