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Notes to Accounts of Cummins India Ltd.

Mar 31, 2015

As at As at March 31, 2015 March 31, 2014 Rs. Lacs Rs. Lacs

1. Contingent liabilities

a. Bills discounted not matured* 1,465 0

b. Income Tax matters 14,927 10,923

c. Central excise duty/service tax matters 1,023 267

d. Duty drawback matters (excludes interests, if any) 2,604 2,604

e. Sales Tax matters 8,380 8,650

f. Claims against the Company not acknowledged as debts (excludes 9 9 interests, penalties if any, and claims which cannot be quantified)

g. Civil liability / secondary civil liability in respect of suits filed 51 21 against the Company

Total 28,459 22,474

* Amount below rounding off norm adopted by the Company

2. Inter corporate deposit includes an amount of Rs. 12,977 lacs (March 31, 2014; Rs. 14,601 Lacs) placed with Cummins Technologies India Private Limited, a fellow subsidiary. Maximum amount due during the year Rs. 14,626 lacs (March 31, 2014; Rs. 14,601 lacs)

3. Other expenses include provision for doubtful debts Rs. 300 lacs (March 31, 2014; Rs. 207 lacs)

4. Operating Leases

The company has entered into non-cancellable operating leases for warehouse, office and residential premises. These lease arrangements range for a period between 12 months and 60 months with lock in period between 3 months and 24 months, which include both renewal and non-renewal leases. These leases also include escalation clauses.

The minimum lease payments recognised in the Statement of Profit and Loss (included under ''Rent'' in note no. 23) for the year amount to Rs. 487 lacs (March 31, 2014; Rs. 931 lacs).

5. Segment Information

a. Primary Segment

On a review of all the relevant aspects including, in particular, the system of internal financial reporting to the Board of Directors and Managing Director, the relative "risks and returns" governing the operations and products & its related services, the Company is of the view that it operates in a single segment viz. ''Engine Business Segment''. This is in accordance with Accounting Standard 17, ''Segment Reporting'' issued under Companies (Accounting Standards) Rules, 2006.

6. As set out in section 135 of the Companies Act, 2013, the Company is required to contribute Rs. 1,590 lacs towards Corporate Social Responsibility activities, as calculated basis 2 % of its average net profits of the last three financial years. Accordingly, during the current year, the Company has contributed Rs. 810 lacs to Cummins India Foundation towards the eligible projects as mentioned in Schedule VII (including amendments thereto) of the Companies Act, 2013.

7. Previous year''s figures have been regrouped / reclassified, wherever necessary.


Mar 31, 2014

1) Purchase of fixed assets include payments for items in capital work in progress and advances for purchase of fixed assets.

Adjustments for increase/decrease in liabilities related to acquisition of fixed assets have been made to the extent identified.

2) The figures in brackets represent outflows of cash and cash equivalents.

3) Previous year''s figures have been regrouped/reclassified, wherever necessary.


Mar 31, 2013

1. Earning per share (EPS)

Earnings per share is calculated by dividing the profit attributable to the Equity Shareholders by the weighted average number of Equity Shares outstanding during the year. The numbers used in calculating basic and diluted earnings are stated below :

As at As at March 31, 2013 March 31, 2012 Rs. Lacs Rs. Lacs

2. Contingent liabilities

a. Bills discounted not matured 17 265

b. Income Tax matters 9,385 8,735

c. Central excise duty/service tax matters 456 456

d. Duty drawback matters (excludes interests, if any) 4,816 4,816

e. Sales Tax matters 8,315 6,872

f. Claims against the Company not acknowledged as debts (excludes 9 9 interests, penalties if any, and claims which cannot be quantified)

g Civil liability / secondary civil liability in respect of suits filed against the Company 19 19

Total 23,017 21,172

3. Other expenses include provision for doubtful debts Rs.147 lacs (previous year Rs. 354 lacs)

4. Operating Leases

The company has entered into non-cancellable operating leases for warehouse, office and residential premises. These lease arrangements range for a period between 12 months and 60 months with lock in period between 12 months and 24 months, which include both renewal and non-renewal leases. These leases also include escalation clauses.

The minimum lease payments recognised in the Statement of Profit and Loss (included under ''Rent'' in note no. 23) for the year amount to Rs. 1,397 lacs (previous year Rs. 1,156 lacs).

5. Disclosure on Provisions made, utilised and reversed during the year as per AS-29

(i) Provision for Warranty

The provision for warranty is on account of warranties given on products sold by the Company. The provision is based on historical information of the nature, frequency and average cost of warranty claims and management estimates regarding possible future incidence. The timing and amount of cash flows that will arise from these matters will be determined at the time of receipt of claims. Amount expected to be paid in 1 year is classified as Current

(ii) Provision for Statutory Matters

The provisions for statutory matters are on account of legal matters where the Company anticipates probable outflow. The amount of provision is based on estimates made by the Company considering the facts and circumstances of each case. The timing and amount of cash flows that will arise from these matters will be determined by the relevant authorities only on settlement of these cases.

(iii) Provision for New Engine Performance Inspection (NEPI)

The provision for New Engine Performance Inspection (NEPI) is on account of checks to be carried out by the Company at specified intervals. The provision is based on historical information of the nature, frequency and average cost of claims and management estimates regarding possible future incidence. The timing and amount of the cash flows that will arise from these matters will be determined at the time of receipt of claims. Amount expected to be paid in 1 year is classified as Current.

6. The Company has 50% interest in Joint Ventures namely Cummins Research and Technology India Limited, Cummins Svam Sales & Service Limited (w.e.f. January 17, 2012), and Valvoline Cummins Limited incorporated in India. The following represents the Company''s share of Assets and Liabilities as at 31st March, 2013 and Income and Expenses for the year ended on that date.

7. Segment Information

a) Primary Segment

The Company had in the previous years identified two separate reportable business segments, namely ''Engine Business Segment'' (manufacture and sale of Internal combustion engines, gensets and parts thereof) and ''Others'' (Service solutions business). On a review of all the relevant aspects including, in particular, the system of internal financial reporting to the Board of Directors and Managing Director, the relative "risks and returns" governing the operations and products & its related services, the Company has now identified a single segment viz. '' Engine Business Segment'' without distinguishing between the products & its related services.

b) Secondary Segment

Two secondary segments have been identified based on the geographical locations of customers: domestic and export.

8. Previous year''s figures have been regrouped / reclassified, wherever necessary.


Mar 31, 2012

A. Rights, preferences and restrictions attached to shares

The Company has only one class of equity shares having a par value of Rs. 2 per share. Each shareholder is entitled to one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation of the Company, the equity shareholders are eligible to receive remaining assets of the Company, after distribution of all preferential amounts, in the proportion to their shareholding.

b. Of the above equity shares, 141,372,000 (previous year 100,980,000) shares of Rs. 2 each are held by the Holding Company, Cummins Inc. USA

* Exceptional item of Rs. 5,144 Lacs represents profit realised on divestment of the Company's entire shareholding in Cummins Exhaust India Limited (CEIL).

* The Company has issued Bonus shares in the ratio of 2:5 pursuant to approval by the members at the Extra Ordinary General Meeting held on September 9, 2011. Accordingly, Basic and Diluted Earnings Per Share (EPS) have been restated for the corresponding period to give effect to the said issue of Bonus shares, in accordance with Accounting Standard (AS) 20 "Earnings Per Share" notified under Section 211(3C) of the Companies Act, 1956.

1 The amount of further interest due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise, for the purpose of disallowance as a deductible expenditure under section 23 of the MSMED Act, 2006.

The Company has compiled this information based on intimations received from the suppliers of their status as Micro or Small Enterprises and / or its registration with the appropriate authority under the Micro, Small and Medium Enterprises Development Act, 2006.

As at As at March 31, 2012 March 31, 2011 Rs. in Lacs Rs. in Lacs

2. Contingent liabilities

a. Bills discounted not matured 265 326

b. Income tax matters 8,735 5,658

c. Central excise duty/service tax matters 456 286

d. Duty drawback demand pending in appeal 4,816 2,604 (excludes interests, if any)

e. Sales Tax Matters pending in appeal 6,872 2,403

f. Claims against the Company not acknowledged as debts 9 7 (excludes interests, penalties if any, and claims which cannot be quantified)

g. Civil liability / secondary civil liability in respect of 19 19 suits filed against the Company

3. Inter corporate deposit includes an amount of Rs. NIL (previous year Rs. 2,750 lacs) placed with Cummins Technologies India Limited, a fellow subsidiary. Maximum amount due during the year Rs. 3,950 lacs (previous year Rs. 2,908 lacs).

4. Other expenses include provision for doubtful debts Rs. 354 lacs (previous year Rs. 178 lacs).

5. Operating Leases

The company has entered into non-cancellable operating leases for warehouse and office premises. These lease arrangements range for a period between 12 months and 60 months with lock in periods between 11 months and 24 months, which include both renewal and non-renewal leases. These leases also include escalation clauses.

The minimum lease payments recognised in the statement of Profit and Loss (included under 'Rent' in note no. 24) for the year amount to Rs. 1,156 lacs (previous year Rs. 753 lacs).

(i) Provision for Warranty

The provision for warranty is on account of warranties given on products sold by the Company. The provision is based on the historic data and estimated figures. The timing and amount of the cash flows that will arise from these matters will be determined based on the receipt of claims from customers. Amount expected to be paid in 1 year is classified as Current.

(ii) Provision for Statutory Matters

The provisions for statutory matters are on account of legal matters where the Company anticipates probable outflow. The amount of provision is based on estimate made by the Company considering the facts and circumstances of each case. The timing and amount of cash flows that will arise from these matters will be determined by the relevant authorities on settlement of these cases.

(iii) Provision for New Engine Performance Inspection (NEPI)

The provision for New Engine Performance Inspection (NEPI) is on account of installation checks to be carried out by the Company at specified intervals after the equipment is commissioned. The provision is based on the historic data and estimated figures. The timing and amount of the cash flows that will arise from these matters will be determined based on the receipt of claims from dealers. Amount expected to be paid in 1 year is classified as Current.

6. The Company has 50% interest in Joint Ventures namely Cummins Research and Technology India Limited, Cummins Svam Sales & Service Limited (w.e.f. January 17, 2012), Valvoline Cummins Limited and Cummins Exhaust India Limited (upto April 29, 2011), incorporated in India. The following represents the Company's share of Assets and Liabilities as at 31st March, 2012 and Income and Expenses for the year ended on that date.

Item (iii) includes the cost of accessories sold and cost of purchased components sold as spare parts (for the goods manufactured and sold by the Company), this activity being ancillary to the Company's manufacturing activity.

All of the above have been included in the line 'Contribution to provident and other funds', in Note 22 of the Stateme of Profit and Loss.

The overall expected rate of return on assets is based on the expectations of the average long term rate of return expected on investments of the fund during the estimated term of obligations.

The estimates of future salary increases considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors.

ii) Reimbursement of expenses incurred by related parties for and on behalf of the company and vice-versa have not been included above.

iii) The Chairman and Managing Director and some senior employees are also entitled to participate in the Employees Stock Option plan of Cummins Inc. (the holding company), the cost of which is borne by Cummins Inc.

iv) The information given above, has been reckoned on the basis of information available with the Company and relied upon by the auditors.

v ) Figures in brackets are in respect of the previous year.

7. Segment Information

a. Primary Segment

The Company's operations predominantly relate to manufacture of Internal combustion engines, gensets and parts thereof (Engine Business segment) used for various applications such as power generation, construction, compressor, mining, marine, locomotive, fire-fighting etc. Others includes income from Service solutions business.

b. Secondary Segment

Two secondary segments have been identified based on the geographical locations of customers: domestic and export.

Notes:

i) The Company's tangible assets are located entirely in India.

ii) Figures in brackets are in respect of the previous year.

* Amount is below the rounding off norm adopted by the Company.

8. The financial statements for the year ended March 31, 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 March 31, 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.


Mar 31, 2011

1. a) Inter corporate deposit includes an amount of Rs. (000) 275,000 (previous year Rs. (000) 265,000) placed with Cummins Technologies India Limited, a fellow subsidiary. Maximum amount due during the year Rs. (000) 290,840 (previous year Rs. (000) 273,836).

2 The amount of further Interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise, for the purpose of disallowance as a deductible expenditure under Section 23 of the Micro, Small and Medium Enterprises Development Act, 2006.

Included in S. No. 4(b) above is Rs. NIL being interest on amounts outstanding as at the beginning of the accounting year.

The figures in brackets are in respect of the previous year.

The Company has compiled this information based on intimations received from the suppliers of their status as Micro or Small Enterprises and / or its registration with the appropriate authority under the Micro, Small and Medium Enterprises Development Act, 2006.

3. Contingent liabilities

As at As at

31st March, 2011 31st March, 2010

Rs. 000 Rs. 000

a) Bills discounted not matured 32,586 337,804

b) Income tax matters pending in appeal including effect of similar matters in respect of appeals decided in favour of the Company (refer note below) 318,365 66,176

c) Central excise duty matters 28,598 25,141

d) Duty drawback demand pending in appeal (excludes interests, if any) 260,357 -

e) Sales Tax Matters pending in appeal - 240,325 178,943

f) Claims against the Company not acknowledged as debts (excludes interests, penalties if any, and claims which cannot be quantified) 667 665

g) Civil liability / secondary civil liability in respect of suits filed against the Company 1,944 1,944

In addition to above, the company has received a draft assessment order u/s 143 (3) read with Section 144C of the Income Tax Act, 1961 proposing adjustments to income returned by the company by Rs.(OOO) 735,054 on account of transfer pricing matters for the assessment year 2007-08, the tax impact of which could range upto Rs. (000) 247,419 (previous year Rs (000) 171,900), The company has filed objections with the Dispute Resolution Panel which are yet to be heard and only post this hearing a demand may potentially be raised. Pending hearing before the Dispute Resolution Panel, the management is of the opinion that the said amount is not payable.

Notes:

i) The names of the related parties under the appropriate relationship included in notes 5(b) and (c) above are as follows:

Nature of Relationship Name of the Party

Holding Company Cummins Inc.

Fellow subsidiaries

Name of the Party

Cummins Engine (China) Investment Co. Ltd.

Cummins, Belgium

Cummins Brazil Limited

Cummins Commercializadora S. de R.L. de C.V.

Cummins De Los Andes S.A.

Cummins Deutschland GmbH

Cummins Diesel Italia Spa

Cummins Diesel N.V.

Cummins Diesel Recon

Cummins Diesel Sales Corporation, Singapore

Cummins DKSH (Singapore) Re. Ltd.

Cummins DKSH (Thailand) Limited

Cummins Emission Solutions

Cummins Engine (Shanghai) Trading And Service Co.

Cummins Firepower

Cummins France, S.A.

Cummins Generator Technologies (China) Co. Ltd.

Cummins Ghana Limited

Cummins Japan Limited

Cummins Limited

Cummins Middle East Fze

Cummins Natural Gas Engines, Inc.

Cummins Power Generation (China) Co., Ltd.

Cummins Power Generation (S) Re. Ltd.

Cummins Power Generation Limited

Cummins Power Generation Limited, U.S.A.

Cummins Power Generation, Australia

Cummins Rocky Mountain LLC

Cummins S De R L De C V

Cummins Sales & Service Philippines, Inc.

Cummins Sales and Service Korea Co., Ltd.

Cummins Sales and Service Singapore Re. Ltd.

Cummins Serbomonte

Cummins South Africa (Pty.) Ltd.

Cummins South Pacific Pty. Limited

Cummins Spain S.L

Cummins Technologies India Limited

Cummins Turbo Technologies (US)

Cummins Turbo Technologies Limited

Cummins Westport

Diesel Recon UK Depot

Distribuidora Cummins S.A.

Dongfeng Cummins Engine Company

Komatsu Cummins Chile, Limited

OOO Cummins

Shanghai Cummins Trade Co. Ltd.

Key Management Personnel Anant Talaulicar (Chairman and Managing Director)

Raj Menon (Chief Operating Officer)

Associate Cummins Generator Technologies India Limited

Joint Venture Valvoline Cummins Limited

Cummins Exhaust India Limited

Cummins Reseach and Technology India Limited

Enterprise with common Key Management Personnel Tata Cummins Limited

(Anant Talaulicar)

ii) Reimbursement of expenses incurred by related parties for and on behalf of the company and vice-versa have not been included above.

iii) The information given above, has been reckoned on the basis of information available with the Company and relied upon by the auditors.

iv) Figures in brackets are in respect of the previous year.

6. Segmental Information

a) Primary Segment

The Companys operations predominantly relate to manufacture of Internal combustion engines, gensets and parts thereof (Engines business segment) used for various applications such as power generation, construction, compressor, mining, marine, locomotive, fire-fighting etc. Others includes income from Service solutions business.

b) Secondary Segment

Two secondary segments have been identified based on the geographical locations of customers: domestic and export.

4. Lease commitments Operating lease:

There are no future minimum lease payments under these leases as at the end of the year.

The minimum lease payments recognized in the statement of profit and loss (included under other expenses) for the year are Rs. NIL (previous year Rs. (000) 16,473).

5. The net exchange differences (gains/(losses)) arising during the year appropriately recognised in the profit and loss account is Rs. (000) 12,752 (previous year Rs. (000) 101,973).

c) The Chairman, Managing Director and some senior employees are also entitled to participate in the Employees Stock Option plan of Cummins Inc. (the holding company), the cost of which is borne by Cummins Inc.

6. a) Other expenses include provision for doubtful debts Rs. (000) 17,837 (previous year Rs. (000) 24,405). b) Other Income includes commission income of Rs. (000) 541,863 (previous year Rs. (000) 154,182).

7. The Company has 50% interest in Joint Ventures namely Cummins Exhaust India Limited, Cummins Research and Technology India Limited and Valvoline Cummins Limited, incorporated in India. The following represents the Companys share of Assets and Liabilities as at 31st March, 2011 and Income and Expenses for the year ended on that date.

2. Defined Benefit Plans -

The following figures are as per actuarial valuation, as at the Balance Sheet date, carried out by an independent actuary.

i. Para 132 of AS15 (revised 2005) does not require any specific disclosures except where expense resulting from compensated absence is of such size, nature or incidence that its disclosure is relevant under Accounting Standard No. 5 or Accounting Standard No. 18. In the opinion of the management the expense resulting from compensated absence is not significant and hence no disclosures are prepared under various paragraphs of AS 15 (revised 2005).

8. Previous years figures have been regrouped / reclassified, wherever necessary.


Mar 31, 2010

1. a ) Inter Corporate deposits include –

i) An inter corporate deposit of Rs. (’000) 265,000 (previous year Rs. (’000) 230,000) placed with Cummins Technologies India Limited (previously known as Cummins Turbo Technologies India Limited), a fellow subsidiary. Maximum amount due during the year Rs. (’000) 273,836 (previous year Rs. (’000) 235,361).

ii) An inter corporate deposit of Rs. (’000) NIL (previous year Rs. (’000) 70,000) placed with Cummins Research and Technology India Limited, a Joint Venture. Maximum amount due during the year Rs. (’000) 70,538 (previous year Rs. (’000) 70,490).

iii) An inter corporate deposit of Rs. (’000) NIL (previous year Rs. (’000) 100,000) placed with Valvoline Cummins Limited, a Joint Venture. Maximum amount due during the year Rs. (’000) 106,301(previous year Rs. (’000) 104,242).

2 The amount of further Interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise, for the purpose of disallowance as a deductible expenditure under Section 23 of the Micro, Small and Medium Enterprises Development Act, 2006.

Included in S. No. 4(b) above is Rs. NIL being interest on amounts outstanding as at the beginning of the accounting year.

The figures in brackets are in respect of the previous year.

The Company has compiled this information based on intimations received from the suppliers of their status as Micro or Small Enterprises and / or its registration with the appropriate authority under the Micro, Small and Medium Enterprises Development Act, 2006.

3. Contingent liabilities

As at As at 31st March, 2010 31st March, 2009 Rs. ’000 Rs. ’000

a) Bills discounted not matured 337,804 240,208

b) Income tax matters pending in appeal including effect of similar matters in respect of appeals decided in favour of the Company 66,176 58,345

c) Central excise duty/customs duty – demands not accepted by the Company 25,141 23,564

d) Sales Tax Matters pending in appeal 178,943 53,249

e) Claims against the Company not acknowledged as debts (excludes interests, penalties if any, and claims which cannot be quantified) 665 --

f) Civil liability / secondary civil liability in respect of suits filed against the Company 1,944 43,150

During the year the company has received a draft assessment order u/s 143 (3) read with Section 144C of the Income Tax Act, 1961 proposing adjustments to income returned by the company by Rs. (’000) 510,700 on account of transfer pricing and other matters for the assessment year 2006-07, the tax impact of which could range upto Rs. (’000) 171,900. The company has filed objections with the Dispute Resolution Panel which are yet to be heard and only post this hearing a demand may potentially be raised. Pending hearing before the Dispute Resolution Panel, the management is of the opinion that the said amount is not payable.

4. Related Party Disclosures

a) Name of the related party and nature of relationship where control exists

Name of the related party Nature of relationship

Cummins Inc. Holding Company

Notes:

i) The names of the related parties under the appropriate relationship included in notes 5 (b) and (c) above are as follows:

Nature of Relationship Name of the Party

Holding Company Cummins Inc.

Fellow subsidiaries Cummins (China) Investment Company Ltd.

Cummins Business Services, Nashville Cummins Commercializadora Cummins Deutschland Gmbh Cummins Diesel N.V.

Cummins Diesel Sales Corporation, Singapore Cummins Diesel South Africa Pvt. Ltd. Cummins Diesel UK Cummins Diethelm Limited Cummins Engine (China) Investment Co. Ltd. Cummins Engine (Shanghai) Trading And Service Co. Cummins Engine (Beijing) Co., Ltd. Cummins Filtration Australia Cummins Firepower Cummins France Sa

Cummins Generator Technologies (China) Co., Ltd. Cummins Generator Technologies Limited, UK Cummins Hong Kong Limited Cummins Indiana Cummins Italia Spa Cummins Japan Ltd. Cummins Mexico Sa Cummins Middle East Fze Cummins Mid-South, LLC Cummins Natural Gas Engines, Inc. Cummins Power Generation (China) Co., Ltd. Cummins Power Generation, Australia Cummins Power Generation Limited, U.S.A. Cummins Power Generation Limited, Kent Cummins Power Generation Singapore PTE Ltd. Cummins Power Generation(China) Co. Ltd. Cummins Rocky Mountain Llc Cummins Sales & Service Philippines Inc. Cummins South Africa (Pty) Ltd. Cummins Taiwan Pte. Ltd. Cummins Technologies India Limited Cummins Turbo Technologies (US) Cummins Turbo Technologies Ltd. Cummins UK Cummins Westport

Cummmins Generator Technologies (China) Co., Ltd. Diesel Recon Co. Diesel Recon, El Paso Shanghai Cummins Trade Co. Ltd. Cummins Npower Cummins Brasil Ltd. Cummins Limited Cummins S De R L De C V

Nature of Relationship Name of the Party

Key Management Personnel Anant Talaulicar

Associate Cummins Generator Technologies India Limited

Joint Venture Valvoline Cummins Limited

Cummins Exhaust India Limited

Cummins Reseach and Technology India Limited

Enterprise with common Tata Cummins Limited

Key Management Personnel

ii) Reimbursement of expenses incurred by related parties for and on behalf of the company and vice versa have not been included above.

iii) The information given above, has been reckoned on the basis of information available with the Company and relied upon by the auditors.

iv) Figures in brackets are in respect of the previous year.

5. Segmental Information

a) Primary Segment

The Company’s operations predominantly relate to manufacture of Internal combustion engines, gensets and parts thereof (Engines business segment) used for various applications such as power generation, construction, compressor, mining, marine, locomotive, fire-fighting, etc. Others includes income from Service solutions business.

6. Disclosure on Provisions made, utilised and reversed during the year as per Accounting Standard 29 issued by The Institute of Chartered Accountants of India

i) The provision for warranty is on account of warranties given on products sold by the Company. The provision is based on the historic data and estimated figures. The timing and amount of the cash flows that will arise from these matters will be determined at the time of receipt of claims from customers.

ii) The provision for overhaul is on account of engines given on rent to various customers. The provision is based on the data on overhaul costs on various types of gensets as accumulated by the Company. The timing and amount of the cash flows that will arise from these matters will be determined at the time of actual overhauling of the gensets.

Provision for service costs comprise of dealer claims. Provision is made on the amount claimed by the dealers. The timing and the amount of cash flows that will arise from the dealer claims will be determined at the time of settlement of these claims.

iii) The provisions for statutory matters are on account of legal matters where the Company anticipates probable outflow. The amount of provision is based on estimate made by the Company considering the facts and circumstances of each case. The timing and amount of cash flows that will arise from these matters will be determined by the relevant authorities only on settlement of these cases.

7. Lease income

The Company has not provided any equipment under finance / operating lease arrangements during the year and does not have any such arrangements outstanding as at the end of the year.

8. Lease commitments

i) Finance lease :

The Company had acquired computers under finance lease arrangements in earlier years for a period of three years which expired during the year and no amount is outstanding as at the end of the year.

ii) Operating lease :

The Company had acquired equipment under operating lease arrangements in earlier years at stipulated rentals for a period of five years. There are no future minimum lease payments under these leases as at the end of the year.

The minimum lease payments recognized in the statement of profit and loss (included under other expenses) for the year are Rs. (’000) 16,473 (previous year Rs. (’000) 10,420).

9. The net exchange differences (gains/(losses)) arising during the year appropriately recognised in the profit and loss account is Rs. (’000) 101,973 (previous year Rs. (’000) 228,690).

10. Other expenses include provision for doubtful debts Rs. (’000) 24,405 (previous year Rs. (’000) 86,695).

11. The Company has 50% interest in Joint Ventures namely Cummins Exhaust India Limited, Cummins Research and Technology India Limited and Valvoline Cummins Limited, incorporated in India. The following represents the Company’s share of Assets and Liabilities as at 31st March, 2010 and Income and Expenses for the year ended on that date.

12. The Company had sold its Power Generation Rental Power Business in the previous year which resulted in a profit of Rs. 192,037 (’000) which was reflected as “Exceptional item” in the Profit & Loss Account.

13. Previous year’s figures have been regrouped / reclassified, wherever necessary.