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Notes to Accounts of Bharat Forge Ltd.

Mar 31, 2014

1. Corporate information

Bharat Forge Limited ("the Company") is a public Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on three stock exchanges in India. The Company is engaged in the manufacturing and selling of forged components.The Company caters to both domestic and international markets.The Company''s CIN is L25209PN1961PLC012046.

2. basis of preparation

These financial statements of the Company have been prepared in accordance with the generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material aspects with accounting principles generally accepted in India, including the accounting standards notifed under the Companies Act, 1956 read with general circular 8/ 2014 dated April 4, 2014 issued by the Ministry of Corporate Afairs. The financial statements have been prepared on an accrual basis under the historical cost convention except for derivative financial instruments which have been measured at fair value.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

3. gratuity and other post-employment benefit plans (a) gratuity plan funded scheme

The Company has a Defined benefit gratuity plan. Under the gratuity plan, every employee who has completed at least five years of service gets a gratuity on departure at 15 days last drawn basic salary for each completed year of service. The scheme is funded with an insurance Company in the form of a qualifying insurance policy.

The following tables summarize the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the respective plan.

(c) Provident fund

In accordance with law, all employees of the Company are entitled to receive benefits under the provident fund. The Company operates two plans for its employees to provide employee benefits in the nature of provident fund, viz. Defined contribution plan and Defined benefit plan.

Under Defined contribution plan, provident fund is contributed to the government administered provident fund.The Company has no obligation, other than the contribution payable to the provident fund.

Under Defined benefit plan, the Company contributes to the "Bharat Forge Company Limited Staf Provident Fund Trust". The Company has an obligation to make good the shortfall, if any, between the return from the investments of the trust and the notifed interest rate.

The details of the Defined benefit plan based on actuarial valuation report is as follows:

The Company has provided Rs. Nil towards shortfall in the interest payment on provident fund as per actuary report during the year ended March 31, 2014 (March 31, 2013: Rs.4.92 million).

The actuary has followed Black Scholes Option Pricing approach.

The following tables summarize the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the respective plans.

4. Leases

Operating leases: Company as lessee

The Company has entered into agreements in the nature of lease/ leave and license agreement with diferent lessors/ licensors for the purpose of establishment of ofce premises / residential accommodations etc. These are generally in nature of operating lease/ leave and license. There are no transactions in the nature of sub lease. Period of agreements are generally for three years and renewal at the option of the lessee. There are no escalation clauses or restrictions placed upon the Company by entering into these leases.

5. Segment information

In accordance with paragraph 4 of notifed Accounting Standard 17 (AS-17) "Segment Reporting", the Company has disclosed segment information only on the basis of the consolidated financial statements.

6. Related Party disclosures

(i) names of the related parties and related party relationship related parties where control exists

Subsidiaries

CDP Bharat Forge GmbH

Bharat Forge America Inc.

BF-NTPC Energy Systems Limited

Kalyani ALSTOM Power Limited

BF Infrastructure Limited

BF Infrastructure Ventures Limited

Kalyani Strategic Systems Limited (formerly known as BF Power

Equipment Limited) BF Elbit Advanced Systems Private Limited Kalyani Polytechnic Private Limited (Section 25 Company) Analogic Controls India Limited (w.e.f. May 14, 2013)

Step down subsidiaries

Bharat Forge Holding GmbH

Bharat Forge Aluminiumtechnik GmbH & Co. KG

Bharat Forge AluminiumtechnikVerwaltungs GmbH

Bharat Forge Beteiligungs GmbH

Bharat Forge Kilsta AB

Bharat Forge Scottish Stampings Limited

Bharat Forge Hong Kong Limited

FAW Bharat Forge (Changchun) Co. Limited

Bharat Forge International Limited

Bharat Forge Daun GmbH

BF New Technologies GmbH

Related parties with whom transactions have taken place during the year

Joint ventures

ALSTOM Bharat Forge Power Limited Impact Automotive Solutions Limited

Step down joint venture

David Brown Bharat Forge Gear Systems India Limited

Enterprises owned or significantly infuenced by key management personnel or their relatives

Kalyani Carpenter Special Steels Limited Kalyani Steels Limited BF Utilities Limited Automotive Axle Limited

Key management personnel

Mr. B. N. Kalyani

Mr. A. B. Kalyani

Mr. G. K. Agarwal

Mr. B. P. Kalyani

Mr. S. E. Tandale

Mr. S. K. Chaturvedi (up to December 31, 2013)

7. Capitalization of expenditure

During the year, the Company has capitalised the following expenses of revenue nature to the cost of fixed asset / capital work- in- progress (CWIP). Consequently, expenses disclosed under the respective notes are net of amounts capitalised by the Company

8. Contingent liabilities

In Rs. Million

As at As at March 31, 2014 March 31, 2013

Sales bills discounted 7,103.34 5,584.61 Of which:

Bills since realised 1,674.57 1,231.55

- Matured, overdue and outstanding since close of the period Guarantees given by the Company on behalf of other companies:

Balance Outstanding 1,457.92 1,898.71

(Maximum Amount) (1,952.14) (2,269.38)

Claims against the Company not acknowledged as Debts - to the extent ascertained * # 118.97 138.83

Excise/Service tax demands - matters under dispute # 358.51 176.39

Customs demands - matters under dispute # 50.97 50.97

* The Claim against the Company comprise of dues in respect to personnel claims (amount unascertainable), local taxes etc.

# The Company is contesting the demands and the management, including its tax/ legal advisors, believe that its position will likely be upheld in the appellate process. No tax expense has been accrued in the financial statements for the tax demand raised.

The management believes that the ultimate outcome of this proceeding will not have a material adverse efect on the Company''s financial position and results of operations

9. Capital and other commitments

(d) Performance guarantee

The Company has along with ALSTOM Power Holdings S.A. given an irrecoverable and unconditional undertaking to NTPC Limited for technology transfer, training, execution and successful performance of steam turbines generator and auxiliary equipments supplied by ALSTOM Bharat Forge Power Limited, joint venture of the Company.

Cross currency swap

On August 5, 2009, the Company had entered into a Cross Currency Swap (CCS) for a period of five years by converting a Long Term Rupee NCD liability ofRs. 250 million (out of 10.75% XVth Series NCD ofRs. 2,500 million) into an equivalent USD liability at the prevailing spot rate. Under this structure, the Company will receive a fixed interest coupon on a quarterly basis on the rupee amount swapped and will pay foating rate interest (which is subject to a cap) on the USD notional amount. On maturity of the swap, the Company will pay the contracted USD loan liability at prevailing rate and receive the original rupee amount swapped.

10. Deferral / Capitalisation of exchange diferences

The Ministry of Corporate Afairs (MCA) has issued the amendment dated December 29, 2011 to AS 11 "The Efects of Changes in Foreign Exchange Rates", to allow companies deferral/capitalization of exchange diferences arising on long-term foreign currency monetary items. In accordance with the amendment/ earlier amendment to AS 11, the Company has capitalised exchange loss, arising on long-term foreign currency loan to the cost of plant and equipments. The Company also has other long-term foreign currency monetary item, where the gain / (loss) due to fuctuation in foreign currency is accounted for as FCMITDA and disclosed under reserve and surplus.

11. (a) exchange diference gain / (loss) on account of fuctuations in foreign currency rates

The net exchange diferences gain / (losses) arising during the year on highly probable forecasted transaction relating to exports as a part of sales recognised in the statement of profit and loss is Rs. (522.37) million (March 31,2013Rs. (461.76) million).

(b) deferred payment liabilities

Sales tax deferral incentives attached to the erstwhile windmill division, which was demerged to BF Utilities Limited (BFUL) under section 392 and 394 of the Companies Act, 1956 sanctioned by the High Court of the Judicature at Mumbai, have been passed on thereafter from year to year by the Company to the latter, under an arrangement, with all liabilities and obligations attached thereto taken over completely by BFUL. The net liability outstanding of BFUL after such pass on amounts to Rs. 708 million (March 31, 2013: Rs. 775 million).

12. The financial statements are presented in Rs. million and decimal thereof except for per share information or as otherwise stated.

13. Previous year figures have been regrouped / reclassified, where necessary, to confirm to the current year''s classification.


Mar 31, 2013

1. Corporate information

Bharat Forge Limited ("the Company") is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on two stock exchanges in India. The Company is engaged in the manufacturing and selling of forged components. The Company caters to both domestic and international markets.

2. Basis of preparation

These financial statements of the Company have been prepared in accordance with the generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material aspects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. These financial statements have been prepared on an accrual basis under the historical cost convention except for derivative financial instruments which have been measured at fair value.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

3. Gratuity and other post-employment benefit plans

(a) Gratuity plan Funded scheme

The Company has a defined benefit gratuity plan. Under the gratuity plan, every employee who has completed atleast five years of service get a gratuity on departure at 15 days last drawn basic salary for each completed year of service. The scheme is funded with an insurance Company in the form of a qualifying insurance policy.

The following tables summarize the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the respective plans.

(b) Special gratuity

The Company has a defined benefit special gratuity plan. Under the gratuity plan, every eligible employee who has completed ten years of service get an additional gratuity on departure which will be salary of five months based on last drawn basic salary. The scheme is unfunded.

The following table summarize the components of net benefit expense recognised in the statement of profit and loss and amounts recognised in the balance sheet.

(c) Provident fund

In accordance with law, all employees of the Company are entitled to receive benefits under the provident fund. The Company operates two plans for its employees to provide employee benefits in the nature of provident fund, viz. defined contribution plan and defined benefit plan.

Under defined contribution plan provident fund is contributed to the government administered provident fund. The Company has no obligation, other than the contribution payable to the provident fund.

Under defined benefit plan, the Company contributes to the "Bharat Forge Company Limited Staff Provident Fund 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.

The details of the defined benefit plan based on actuarial valuation report is as follows:

The Company has provided Rs. 4.92 Million towards shortfall in the interest payment on provident fund as per actuary report during the year ended March 31, 2013 (March 31, 2012: Rs. Nil)

The actuary has followed Black Scholes Option Pricing approach

The following tables summarize the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the respective plans.

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

Amount for the current and previous year are as follows:

Till the year ended March 31, 2011 the interest shortfalls could not be computed by the actuaries since The Institute of Actuaries of India has not issued the final guidance on valuation of the same. In the year 2011-12 The Institute of Actuaries of India has issued the guidance note for measurement of provident fund liabilities, accordingly the Company has started providing for interest shortfalls based on actuarial valuation since last year. Hence earlier years data is not available.

4. Operating leases - Company as lessee

The Company has entered into agreements in the nature of lease/leave and license agreement with different lessors/ licensors for the purpose of establishment of office premises/residential accommodations etc. These are generally in nature of operating lease/leave and license. There are no transactions in the nature of sub lease. Period of agreements are generally for three years and renewal at the options of the lessee. There are no escalation clause or restrictions placed upon the company by entering into these leases.

5. Segment information

In accordance with paragraph 4 of notified Accounting Standard 17 (AS-17) "Segment Reporting" the Company has disclosed segment information only on the basis of the consolidated financial statements.

6. Related Party Disclosures

(i) Names of the related parties and related party relationship Related parties where control exists

Subsidiaries CDP Bharat Forge GmbH

Bharat Forge America Inc.

BF-NTPC Energy Systems Limited

Kalyani ALSTOM Power Limited

BF Infrastructure Limited

BF Infrastructure Ventures Limited

BF Power Equipment Limited

BF Elbit Advanced Systems Private Limited

Kalyani Polytechnic Private Limited

Step down subsidiaries Bharat Forge Holding GmbH

Bharat Forge Aluminiumtechnik GmbH & Co. KG

Bharat Forge Aluminiumtechnik Verwaltungs GmbH

Bharat Forge Beteiligungs GmbH

Bharat Forge Kilsta AB

Bharat Forge Scottish Stampings Limited

Bharat Forge Hong Kong Limited

FAW Bharat Forge (Changchun) Co. Limited

Bharat Forge International Limited

Bharat Forge Daun GmbH

BF New Technologies GmbH

Related parties with whom transactions have taken place during the year

Associates Technica U.K. Limited (Investment through wholly owned subsidiary]

Joint Ventures ALSTOM Bharat Forge Power Limited

Impact Automotive Solutions Limited

Step down joint venture David Brown Bharat Forge Gear Systems India Limited

Enterprises owned or significantly influenced by key management personnel or their relation

Kalyani Carpenter Special Steels Limited

Kalyani Steels Limited

BF Utilities Limited

Automotive Axle Limited

Key management personnel Mr. B. N. Kalyani

Mr. A. B. Kalyani

Mr. G. K. Agarwal

Mr. P. K. Maheshwari

Mr. B. P. Kalyani

Mr. S. E. Tandale

Mr. S. K. Chaturvedi

7. Capitalization of expenditure

During the year, the Company has capitalised the following expenses of revenue nature to the cost of fixed asset/capital work-in-progress (CWIP). Consequently, expenses disclosed under the respective notes are net of amounts capitalised by the Company.

8. Deferral/Capitalisation of exchange differences

The Ministry of Corporate Affairs (MCA) has issued the amendment dated December 29, 2011 to AS 11 "The Effects of Changes in Foreign Exchange Rates", to allow companies deferral/capitalization of exchange differences arising on long-term foreign currency monetary items. In accordance with the amendment/earlier amendment to AS 11, the Company has capitalised exchange loss, arising on long-term foreign currency loan to the cost of plant and equipments. The Company also have other long-term foreign currency monetary item, where the gain/(loss) due to fluctuation in foreign currency is accounted for as FCMITDA and disclosed under reserve and surplus.

9. (a) Exchange difference gain/(loss) on account of fluctuations in foreign currency rates

The net exchange differences [gain/(losses)] arising during the year on highly probable forecasted transaction relating to exports as a part of sales recognised in the statement of profit and loss account is Rs. (461.76) Million (March 31, 2012 Rs. (173.04) Million)

(b) Deferred payment liabilities

Sales tax deferral incentives attached to the erstwhile windmill division, which was demerged to BF Utilities Limited (BFUL) under section 392 and 394 of the Companies Act, 1956 sanctioned by the High Court of the Judicature at Mumbai, have been passed on thereafter from year to year by the Company to the latter, under an arrangement, with all liabilities and obligations attached thereto taken over completely by BFUL. The net liability outstanding of BFUL after such pass on amounts to Rs. 775 Million (March 31, 2012: Rs. 821 Million).

10. The financial statements are presented in Rs. Million and decimal thereof except for per share information or as otherwise stated.

11. Previous year financial statements were audited by another firm of Chartered Accountants and previous year''s figures have been regrouped or reclassified, where necessary, to confirm to the current year''s classification.


Mar 31, 2012

1 (a) Terms / rights attached to equity shares:

The company has only one class of issued equity shares having a par value of Rs 2/- per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors and approved by the shareholders in the Annual General Meeting is paid in Indian rupees. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amount. The distribution will be in proportion to the number of equity shares held by the shareholders.

1 (b) Terms of securities convertible into equity shares:

(i) The Company issued and allotted to Qualified Institutional Buyers, 10,000,000 Equity Shares of Rs 2/- each at a price of Rs 272/- per share aggregating to Rs 2,720 million on 28th April, 2010, simultaneous with the issue of 1,760 10.75% Non Convertible Debentures (NCD) of a face value of Rs 1,000,000/- at par , together with 6,500,000 warrants at a price of Rs 2/- each entitling the holder of each warrant to subscribe for 1 equity share of Rs 2/- each at a price of Rs 272/- at any time within 3 years form the date of allotment. The subscription money received on issue of warrants has been credited to Capital Reserve as the same is not refundable / adjustable. Out of the funds raised, Rs 2,365 million has been temporarily deployed in Fixed Deposits with Banks and in Mutual Funds and the Balance has been utilised towards the object of the issue.

(ii) See Note 4(d) regarding Foreign Currency Convertible Bonds.

1 (c) Other information:

The Company had issued 3,636,500 Equity Shares of Rs 10/- each ( later sub-divided into 18,182,500 Equity Shares of Rs 2/- each) in April and May 2005 represented by 3,636,500 Global Depository Receipts (GDR) (on sub division 18,182,500 GDRs) evidencing 'Master GDR Certificates' at a price of USD 27.50 per GDR (including premium). GDRs outstanding at the close of the year are 9,200. The Funds raised has been utilised towards the object of the issue.

2 (a) Sales Tax Deferral Incentive:

The Company, upto March, 2006, had prematurely retired its obligations of the Sales Tax Deferral Incentive availed under the package scheme of Incentives 1993, thereby generating a cumulative surplus of Rs 108.63 million. Since the incentive was fundamentally provided to encourage capital investments in designated underdeveloped zones and thereby defray, to some extent, deficiencies, the same has been, as per the opinion of the 'Expert Advisory Committee', set up by the Institute of Chartered Accountants of India, credited to 'Capital Reserve' to be apportioned to 'Revenue Reserves' over the future/ balance life of the underlying investments, at the end of each financial year.

2 (b) Subsidy for setting up new Industrial Unit:

The Company's manufacturing facility at Baramati has been granted 'Mega Project' status by Government of Maharashtra and therefore is eligible for Industrial Promotion Subsidy (IPS) under Packaged Scheme of Incentive (PSI) 2007. The company has been granted Eligibility Certificate issued by the Directorate of Industries, Government of Maharashtra in this regard.

IPS consists of the following:

a. Electricity Duty exemption for the period of 7 years from the date of commencement of the project i.e. 1st April, 2009,

b. 100% exemption from payment of Stamp duty for the Leasehold land acquired for the Baramati Plant, and

c. VAT and CST payable to the State Government (before adjustment of Set-off) on sales made from Baramati plant, within a period of 7 years starting from 1st April, 2009 to 31st March, 2016.

IPS will however be restricted to 75% of the eligible fixed capital investments made from 11th May, 2005 to 10th May, 2010. The Eligibility Certificate issued allows maximum subsidy of Rs 3,198.20 million.

The Packaged Scheme of Incentive (PSI) 2007 is for intensifying and accelerating the process of dispersal of industries to the less developed regions and promoting high tech industries in the developed areas of the State coupled with the object of generating mass employment opportunities.

Further, in terms of the Accounting Standard (AS 12) 'Accounting for Government Grants' prescribed by Companies (Accounting Standards) Amendment Rules, 2006, eligible incentive is considered to be in the nature of promoters' contribution. Therefore incentive of Rs 34.08/- million received during the year (P.Y. Rs Nil) has been credited to the Capital Reserve.

2 (c) Debenture Redemption Reserve:

Debenture Redemption Reserve has been created in accordance with circular No.9/2002 dated 18th April, 2002 issued by Department of Company Affairs, Ministry of Law, Justice and Company Affairs, Government of India and Section 117(C) of the Companies Act, 1956 at 25% of the maturity amount equally over the terms of the Debentures Privately placed. Amount set aside for the year represents for full year in respect of Debentures issued in earlier years.

2 (d) Foreign Currency Monetary Item Translation Difference Account (FCMITDA):

The Accounting Standard (AS 11) 'The effects of changes in Foreign Exchange Rates' prescribed by Companies (Accounting Standards) Rules, 2006 was amended on 31st March, 2009, vide a notification dated 31st March, 2009, by the Ministry of Corporate Affairs. The said amendment offered an option to Companies to recognise Foreign Exchange Gains and Losses arising on translation of all long term monetary assets and liabilities acquired upto 31st March, 2009, retrospectively from accounting periods commencing after 7th December, 2006 ( i.e. from 1st April, 2007 for the company) upto 31st March, 2011, The Company had chosen to exercise the option in preparation of financial statements in the year ended 31st March, 2009.

The Company continues, upon the extension granted by the Ministry of Corporate Affairs, to exercise the option offered in paragraph 46 of the Accounting Standard (AS 11) relating to ''The effects of changes in foreign exchange rates'' to capitalise foreign exchange difference on translation of long term monetary liabilities to cost of Assets where used to acquire such assets and in case of other long term monetary item to Foreign Currency Monetary Item Translation Difference Account (FCMITDA). The amount so recognised as capital cost of acquisition of assets is to be depreciated over the balance life of the relevant assets. In case of the amount recognised in the FCMITDA to be amortised over the balance term of the monetary asset or liability but not beyond 31st March, 2020, aggregate Rs 28.32 million.

Accordingly Foreign exchange differences adjusted against the cost of the assets/ CWIP aggregates Rs 588.23 million (loss), amount in ''Foreign Currency Monetary Item Translation Difference Account'' (FCMITDA) aggregates Rs 66.50 million (loss) and amortised in the current year amounts to Rs 38.18 million.

2 (e) Hedge Reserve:

In order to recognise the impact of fluctuation in foreign currency rates arising out of instruments acquired to hedge highly probable forecast transactions, in appropriate accounting periods, the company applies the principles of recognition set out in the Accounting Standard 30- Financial Instruments - Recognition and Measurement (AS-30) as suggested by the Institute of Chartered Accountants of India. Accordingly, the unrealised gain/(loss) (net) consequent to foreign currency fluctuations, in respect of effective hedging instruments , represented by simple forward covers, to hedge future exports, are carried as a Hedging Reserve and ultimately set off in the Profit and Loss account when the underlying transaction arises.

The amount outstanding in the Hedge Reserve at the close of the year is Rs 381.64 Million (Debit Balance / Valuation Loss).

2(f) The Equity Shares allotted on exercise of option to convert FCCBs by the Bondholders, and the 10,000,000 equity shares of Rs 2/- each allotted as detailed in Note 2(d) and equity shares issued and allotted on conversion of warrants , if any, before the record date/ book closure for dividend would rank pari passu with the existing share capital reflected in Note 2 in all respect including dividend declared for the year. Dividend for the year has been provided for on 232,794,316 equity shares of Rs 2/- each at the rate recommended by the Board of Directors on the basis of equity shares issued and allotted up to 27th May, 2012.

However, as the Company is unable to estimate further conversions upto the record date set for determining the said eligibility, any further amounts required to be distributed as dividend will be adjusted against the balance in the Profit and Loss account carried forward to the subsequent financial year.

3 (a) Debentures:

The Company has issued the following secured redeemable non-convertible debentures:

(i) 3,500 - 10.75% Redeemable Secured Non-Convertible Debentures Seventeenth Series of Rs 1,000,000/- each redeemable @ 25.00% on 22nd March, 2015; @ 50.00% on 22nd September, 2014; & @ 25.00% on 22nd March, 2014.

Above Debentures are secured by a (i) First pari passu Mortgage in favour of the Trustees, of all rights and interest on the Company's immovable properties situated at Mundhwa, Satara, Jalgaon and Chakan with negative lien on properties situated at Jejuri and Baramati; and (ii) First pari passu charge in favour of the Trustees by way of hypothecation of movable properties, present and future both such as all plant and machinery, equipments, tools, furniture & fixtures etc., as described in Debenture Trust - cum -Mortgage Deed dated 14th December, 2009.

(ii) 1,760 - 10.75 % Redeemable Secured Non-Convertible Debentures Eighteenth Series of Rs 1,000,000/- each redeemable at 35.00% on 28th April, 2016; @ 35.00% on 28th April, 2015; & @ 30.00% on 28th April, 2014.

Above Debentures are secured by a (i) First pari-passu Mortgage in favour of Trustees, of all rights and interest on the Company's immovable properties, present and future situated at Mundhwa, Chakan, Satara and Jalgaon with negative lien on properties situated at Jejuri and Baramati as described in schedule-I as per Debenture Trust-cum-Mortgage Deed dated 28th June, 2010 and (ii) First pari-passu Charge in favour of the Trustees on moveable properties, present & future as described in Schedule-II as per Debenture Trust-cum-Mortgage Deed dated 28th June, 2010.

3 (a) Debentures (contd.):

(iii) 2,500 - 11.95 % Redeemable Secured Non-Convertible Debentures Sixteenth Series of Rs 1,000,000/- each redeemable at 33.34% on 5th January, 2017; @ 33.33% on 5th January, 2016; & @ 33.33% on 5th January, 2015.

Above Debentures are secured by a (i) First pari passu Mortgage in favour of the Trustees, of all rights and interest on the Company's immovable properties situated at Mundhwa, Satara, Jalgaon and Chakan with negative lien on properties situated at Jejuri and Baramati; and (ii) First pari passu charge in favour of the Trustees by way of hypothecation of movable properties, present and future both such as all plant and machinery, equipments, tools, furniture & fixtures etc., as described in Debenture Trust-cum - Mortgage Deed dated April 30, 2009.

3 (b) Foreign Currency Term Loans:

I. From Bank of India, London

Balance outstanding USD 2.50 million (Previous year USD 5.00 million)

Secured By (i) First charge by way of Hypothecation of the whole of the movable properties including its movable plant and machinery, machinery spares, tools and accessories and other movables, both present and future, whether installed or not and whether now lying loose or in cases or now lying or stored in or about or shall from time to time during the continuance of the security be brought into or upon or be stored or be in or about all the factories, premises and godowns situate at Mundhwa, District Pune; Chakan, District Pune; Vaduth, District Satara; Village Kusumbe, District Jalgaon, all in the state of Maharashtra or wherever else the same may be or be held by any party to the order of disposition or in the course of transit or on high seas or on order, or delivery, howsoever and wheresoever in the possession and either by way of substitution or addition except specific movable plant and machinery consisting of Wind Energy converter of 600 K.V. 7 Nos at Village Boposhi, District Satara, exclusively hypothecated to Standard Chartered Bank, as described under the Deed of Hypothecation dated 17th March, 2005 and; (ii) Equitable Mortgage by deposit of title deeds of Immovable properties situate at Village Mundhwa, Pune; Village Vaduth, Taluka and District Satara; Village Kusumbe Khurd, Taluka and District Jalgaon and Village Chakan, Pune all in the state of Maharashtra, together with all buildings and structures thereon and all Plant and Machinery attached to the earth or permanently fastened to anything attached to the earth, as described under Memorandum of Entry dated 17th March, 2005.

II. From Credit Agricole Corporate & Investment Bank, Singapore

Balance outstanding USD 50 million (Previous year USD 50 million)

Secured By First Pari passu charge over present and future movable fixed assets viz. Plant and Machinery, Computers, Furnitures and Fixtures, whether installed or not and whether now lying loose or in cases or otherwise or being on or upon or at any time, hereafter being on or upon about the premises and godowns at Mundhwa, Pune; Village Kuruli, Chakan; Taluka Khed, District Pune; Village Vaduth, Taluka & District Satara and at Baramati, Pune or anywhere else.

Repayable in 6 equal yearly installments from date of its' origination, i.e. 14th October, 2012, along with interest of 3M Libor 280 bps p.a.

3 (c) Rupee Term Loans:

From Axis Bank

Balance outstanding Rs 330.56 million (Previous year Rs 225 million)

Above loan is to be secured against (i) First pari-passu charge on the Company's immovable properties, present & future Situate at Mundhwa, Chakan, Satara and Jalgaon with negative lien on properties situated at Jejuri and Baramati and (ii) First pari-passu Charge on moveable properties, present & future including Land & Building.

Repayable in 18 equal half yearly installments from date of its' origination i.e. 20th March, 2012 along with interest of Base Rate 2% p.a.

3 (d) Foreign Currency Convertible Bonds:

The Company had issued Foreign Currency Convertible Bonds (FCCB) in two tranches aggregating USD 79.90 million, detailed in the table below, to finance Capital Expenditure and Global Acquisitions. The said bonds are optionally convertible into GDR/ Equity Shares to be exercised at any time during the exercise period at a pre determined initial price subject to adjustments upon occurrence of certain events.

However, the Company has option to redeem the balance of the above Bonds if such balance is less than 10% in aggregate of principal amount of such tranche of bonds originally issued in respect of each tranche, during the redemption exercise period in the manner specified in the offering circular at a premium so as to provide a predetermined yield to the Bondholders.

The Company also has the option to call the Bondholders of Tranche A & Tranche B to mandatorily convert the Bonds into Equity Shares if the Market Price on the specified date provided the holder a gain of at least a 30% over the Early Redemption amount.

# Tranche A of the above FCCBs amounting to USD 40.00 Million outstanding as at April 26, 2012 were redeemed on April 27, 2012 along with the redemption premium amounting to USD 17.03 Million. The premium on redemption aggregating Rs 994.06 Million, (including withholding Tax amounting to Rs 98.96 Million) since crystalised has been adjusted to securities premium account, net of deferred tax asset amounting to Rs 322.52 million, in terms of Section 78(2) (d) of the Companies Act, 1956.

Due to variables currently indeterminate, the premium on actual redemption for Tranche B is not computable and hence will be recognised if and as and when the redemption option is exercised, as a charge to the securities premium account in terms of Section 78(2)(d) of the Companies Act,1956.

The Company has been legally advised by an eminent law firm that the above mentioned Convertible Bonds issued upon terms and conditions set out in the offering circular dated 19th April, 2005, would be outside the purview of Section 117 (C) of the Companies Act, 1956 as regards creation of Debenture Redemption Reserve. The Auditors have relied upon the said legal opinion.

3 (e) Term Loans from Banks:

Foreign Currency Term Loans on Syndicated basis

Balance outstanding USD 80 million (Previous year NIL)

Repayable in 3 half yearly installments from date of its' origination i.e. 31st October, 2016, along with interest of 6M Libor 280 bps p.a.

3 (f) Deferred payment liabilities:

Sales tax deferral incentives attached to the erstwhile windmill division, which was demerged to BF Utilities Ltd. under Section 392 and 394 of the Companies Act, 1956 sanctioned by the High Court of the Judicature at Mumbai, have been passed on thereafter from year to year by the Company to the latter, under an arrangement, with all liabilities and obligations attached thereto. Consequently sales tax deferral liability represents net liability to the Company after such pass on aggregating to Rs 821 million (Previous year Rs 845 million).

NOTES:

(a) At cost, except lease hold land which is at cost less amounts written off.

(b) Buildings include premises on ownership basis in co-operative Societies Rs 32.81 million and also cost of hangar jointly owned with other Companies Rs 0.12 million.

(c) See Note 1 - clause 2 for accounting policy on Fixed Assets and Depreciation.

(d) Includes 25 acres land given on lease.

(e) Documents for the ownership premises at Sai Nagari & Surajban Apartments, Lullanagar at Pune, Antriksha Bhawan at New Delhi, Land at Keshavnager, Mundhawa and Lease deed for Land at Baramati & Jejuri still continue to be under execution.

(f) Cost incurred by the Company. Ownership vests with Maharashtra State Electricity Distribution Company Ltd.

(g) Represents amount amortised upto 31 st March, 2012

$ Refer Note 1 - Clause 6(a) for accounting policy.

@ Joint Ventures:- Company holds 50% of the Share Capital

* Company holds 5% of the share capital

# Joint Ventures:- Company holds 49% of the share capital

1 (a) Contribution to Capital Reserve Credited in favour of Bharat Forge Ltd.:

Contributions in to the Capital Reserves of CDP - Bharat Forge GmbH as per the German Commercial Code, forms a part of the Equity Share Capital and accordingly has been considered as an investment and is redeemable subject to provisions of the code.

1 (b) Bharat Forge America Inc.:

Bharat Forge America Inc. (BFA), a wholly owned subsidiary has registered losses which have substantially eroded its Net worth. The auditors of the BFA have, given current adverse conditions prevailing in the American auto industry, disclaimed expression of any opinion on the validity of the assumption of going concern, the basis on which the financial statements have been prepared. Given the uncertainties in the American economy and its further impact on the auto industries slow revival, the Company has, as a matter of prudence, tested the investment in BFA for impairment / diminution with reference to the value of assets. Accordingly the Company has provided for impairment aggregating Rs 704.16 Million during the year which has been recognised as an exceptional item in the statement of profit and loss.

2 (a) Loan to a company:

Interest free loan of Rs 309.09 million given to a Company which has given an undertaking to hold the shares solely for the purpose and obligations of the ''BFL Executives Welfare and Share Option Trust'' in terms of clause (b) of the proviso to Section 77(2) of the Companies Act, 1956, which in the opinion of an eminent Counsel, obtained by a Group Company, falls within the purview of the said proviso to the above mentioned section.

# Included in Market value at NAV as on 31st March, 2012 & 31st March, 2011 respectively, as there was no trade for the schemes, hence, quotations are not available.

* Refer Note 1 - clause 6(b) of Accounting Policy.

(Rs in Million)

As at As at

3 Contingent Liabilities not provided for in respect of : 31st March, 2012 31st March, 2011

(i) Sales Bills Discounted 7,222.08 4,911.08 Of Which:

Bills since realised 2,410.02 1,739.26

Matured, Overdue & outstanding since close of the period - -

(ii) Guarantees given by the Company on behalf of other companies Balance Outstanding 1,996.82 1,845.43

(Maximum Amount) (2,193.50) (2,025.61)

(iii) Claims against the Company not acknowledged as Debts- to the extent ascertained 140.48 142.00

(iv) Excise/Service Tax Demands - matters under dispute 180.37 184.65

(v) Customs Demands - matters under dispute 50.97 50.97

ii) On 5th August, 2009, the Company has entered into a Cross Currency Swap (CCS) for a period of five years by converting a Long Term Rupee NCD liability of Rs250 million (out of 10.75% XVth Series NCD of Rs2,500 million) into an equivalent USD liability at the prevailing spot rate. Under this structure, the Company will receive a fixed interest coupon on a quarterly basis on the rupee amount swapped and will pay floating rate interest (which is subject to a cap) on the USD notional amount. On maturity of the swap, the Company will pay the contracted USD loan liability at prevailing rate and receive the original rupee amount swapped.

4 Guarantees given by Company's Bankers on behalf of the Company, against sanctioned guarantee limit aggregating to Rs 3,250.00 million (Previous Year Rs 3,250 .00 million) for contracts undertaken by the Company and other matters are secured by extension of charge by way of joint hypothecation of stock-in-trade, stores and spares etc., book debts, subject to prior charge in their favour. Amount outstanding Rs 711.05 million (Previous Year Rs 856.83 million)

5 The Company has entered into agreements in the nature of lease / leave and license agreement with different lessors / licensors for the purpose of establishment of office premises/Residential Accommodations. These are generally in nature of operating lease / leave and license, disclosure required as per Accounting Standard 19 with regard to the above is as under:

i) Payment under operating lease / leave and license for period

1) Not later than one year Rs 4.09 million

2) Later than one year but not later than five years Rs 1.63 million

3) Later than five years Rs 0.81 million

ii) There are no transactions in the nature of sub-lease.

iii) Payments recognised in the Profit and Loss Account for the year ended 31st March, 2012 Rs 5.54 million

iv) Period of agreement is generally for three years and renewable at the option of the Lessee.

6 Segment information based on consolidated financial statements has been disclosed in a statement annexed thereto. Primary Segments have been determined by the management in light of the dominant source and nature of risks and returns of the consolidated group and relied upon by the auditors.

7 Related Party disclosures have been set out in a separate statement annexed to this Note. The related parties, as defined by Accounting Standard 18 'Related Party Disclosures' issued by The Companies Accounting Standard Amendment Rules, 2006, in respect of which the disclosures have been made, have been identified on the basis of disclosures made by the key managerial persons and taken on record by the Board.

8 Information on Joint Ventures is set out in a separate statement annexed to this Note.

9 Figures less than Rs 5,000/- have been shown at actuals in bracket as the figures have been rounded off to the nearest second decimal to millions.

10 The financial statements for the year ended 31 March, 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended 31 March, 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year's classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of financial statements.

 
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