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Notes to Accounts of Bharat Gears Ltd.

Mar 31, 2015

1.1 Details of shares held by each shareholder holding more than 5% shares:

(i) Term loans from bank: Rupee loan from State Bank of India

Secured by first pari passu charge on Current assets with loans referred to in footnote of Note 7 and also by way of first charge on Fixed Assets of the Company located at Mumbra plant and Faridabad plant on pari passu basis with loans referred to in footnotes [(ii) (A) (a) & (b)] below.

Repayable in thirty six monthly installments by 31 March, 2018 and carries an interest rate of 12.30 % p.a.

(ii) Term loans from others:

(A) Rupee loan from Export-Import Bank of India (EXIM):

(a) Rs.1000 lacs (As at 31 March, 2014: Rs. 1400 lacs): Secured by first pari passu charge by way of hypothecation over the movable fixed assets and mortgage of immovable properties located at Mumbra plant and Faridabad plant, both present and future, with loans referred to in footnote (i) and [(ii) (A) (b)]. Repayable in equal quarterly installments by 1 September, 2017 and carries an interest rate of 12.45% p.a.

(b) Rs. 1125 lacs (As at 31 March, 2014: Rs. 1425 lacs): Secured by first pari passu charge by way of hypothecation over the movable fixed assets and mortgage of immovable properties located at Mumbra plant and Faridabad plant, both present and future, with loans referred to in footnotes (i) and [(ii) (A) (a)]. Repayable in equal quarterly installments by 1 November, 2018 and carries an average interest rate of 12.26% p.a.

(c) Rs. 3000 lacs (As at 31 March, 2014: Rs. 3000 lacs): Secured by hypothecation of movable fixed assets and mortgage of immovable properties, located at Satara plant. Repayable in equal quarterly installments by 1 February, 2020 and carries an average interest rate of 12.27% p.a.

(B) Rupee loan from Hero FinCorp Limited:

Rs. 500 lacs (As at 31 March, 2014: Rs. Nil): Secured by exclusive charge on office premises situated at Nariman Point, Mumbai. Repayable in Fifty Four monthly installments commencing from 8 September, 2015 and carries an interest rate of 13.00 % p.a.

(iii) Finance leases are secured on the asset to which they relate and repayable in equated monthly/quarterly installments.

Loans repayable on demand from banks are secured by hypothecation of stocks of raw materials, stock in process, semi finished and finished goods, loose tools, general stores and book debts and all other moveables both present and future ranking pari passu with loans referred to in footnote (i) of Note 4 and by joint mortgage created/to be created for all immoveable properties of the Company located at Mumbra, Faridabad and Satara plants together with all buildings, plant and machinery thereon which rank second subject and subservient to charges created in favour of loans referred to in footnotes (i) and [(ii) (A)] of Note 4.

(D) 1. The Company has revisited and changed the method of depreciation for certain categories of fixed assets from written down value (WDV) method to straight line method (SLM) as on 1 April, 2014, because the Management believes following uniform method of depreciation for all categories of fixed assets would result in a more appropriate presentation of the financial statements. Accordingly, all assets are now being depreciated under SLM. As a result of this change, the surplus depreciation of Rs. 250.00 lacs as on 1 April, 2014 has been netted off against the depreciation and amortization expense for the year.

2. Pursuant to the notification of Schedule II to the Act, the Company also revised the estimated useful life of some of its assets to align the useful life with those specified in Schedule II. Further, assets individually costing Rs. 0.05 lac or less that were depreciated fully in the year of purchase are now depreciated based on the useful life considered by the Company for the respective category of assets.

3. Pursuant to the transition provisions prescribed in Schedule II to the Act, the Company has fully depreciated the carrying value of assets (determined after considering the change in the method of depreciation from WDV to SLM), net of residual value, where the remaining useful life of the asset was determined to be nil as on 1 April, 2014, and has adjusted an amount of Rs. 96.38 lacs (net of deferred tax of Rs. 46.29 lacs) against the opening Surplus balance in the Statement of Profit and Loss under Reserves and surplus.

The depreciation and amortisation expense in the Statement of Profit and Loss for the year is lower by Rs. 189.33 lacs consequent to the above change in the method of depreciation.

The depreciation and amortisation expense in the Statement of Profit and Loss for the year is higher by Rs. 72.58 lacs consequent to the change in the useful life of the assets.

Defined Benefit Plans

A general description of the Employees Benefit Plans:

(i) Gratuity (Funded)

The Company has an obligation towards gratuity, a funded defined benefits retirement plan covering eligible employees. The plan provides for lump sum payment to vested employees at retirement, death while in employment or on termination of the employment, of an amount calculated in accordance with the provisions of the Payment of Gratuity Act, 1972. Vesting occurs upon completion of 5 years of service.

(ii) Terminal Ex-gratia (Unfunded)

The Company has an obligation towards Terminal Ex-gratia, an unfunded defined benefit retirement plan covering eligible employees. The plan provides for lump sum payment which varies depending upon the number of completed years of service to vested employees on completion of employment. Vesting occurs upon the completion of 15 years of service.

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


Mar 31, 2013

1.1.a Defined Contribution Plans

During the year ended 31 March the Company has recognized the following amounts in the Statement of Profit and Loss :

The above amounts are included in Contributions to provident and other funds under Note 21 Employee benefits expense. Defined Benefit Plans

A general description of the Employees Benefit Plans:

1.1.b (i) Gratuity (Funded)

The Company has an obligation towards gratuity'' a funded defined benefits retirement plan covering eligible employees. The plan provides for lump sum payment to vested employees at retirement'' death while in employment or on termination of the employment'' of an amount calculated in accordance with the provisions of the Payment of Gratuity Act'' 1972. Vesting occurs upon completion of 5 years of services.

(ii) Terminal Ex-gratia (Unfunded)

Company has an obligation towards terminal ex-gratia'' an unfunded defined benefit retirement plan covering eligible employees. The plan provides for lump sum payment which varies depending upon the number of completed years of services to vested employees on completion of employment. Vesting occurs upon the completion of 15 years of service.

1.2 Segment information

The Company is primarily engaged in the Automotive Gears business. Risks and rewards involved in sales to overseas customers are not significantly different from those attributable to domestic market. As such there is no other separate reportable segment as defined by Accounting Standard - 17 " Segment Reporting.”

1.3 Related party transactions

1.3.a Details of related parties with whom the Company had transactions during the year.

Key Management Personnel (KMP) (i) Mr. Surinder P. Kanwar (SPK) - Chairman and Managing Director (who also has ability to exercise''significant influence'' over the Company)

(ii) Mr. Sameer Kanwar (SK) - Joint Managing Director (Son of Chairman and Managing Director of the Company)

Enterprises over which KMP is able to exercise significant influence

(i) Cliplok Simpak (India) Pvt. Ltd. (CSIPL)

(ii) Raunaq International Ltd. (RIL)

(iii) Vibrant Finance & Investments Pvt. Ltd. (VFIPL)

(iv) Xlerate Driveline India Limited (XDIL)

1.4 Details of Leasing arrangements

(A) Finance Lease:

(i) For net carrying amount as at 31 March'' 2013 for assets acquired under finance lease. (Refer Note 11 A Fixed assets)

(ii) The maturity profile of finance lease obligations is as follows:

Figures in brackets are for the Previous Year.

(iii) General description of these agreements:

- Some of these agreements contains renewal clause.

- There are no restrictions such as those concerning dividends'' additional debt and further leasing imposed by the lease agreements entered into by the Company.

(B) Operating Lease: (Not non-cancellable)

(i) Lease payments recognised in the Statement of Profit and Loss for the year are as follows:

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


Mar 31, 2012

Series VI, VII & VIII, aggregating Rs 208.50 Lacs were allotted on 29th September, 2003 in respect of the present value of 50% of the differential interest on account of reduction in interest rate on the term loans as per the Corporate Debt Restructuring scheme. 50% of Series VI, VII & VIII amounting to Rs 104.25 Lacs were redeemed at par on 31 March, 2011 and balance of Rs 104.25 Lacs were redeemed at par on 31 March, 2012.

(ii) Rupee loan from IDBI Bank Limited is secured by an exclusive first charge by way of hypothecation of specific Plant and Machinery, Spares, Tools and Accessories and all other specific movables, both present and future, purchased and / or to be purchased out of the loan and Hypothecation of Movable (save & except Book Debts) including Movable Plant and Machinery, Spares, Tools and Accessories, both present and future subject to prior charges created in respect of loans referred to in footnote of Note 7 and footnote (iii) of Note 9. Also by mortgage of Company's immovable properties located at Mumbra plant and Faridabad plant together with all buildings and structures and Plant and Machinery thereon on pari passu basis with loans referred to in footnote (iii) below and current maturities of long term debt referred to in footnotes (ii), (iv) and (v) of Note 9.

The term loan is repayable in four quarterly installments and carries an interest rate of 14.75% p.a.

(iii) Rupee loan from Export-Import Bank of India (EXIM) is secured by first pari passu charge by way of hypothecation over the Company's entire Movable Fixed Assets and Mortgage over immovable properties located at Mumbra plant and Faridabad plant, both present and future with loans referred to in footnote (ii) above and current maturities of long term debt referred to in footnotes (ii),(iv) and (v) of Note 9.

The term loan is repayable in eighteen equal quarterly installments and carries an interest rate of 12.40%.

(iv) Finance leases are secured on the asset to which they relate and repayable in equated monthly installments.

(v) For current maturities of long-term borrowings, refer items (a) and (b) of Note 9 - Other Current Liabilities.

Footnote:

Loans payable on demand from banks are secured by hypothecation of stocks of raw materials, stock in process, semi finished and finished goods, loose tools, general stores and book debts and all other movables both present and future and by joint mortgage created for all immovable properties of the Company located at Mumbra plant and Faridabad plant together with all buildings, plant and machinery thereon which rank second subject and subservient to charges created in favour of loans referred to in footnotes (ii) and (iii) of Note 4 and footnotes (ii), (iv) and (v) of Note 9.

(ii) Rupee loans from The Federal Bank Limited, IDBI Bank Limited and Foreign currency loan from Export Import Bank of India are secured by first mortgage and charge created on the immovable and movable assets at Mumbra plant, on pari passu basis with loans referred to in footnote (v) below and footnotes (ii) and (iii) of Note 4.

(iii) Rupee loan from State Bank of India is secured by a first charge by way of hypothecation of specific plant and machinery purchased out of the loan.

(iv) Rupee loans from The Federal Bank Limited, IDBI Bank Limited and Foreign currency loan from Export Import Bank of India are secured by way of joint mortgage of land at Faridabad plant together with all buildings and structures thereon and all Plant and Machinery attached to the earth and by way of hypothecation of all movable fixed assets at Faridabad plant ranking pari passu with each other and with loan referred to in footnotes (ii) and (iii) of Note 4.

(v) Rupee loan from IDBI Bank Limited is secured by mortgage of immovable properties and hypothecation of movable fixed assets located at Mumbra plant, both present and future, which ranks pari passu with charges created in respect of loans referred to in footnote (ii) above and footnotes (ii) and (iii) of Note 4.

(vi) Rupee loans referred to in footnote (ii) is also guaranteed by a Director of the Company aggregating Rs. Nil (previous year: Rs 165.43 Lacs) {from Banks: Rs Nil; (previous year: Rs 128.08 Lacs) from others: Rs Nil; (previous year: Rs 37.35 Lacs)}.

(vii) Rupee loan from The Federal Bank Limited was also secured by mortgage of Company's office premises at Nariman Point, Mumbai.

(viii) The figures reflect the position as at the year end. The actual amount to be transferred to the Investor Education and Protection Fund in this respect shall be determined on the due date.

Footnote :

Security deposits includes Rs 10.00 Lacs; (As at 31 March, 2011: Rs 10.00 Lacs) due from a Director and Rs 5.00 Lacs; (As at 31 March, 2011: Rs 5.00 Lacs) due from a Private Limited Company, in which Directors of the Company are Directors.

1.1.a (i) Gratuity (Funded)

The Company has an obligation towards gratuity, a funded defined benefits retirement plan covering eligible employees. The plan provides for lump sum payment to vested employees at retirement, death while in employment or on termination of the employment, of an amount calculated in accordance with the provisions of the Payment of Gratuity Act, 1972. Vesting occurs upon completion of 5 years of services.

(ii) Terminal Ex-gratia (Unfunded)

Company has an obligation towards terminal ex-gratia, an unfunded defined benefit retirement plan covering eligible employees. The plan provides for lump sum payment which varies depending upon the number of completed years of services to vested employees on completion of employment. Vesting occurs upon the completion of 15 years of service.

1.2 Segment Information

The Company is primarily engaged in the Automotive Gears business. Risks and rewards involved in sales to overseas customers are not significantly different from those attributable to domestic market. As such there is no other separate reportable segment as defined by Accounting Standard - 17 "Segment Reporting."

1.3.a No amounts have been written off / provided for or written back during the year in respect of amounts receivable from or payable to related parties.

(iii) General description of these agreements:

Some of these agreements contains renewal clause.

There are no restrictions such as those concerning dividends, additional debt and further leasing imposed by the lease agreements entered into by the Company.

(B) Operating Lease : (Not Non-cancellable)

NOTE 2 : PREVIOUS YEAR'S FIGURES

The Revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements. This has significantly impacted 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. In accordance with the Companys proposal for exit from Corporate Debt Restructuring (CDR) scheme, which was approved subject to finalisation and payment of recompense amount to the six participating lenders, recompense amount of Rs. 2.02 lacs was paid to two participating lenders in the previous year. In respect of other participating lenders, recompense amount of Rs. 149.68 lacs has been paid /determined by the Company during the year which is included in Bank and other financing charges in Schedule 16 - Interest and Other Financing Charges.

2. Contingent liabilities:

A. *ln respect of claims against the Company not acknowledged as debt (Sales tax, ESIC) Rs.7.52 lacs; (previous year; Rs.8.58 lacs) against which the Companys appeals are pending with the relevant appellate authorities.

B. *ln respect of Income tax for assessment years 1994-95 mainly on account of disallowance of expenditure on reconditioning of machinery - Rs.50.41 lacs; (previous year: Rs.50.41 lacs) for which the Companys appeal against ITAT order is pending with the High Court.

C In respect of guarantee given to Housing Development Finance Corporation Limited for loans availed, by employees Rs. Nil; (previous year: Rs. 0.31 lac)

* Future ultimate outflow of resources embodying economic benefits in respect of these matters is uncertain as it depends on financial outcome of judgments / decisions on the matters involved.

3. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 684.22 lacs (previous year: Rs 1009.75 lacs)

4. Income from service rendered Rs. 44.12 lacs; (previous year: Rs. 248.55 lacs) is included in sales including processing charges.

5. The information disclosed below in respect of principal and/or interest due to Micro, Small and Medium Enterprises has been determined on the basis of information available with the Company and confirmations received from the suppliers for registration under the Micro, Small and Medium Enterprises Development Act, 2006 and for interest outstanding /due.

6. Security deposits in Schedule 9 -Loans and advancesincludes Rs. 10.00 lacs ( previous year: Rs. Nil) due from a director {maximum amount due at any time during the year Rs.10.00 lacs (previous year: Rs. Nil)} and Rs. 5.00 lacs; (previous year: Rs.5.00 lacs) due from a private limited company, in which a director of the company is a director.

7. The Company is primarily engaged in the Automotive Gears business. As such there is no other separate reportable segment as defined by Accounting Standard - 17 " Segment Reporting."

8. Related Party Disclosures

(i) Related parties with whom the Company had transactions during the year:

(a) Enterprises over which key management personnel is able to exercise significant influence: Bharat Gears Officers Provident Fund (BGOPF)

Cliplok Simpak (India) Pvt. Ltd. (CSIPL)

Raunaq International Ltd. (RIL)

Vibrant Finance & Investments Pvt. Ltd. (VFIPL)

(b) Key Management Personnel:

Mr. Surinder P. Kanwar (SPK) - Chairman and Managing Director (who also has ability to exercise significant influence over the company)

Mr. Sameer Kanwar (SK) - Joint Managing Director with effect from 1st June,2008 (Executive Director up to 31st May, 2008 - son of Chairman and Managing Director of the company)

9. Details of Employees Benefits as required by the Accounting Standard-15 Employee Benefits are as follows:-

2. Defined Benefit Plans

a) A general description of the Employees Benefit Plans: i) Gratuity (Funded)

The Company has an obligation towards gratuity, a funded defined benefits retirement plan covering eligible employees. The plan provides for lump sum payment to vested employees at retirement, death while in employment or on termination of the employment, of an amount calculated in accordance with the provisions of the Payment of Gratuity Act, 1972. Vesting occurs upon completion of 5 years of services.

ii) Terminal Ex-gratia (Unfunded)

The company has an obligation towards terminal ex-gratia, an unfunded defined benefit retirement plan covering eligible employees. The plan provides for lump sum payment which varies depending upon the number of completed years of services to vested employees on completion of employment. Vesting occurs upon the completion of 15 years of service.

10. (a) Excise duty paid and collected from customers is shown separately and deducted from the Gross Sales including processing charges in the Profit and Loss Account.

(b Excise duty appearing under Other expenses (Schedule 15) represents (i) the difference between the excise duty included in the closing stock and that in the opening stock of manufactured finished goods Rs.12.35 lacs (credit) {Previous Year :Rs. 28.26 lacs (debit)} and (ii) the excise duty on free supplies under sales promotion schemes, free replacement, shortages, etc. Rs. 6.59 lacs (Previous Year: Rs.19.43 lacs)

11. Salaries, wages and bonus in Schedule 14 -Payments to and provision for Employees includes Rs. 137.45 lacs (Previous Year: Rs. 262.84 lacs) on account of payments made under the Voluntary Retirement Schemes.

12. Previous years figures have been regrouped wherever necessary.

 
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