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Notes to Accounts of Dynamatic Technologies Ltd.

Mar 31, 2015

1 Company Overview

Dynamatic Technologies Limited ("the Company") was incorporated in 1973 as Dynamatic Hydraulics Limited under provisions of the Companies Act, 1956 ('the Act'). In 1992, the name of the Company was changed to Dynamatic Technologies Limited. The Company is in the business of manufacturing automotive components, hydraulics components, aerospace components and wind farm power generation. The Company is listed in India with National Stock Exchange and Bombay Stock Exchange.

2. Contingent liabilities

The details of contingent liabilities are as under:

A) Claim against the company not acknowledged as debts in respect of:

(Rs. in lacs)

As at As at Particulars 31 March 2015 31 March 2014

Excise duty related matters 45 45

Income taxes 41 41

3. Segment information

Information about Primary Business Segments:

The business segment has been considered as the primary segment. The Company is organised into three main business segments, namely:-

- Hydraulics - comprising hydraulic pumps, hand pumps, lift assemblies, valves and power packs

- Automotive and aluminium castings ("AUC") - comprising case front, water pumps, intake manifolds and exhaust manifold.

- Aerospace and defence ("ASP") - comprising airframe structures, precision aerospace, components and Homeland division which offers cutting edge security products and technologies which will enhance potential customer capability in countering modern day security threats.

- Others - comprising Wind farm division which is into generation of power through wind energy and corporate.

Segment revenue, assets and liabilities have been accounted for on the basis of their relationship to the operating activities of the segment and amounts allocated on a reasonable basis.

4. Derivative instruments

A. Hedged derivative instruments:

As of 31 March 2015, the Company has recognised a cumulative loss of Rs.417 lacs (2014: Rs.1,836 lacs) relating to derivative instruments (comprising of foreign currency forward contracts) that are designated as effective cash flow hedges in the shareholders' fund.

The following table presents the aggregate contracted principal amounts of the Company's derivative contracts outstanding as at:

5. Dues to Micro and Small Enterprises

According to the information available with the Company, there are no dues payable to Micro and Small Enterprises as defined under the "The Micro, Small and Medium Enterprises Development Act, 2006". The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneur's Memorandum Number as allocated after filling of the Memorandum. Further there are no dues payable to micro and small scale industries (previous year: Rs.Nil).

6. Management fees represents the cost with an agreed markup for rendering executive management, finance accounting, human resources services, legal and other miscellaneous services to its overseas subsidiaries.

7. Pursuant to a resolution passed in the Extraordinary General Meeting of shareholders of the Company dated 25 March 2013, amounts aggregating Rs.675 lacs and Rs.575 lacs (being 25% of the total value of warrants at the date of allotment) has been brought in by Mr Udayant Malhoutra in his capacity as Promoter and by Wavell Investments Private Limited, being a Promoter group company, towards subscription of 338,440 and 288,300 convertible warrants of Rs.797.78 each respectively. These warrants give the right to the warrant holders to subscribe for one equity share of Rs.10 each in the Company per warrant which is exercisable within 18 (eighteen) months from the date of allotment i.e. 26 March 2013.

Out of these 288,300 and 338,440 convertible warrants, the Company after receiving balance 75% consideration issued 125,347 equity shares to Wavell Investments Private Limited during the year ended 31 March 2014 and 338,440 equity shares and 162,953 equity shares to Mr Udayant Malhoutra and Wavell Investments Private Limited respectively during the year ended 31 March 2015.

8. The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under Sections 92-92F of the Income-tax Act. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company is in the process of updating the documentation for the international as well as specified domestic transactions entered into with the associated enterprise during the financial year and expects such records to be in existence latest by the end of the stipulated timeline, as required by law. The Management is of the opinion that its international as well as specified domestic transactions are at arm's length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expenses and that of provision for taxation

9. Exceptional items for the year ended 31 March 2015 includes profit on sale of one of its assets (Land, Buildings and other structures at Dynamatic Park, Peenya, hereinafter referred to as "Peenya Property"). During the year ended 31 March 2015, the Company entered into a "Deed of Conveyance and Absolute Sale" ("Sale deed") dated 22 August 2014 with M/s Raised on Denim India and Karnataka Texspares and Steel Profiles Private Limited (collectively known as "Purchasers") towards the sale of Peenya Property at a gross consideration of Rs.7,000 lacs. The related written down value of the aforesaid asset as at the date of sale was Rs.2,830 lacs. Upon the execution of Sale deed and corresponding sale of the Peenya Property on 22 August 2014, the Company credited Rs.4,164 lacs (after netting off selling expenses of Rs.160 lacs and adjusting Revaluation Reserve of Rs.154 lacs) to the statement of profit and loss. The aforesaid asset is leased back to the Company for a lock in period of eight years with an option to continue the same for a further period of two years. The Company does not have any obligation to buy back the Peenya Property at the end of the lease term.

Further, exceptional items for the year ended 31 March 2015 also includes expenses such as redemption premium charges, prepayment penalty, processing fees, negotiation fees and other ancillary charges incurred by the Company towards prepayment of loan funds to KKR India Financial Services Private Limited, a Non-Banking Financial Company aggregating to Rs.445 lacs.

During the year ended 31 March 2014, the Company had transferred its right on leasehold land located at the SIPCOT area in Tamil Nadu along with the building and the superstructure constructed on it for aggregate consideration of Rs.2,854 lacs. Accordingly, the Company had credited Rs.1,183 lacs (after netting off selling expenses) to the statement of profit and loss after adjustment of revaluation reserve of Rs.1,387 lacs which is included in exceptional items.

Further, exceptional items for the year ended 31 March 2014 includes various expenses such as professional fees and other incidental charges incurred by the Company towards loan funds raised from KKR India Financial Services Private Limited, a Non-Banking Financial Company.

10. The Board of Directors of the Company vide its meeting dated 8 September 2014 has delegated its power to the Finance Committee to act as deemed necessary in relation to the issue of equity shares by way of Qualified Institutional Placement (QIP) in accordance with Chapter VIII of Securities and Exchange Board of India ("Issue of Capital and Disclosure Requirements") Regulations, 2009, as amended and Section 42 of the Companies Act, 2013 read with Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 and other relevant provisions in connection with this QIP. The Finance Committee in its meeting dated 13 September 2014 has accorded its approval to create, issue, offer and allot equity shares subject to Shareholders' approval. The Company had obtained the Shareholders' approval by way of special resolution passed in Extraordinary General Meeting dated 11 October 2014. The Finance Committee on 17 October 2014 has approved the allotment of 300,000 equity shares of face value of Rs.10 each pursuant to the QIP on the receipt of funds aggregating Rs.5,400 lacs. The said shares were allotted on 17 October 2014.

11. As per the requirement of Section 123 of the Companies Act 2013, the Company, based on the external technical evaluation, has reassessed the remaining useful lives of assets, primarily consisting of plant and machinery and buildings with effect from 1 April 2014. Based on the reassessment, the Management believes that there would not be any change in the useful lives of fixed assets from the previous estimates and accordingly no accounting adjustments is currently required.


Mar 31, 2014

1. Other Commitment

JKM Erla Automotive Limited (JEAL), a subsidiary of the Company, has issued 2,636,000 0.01% redeemable, non- cumulative redeemable preference shares [NCRPS] of Rs.10/- each, with SHL Trading Limited ("Subcriber") on 8 June 2011 at a premium of Rs.115/- per share aggregating Rs.3,300 lacs. These shares were redeemable, in whole or in part after 18 months by subscriber, after giving a notice in writing to JEAL, at a price that ensures to the subscriber an internal rate of return of 18% per annum. The Company undertakes the liability in case JEAL is unable to redeem the NCRPS or does not pay the Redemption value when due and payable. There are no other material commitments.

2. Contingent liabilities

The details of contingent liabilities are as under:

As at As at Particulars 31 March 2014 31 March 2013

Corporate guarantee 23,986 22,075

3. Lease transactions

a) The Company is obligated under cancellable operating leases for office, residential facilities and vehicles. Lease rental expense under cancellable operating leases during the year was Rs.235 lacs (previous year Rs.269 lacs).

b) The Company is obligated under non-cancellable operating leases for plant and machinery. Lease rental expense under non-cancellable operating leases during the year was Rs.495 lacs (previous year Rs.337 lacs).

4. Segment information

Information about Primary Business Segments:

The business segment has been considered as the primary segment. The Company is organized into three main business segments, namely:-

- Hydraulic and Precision Engineering ("HPE") - comprising hydraulic pumps, hand pumps, lift assemblies, valves and power packs

- Automotive Components ("AUC") - comprising case front, water pumps, intake manifolds and exhaust manifold.

- Aerospace ("ASP") - comprising airframe structures, precision aerospace, components and Homeland division which offers cutting edge security products and technologies which will enhance potential customer capability in countering modern day security threats.

- Others - comprising Wind farm division which is into generation of power through wind energy and corporate

Segment revenue, assets and liabilities have been accounted for on the basis of their relationship to the operating activities of the segment and amounts allocated on a reasonable basis.

5. Derivative instruments

As of 31 March 2014, the Company has recognized a cumulative loss of Rs.1,836 lacs (2013: Rs.1,495 lacs) relating to derivative instruments (comprising of foreign currency forward contracts) that are designated as effective cash flow hedges in the shareholders'' fund.

6. Dues to Micro and Small Enterprises

According to the information available with the Company, there are no dues payable to Micro and Small Enterprises as defined under the "The Micro, Small and Medium Enterprises Development Act, 2006". The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneur''s Memorandum Number as allocated after filling of the Memorandum. Further there are no dues payable to small scale industries (previous year: Rs.Nil).

7. Management fee represents the cost with an agreed markup for rendering executive management, finance accounting, human resources services, legal and other miscellaneous services to its step down subsidiaries.

8. Pursuant to a resolution passed in the Extraordinary General Meeting of shareholders dated 25 March 2013, amounts aggregating Rs.67,500,166 and Rs.57,499,994 (being 25% of the total value of warrants at the date of allotment) has been brought in by Mr Udayant Malhoutra in his capacity as Promoter and by Wavell Investments Private Limited, being a Promoter group company, towards subscription of 338,440 and 288,300 convertible warrants of Rs.797.78 each respectively. These warrants give the right to the warrant holders to subscribe for one equity share of Rs.10 each in the Company per warrant which is exercisable within 18 (eighteen) months from the date of allotment i.e. 26 March 2013.

Out of 288,300 convertible warrants issued to Wavell Investments Private Limited, the Board vide its circular resolution dated 26 March 2014 has accorded its approval to allot 125,347 equity shares by conversion of 125,347 convertible warrants at a price of Rs.797.78 each (face value of Rs.10 and premium of Rs.787.78). Accordingly, the Company has received balance 75% of total value of 125,347 warrants aggregating Rs.75,000,000 towards the allotment of 125,347 equity shares on conversion of these 125,347 warrants.

9. During the year, the Company has transferred its right on leasehold land located at the SIPCOT area in Tamil Nadu along with the building and superstructure constructed on it for aggregate consideration of Rs.2,854 lacs. Accordingly, the Company has credited Rs.1,295 lacs to the statement of profit and loss account including adjustment of revaluation reserve of Rs.1,387 lacs.

10. The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under Sections 92-92F of the Income-tax Act. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company is in the process of updating the documentation for the international as well as specified domestic transactions entered into with the associated enterprise during the financial year and expects such records to be in existence latest by the end of the stipulated timeline, as required by law. The Management is of the opinion that its international as well as specified domestic transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expenses and that of provision for taxation.


Mar 31, 2013

1 Company overview

Dynamatic Technologies Limited ("the Company") was incorporated in 1973 as Dynamatic Hydraulics Limited under provisions of the Companies Act, 1956 (''the Act''). In 1992, the name of the Company was changed to Dynamatic Technologies Limited. The Company is in the business of manufacturing automotive components, hydraulics gear pumps, aerospace components and wind farm power generation. The Company is listed in India with National Stock Exchange and Bombay Stock Exchange.

2. segment information

information about primary business segments:

The business segment has been considered as the primary segment. The Company is organized into five main business segments, namely:-

- Hydraulic and Precision Engineering ("HPE") - comprising hydraulic pumps, hand pumps, lift assemblies, valves and power packs

- Aluminium Castings ("AC") - comprising castings for automotive components

- Automotive Components ("AUC") - comprising case front, water pumps, intake manifolds and exhaust manifold

- Aerospace ("ASP") - comprising airframe structures, precision aerospace and components

- Others - comprising Wind farm division which is into generation of power through wind energy and Homeland division which offers cutting edge security products and technologies which will enhance potential customer capability in countering modern day security threats Segment revenue, assets and liabilities have been accounted for on the basis of their relationship to the operating activities of the segment and amounts allocated on a reasonable basis.

3. derivative instruments

As of 31 March 2013, the Company has recognized a cumulative loss of Rs.1,495 lacs (2012: Rs.1,600 lacs) relating to derivative instruments (comprising of foreign currency forward contracts) that are designated as effective cash flow hedges in the shareholders'' fund.

4. dues to Micro and small Enterprises

According to the information available with the Company, there are no dues payable to Micro and Small Enterprises as defined under the "The Micro, Small and Medium Enterprises Development Act, 2006". The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneur''s Memorandum Number as allocated after filling of the Memorandum. Further there are no dues payable to small scale industries (previous year: Rs.Nil).

5. These financial statements have been prepared on a going concern basis considering support from its bankers in the future at existing level, although there has been breach of few covenants of some loans for which, the management has initiated the process with banks for relaxation.

6. Management fee represents the cost with an agreed markup for rendering executive management, finance accounting, human resources services, legal and other miscellaneous services to its step down subsidiaries.

7. Pursuant to a resolution passed in the Extraordinary General Meeting of shareholders dated 25 March 2013, amounts aggregating Rs.67,500,166 and Rs.57,499,994 (being 25% of the total value of warrants at the date of allotment) has been brought in by Mr Udayant Malhoutra in his capacity as Promoter and by Wavell Investments Private Limited, being a Promoter group company, towards subscription of 338,440 and 288,300 convertible warrants of Rs.797.78 each respectively. These warrants give the right to the warrant holders to subscribe for one equity share of Rs.10 each in the Company per warrant which is exercisable within 18 (eighteen) months from the date of allotment i.e. 26 March 2013.

8. The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under Sections 92-92F of the Income-tax Act. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company is in the process of updating the documentation for the international as well as specified domestic transactions entered into with the associated enterprise during the financial year and expects such records to be in existence latest by the end of the stipulated timeline, as required by law. The Management is of the opinion that its international as well as specified domestic transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expenses and that of provision for taxation.

9. Previous year''s figures have been re-grouped/ re-classified, wherever necessary, to conform to the current year presentation.


Mar 31, 2012

1 Company overview

Dynamatic Technologies Limited ("the Company") was incorporated in 1973 as Dynamatic Hydraulics Limited under provisions of the Companies Act, 1956 ('the Act'). In 1992, the name of the Company was changed to Dynamatic Technologies Limited. The Company is in the business of manufacturing automotive components, hydraulics gear pumps, aerospace components and wind farm power generation. The Company is listed in India with National Stock Exchange and Bombay Stock Exchange.

Rights, preferences and restrictions attached to equity shares:

The Company has a single class of equity shares. Accordingly, all equity shares rank equally with regard to dividends and share in the company's residual assets. The equity shares are entitled to receive dividend as declared from time to time. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to its share of the paid-up equity capital of the company. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining asset of the Company after distribution of all preferential amounts, if any. The distribution will be in proportion to the number of equity shares held by the shareholders.

* Secured by hypothecation of vehicle. The amount is payable in 36 monthly instalments from the date of purchase. The rate of interest for the outstanding vehicle loan ranges from 9.75% p.a to 11.50% p.a.

** To promote the industries in backward area (i.e. @ Irrungattukkottai) Government of Tamil Nadu, announced a sales tax loan facility. To avail the facility, the Company has entered into an agreement with the Sales tax department for deferring payment of sales tax collected during financial year 2001-02 to 2005-06. The deferred amount will be repaid by 2014-15. The amount repayable in 2012-13 is Rs.186 lacs and accordingly disclosed as current liability.

*** Deposits from shareholders carry interest rate in the range 10-11 % and are repayable within 1- 3 years from respective date of deposit.

# Deposits from others carry interest rate in the range 10-11 % and are repayable within 1- 3 years from respective date of deposit.

* Cash credit from banks carry interest ranging between 10.50% - 15.25% p.a., computed on a monthly basis on the actual amount utilized, and are repayable on demand. These are secured by pari passu charge by way of hypothecation of stock and book debts of the Company.

** The Company has taken foreign currency buyer's credit, which carry interest ranging between 2.55% - 4.25% p.a and are renewable at 6 monthly rest for a maximum of three years.

# The Company has availed vendor bill discounting facility from banks which carry interest between 12% - 14.50% p.a.., and is payable within 90 days from date of bill discounted.

## The Company has taken inter corporate loan from JKM Holdings Private Limited, which carry interest @ 14.75% p.a. and is repayable on 15 April 2012.

* Shares pledged with State Bank of India, London and Punjab National Bank (International) Limited, London, for availing loan facilities by JKM Global Pte Limited, Singapore and Dynamatic Limited, UK, both being subsidiary companies.

* Pertains to various expenses incurred by the Company such as professional and other ancillary charges towards acquisition of shares of Eisenwerk Erla GmbH, Germany, through its step subsidiary, which do not qualify for cost of investment as envisaged in Accounting Standard (AS) 13 -'Accounting for Investments'.

2. Contingent liabilities

The details of contingent liabilities are as under:

As at As at Particulars 31 March 2012 31 March 2011

Financial guarantee 19,423 7,570

3. Lease transactions

a) The Company is obligated under cancellable operating leases for office, residential facilities and vehicles. Lease rental expense under cancellable operating leases during the year was Rs.237 lacs (previous year Rs.190 lacs).

b) The Company is obligated under non-cancellable operating leases for plant & machinery.

Lease rental expense under non-cancellable operating leases during the year was Rs.53 lacs (previous year Rs. Nil).

Notes:

1. Closing stock is after adjustment for shortage / excess, write-off, etc.

2. The individual item of these are less than 10% of turnover.

3. Figures in brackets relate to previous year.

4. Turnover is gross of excise duty.

Warranty provision is utilised to make good the amount spent on spares, labour, and all other related expenses on the event of failure of automotive products. All the amounts are expected to be utilised in the ensuing year. Outflows are expected to maintain the same trend as that of past years. No amount is expected as a reimbursement towards this cost.

4. Segment information

Information about Primary Business Segments:

The business segment has been considered as the primary segment. The Company is organized into five main business segments, namely:-

- Hydraulic and Precision Engineering ("HPE") - comprising hydraulic pumps, hand pumps, lift assemblies, valves and power packs

- Aluminium Castings ("AC") - comprising castings for automotive components

- Automotive Components ("AUC") - comprising case front, water pumps, intake manifolds and exhaust manifold

- Aerospace ("ASP") - comprising airframe structures, precision aerospace and components

- Wind farm ("WF") - generation of power through wind energy

Segment revenue, assets and liabilities have been accounted for on the basis of their relationship to the operating activities of the segment and amounts allocated on a reasonable basis.

5. Derivative instruments

As of March 31, 2012 the Company has recognized losses of Rs 1,600 lacs (2011: 275 lacs) relating to derivative instruments (comprising of foreign currency forward contracts) that are designated as effective cash flow hedges in the shareholders' fund.

6. Dues to Micro, Small and Medium Enterprises

According to the information available with the Company, there are no dues payable to Micro, Small and Medium Enterprises as defined under the "The Micro, Small and Medium Enterprises Development Act, 2006". The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated August 26, 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneur's Memorandum Number as allocated after filling of the Memorandum. Further there are no dues payable to small scale industries (previous year: Rs.Nil).

7. These financial statements have been prepared on a going concern basis considering support from its bankers in the future at existing level, although there has been breach of few covenants of some loans for which, the management has initiated the process with banks for relaxation.

8. The Board of Directors in their meeting dated 07 May 2011 had decided to demerge the "Automotive Division" of the Company into JKM Erla Automotive Limited (JEAL) (a wholly owned subsidiary of the Company) w.e.f. 01 April 2011 and had received No Objection Certificate from Bombay Stock Exchange and National Stock Exchange Limited.

Taking into consideration the tight timelines available for integration of multiple corporate structures within the automotive business, as well as the financial / tax implications, the Board of Directors decided to withdraw the Scheme of demerger in their meeting dated 13 February 2012. It is proposed to evaluate an appropriate scheme during the following year.

9. Management fee represents the cost with an agreed markup for rendering executive management, finance accounting, human resources services, legal and other miscellaneous services to its step down subsidiaries.


Mar 31, 2010

1 Share capital

Authorised:

20,000,000 (previous year: 20,000,000) equity shares of Rs.10 each

500,000 (previous year: 500,000) redeemable cumulative preference shares of Rs.100 each Issued, subscribed and paid-up:

5,414,703* (previous year: 5,414,703) equity shares of Rs.10 each fully paid up

* includes

(i) 1,048,390 (previous year:1,048,390) shares

Allotted by way of bonus shares by capitalisation out of securities premium and capital redemption reserve.

(ii) 617,143 (previous year: 617,143) shares alloted as fully paid up pursuant to the merger with JKm Daerim automotive limited without paymen being received in cash.

2. Earnings per share

The basic earnings / (loss) per share is computed by dividing the net profit / (loss) attributable to equity shareholders for the year by the weighted average number of equity shares outstanding during the year. the company did not have any potentially dilutive equity shares during the year.

3. Government grants and subsidies

Grants and subsidies from the government are recognized when there is reasonable assurance that the grant / subsidy will be received and all attaching conditions will be complied with.

The grant or subsidy relating to an asset is reduced from the cost of the asset. the grant or subsidy not specifically attached to a specific fixed asset is credited to capital Reserve and is retained till the attached conditions are fulfilled.

4 Cash flow statement

Cash flows are reported using indirect method, whereby net profits before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. the cash flows from regular revenue generating, investing and financing activities of the company are segregated.

5. Lease transactions

a) The company is obligated under cancelable operating leases for office, residential facilities and vehicles. lease rental expense under operating leases during the year was Rs 18,829 (previous year Rs 13,713).

b) The company has entered into operating leases for machines. lease rental income under operating lease during the period was Rs 683 (previous year Rs 683). the gross carrying amount, accumulated depreciation and the depreciation charge for the year ended 31 march 2010 and 31 march 2009 for the machinery leased by the company are as set below:

6. Segment information

Information about Primary Business Segments:

The business segment has been considered as the primary segment. the company is organized into five main business segments, namely:-

- Hydraulic and precision engineering ("hpe") - comprising hydraulic pumps, hand pumps, lift assemblies, valves and powerpacks

- Aluminium castings ("ac") - comprising castings for automotive components

- Automotive components ("auc") - comprising case front, water pumps, intake manifolds and exhaust manifold

- Aerospace ("asp") - comprising airframe structures, precision aerospace and components

- Wind farm ("WF") - generation of power through wind energy

7. Transfer Pricing

The company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the income-tax act, 1961. the companys management is of the opinion that its international transactions with related parties are at arms length and the company is in compliance with the transfer pricing legislation. accordingly, the companys management believes that the transfer pricing legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

8. Dues to Micro, Small and Medium Enterprises

The Management has initiated the process of identifying enterprises which have provided goods and services to the company and which qualify under the definition of micro and small enterprises, as defined under micro, small and medium enterprises Development act, 2006. the ministry of micro, small and medium enterprises has issued an office memorandum dated 26 august 2008 which recommends that the micro and small enterprises should mention in their correspondence with its customers the entrepreneurs memorandum number as allocated after filing of the memorandum. the company has not received any claim for interest from any supplier under the said act.

9. Forward contracts

The company has outstanding forward contracts aggregating to usD 3.81 million (previous year usD 5.57 million) as of 31 march 2010.

10. Cash flow hedge

The company has hedged a part of its future foreign currency receivables to mitigate its foreign exchange fluctuation risks. the same has been designated as a cash flow hedge with effect from 01 april 2008 applying the hedging criteria. the mark to market gain on this contract at the date of designation of the hedge aggregating Rs.5,494 (after discounting) has been credited to the profit and loss account. the movement in the mark to market subsequent to the designation as a cash flow hedge aggregates Rs. 12,064. the cash flow hedge is expected to occur in the next one year, when the effect in the profit and loss account would be accounted for.

11. These financial statements have been prepared on a going concern basis considering support from its bankers in the future at existing level, although there has been breach of few covenants of some loans for which, the management has initiated the process with bank for relaxation.

12. The current year numbers are not comparable with the previous year numbers as the company acquired wind farm division in the previous year.

13. Previous years figures have been re-grouped/ re-classified, wherever necessary, to conform to the current year presentation.

14. Previous year audit was carried out by a firm other than B s R & associates.







 
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