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Notes to Accounts of Commercial Engineers & Body Builders Co Ltd.

Mar 31, 2015

1. Background of the Company

The Company was incorporated in the year 1979, under the name Commercial Engineers & Body Builders Co Private Limited. The name was changed to 'Commercial Engineers & Body Builders Co Limited' in the year 2010. The Company's Equity Shares were listed in the same year. The Company caters to Commercial Vehicles, Railways and Power sectors through manufacturing of tippers, load bodies, wagons and components.

2. Issue of Bonus Shares :

36,767,760 Equity Shares of Rs 10/- each were issued as fully paid-up Bonus shares during the year ended 31st March, 2010, by capitalisation of Securities Premium Account and balance in Statement of Profit and Loss account.

3. Details of calls unpaid :

The NCRPS have been issued on partly paid basis with last call falling due on December 31,2015 when it will become fully paid-up.

i) Nature of Security

a) Corporate Loan is secured by: -

Primary Security- Equitable mortgage on certain properties of group concerns and director.

Collateral Security -

1. Subservient charge without NOC on entire fixed assets of the company, present and future.

2. Pledge of 26.74% shareholding of the promoters in the company.

3. Personal gurantees of two directors and partners of group concern.

b) ECB Loan is secured by: -

Primary Security: - Exclusive First charge on the entire fixed assets of the company, both present and future, except on specific equipments which are exclusively and specifically charged to banks/ financial institutions and factory land & building situated at Plot Nos. 21,22,33,34 at Industrial Estate, Richhai, Jabalpur.

Collateral Security: - Second pari passu charge on the entire current assets of the company, both present and future.

c) RupeeTerm Loan: -

Primary Security :- Extension of first charge on entire fixed asset of the company except factory land and building situated at industrial estate Richahai, Jabalpur and factory land and building situated at Jamshedpur.

Collateral Security: - Pari passu second charge on the entire current assets of the company, both present and future.

Guarantee: -

Personal guarantee of Mr.Kailash Gupta, Mrs. Rekha Gupta and Mrs. Nandani Malpani.

d) Term Loan from Other : -

Primary Security: - First pari passu charge Bank on below mentioned fixed assets

1. Factory land and building at Jamshedpur unit

2. Factory land and building Richhai and second pari passu charge on all fixed assets of the company.

Collateral Security: - Pledge of 10,313,443 unencumbered shares of the Company held by Jashn Benificiary Trust and Mr. Kailash Gupta.

Guarantee: -

1. Irrevocable and unconditional personal guarantee of Mr. Kailash Gupta and Mrs. Rekha Gupta

2. Irrevocable and unconditional personal guarantee of Mrs. Nandani Malpani to the extent value of shares (3,213,443 nos.)

3. Irrevocable and unconditional corporate guarantee of Jashn Benificiary Trust

ii) Terms of Repayment

a) Corporate Loan: -

Corporate Loan is repayable in 9 quarterly instalments commencing from the end of 12 months from the date of first disbursment i.e. 13th December, 2013 and carries fixed interest rate of 14.50% p.a.

b) ECB Loan: -

ECB loan is repayable in quarterly 20 equal installments starting from 21st month from the date of 1st disbursement i.e 17th February, 2012 and carries variable interest rate @ 6 months LIBOR 3.50 bps margin

c) Rupee Term Loan: -

in 21 unequal monthly installment starting from 31 st December, 2016 as under :-

1st - 3rd Installment Rs. 333 lacs each

4th -15th Installment Rs. 100 lacs each

16th - 21st Installment Rs. 200 lacs each

And it carries interest rate of 14.15% p.a.

d) Term Loan from Other: -

"Interest - it carries interest rate of 14.50% p.a. to be paid on monthly basis till maturity."Principal - 6 month moratorium starts from date of first tranche Disbursement made in various installments from 16th December, 2014 to 25th February, 2015, thereafter payable in a structured manner as mentioned below."

1. Next 6 months : Rs. 25 lacs per month

2. Next 12 months : Rs. 41.67 lacs per month

3. Next 12 months : Rs. 50 lacs per month

(i) Nature of Security

Cash Credit Facilities, Working Capital Loans and Short Term Loan are secured by either one or more of the following as per terms of Arrangement with respective banks:

Primary Security:

Pari -passu First charge on the entire current assets of the company, both present and future.

Collateral Security:

a. Pari-Passu first charge by way of extension of Equitable Mortgage of factory land and building and hypothecation of plant and machineries situated at Plot Nos. 21, 22, 33 and 34 at Industrial Estate, Richhai, Jabalpur

b. First Pari-Passu charge on movable fixed assets of the Company

c. Equitable Mortgage of flat no. 14,5,2,3,6,7,9,10,8 Mouza Hathital, Gorakhpur, Jabalpur.

d. Equitable Mortgage of Property situated at Block No.36, Plot No.2/29, Pachpedi, South Civil Lines, Jabalpur standing in the name of Shri Arun Gupta

"e. First and exclusive charge on the following Fixed assets of the Company situated at lease hold / free hold land by way of Hypothecation of "

* Plot Nos. (Nos. to be allotted) at Industrial Estate, Richhai, area- 105000 sq.feet, Jabalpur (lease hold)

* Plot Nos.(Nos. to be alloted) at Industrial Estate, Richhai area- 105000 sq feet, Jabalpur (lease hold).

* Plot No.133/2 (New no.169) at Udaipura, area- 15.92 acres, Dist: - Mandla.(free hold)

* Sector -3, Plot no. 690-693, 751-756 at MPAKVN Growth Centre, Phase-III, area 8.67 acres, Pithampur, Distt-Dhar. (lease hold)

* Land and Building measuring 50.16 acres situated at Village - Deori/Imlai, Jabalpur.

f. Personal guarantees of two directors and their relatives.

g. Corporate Guarantee of group concerns

Bank Overdraft facility was secured against Term Deposit Receipts.

4. Capital Commitments

The estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) as at 31st March 2015 aggregate Rs. 116.10Lacs (Previous Year - Rs.1343.58Lacs).

5. Contingent liabilities

(Rs. in Lacs)

Sr. Particulars As at As at No. 31st March, 31st March, 2015 2014 a) Disputed demands of following authorities :

(i) Income-tax 15.93 126.93

(ii) Excise duty related to Rule10A matter - - (see note below)

(iii) Other Excise duty&Service Tax Matter 2520.38 2481.43 (Rs. 12.83Lacs (Previous Year Rs. 8. 67 Lacs) paid under protest)

(iv) Sales tax/ Entry Tax (Rs. 48.06Lacs 1584.32 199.91 (Previous Year Rs. 55.11 Lacs) paid under protest) (The Company has contested all the above demands before various authorities and is hopeful of success in the respective matters)

b) Claims against the Company not 24.63 - acknowledged as debt

Total 4145.26 2808.27

6. Pursuant to the Rule 10(A) of Central Excise Rules, 2002 which was inserted vide Notification no. 9/2007-CE(N.T) dated 1st March, 2007, the Company has started paying differential Excise Duty on behalf of customer on sales made to them since September' 2010 under protest. The Excise department has issued demand notices in respect of this matter aggregating Rs. 3016.95 lacs (previous year Rs. 2910.91 Lacs) for the period up to 31stMarch, 2009.The aggregate of total payment made under protest up to the year-end is Rs. 1130.87 Lacs (Previous year - Rs. 895.92Lacs).

Since, the liability, if any in this regard is recoverable from the customer, there will be no impact on Statement of Profit and Loss as a consequence of the outcome of this case.

7. As per the information available with the company, the following are the details of dues to the creditors who have confirmed their registration under the Micro, Small and Medium Enterprises Development Act, 2006. (MSMED Act)

i) Dues remaining unpaid as at the year-end

Principal - Rs. 9.08Lacs (Previous Year Rs. 7.07 Lacs)

Interest- Rs. 18.18Lacs (Previous Year Rs. 16.39 Lacs)

ii) Interest paid in terms of Section 16 of the MSMED Act - Nil (Previous Year -Nil)

iii) Amount of interest due and payable for the year of delay in making Payments - Rs. 1.79 Lacs (Previous Year Rs. 1.21Lacs)

iv) Amount of interest accrued and remaining unpaid as at the year-end - Rs.18.18 Lacs (Previous Year Rs. 16.39Lacs)

v) Amount of interest due and payable on previous year's outstanding amount Rs. 16.39Lacs. (Previous Year Rs. 15.18Lacs)

8. (a) Contributions are made to Provident Funds which covers all regular employees. Amount recognized as expense in respect of these defined contribution plans, aggregate to Rs. 31.50Lacs (Previous year Rs. 32.96Lacs).

Provision is made for gratuity based upon actuarial valuation done at the end of every financial year using 'Projected Unit Credit' method and it covers all regular employees. Gains and losses on changes in actuarial assumptions are accounted for in the Statement of Profit and Loss account.

9. The principal business of the Company is sheet metal fabrication and bodybuilding. All other activities of the Company revolve around its main business. Hence, there is only one reportable business segment as defined by Accounting Standard 17 on 'Segment Reporting' (AS 17).

10. Disclosures as required by the Accounting Standard 18 (AS - 18) on 'Related Party Disclosures' are given below:

a) Names of related parties and description of relationship :

Sr. Names of Related party Nature of Relationship No. 1 Dr. Kailash Gupta Director having significant influence through voting power (Key Management Personnel till 15th July, 2014)

2 Mr. Deepak Tiwary Key Management Personnel

3 Commercial Auto Centre

4 Commercial Automobiles Private Enterprises over which Director Limited with significant influence and their relatives

5 Commercial Body Builders are able to exercise significant influence.

6 Commercial Motors

7 Commercial Toyota

8 Kailash Traders

9 Commercial Motors Sales P Ltd.

10 Shivam Motors Private Limited

11 Anubha Engineering Limited

12 Kailash Infratech Private Limited

13 Commercial Installments

14 Shubham Multi Services Private Limited

15 J.N. Auto Limited (Unit Rekha Engineering)

16 Jai Narayan Charitable Trust

17 Kailash Motors

18 Jashn Beneficiary Trust

19 Commercial Motors (Dehradun) P. Ltd.

20 Kailash Motors Private Limited

"Long Term Loans and Advances" include Inter corporate deposits (ICD) of Rs. 1000 Lacs given to two Companies in an earlier year and which are outstanding as on 31st March 2015. These amounts have been fully provided for in an earlier year. The Company has, during the year filed a legal suit for recovery of the same (along with accumulated interest thereon). The suit is pending for admission before the relevant Court in Jabalpur.

11. In respect of recall/closure facility notice received from a bank in the previous year, in respect of outstanding fund-based credit facility availed by the Company of Rs. 662.41 Lacs with interest thereon which is still outstanding as on 31st March, 2015, the bank has subsequent to the year-end invoked the pledge of shares given as collateral by the promoters. The Company is in the process of negotiating with bank for resolution of the matter.

12. During the recent past, there has been a significant reduction in volumes mainly due to general economic slowdown. The Company has reviewed future business scenario. While the Company expects a revival in the economy in the foreseeable future, the Company has decided to rationalize the operations in order to optimize costs. Consequently and as required by the Accounting Standard (AS) 28 "Impairment of Assets", the Company has provided for impairment of Rs. 6300 Lacs in the value of its plant & machinery relating to the cash generating unit located in a particular region based on the assessment of its "value in use" with a weighted average cost of capital (WACC) in the range of 13 to 15%. The same has been disclosed as an exceptional item in the statement of Profit and Loss.

13. During the year ended 31st March 2015, pursuant to the assessment by the commercial tax department, an amount of Rs. 129.72 Lacs has been determined as payable towards entry tax on certain sales made by the company within the state of Madhya Pradesh for the year ended 31st March, 2012. Following the rationale of this decision, the company had during the year deposited Rs. 678.04 lacs(including interest of Rs. 156 Lacs) towards entry tax liability for the year ended 31st March 2013. Subsequent to the year end, on completion of assessment for the year ended March 2013, an amount of Rs. 723.89 Lacs (inclusive of interest of Rs. 176 Lacs) has been assessed and the same has been charged to the Statement of Profit and Loss. The liability in respect of subsequent years is not expected to be material.

The company's depreciation policy in respect of fixed assets until 31st March, 2014 was as under:

a. Assets acquired prior to 1st January, 2011 on WDV basis; and

b. Assets acquired after 1st January, 2011 on straight line method

With effect from 1st April, 2014, the Company has adopted the useful life as prescribed by Schedule II to the Companies Act, 2013 to depreciate its assets. Consequently, the depreciation charge for the year ended31st March, 2015 and net loss from ordinary activities are lower by Rs. 979.89 lacs.

14. Details of Loans given, Investment made and Guarantee given covered u/s 186(4) of the Companies Act, 2013

(i) The company has not given any loans.

(ii) Investments made by the company as at 31stMarch, 2015 (Refer note 13)

(iii) The Company has not given any Corporate Guarantees in connection with a loan to any other body corporate or person

15. In view of the financial position of the Company and the performance of the Company during the previous year, the shareholders, in the Annual General Meeting of the Company held on 28th September, 2013, after discussions, disapproved the proposal of distribution of dividend for the year ended 31stMarch, 2013. Accordingly the proposed dividend of Rs. 219.78 Lacs (Rs. 0.40 per share) and the dividend distribution tax of Rs. 37.35 Lacs provided during the year ended 31stMarch, 2013 had been reversed in the books of account.

16. The Company during the previous year had filed claim for refund of excise duty on sales made to customers which are exported under ARE-1 with Department of Customs and Excise aggregating to Rs. 259.17 Lacs (Previous year Rs. 259.17 Lacs). However, the Department has issued orders rejecting the claims based on certain technical grounds. The Company has preferred an appeal against the orders passed and is confident of succeeding in the matter.

17. The figures of the previous year have been regrouped wherever necessary to correspond with those of the current year.


Mar 31, 2014

Background of the Company

The Company was incorporated in the year 1979, under the name Commercial Engineers & Body Builders Co Private Limited. The name was changed to ''Commercial Engineers & Body Builders Co Limited'' in the year 2010. The Company''s Equity Shares were listed in the same year. The Company caters to Commercial Vehicles, Railways and Power sectors through manufacturing of tippers, load bodies, wagons and components.

1. Nature of Security

a) Corporate Loan is secured by: -

Primary Security- Equitable mortgage of following properties of group concerns and director.

1. Shop/Office bearing No 906, New Municipal No. 6/139, situated in 9th Floor, ''A'' Wing, Mittal Tower, New No. 21 (Old No. 6/47), Mahathma Gandhi road, in Civil Station Corporation Division No. 78, Vide City Survey No. 355, PTS No. 952 and Chaltha No. 5 Bangalore, comprising of super built up area of 720 sq. ft.

2. Unit No 201, New Municipal No. 100/6, 2nd Floor, Kengal Hanumanthaiah Road, Ward Name - Sudhamanagar ward no. 48, Money Terrance, Banglore having super built up area of 996 sq. ft.

3. Commercial property at Unit No. 202, 2nd Floor, ''Money Terrace'', Khata No 100/7, Double road (Kengal Hanumanthaiah Road) Banglore, Sudhama Nagar, Ward No. 48 with super built up area of 978 sq. ft.

4. Khasra No. 30/375 (Part of Khasra no. 30/1, 30/23, & 30/24) Area 0.023 Hec. (2500 Sq. Ft.), Plot No. E- 18, Area 50 x 50 = 2500 sq. ft. situated in - Lamti, Tehsil & Distt. Jabalpur, Babu Kamla Grih Nirman Sahakari Samiti Maryadit, Jabalpur.

5. Part of Khasra No 6/17, Plot No 92 Area 160 X 100= 16000 sq. ft., constructed Area 200 sq. ft., situated in Municipal Corporation House No. 1310/92, Shaheed Gulabsingh Ward No 56, Nayagaon Housing Co- operative Society, Village Nayagaon Settlement no. 726, P C. No. 28/32, Tehsil & Distt. Jabalpur.

Collateral Security -

1. Subservient charge without NOC on entire fixed assets of the company, present and future.

2. Pledge of 26.74% shareholding of the promoters in the company.

3. Personal guarantee of two directors and partners of group concern.

b) ECB Loan is secured by: -

Primary Security: - Exclusive First charge on the entire fixed assets of the company, both present and future, except on specific equipments which are exclusively and specifically charged to banks/ financial institutions and factory land & building situated at Plot Nos. 21,22,33,34 at Industrial Estate, Richhai, Jabalpur.

Collateral Security: - Second pari passu charge on the entire current assets of the company, both present and future.

2. Terms of Repayment

a) Corporate Loan: -

Corporate Loan is repayable in 9 quarterly instalments commencing from the end of 12 months from the date of first disbursement i.e.13/12/2013 and carries fixed interest rate of 14.50% p.a.

b) ECB Loan: -

ECB loan is repayable in quarterly 20 equal installments starting from 21st month from the date of 1st disbursement i.e 17/02/2012 and carries variable interest rate @ 6 months LIBOR 3.50 bps margin

Note 2: Capital Commitments

The estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) as at 31st March 2014 aggregate Rs. 1,343.58 Lacs (Previous Year - Rs. 1,650.93 Lacs).

Note 3: Contingent liabilities (Rs. In Lacs)

As at As at Particulars 31st March 31st March 2014 2013

a) Disputed demands of following authorities:

Income-tax 126.93 -

Excise duty (Rs. 408.67 Lacs (Previous Year 5392.34 5,182.77 Rs. 405.67 Lacs) paid under protest) (Also Refer note below)

Sales tax/ Entry Tax (Rs. 55.11 Lacs 199.91 171.99 ( Previous Year Rs. 47.79 Lacs) paid under protest)

(The Company has contested all the above demands before various authorities and is hopeful of success in the respective matters)

b) Claims against the Company not - 23.32 acknowledged as debt

c) Guarantees given by banks as performance guarantees 431.64 805.22

d) Letters of Credit (L/C) 95.49 421.38

Total 6246.31 6,604.68

Note:

Pursuant to the Rule 10(A) of Central Excise Rules, 2002 which was inserted vide Notification no. 9/2007-CE(N.T) dated 01.03.2007, the Company has started paying differential Excise Duty on sales made to a customer (which is the subject matter of dispute in the aforesaid demands) since September''2010 under protest. The aggregate of such payment made under protest up to the year-end aggregates to Rs. 495.92 Lacs (Previous year - Rs. 337.81 Lacs).

Note 4:

The Company had challenged the constitutional validity of entry tax collected by State of Madhya Pradesh on goods purchased from other States by filing a writ petition in Honorable High Court of Madhya Pradesh on 30th August, 2007. The petition was decided against the Company during an earlier year. The Company had filed a special leave petition (SLP) before the Honorable Supreme Court, again challenging the constitutional validity of Entry Tax. As per the interim order passed by Supreme Court, the Company has been directed to deposit the unpaid Entry tax before the petition is decided.

The Company had already deposited Entry tax aggregating to Rs. 1015.86 Lacs including interest of Rs. 1.47 Lacs for the period from April 2007 to March 2013 to the authorities, under protest.

The Supreme Court has transferred the above SLP to a Higher Bench before the Chief Justice of the Supreme Court of India for decision, which is pending.

Since, the matter has been pending for hearing for a long time and further the probability of availing relief is reduced due to the passage of time, the Company during the previous year ended March 31, 2013, after obtaining expert opinion decided to charge-off the amounts of entry tax paid under protest for the period from April 2007 to March 2012, aggregating to Rs. 979.12 Lacs. The same were included under ''Other Expenses''. Entry tax for the period after April 2012 is charged to the Statement of Profit and Loss and included under ''Manufacturing Expenses''.

Note 5:

The Company had an agreement with a party for the purpose of engaging into a Jointly Controlled Operations (JCO) to manufacture market and sell fabricated automobile bodies and components to Original Equipment Manufacturers and to other customers, at Jamshedpur. As per the agreement, the Company and the other venture agreed to share the distributable cash flow from the JCO after paying all taxes in the ratio of 60:40 respectively. In addition to the above, the Company was required to pay a fixed sum for grant of license to use the factory premises of the other venture for the purposes of the operations as follows:

In year 1 - Rs. 300,000 per month In year 2 - Rs. 315,000 per month In year 3 - Rs. 330,750 per month

During the previous year the Company entered into a Memorandum of Understanding (MOU) with the above party for purchase of its factory premises (including land) for a total consideration of Rs. 1,518 Lacs. Accordingly an advance of Rs. 218 Lacs were paid to the party. As per the MOU, the balance amounts had to be paid in installments by 31st March, 2013 upon which Formalities for the transfer of ownership in the name of the Company would be completed. Pursuant to this agreement, Joint venture agreement with the party came to an end on 30th September, 2012. However, due to the on-going negotiations, no further payments were made to the party till 31st March, 2013.

During the year, as per addendum executed to the above MOU, the Company agreed to pay rent for the period October 2012 to March 2013 aggregating to Rs. 20.84 Lacs and the above consideration of Rs. 1,518 Lacs was divided into two separate considerations of Rs. 759 Lacs each based on the segregation of area the land and value of other assets to be purchased. Accordingly, a sale deed was executed between the Company and the party for transfer of portion of the land and factory premises valued at Rs. 759 Lacs by paying off the balance consideration of Rs. 541 Lacs. Possession of these assets has been handed over to the Company, though formalities relating to registration of the land are yet to be completed. Accordingly, these assets have been capitalized in the books. Sale deed for balance consideration of Rs. 759 Lacs consisting of remaining portion of the land and other assets would be executed on full payment of the consideration by the Company. The Company has, however provided for the interest on these overdue amounts aggregating to Rs. 120.56 Lacs (Previous Year Rs. 22.44 Lacs) as per the terms of MOU and disclosed as Finance charges in Note 26.

Note 6:

As per the information available with the company, the following are the details of dues to the creditors who have confirmed their registration under the Micro, Small and Medium Enterprises Development Act, 2006. (MSMED Act)

i) Dues remaining unpaid as at the year-end

Principal - Rs. 7.07 Lacs (Previous Year Rs. 4.66 Lacs)

Interest- Rs. 16.39 Lacs (Previous Year Rs. 15.18 Lacs)

ii) Interest paid in terms of Section 16 of the MSMED Act - Rs. Nil (Previous Year - Rs. Nil)

iii) Amount of interest due and payable for the year of delay in making Payments - Rs. 1.21 Lacs (Previous Year Rs. 0.48 Lacs)

iv) Amount of interest accrued and remaining unpaid as at the year-end - Rs. 16.39 Lacs (Previous Year Rs. 15.18 Lacs)

v) Amount of interest due and payable on previous year''s outstanding amount - Rs. 15.18 Lacs. (Previous Year Rs. 14.70 Lacs)

Note 7:

(a) Contributions are made to Provident Funds which covers all regular employees. Amount recognized as expense in respect of these defined contribution plans, aggregate to Rs. 32.96 Lacs (Previous year Rs. 53.05 Lacs).

Provision is made for gratuity based upon actuarial valuation done at the end of every financial year using ''Projected Unit Credit'' method and it covers all regular employees. Gains and losses on changes in actuarial assumptions are accounted for in the Statement of Profit and Loss account.

(b) The disclosure as required under AS 15 (Revised) regarding Company''s gratuity plan is as follows:

Note: Net Liability recognized in Balance Sheet stands at Rs. 9.23 Lacs (Previous year Rs. 23.78 Lacs) as the company has made an additional provision of Rs. 9.00 Lacs in the books based on contribution demand notice received from LIC towards shortfall in the plan assets as at the year-end as per valuation carried out by them

Note 8:

The principal business of the Company is sheet metal fabrication and bodybuilding. All other activities of the Company revolve around its main business. Hence, there is only one reportable business segment as defined by Accounting Standard 17 on ''Segment Reporting'' (AS 17).

Note 9:

The Company during an earlier year had availed External Commercial Borrowing (ECB) of USD 6mn (in Rs. 2957.10 Lacs) for construction of new facility, for the purpose of manufacture of vehicle bodies in Jabalpur and also for the purchase of other capital assets. Construction work of the facility started during previous year and capital expenditure along with the borrowing costs were carried forward under Capital work-in-progress.

The said facility has been fully constructed and capitalized during the previous year. The borrowing costs attributable to the project aggregating Rs. 386.16 Lacs incurred till the date of capitalization has been added to the total value of the facilities capitalized in accordance with AS 16 on ''Borrowing Costs'' during the year ended March 31, 2013.

Note 10:

During an earlier year, the Company had advanced Inter-corporate deposits (ICD) to certain companies aggregating to Rs. 1,500 Lacs at an interest rate of 21%. Out of these, amounts aggregating to Rs. 500 Lacs, pertaining to one ICD were received back by the Company during the previous year without interest in the previous year. The other deposits aggregating to Rs. 1,000 Lacs are still outstanding. Further, no interest has been received from these companies. The Company is following up rigorously for recovery of principle amounts and interest.

Out of abundant caution, the Company, in the previous year had provided for the aforesaid principle amounts of the outstanding ICDs aggregating to Rs. 1,000 Lacs and had also not accounted for the interest income. The Company continues to pursue this matter with the aforesaid companies and is hopeful of recovering the amounts along with interest. The company will account for the interest income as and when the same is received.

Note 11:

In view of the financial position of the Company and the performance of the Company during the quarter ended June 30, 2013, the shareholders, in the Annual General Meeting of the Company held on September 28, 2013, after discussions, disapproved the proposal of distribution of dividend for the year ended March 31, 2013. Accordingly the proposed dividend of Rs. 219.78 Lacs (Rs. 0.40 per share) and the dividend distribution tax of Rs. 37.35 Lacs provided during the year ended March 31, 2013 has been reversed in the books of account. The Company has also informed the Stock Exchanges regarding the same as per Clause 36(7) (VIII) of the Listing Agreement.

The Company has filed claims for refund of excise duty on sales made to customers which are exported under ARE-1 with Department of Customs and Excise aggregating to Rs. 259.17 Lacs (Previous Year Rs. 162.5 Lacs). However, the department has issued orders rejecting the claims aggregating to Rs. 17.63 Lacs and issued show cause notices for other claims stating that why the claims should not be rejected based on certain technical grounds. The Company has preferred an appeal against the orders passed and is also in the process of replying to the show cause notices. The Company is confident of succeeding in the matter.

Note 12:

The Company has been availing certain fund-based credit facilities from two banks. Due to the general business conditions, the Company has defaulted in payment of dues to these banks. Consequently, the Company has received recall/closure notices from these banks in relation to these facilities. Subsequently, one of the facility has been closed during the year after the Company settled the outstanding dues. The Company is negotiating with the other banks and is hopeful of honoring the dues of the bank as per schedule. The Company has accounted for the overdue and penal interest, wherever applicable.

Note 13:

Due to overall slowdown in the commercial vehicle segment, the Company, during the year received reduced number of orders for commercial vehicles from its'' customers. This affected the working capital availability and resulted in the Company reporting a loss for the year.

However, subsequent to the year-end, the market for commercial vehicle segment has revived and currently the Company has sizable orders for commercial vehicles to be executed in the financial year 2014-15. Further, the Company is negotiating with its'' bankers for extension and enhancement of credit facilities. Accordingly, the Company expects improvement in its'' financial results in the financial year 2014-15.

Note 14:

The figures of the previous year have been regrouped wherever necessary to correspond with those of the current year.


Mar 31, 2013

Note 1: The Company had challenged the constitutional validity of entry tax collected by State of Madhya Pradesh on goods purchased from other states by filing a writ petition in Honorable High Court of Madhya Pradesh on 30th August, 2007. The petition was decided against the Company during an earlier year.

The Company had filed a special leave petition (SLP) before the Honorable Supreme Court, again challenging the constitutional validity of Entry Tax. As per the interim order passed by Supreme Court, the Company has been directed to deposit the unpaid Entry tax before the petition is decided.

The Company has already deposited Entry tax aggregating to Rs. 1,015.86 Lacs (Previous year -Rs. 858.71 Lacs) including interest Nil (Previous year - ^ 1.47 Lacs) for the period from April 2007 to March 2013 to the authorities, under protest.

The Supreme Court has transferred the above SLP to a Higher Bench before the Chief Justice of the Supreme Court of India for decision, which is pending.

Since, the matter is pending for hearing for a long time and further the probability of availing relief is reduced due to the passage of time, the Company during the last quarter after obtaining expert opinion decided to charge-off the amounts of entry tax paid under protest relating to the period from April 2007 to March 2012, aggregating to Rs. 979.12 lacs. The same are included under ''Other Expenses'' in Note 28. Entry tax relating to the period from April 2012 to March 2013 aggregating to ^41.15 lacs, being on account of raw material purchases have been disclosed as ''Other Manufacturing Expenses'' in Note 25.

Note 2: The Company has an agreement with a party for the purpose of engaging into a Jointly Controlled Operations (JCO) to manufacture market and sell fabricated automobile bodies and components to Original Equipment Manufacturers and to other customers, at Jamshedpur. As per the agreement, the Company and the other venture have agreed to share the distributable cash flow from the JCO after paying all taxes in the ratio of 60:40 respectively. In addition to the above, the Company is required to pay a fixed sum for grant of license to use the factory premises of the other venture for the purposes of the operations as follows:

During the year the Company has entered into a Memorandum of Understanding (MOU) with the above party for purchase of its factory premises (including land) for a total consideration of Rs. 1,518 lacs. Accordingly an advance of Rs. 218 lacs has been paid to the party which is disclosed under ''Capital Advances'' in Note 14. As per the MOU, the balance amounts had to be paid in instalments by 31st March, 2013. However, due to the on-going negotiations, no further payments were made to the party. The Company has, however provided for the interest on these overdue amounts aggregating to Rs. 22.43 lacs as per the terms of MOU and disclosed as Finance charges in Note 27. Formalities for the transfer of ownership in the name of the Company would be completed on full and final payment being made. Pursuant to this agreement Joint venture agreement with the party has come to an end on 30th September, 2012.

Accordingly, 40% share of profit from the operations for the period ended September 30, 2012 of Rs. 16.04 Lacs (Previous Year - Rs. 79.33 Lacs) have been transferred to the joint venture partner and disclosed as "Other expenses" in Note 28.

The Company is in the process of completing the negotiations and related formalities for the above.

Notes forming part of the financial statements

Note 35: As per the information available with the company, the following are the details of dues to the creditors who have confirmed their registration under the Micro, Small and Medium Enterprises Development Act, 2006. (MSMED Act)

(i)Dues remaining unpaid as at the year-end

Rs. Principal - Rs. 4.67 Lacs (Previous Year Rs. 8.20 Lacs)

Rs. Interest - Rs. 15.18 Lacs (Previous Year Rs. 14.70 Lacs)

(ii) Interest paid in terms of Section 16 of the MSMED Act - Rs. Nil (Previous Year - Rs. Nil)

(iii) Amount of interest due and payable for the year of delay in making Payments - Rs. 0.48 Lacs (Previous Year Rs. 1.19 Lacs)

(iv) Amount of interest accrued and remaining unpaid as at the year-end-Rs.15.18Lacs (Previous Year Rs.14.70Lacs)

(v) Amount of interest due and payable on previous year''s outstanding amount - Rs. 14.70 Lacs. (Previous Year Rs. 13.51 Lacs)

Note 3

(a) Contributions are made to Provident Funds which covers all regular employees. Amount recognized as expense in respect of these defined contribution plans, aggregate to Rs. 53.05 Lacs (Previous year Rs. 64.85 Lacs).

Provision is made for gratuity based upon actuarial valuation done at the end of every financial year using ''Projected Unit Credit'' method and it covers all regular employees. Gains and losses on changes in actuarial assumptions are accounted for in the Statement of Profit and Loss.

(b) The disclosure as required under AS 15 (Revised) regarding Company''s gratuity plan is as follows:

Notes forming part of the financial statements

Note 4: During the previous year, the Company had advanced Inter-corporate deposits (ICD) to certain companies aggregating to Rs. 1,500 lacs at an interest rate of 21%. Out of these, amounts aggregating to Rs. 500 lacs, pertaining to one ICD has been received back without interest. The other deposits aggregating to Rs. 1,000 lacs are outstanding as at the year-end. Further, no interest has been received from these companies. The Company has followed-up with the companies for recovery of principle amount and interest and is hopeful of recovering the pending dues.

However, out of abundant caution, the Company, at the year-end has provided for the principle amounts of the outstanding ICDs aggregating to Rs. 1,000 lacs and also reversed the interest income aggregating to Rs. 173 lacs, accounted on these ICDs up to 31st December, 2012. The Company will account for the interest income as and when the same is received.

Note 5: The Board of Directors have recommended payment of Dividend of Rs. 0.40/- per Equity share of Rs. 10/- each i.e. 4%. The total outlay on this along with the dividend distribution tax aggregates to Rs. 257.12 lacs.

Note 6: The Company has filed claims for refund of excise duty on sales made to customers which are exported under ARE-1 with Department of Customs and Excise aggregating to Rs. 162 lacs. However, the department has issued orders rejecting the claims aggregating to Rs. 17.63 lacs and issued show cause notices for other claims stating that why the claims should not be rejected based on certain technical grounds. The Company has preferred an appeal against the orders passed and is also in the process of replying to the show cause notices. The Company is confident of succeeding in the matter.

Note 7: The figures of the previous year have been regrouped wherever necessary to correspond with those of the current year in-line with the Revised Schedule VI to the Companies Act, 1956.


Mar 31, 2011

1. Capital commitments:

The estimated amount of contracts remaining to be executed on capital account, and not provided for (net of advances) as at 31 st March, 2011 Rs. 8,680.70 lacs (Previous year: Rs. 152.84 lacs) (including in respect of loint Venture Rs. 130.09 lacs (Previous year Rs. Nil)).

2. Contingent liabilities:

Rs. in Lacs

As at 31st March, 2011 As at 31st March ,2010

a) Disputed demands of following authorities

Income tax 19.68 18.58

Excise duty ( Rs.19.41 lacs (Previous Year Rs.16.41 lacs) paid under protest) 4,663.64 1,727.38 (Also Refer Note No. 1 below)

Sales tax ( Rs. 7.70 lacs ( Previous Year Rs. Nil) paid under protest) 77.03 -

employees State Insurance Corporation (ESIC) (Refer Note No. 2 below) 0.96 -

(The Company has contested these demands before various authorities and is hopeful of success in the respective matters)

b) Bank Guarantee (Given as performance guarantee) 436.05 293.57

c) Letters of Credit (L/C) 1,280.83 12.65

Total 6,456.92 2,052.18

Note:

1) Pursuant to the Rule 10(A) of Central Excise Rules, 2002 which was inserted vide Notification no. 9/2007-CE(N.T) dated 1.03.2007, the Company has started paying differential Excise Duty on sales made to a customer (which is the subject matter of dispute in the aforesaid demands) since September 2010 under protest. The aggregate of such payment made under protest up to the year-end amounts to Rs. 38.68 lacs (Previous Year Nil).

3) The Company is in the process of filling reply with the ESIC authorities, as the said demand has arisen due to payment of ESIC dues under an incorrect code which needs to be rectified by the authorities.

4. The Company had challenged the constitutional validity of entry tax collected by State of Madhya Pradesh on goods purchased from other states by filing a writ petition in Honorable High Court of Madhya Pradesh on 30th August, 2007. The petition was decided against the Company during the previous year. The Company had filed a special leave petition (SLP) before the Honorable Supreme Court, again challenging the constitutional validity of Entry Tax. As per the interim order passed by Supreme Court, the Company has been directed to deposit the unpaid Entry tax before the petition is decided.

The Company has already deposited Entry tax aggregating to Rs. 606.15 lacs (Including Interest Rs. 1.47 lacs) for the period from April 2007 to Dec 2010 to the authorities, under protest (included in Schedule 10: 'Loans and Advances'). Balance amount of Entry tax payable forthe period from January 2011 to March 2011 aggregates to Rs. 45.11 lacs, which will be deposited subsequently, under protest.

The Supreme Court has transferred the above SLP to a Higher Bench before the Chief Justice of the Supreme Court of India for decision, which is pending. The Company is hopeful that the matter will be decided in its favor and hence no provision forthe above is required in the accounts at this stage.

5. The Company operates in the business of sheet metal fabrication and bodybuilding. Due to the nature of the production activities, wherein fixed assets like plant and machinery can be put to multiple uses and multiple activities can be carried out simultaneously in production premises etc., changes in related technology may not materially affect the productivity of the Company in future. Accordingly, the fixed assets acquired/purchased after 1st January, 2011 are being depreciated using the straight line method overthe management's estimate of useful life of these assets. Due to this change in providing for depreciation, the depreciation charge forthe year is lower and the written down value of such assets is higher by Rs. 6.68 lacs and the profit after tax for the year is higher by Rs. 6.62 lacs.

6. During the previous year, the Company has entered into an agreement with a party for the purpose of engaging into a Jointly Controlled Operations (]C0) to manufacture market and sell fabricated automobile bodies and components to Original Equipment Manufacturers and to other customers, at ]amshedpur. Per the agreement, the Company and the other venturer have agreed to share the distributable cash flow from the ]C0 after paying all taxes in the ratio of 60:40 respectively. In addition to the above, the Company is required to pay a fixed sum for grant of license to use the factory premises of the other venture for the purposes of the operations as follows:

In year 1 - Rs. 300,000 per month

In year 2- Rs. 315,000 per month

In year 3 - Rs. 330,750 per month

Accordingly, 40% share of loss from the operations for the year ended 31st March, 2011 aggregating to Rs. 32.00 lacs (Previous Year- Rs. 5.59 lacs) has been transferred to the joint venture partner and disclosed as "Other income" in Schedule 14.

7. During the previous year, pursuant to the resolution passed by the shareholders at the Extraordinary General Meeting held on 18th March, 2010, the Company has sub-divided each Equity share of Rs. 100/- each into 10 shares of Rs. 10/- each.

Further, the Company, during the previous year has issued 36,767,760 Equity shares of Rs. 10/- each as bonus shares at the rate of 6 shares for each share held at 18th March, 2010 aggregating to Rs. 3,676.77 lacs by way of capitalisation of Securities premium account and balance in Profit and Loss Account respectively.

8. As per the information available with the company, the following are the details of dues to the creditors who have confirmed their registration under the Micro, Small and Medium Enterprises Development Act, 2006. (MSMED Act)

i) Dues remaining unpaid as at the year-end

Principal - Rs.9.71 lacs (Previous Year 15.35 lacs) Interest - Rs.1.05 lacs (Previous Year 12.46 lacs)

ii) Interest paid in terms of Section 16 of the MSMED Act- Nil (Previous Year-Nil)

iii) Amount of interest due and payable for the year of delay in making payments- Rs. 1.05 lacs (Previous Year Rs. 3.62 lacs) iv) Amount of interest accrued and remaining unpaid as at the year-end - Rs.13.51 lacs (Previous Year Rs. 12.46 lacs) v) Amount of interest due and payable on previous year's outstanding amount - Rs.-12.46 lacs. (Previous Year Rs. 8.84 lacs)

9. (a) Contributions are made to Provident Funds which covers all regular employees. Amount recognised as expense in respect of these defined contribution plans, aggregate to Rs. 67.36 lacs (previous year Rs. 44.77 lacs).

Provision is made for gratuity based upon actuarial valuation done at the end of every financial year using 'Projected Unit Credit' method and it covers all regular employees. Gains and losses on changes in actuarial assumptions are accounted for in the Profit and Loss account.

10. The principal business of the Company is sheet metal fabrication and bodybuilding. All other activities of the Company revolve around its main business. Hence, there is only one reportable business segment as defined by Accounting Standard 17- "Segment Reporting" (AS 17).

11. During the year, the Company successfully completed the Initial Public Offering (IPO) of its shares which are now listed on the Bombay Stock Exchange and the National Stock Exchange. The IPO consisted of issue of 1,20,47,244 Equity Shares of Rs. 10/- each issued at a premium of Rs. 117 each, aggregating to Rs.127.

The expenses relating to the IPO aggregating to Rs.1,257.48 lacs, have been adjusted from the Securities premium account received as stated above in accordance with section 78 of the Companies Act, 1956.

12. Figures of previous year are regrouped wherever necessary to correspond with the figures of the current year.

 
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