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Notes to Accounts of Batliboi Ltd.

Mar 31, 2015

NOTE 1:

I. Borrowings and Securities:

a) Rupee Term Loans of Rs. 111.93 lacs from a Bank is secured by first charge on the Fixed Assets purchased out of the loans and second charge on the Company's Immovable property at Udhana, Surat. Working capital lender banks have the second pari-passu charge on the aforesaid Fixed Assets.

b) Working Capital Borrowings from Consortium banks on cash credit Overdraft/Short Term Loan and non-fund based facilities are secured by first pari-passu charge on stock of Raw Materials, Stock in Process, Semi-finished and finished goods, consumable stores and spares, bills receivable, book debts and other moveable current assets (both present and future) of the Company; and Second pari-passu charge on the fixed assets of the Company (both present and future) at Udhana, Surat and Hosur Road Bangalore. Credit facilities including sub-limits extended by consortium banks to Batliboi Environmental Engineering Limited (BEEL), are secured by 2nd pari-passu charge on the fixed assets of the Company (both present and future) at Udhana, Surat and Hosur Road, Bangalore.

c) A specific guarantee facility of Rs. 288.00 Lacs (PY Rs. 288.00 Lacs) of BEEL from a Bank is secured by first pari-passu charge by way of an equitable mortgage on the immovable property of the Company situated on the leasehold land at Deonar, Mumbai. Balance outstanding as on 31.03.2015: Rs. 171.33 Lacs (PY. Rs. 171.33 Lacs).

II. Contingent Liabilities not provided for in respect of:

a) Claims against the Company not acknowledged as debts: Rs. 227.85 Lacs (Previous Year: Rs. 350.69 Lacs).

b) Disputed Sales Tax/Excise demands under appeal Rs. 76.30 Lacs (Previous Year: Rs. 76.30 Lacs).

c) Corporate Guarantees given to banks & financial institutions for credit facilities/performance guarantees extended by them to Batliboi Environmental Engineering Limited (BEEL), a related party: Rs. 2,290.00 Lacs (Previous year: Rs. 2,540.00 Lacs). Balance outstanding as on 31.03.2015: Rs. 1,968.52 Lacs (Previous Year: Rs. 2,030.50 Lacs).

d) Guarantees given on behalf of the Company by its bankers and outstanding Rs. 1,127.48 Lacs (Previous year: Rs. 1,475.40 Lacs). Out of the above, Guarantees of Rs. 109.56 Lacs (Previous year Rs. 109.56 Lacs) given by Company's bankers and outstanding in respect of contracts of Batliboi Environmental Engineering Limited (BEEL), a related party.

e) I n respect of guarantees given by the Company to the bankers of Batliboi Environmental Engineering Limited (BEEL), a related party, BEEL has given counter guarantees on behalf of the Company.

f) Company has given Corporate Guarantee to others on behalf of its step down subsidiary Quickmill Inc in current year CAD Nil equivalent to Rs. Nil (PY CAD 0.739 Million equivalent to Rs. 407.26 Lacs).

III. Commitments:

a) Estimated amount of contracts remaining to be executed on capital account not provided for: Rs. Nil Lacs (Previous Year: Rs. Nil Lacs).

b) The Company does not have any other commitment.

IV. B. The effects of Changes in Foreign Exchange Rates:

Exchange Gains/Loss credited/charged to Profit and Loss Account: Exchange Loss Rs. 4.37 Lacs (P.Y Exchange gain Rs. 346.20 Lacs).

Exchange loss of Rs. 431.41 Lacs (PY Rs. NIL) on long term investment in wholly owned foreign subsidiary shown under "Foreign Currency Translation Reserve" in Reserves and Surplus.

Gratuity:

The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to fifteen days/one month salary last drawn for each completed year of service depending on the length of service. The same is payable on termination of service, or retirement, whichever is earlier. The benefit vests after five years of continuous service.

(iii) Provident fund:

The fair value of the assets of Provident Fund Trust as of Balance Sheet date is greater than the obligation, including interest, and also the returns on these plan assets including the amount already provided are sufficient to take care of PF interest obligations, over and above the fixed contribution recognized.

V. E. Segment Reporting:

The Company has considered business segments as the primary segments for disclosure.

Segments have been identified in line with the Accounting Standards on Segment Reporting (AS-17), taking into account the nature of business, products and services, the Company's organization structure as well as the differential risks and returns of these segments. Segments Revenue, Results, Assets and Liabilities include the respective amounts identifiable to each of the segments. Those not identifiable to the individual segments are included under unallocated.

The Company has classified its business into the following segments:

a) Machine Tool Business Group, which handles manufacturing and marketing (including trading and agency business) of machine tool and components e.g. CNC and GPM machines, machine castings, machine carcasses, cranes etc.

b) Textile Engineering Group, which deals in manufacturing and marketing of textile air-engineering systems range i.e. Humidification, waste recovery, and auto control systems, besides marketing (including trading and agency business) of textile machinery e.g. circular knitting, spinning, and flat-knitting machines etc.

c) Others, which covers remaining business i.e., air conditioning equipments, agro-industrial products (e.g. pumps/motors) etc.

VI. F. Related Party Disclosures:

Related party disclosures as required under Accounting Standard 18 (AS-18) on "Related Party Disclosures" are given below:

(A) Relationships:

(i) Subsidiary Companies:

(a) Queen Projects (Mauritius) Ltd. - Mauritius

(b) Vanderma Holdings Ltd. - Cyprus

(c) Pilatus View Holdings AG - Switzerland

(d) Quickmill Inc. - Canada

(e) Aesa Air Engineering SA - France

(f) Aesa Air Engineering PTE Ltd. - Singapore

(g) Aesa Air Engineering Ltd. - China

(h) Aesa Air Engineering Pvt. Ltd. - India

(i) Aesa Air Engineering Ltd. - Hong Kong (ceased to exist w.e.f. 05th Dec 2014)

(j) Aesa Air Engineering SPA - Italy (ceased to exist w.e.f. 20th Feb 2015)

(k) 760 Rye Street Inc., Canada

(ii) Key Management Personnel:

(a) Mr. Nirmal Bhogilal, Chairman & Managing Director

(b) Mrs. Sheela Bhogilal, Director

(c) Mrs. Prema Chandrasekhar, Chief Financial Officer

(d) Mrs. Puneet Kapur, Chief Corporate Counsel and Company Secretary

(iii) Relatives of Key Management Personnel:

(a) Mr. Kabir Bhogilal, Vice-President - Corporate Strategy

(b) Mrs. Maya Bhogilal

(c) Mr. Akshay Chandrasekhar

(iv) Entities over which key management personnel are able to exercise significant influence:

(a) Batliboi Environmental Engineering Ltd.

(b) Batliboi International Limited

(c) Batliboi Impex Ltd.

(d) Batliboi Enxco Pvt. Ltd.

(e) Sustime Pharma Ltd.*

(f) Spartan Electricals

(g) Bhagmal Investments Pvt. Ltd.*

(h) Delish Gourment Pvt. Ltd.*

(i) Hitco Investments Pvt. Ltd.*

(j) Nirbhag Investments Pvt. Ltd.*

(k) Pramaya Shares & Securities Pvt. Ltd.*

(l) Bhogilal Trustship Pvt. Ltd.*

(v) Entities in which management personnel are trustees:

(a) Bhogilal Leherchand Foundation*

(b) Leherchand Uttamchand Trust Fund*

(c) Shekhama Family Trust

* No transaction with the entities during the year.

The aforesaid Provisions are made towards claims made by sales tax and excise authorities pending under appeal and provisions for warranty cover related to goods sold and jobs executed.

VII. A. Balances of receivables and payables are as per books of account. Letters have been sent to selected parties seeking confirmation of balances, and replies are awaited. Adjustments, if necessary, will be made on receipt of such confirmations/reconciliation.

B. In the opinion of the management, current assets, long term loans and advances and other non-current assets have a realizable value in ordinary course of the business at least equal to the amounts at which they are stated in the Balance Sheet.

C. Assets and Liabilities are classified as current or non-current based on the terms of contract where available and based on the judgment of the management in other cases.

D. The Company did not have any long term contracts including derivative contract for which there were any material foreseeable losses.

E. Advances from customers reflected under "Other Long Term Liabilities" and "Other Current Liabilities" represent advance/security deposit received by the Company for supply of capital goods.

VIII. A. The Company has incurred operating losses during the year mainly due to under performance of one of its division as it has not been able to execute the orders on time due to stretched working capital owing to overall slowdown in the economy affecting the investment by private parties in the capital intensive sector to which the said division caters to. The Company has taken steps to improve the working capital situation and timely execution of the orders by the said division.

The Company is also intending to dispose of non-core assets in order to mitigate the losses incurred during the current year and to improve the liquidity position. The promoters have brought in money in the form of unsecured loan and intend to bring further money to improve the liquidity position.

B. The Company has investment in its subsidiary Aesa Air Engineering SA-France whose accumulated losses are greater than the net worth. In the opinion of the Management, having regard to the long term interest of the Company in the said subsidiary and considering the sizeable order books and cash flow projections of the subsidiary, there is no diminution other than temporary, in the value of the Investments.

The Company has investments in Batliboi Environmental Engineering Ltd., (BEEL) of Rs. 191.21 Lacs. BEEL has accumulated losses which have significantly eroded their net worth. In the opinion of the Management, having regard to the long term interest of the Company in BEEL, there is no diminution other than temporary, in the value of the Investments.

In respect of the option granted during the year, the intrinsic value of Rs. 17.20 per share is treated as discount and accounted as employee compensation cost over the vesting period. The employee compensation cost accrued as on 31.03.2015 is Rs. 9.17 lacs.

IX. With effect from 01.04.2014, the Company has revised depreciation rate on certain fixed assets in accordance with the useful life specified in the Schedule II to the Companies Act, 2013 and re-assessed the useful life of certain other fixed assets based on Chartered Engineer and valuer's report and charged depreciation based on said report. Accordingly an amount of Rs. 59.98 lacs has been charged to Profit & Loss account over & above the normal depreciation in respect of assets which have remaining useful life as at 01.04.2014 and amount of Rs. 61.47 lacs has been charged to Retained Earnings (General Reserves) in respect of assets where remaining useful life is NIL.

X. Pursuant to the change in terms of redemption of Non-Cumulative Preference Shares invested in Queen Project Mauritius Ltd., a subsidiary with effect from 01.01.2015, the said investment is treated as long term foreign currency monetary asset forming part of the Company's net investment in the said subsidiary. The exchange loss of Rs. 431.41 lacs has been debited to Foreign Currency Translation Reserve A/c in accordance with Para 15 of Accounting Standard (AS) 11 on "The Effects of Changes in Foreign Exchange Rates".

XI. Previous year's figures have been reclassified and regrouped to confirm to current year's classification and grouping. Figures in bracket represent previous year's figures.


Mar 31, 2012

I. Borrowings and Securities

a. Rupee Term Loans of Rs 383.54 Lacs from a Bank is secured by first charge on the Fixed Assets purchased out of the loans and second charge on the Companyths Immovable property at Udhna, Surat. Working capital lender banks have the second pari passu charge on the aforesaid Fixed Assets.

b. Rupee Term Loan of Rs 428.88 Lacs from a Bank and Foreign Currency Term Loans of Rs 594.65 Lacs are secured by first pari passu charge on the entire Fixed Assets of the Company situated at Udhna, Surat and Hosur Road, Bangalore. Foreign Currency Term Loans are further secured by first and exclusive charge on Land & Building situated at Coimbatore.

c. Working Capital Borrowings from Consortium banks on Cash Credit/Overdraft/Short Term Loan and Non Fund based facilities are secured by first pari-passu charge on stock of Raw Materials, Stock in Process, Semi-finished and finished goods, consumable stores and spares, bills receivable, book debts and other moveable current assets (both present and future) of the company and Second pari passu charge on the fixed assets of the company (both present and future) at Udhna, Surat and Hosur Road, Bangalore.

d. A specific guarantee facility of Rs 288.00 Lacs (Previous Year Rs 288.00 Lacs) of Batliboi Environmental Engineering Limited (BEEL) from a Bank is secured by first pari passu charge by way of an equitable mortgage on the immoveable property of the company situated on the leasehold land at Deonar, Mumbai. Balance outstanding as on 31st March, 2012 Rs 171.33 Lacs (Previous Year Rs 288.00 Lacs).

II. Contingent Liabilities not provided for in respect of:

a. Claims against the company not acknowledged as debts Rs 311.24 Lacs (Previous Year Rs 149.72 Lacs).

b. Disputed Sales Tax/Excise demands under appeal Rs 76.30 Lacs (Previous Year Rs 76.30 Lacs).

c. Corporate Guarantees given to banks and financial institutions for credit facilities/performance guarantees extended by them to Batliboi Environmental Engineering Limited (BEEL), a related party Rs 2,960.00 Lacs (Previous Year Rs 2,690.00 Lacs). Balance outstanding as on 31st March, 2012 Rs 2,207.97 Lacs (Previous Year Rs 2,360.26 Lacs).

d. Guarantees given on behalf of the Company by its bankers and outstanding Rs 1,379.41 Lacs (Previous Year Rs 1,318.05 Lacs). Out of the above, Guarantees of Rs 182.42 Lacs (Previous year Rs 224.64 Lacs) given by Companyths bankers and outstanding in respect of contracts of Batliboi Environmental Engineering Limited (BEEL), a related party.

e. In respect of guarantees given by the company to the bankers of Batliboi Environmental Engineering Limited (BEEL), a related party, BEEL has given counter guarantees on behalf of the Company.

f. Company has given Corporate Guarantee to others on behalf of its step down subsidiary Quickmill Inc. amounting to Canadian Dollar (CAD) 0.94 Million equivalent to Rs 479.82 Lacs (Previous Year CAD 0.74 Million equivalent to Rs 339,87 Lacs).

III. Commitments:

(a) Estimated amount of contracts remaining to be executed on capital account not provided for Rs 333.75 Lacs (Previous Year Rs 135 Lacs).

(b) The Company does not have any other commitment.

IV. B. The effects of Changes in Foreign Exchange Rates:

(a) Foreign currency long term loan includes:

(i) Canadian dollar (CAD) 801000 i.e. Rs 408.11 Lacs against which the company has not taken any forward cover as at balance sheet date.

(ii) EURO 149075 i.e. Rs 101.21 Lacs against which the company has not taken any forward cover as at balance sheet date. The company has natural hedge against commission receivable.

(iii) USD 167724 i.e. Rs 85.34 Lacs against which the company has no forward cover or natural hedge.

(iv) The company has no exposure by way of derivative contracts.

(b) Exchange Gains/Loss credited/charged to Profit and Loss Account: Exchange Gain Rs 254.97 Lacs (Previous year Exchange Gain Rs 95.68 Lacs).

V. Defined Benefit Plans/Compensated Absence:

General description of Defined Benefit Plan Gratuity:

The company operates gratuity plan wherein every employee is entitled to the benefit equivalent to fifteen days/one month salary last drawn for each completed year of service depending on the length of service. The same is payable on termination of service or retirement, whichever is earlier. The benefit vests after five years of continuous service.

(iii) Provident fund:

The fair value of the assets of Provident Fund Trust as of balance sheet date is greater than the obligation, including interest, and also the returns on these plan assets including the amount already provided are sufficient to take care of interest obligations, over and above the fixed contribution recognized.

VI. A. Segment Reporting

The Company has considered business segments as the primary segments for disclosure.

Segments have been identified in line with the Accounting Standards on Segment Reporting (AS-17), taking into account the nature of business, products and services, the Companyths organization structure as well as the differential risks and returns of these segments. Segments Revenue, Results, Assets and Liabilities include the respective amounts identifiable to each of the segments. Those not identifiable to the individual segments are included under unallocated.

The company has classified its business into four major segments:

(a) Machine Tool Business Group, which handles manufacturing and marketing (including trading and agency business) of machine tool and components e.g. CNC and GPM machines, machine castings, machine carcasses, cranes etc.

(b) Textile Engineering Group, which deals in manufacturing and marketing of textile air-engineering systems range i.e. Humidification, waste recovery, and auto control systems, besides marketing (including trading and agency business) of textile machinery e.g. circular knitting, spinning and flat-knitting machines etc.

(c) Air-conditioning and Refrigeration division, which covers manufacturing, marketing, commissioning and servicing of packaged air-conditioners and chillers etc.

(d) Others, which covers remaining business i.e. agro-industrial products (e.g. pumps/motors), air and water treatment jobs etc.

(ii) Secondary Segment Reporting

The Company caters mainly to the needs of the domestic market. The export turnover is not significant in the context of the total turnover. As such there are no reportable geographical segments.

VI B. Related Party Disclosures:

Related party disclosures as required under Accounting Standard 18 (AS-18) on "Related Party Disclosures" are given below:

(A) Relationships:

(i) Subsidiary companies:

(a) Queen Projects (Mauritius) Ltd. — Mauritius

(b) Vanderama Holdings Ltd. — Cyprus

(c) Pilatus View Holdings AG — Switzerland

(d) Quickmill Inc.— Canada

(e) Aesa Air Engineering SA — France

(f) Aesa Air Engineering SPA — Italy

(g) Aesa Air Engineering Pte Ltd. — Singapore

(h) Aesa Air Engineering Ltd. — Hong Kong

(i) Aesa Air Engineering Ltd. — China

(j) Aesa Air Engineering Pvt. Ltd. — India

(k) 760 Rye Street Inc. — Canada

(ii) Key Management Personnel:

Mr. Nirmal Bhogilal, Chairman & Managing Director

(iii) Relatives of Key Management Personnel:

(a) Mr. Pratap Bhogilal, Chairman Emeritus

(b) Mr. Kabir Bhogilal, Vice President - Corporate Affairs

(c) Mrs. Sheela Bhogilal

(d) Ms. Maya Bhogilal

(iv) Entities over which key management personnel are able to exercise significant influence:

(a) Batliboi Environmental Engineering Ltd.

(b) Batliboi International Limited

(c) Batliboi Impex Ltd.

(d) Batliboi Enexco Pvt. Ltd.

(e) Sustime Pharma Ltd. *

(f) Spartan Electricals

(g) Bhagmal Investments Pvt. Ltd.*

(h) Delish Gourment Pvt. Ltd.*

(i) Hitco Investments Pvt. Ltd.*

(j) Nirbhag Investments Pvt. Ltd.*

(k) Pramaya Shares & Securities Pvt. Ltd.*

(v) Entities in which management personnel are trustees:

(a) Bhogilal Leherchand Foundation*

(b) Leherchand Uttamchand Trust Fund*

(c) Shekhama Family Trust

* No transaction with the entities during the year.

VI. C. Provisions, Contingent Liabilities and Contingent Assets

Disclosure for Provisions in terms of AS-29:

Rs Lacs

Provisions Opening Additional Amount Amount Closing Amount Provision used Reversed Amount

2011-12 235.99 74.07 23.18 56.30 230.58

2010-11 205.17 109.44 50.64 27.98 235.99

The aforesaid Provisions are made towards claims made by Sales Tax and Excise authorities pending under appeal and provisions for warranty cover related to goods sold and jobs executed.

VII. A. Balances of receivables and payables are as per books of account. Letters have been sent to selected parties seeking confirmation of balances and replies are awaited. Adjustments, if necessary, will be made on receipt of such confirmations/reconciliation.

B. In the opinion of the management, current assets, long term loans and advances and other non-current assets have a realizable value in ordinary course of the business at least equal to the amounts at which they are stated in the Balance Sheet.

C. Assets and Liabilities are classified as current or non current based on the terms of contract where available and based on the judgment of the management in other cases.

VIII. The Company has investments in Batliboi Environmental Engineering Ltd., (BEEL) of Rs 191.21 Lacs. BEEL has accumulated losses which have significantly eroded their net worth. The company has also investment in its subsidiary Aesa Air Engineering SA - France whose accumulated losses are greater than the net worth.

In the opinion of the Management, having regard to the long term interest of the company in the aforesaid companies, there is no diminution other than temporary, in the value of the Investments.

IX. Pursuant to the resolution passed in the Extra Ordinary General meeting, the company has reserved 28,68,255 options during the year to the eligible employees of the company and its subsidiaries under the Employee Stock Option Scheme. The exercise price for option is Rs 15.75 (same as the market price on the grant date). Each option entitles the option holder to subscribe to one equity share of the Company.

Out of the above reserved options, 10,00,000 options have been granted. The date of grant of option is 23rd January, 2012. The granted options would vest in the eligible employees as follows:

- 1 /3rd of the total number of options granted after 36 month from the said date;

- 1 /3rd of the total number of options granted after 48 month from the said date; and

- Balance 1 /3rd of the total number of option granted after 60 month from the said date.

All the options granted as above have not been vested as at the Balance Sheet date.

Since the market price of share of the company on the grant date was the same as the exercise price, the intrinsic value of the option was nil and no employee compensation cost accrued.

X. By virtue of acquisition proceeding, Surat Municipal Corporation (SMC), acquired land admeasuring 2541.84 Sq. meters at Udhna in 1995-96, without paying any compensation. SMC had also acquired land admeasuring 3360 Sq. meter at Udhna in the FY 2007-08 against which SMC paid compensation of Rs 3.16 Lacs after adjusting betterment charges ofRs 15.99 Lacs and TDS of Rs 2.79 Lacs. The Company has preferred an application against the said compensations before the Principal Judge Sr. Division Court Surat, claiming compensation at the prevailing market price. At present the matter is pending in the court. Pending the final compensation, the amount received as above has been disclosed under the head "Current Liabilities".

XI. Till the year ended 31st March, 2011, the company was using the pre-revised schedule VI to the Companies Act, 1956, for preparation and presentation of its financial statements. During the year ended 31st March, 2012, the revised Schedule VI notified under the Companies Act, 1956, has become applicable to the Company. The Company has reclassified and regrouped the previous year figures to conform to current year. Figures in bracket represent previous year's figures.


Mar 31, 2011

1. Contingent Liabilities not provided for in respect of-.

a) Claims against the company not acknowledged as debts:Rs. 149.72 Lacs (Previous Year:Rs. 369.57 Lacs).

b) Disputed sales tax/Excise demands under appeal Rs. 76.30 Lacs (Previous Year: Rs. 86.78 Lacs).

c) Corporate Guarantees given to banks and financial institutions for credit facilities/ performance guarantees extended by them to Batliboi Environmental Engineering Limited (BEEL), a related party: Rs.2690.00 Lacs (Previous year: Rs. 2690.00 Lacs). Balance outstanding as on 31.03.2011:Rs. 2360.26 Lacs (Previous Year: Rs. 2082.05 Lacs).

d) Guarantees given on behalf of the Company by its bankers and outstanding Rs. 1318.05 Lacs (Previous year: Rs. 1182.26 Lacs). Out of the above, Guarantees of Rs. 224.64 Lacs (Previous year Rs. 100.51 Lacs) given by Company's bankers and outstanding in respect of contracts of Batliboi Environmental Engineering Limited (BEEL), a related party.

e) In respect of guarantees given by the company to the bankers of Batliboi Environmental Engineering Limited (BEEL), a related party, BEEL has given counter guarantees on behalf of the Company and extended charge on its current assets to secure the financial assistance availed by the Company from banks/financial institutions [Refer note II- 4-(a)(ii)].

f) Company has given Corporate Guarantee to others on behalf of its step down subsidiary Quickmill Inc amounting to CAD 0.74 Million equivalent to Rs. 339.87 Lacs (Previous year CAD 0.74 Million equivalent to Rs. 326.23 Lacs).

2. Estimated amount of contracts remaining to be executed on capital account not provided for: Rs. 135.00 Lacs (Previous Year: Rs. 27.24 Lacs).

3. Borrowings and Security:

a. Security for Bank Borrowings:

i. Working Capital Borrowings from Bank of Baroda led consortium banks on cash credit/overdraft/short term loan and non-fund based facilities are secured by way of first pari passu charge by hypothecation of stock of raw materials, goods in process, finished goods, stores and spares, books debts, outstanding monies, receivables, claims etc. pertaining to the manufacturing division at Udhana and the marketing branches situated all over India, both present and future; besides Second pari passu charge by way of registered mortgage on the immovable property of the company together with plant and machinery attached to the earth or permanently fastened to anything attached to the earth situated at free-hold land at Udhana, Gujarat. Working capital limits of amalgamated SPM division (erstwhile "Batliboi SPM Pvt Ltd") sanctioned by Canara Bank are secured by hypothecation of Book Debts and Inventories of SPM Division. Canara Bank also has first charge on land and building of SPM Division situated at Bangalore.

ii. A specific guarantee facility of Rs. 288 Lacs (Previous year Rs. 288 Lacs) of BEEL from a bank, is secured by first pari passu charge by way of an equitable mortgage of the immoveable properties of the company situated at leasehold land at Deonar, Mumbai.

b. Rupee Term Loans from a Co-operative Scheduled Bank is secured by first charge on the fixed assets financed by these term loans and Second Charge on the Company's immovable and movable property at Udhana, Gujarat. Working capital lender banks have the second pari passu charge on the said fixed assets.

c. Rupee Term Loan from a bank is secured by first pari passu charge on the entire fixed assets of the Company situated at Udhna, Gujarat along with other term lenders.

d. Foreign Currency Term Loans and other Rupee Term Loan are secured by first pari passu charge on the entire fixed assets of the Company situated at Udhna, Gujarat along with other term lenders.

4. a. Balances of Debtors & Creditors are as per books of account. Letters have been sent to selected Debtors & Creditors seeking confirmation of balances and replies are awaited. Adjustments, if necessary, will be made on receipt of such confirmations/reconciliation.

b. In the opinion of the Board of Directors, Current Assets, Loans and Advances have a realizable value in ordinary course of the business at least equal to the amounts at which they are stated in the Balance Sheet.

5. Pursuant to Section 40A (11) of the Income Tax Act, 1961, the company has during the year claimed back the unutilized amounts that were lying with the Welfare Trusts and the company has received Rs. 427.43 lacs.

6. By virtue of acquisition proceeding, Surat Municipal Corporation (SMC), acquired land admeasuring 2541.84 Sq. meter at Udhna in 1995-96, without paying any compensation. SMC had also acquired land admeasuring 3360 Sq. meter at Udhna in the FY 2007-08 against which SMC paid compensation of Rs. 3.16 Lacs after adjusting betterment charges of Rs. 15.99 Lacs and TDS of Rs. 2.79 Lacs. The Company has preferred an application against the said compensation before the Principal Judge Sr. Division Court Surat, claiming compensation at the prevailing market price. Pending the final compensation, the amount received as above has been disclosed under the head "Current Liabilities".

B. Defined Benefit Plans/Compensated Absence: General description of Defined Benefit Plan

Gratuity:

The company operates gratuity plan wherein every employee is entitled to the benefit equivalent to fifteen days/one month salary last drawn for each completed year of service depending on the length of service. The same is payable on termination of service or retirement, whichever is earlier. The benefit vests after five years of continuous service.

(ii) Provident fund:

The Guidance issued by the Accounting Standard Board (ASB) on implementing AS-15 Employee Benefits (Revised 2005). states that provident funds set-up by employers, which require interest shortfall to be met by the employer, needs to be treated as defined benefit plan.

Pending the issuance of the guidance note from the Actuarial Society of India, the company's actuary has expressed his inability to reliably measure provident fund liability. Accordingly, the company is unable to exhibit the related disclosures.

The Provident Fund Trust has surplus to meet out the shortfall on account of increase in the rate of interest on Provident Fund Balances for

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b) In view of losses (after adjusting the losses of earlier years against the profits of the current year) no commission is payable to directors. Hence computation of net profit under Section 349 of the Companies Act. 1956. has not been given.

7. (a) Foreign currency long term loan includes:

(i) Canadian Dollar (CAD) 1701000 i.e. Rs. 782.29 Lacs against which the company has not taken any forward cover as at balance sheet date.

(ii) EURO 316575 i.e. Rs. 200.65 Lacs against which the company has not taken any forward cover as at balance sheet date. The company has natural hedge against commission receivable.

(iii) USD 288384 i.e. Rs. 128.60 Lacs against which the company has no forward cover or natural hedge.

(iv) The company has no exposure by way of derivative contracts.

(b) Exchange Gains/Loss credited/charged to Profit and Loss Account: Exchange Gain Rs. 95.68 Lacs (P.Y. Exchange Loss Rs. 166.59 Lacs).

8. It is the view of the company that the provisions of Items 3(ii) (d) of Part II of Schedule VI of the Companies Act, 1956 do not require disclosure of the quantities and value wise information of Opening and Closing stock and purchases in respect of goods traded in by the Company.

9. Segment Reporting:

The company has considered business segments as the primary segments for disclosure.

Segments have been identified in line with the Accounting Standards on Segment Reporting (AS-17), taking into account the nature of business, products and services, the Company's organization structure as well as the differential risks and returns of these segments. Segments Revenue, Results, Assets and Liabilities include the respective amounts identifiable to each of the segments. Those not - identifiable to the individual segments are included under unallocated.

The company has classified its business into four major segments:

a) Machine Tool Business Group, which handles manufacturing and marketing (including trading and agency business) of machine tool and components e.g. CNC and GPM machines, machine castings, machine carcasses and cranes etc.

b) Textile Engineering Group, which deals in manufacturing and marketing of textile air-engineering systems range i.e. Humidification,. Waste Recovery and Auto Control Systems, besides marketing (including trading and agency business) of textile machinery e.g. circular knitting, spinning, and flat-knitting machines etc.

c) Air-conditioning and Refrigeration division, which covers manufacturing, marketing, commissioning and servicing of packaged air-conditioners and chillers etc.

d) Others, which covers remaining business i.e., agro-industrial products (e.g. pumps/motors), air and water treatment jobs etc.

ii) Secondary Segment Reporting

The Company caters mainly to the needs of the domestic market. The export turnover is not significant in the context of the total turnover. As such there are no reportable geographical segments.

10. Related Party Disclosures:

Related party disclosures as required under Accounting Standard 18 (AS-18) on "Related Party Disclosures" are given below: A) Relationships:

i) Subsidiary companies: .

a) Queen Projects (Mauritius) Ltd.-Mauritius

b) Vanderama Holdings Ltd.-Cyprus

c) Pilatus View Holdings AG-Switzerland

d) Quickmill Inc.-Canada

e) Aesa Air Engineering SA-France

f) Aesa Air Engineering SPA-ltaly

g) Aesa Air Engineering PTE Ltd-Singapore h) Aesa Air Engineering Ltd-Hong Kong

i) Aesa Air Engineering Ltd-China -

j) Aesa Air Engineering Pvt Ltd-lndia

k) 760 Rye Street - Canada ii) Key Management Personnel:

Mr. Nirmal Bhogilal, Chairman & Managing Director iii) Relatives of Key Management Personnel:

a) Mr. Pratap Bhogilal, Chairman Emeritus

b) Mr. Kabir Bhogilal, General Manager-Business Development

c) Mrs. Sheela Bhogilal

iv) Entities over which key management personnel are able to exercise significant influence:

a) Batliboi Environmental Engineering Ltd. .

b) Batliboi International Limited

c) Batliboi Impex Ltd. .

d) Batliboi Enexco Pvt. Ltd.

e) Sustime Pharma Ltd.

f) Spartan Electricals

v) Entities in which management personnel are trustees:

a) Bhogilal Leherchand Foundation

b) Leherchand Uttamchand Trust Fund

11. The Company has investments in Batliboi Environmental Engineering Ltd, (BEEL) of Rs. 191.21 Lacs. BEEL has accumulated losses which have significantly eroded their net worth. The company has also investment in its subsidiary Aesa Air Engineering SA- France whose accumulated losses are greater than the net worth.

In the opinion of the Management, having regard to the long term interest of the company in the aforesaid companies, there is no diminution other than temporary, in the value of the Investments.

12. The figures in respect of the previous financial year have been reclassified and regrouped wherever necessary.


Mar 31, 2010

1. Contingent Liabilities not provided for in respect of:

a) Claims against the company not acknowledged as debts: Rs 369.57 Lacs (Previous Year: Rs. 370.60 Lacs).

b) Disputed sales tax/Excise demands under appeal Rs 86.78 Lacs (Previous Year: Rs.91.87 Lacs).

c) Corporate Guarantees given to banks & financial institutions for credit facilities/ performance guarantees extended by them to Batliboi Environmental Engineering Limited (BEEL), a related party: Rs.2690.00 Lacs (Previous year: Rs. 2690.00 Lacs). Balance outstanding as on 31.03.2010: Rs.2082.05 Lacs (Previous Year: Rs .2297.73 Lacs).

d) Guarantees given on behalf of the Company by its bankers and outstanding Rs 1182.26 Lacs (Previous year: Rs. 866.25 Lacs). Out of the above, Guarantees of Rs 100.51 Lacs (Previous year Rs. 43.53 Lacs) given by Companys bankers and outstanding in respect of contracts of Batliboi Environmental Engineering Limited (BEEL), a related party.

e) In respect of guarantees given by the company to the bankers of Batliboi Environmental Engineering Limited (BEEL), a related party, BEEL has given counter guarantees on behalf of the Company and extended charge on its current assets to secure the financial assistance availed by the Company from banks/financial institutions [Refer note II- 4-(e)].

f) Company has given Corporate Guarantee to others on behalf of its step down subsidiary Quickmill Inc amounting to CAD 0.74 Million equivalent to Rs.326.23 Lacs (P.Y CAD 0.74 Million equivalent to Rs.297.89 Lacs).

The aforesaid Provisions are made towards claims made by sales tax and excise authorities pending under Appeal and provisions for warranty cover related to part sold and jobs executed.

2. Estimated amount of contracts remaining to be executed on capital account not provided for: Rs 27.24.Lacs (Previous Year: Rs. 40.25 Lacs).

3. Borrowings and Security:

a. Security for Bank Borrowings:

i. Working Capital Borrowings from BOB led consortium banks on cash credit/overdraft/short term loan and non-fund based facilities are secured by way of first pari passu charge by hypothecation of stock of raw materials, goods in process, finished goods, stores and spares, books debts, outstanding monies, receivables, claims etc. pertaining to the manufacturing division at Udhana and the marketing branches situated all over India, both present and future; besides Second pari passu charge by way of registered mortgage on the immovable property of the company together with plant and machinery attached to the earth or permanently fastened to anything attached to the earth situated at free-hold land at Udhana, Gujarat. Working capital limits of amalgamated SPM division (erstwhile "Batliboi SPM Pvt Ltd") sanctioned by Canara Bank are secured by hypothecation Of Book Debts and Inventories of SPM Division. Canara Bank also has first charge on land and building of SPM Division situated at Banglore.

ii. A specific guarantee facility of Rs.288 Lacs (P.Y Rs.288 Lacs) of BEEL from a bank, is secured by first pari passu charge by way of an equitable mortgage of the immoveable properties of the company situated at leasehold land at Deonar, Murnbai.

b. Rupee Term Loans from a Co-operative Scheduled Bank is secured by first charge on the fixed assets financed by these term loans (hereafter "the said fixed assets"); and Second Charge on the Companys immovable and movable property at Udhana, Gujarat. Working capital lender banks have the second pari passu charge on the said fixed assets.

c. Rupee Term Loan from a bank is secured by first pari passu charge on the entire fixed assets of the Company situated at Udhna, Gujarat along with other term lenders and personal guarantee of a director.

d. Foreign Currency Term Loans and other Rupee Term Loan are secured by first pari passu charge on the entire fixed assets of the Company situated at Udhna, Gujarat along with other term lenders.

4. Balances of Debtors & Creditors are as per books of account. Letters have been sent to selected Debtors & Creditors seeking confirmation of balances, and replies in some cases are awaited. Adjustments, if necessary, will be made on receipt of such confirmations/reconciliation.

5. In the opinion of the Board of Directors, Current Assets, Loans and Advances have a realizable value in ordinary course of the business at least equal to the amounts at which they are stated in the Balance Sheet.

6. By virtue of acquisition proceeding, Surat Municipal Corporation (SMC), acquired land admeasuring 2541.84 Sq meters at Udhna in 1995-96, without paying any compensation. SMC had also acquired land admeasuring 3360 Sqmeter at Udhna in the FY 2007-08 against which SMC paid compensation of Rs.3.16 Lacs after adjusting betterment charges of Rs.15.99 Lacs and TDS of Rs.2.79 Lacs. The Company has preferred an application against the said compensations before the Principal Judge Sr. Division Court Surat, claiming compensation at the prevailing market price. Pending the final compensation, the amount received as above has been disclosed under the head "Current Liabilities".

7. Taxes on Income:

Keeping in mind the improved performance on a quarter on quarter basis and the higher order inflow in the last quarter and future projections which in the opinion of the management represents convincing evidence of virtual certainty that sufficient future taxable income will be available to realize the deferred tax assets, the company has recognized Deferred Tax Asset to the extent of Rs. 278.44 Lacs in respect of unabsorbed depreciation/losses under the Income Tax Act.

B. Defined Benefit Plans/Compensated Absence: General description of Defined Benefit Plan

Gratuity:

The company operates gratuity plan wherein every employee is entitled to the benefit equivalent to fifteen days/one month salary last drawn for each completed year of service depending on the length of service. The same is payable on termination of service, or retirement, whichever is earlier. The benefit vests after five years of continuous service.

Notes:

*The estimate of future salary increases considered in actuarial valuation are on the basis of rough approximation of the salary an employee will be receiving at the time of actual payment of gratuity/leave encashment. A suitable growth rate is assumed for this purpose. This is implied in the Projected Unit Credit Method.

(ii). Provident fund:

The Guidance issued by the Accounting Standard Board (ASB) on implementing AS-15 Employee Benefits (Revised 2005) states that provident funds set-up by employers, which require interest shortfall to be met by the employer, needs to be treated as defined benefit plan.

Pending the issuance of the guidance note from the Actuarial Society of India, the companys actuary has expressed his inability to reliably measure provident fund liability. Accordingly, the company is unable to exhibit the related disclosures.

b) In view of losses no commission is payable to directois. Hence cowfUftllnn of net profit under Section 349 of the Companies Act, 1956, has not been given.

8. (a) Foreign currency long term toan indudies:

(i) CAD 2556000 i.e Rs.1128.35 Lacs against which lire rarassas^ Iras a fomraid cover for USD/CAD 200000. The USD/INR leg booked for CAD 100000 and CAD 100000 remains open as at Ubnce sheet date.

(ii) EURO 475700 i.e Rs.288.09 Lacs against which the agaparcy Unas toward cover of EURO/USD 50000. The USD/INR leg as at balance sheet date is open.

(iii) USD 390945 i.e Rs.175.53 Lacs against which the uumipai^ Unas mm toward cover or natural hedge.

(iv) The company has no exposure by way of derivative confeatik-

(b) Exchange (Gains)/Loss created/(charged) to Profit and tassAanumtRs.166.59 Lacs (P.Y Rs 19.94 Lacs)

* Capacity Figures are on annual basis

** Includes production of parts of equipments. 4909 Nos. (Previous year 4165 Nos.); and Production of equipments 621 Nos (Previous year: 721 Nos.)

@@ Includes SPM production

*** Spare capacity available at Udhana for production of C.I.Castings was utilized for the production of items under i & j above.

**** Since plant was sold, disclosure is no more required.

9. It is the view of the company that the provisionsarff Items3(P) P| of Pmt Hi of Sdiedule VI of the Companies Act 1956 do not require disclosure of the quantities and value wse Mnwm&ism otf Opsraiog and Closing stock and purchases in respect of goods traded in by the Company.

10. Segment Reporting:

The company has considered business segmnEmtfe as ttte pmraarf segments for disclosure.

Segments have been identified in line with the-taranmifius! SfaBsdarais on Segment Reporting (AS-17), taking into account the nature of business, products and servkses. le Cionsgnn)^ snganizafiion structure as well as the differential risks and returns of these segments. Segments Revenue, ResaSS&, $ssffi& araiS UafoiBies include the respective amounts identifiable to each of the segments. Those not identifiable to toe iwaSwirttari seapraerrjiis are included under unallocated.

The company has classified its business into fcur sroagnr sespraejfe::

a) Machine Tool Business Group, which hamates saaaraisfeEftiflarag arad marketing (including trading and agency business) of machine tool and components e.g. CMC amsE QPM raaarfMraes, machire castings, machine carcasses, cranes etc.

b) Textile Engineering Group, which deals inn araraJaKttiaimg arad marketing of textile air-engineering systems range i.e Humidification, waste recovery, and auto anrttaoil ^sterns, besides irairiketing (including trading and agency business) of textile machinery e.g. circular knitting,, spisnmgL, ani feHoniifflirag machines etc,

c) Air-conditioning and Refrigeration diviskm,, witeirila awos rararaalactaring, marketing, commissioning and servicing of packaged air-conditioners and chillers est.

d) Others, which covers remaining business ile„ ap»-iiraifasiraai products (e.g. pumps/motors), air and water treatment jobs etc

ii) Secondary Segment Reporting

The Company caters mainly to the needs of tfieatoiwe^lfemnai^Tl^e:^^ turnover. As such there are no reportable geugjsqpfcicall sffiepnemfe..

11. Related Party Disclosures:

Related party disclosures as required under Accounting Standard 18 (AS-18) on "Related Party Di A) Relationships:

i) Subsidiary companies:

a) Queen Projects (Mauritius) Ltd.-Mauritius

b) Vanderama Holdings Ltd.-Cyprus

c) Pilatus View Holdings AG-Switzerland

d) Quickmill Inc.-Canada

e) Aesa Air Engineering SA-France

f) Aesa Air Engineering SPA-ltaly

g) Aesa Air Engineering PTE Ltd-Singapore h) Aesa Air Engineering Ltd-Hong Kong

i) Aesa Air Engineering Ltd-China j) Aesa Air Engineering Pvt Ltd-lndia

k) 760 RyeiStreet Inc - Canada

ii) Key Management Personnel:

a) Mr. Nirmal Bhogilal, Chairman & Managing Director

b) *Mr. George Verghese, Executive Director *Ceased to be executive director w.e.f 31.12.2009

iii) Relatives of Key Management Personnel:

a) Mr. Pratap Bhogilal, Chairman Emeritus

b) Mr.Kabir Bhogilal, Asst.General Manager-Business Development

iv) Entities over which key management personnel are able to exercise significant influence:

a) Batliboi Environmental Engineering Ltd.

b) Batliboi International Limited

c) Batliboi Impex Pvt. Ltd.

d) Batliboi Enxco Pvt. Ltd.

e) Sustime Pharma Ltd.

f) Spartan Electricals

v) Entities to which management personnel are trustees

a) Bhogilal Leherchand Foundation

b) Leherchand Uttamchand Trust Fund

12. The Company has investments in Batliboi Environmental Engineering Ltd, (BEEL) of Rs.191.21 Lacs. BEEL has accumu- lated losses which have significantly eroded their net worth. The company has also investment in its subsidiary Aesa Air Engineering SA- France whose accumulated losses are greater than the net worth.

In the opinion of the Management, having regard to the long term interest of the company in the aforesaid companies, there is no diminution other than temporary, in the value of the Investments."

13. Micro, Small and Medium Enterprises

The Statement showing the amount payable above Rs.llacs and outstanding for more than 30 days to Micro. Small and Medium Enterprises as at 3T March, 2010 and interest provision made thereon is given below:

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