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Notes to Accounts of Eicher Motors Ltd.

Dec 31, 2014

1. Share capital

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares 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. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amount, in proportion to their shareholding.

(iii) The Company has not issued shares for consideration other than cash and has not bought back shares during five years immediately preceding the reporting date, December 31, 2014.

(iv) Employee stock option plan

a. 1,77,000 (1,77,000) options on September 30, 2006, exercisable over a period of seven years after vesting on October 1, 2009 at an exercise price of Rs. 297 (including premium of Rs. 287) per option, out of which Nil (Nil) options are outstanding at year end. During the year, Nil (6,400) equity shares were issued and allotted as fully paid up at an exercise price of Rs. 297 (including premium of Rs. 287 each) per equity share.

b. 2,08,900 (2,08,900) options on October 22, 2007, exercisable over a period of seven years after vesting on October 23, 2010 at an exercise price of Rs. 462 (including premium of Rs. 452) per option, out of which 29,500 (32,000) options are outstanding at year end. During the year, 2,500 (31,500) equity shares were issued and allotted as fully paid up at an exercise price of Rs. 462 (including premium of Rs. 452 each) per equity share.

c. 40,000 (40,000) options on April 29, 2010, exercisable over a period of seven years after vesting on April 29, 2011 at an exercise price of Rs. 695 (including premium of Rs. 685) per option are outstanding as at year end.

d. 15,400 (15,400) options on November 8, 2010, exercisable over a period of seven years after vesting on November 8, 2013 at an exercise price of Rs. 1,411 (including premium of Rs. 1,401) per option out of which Nil (15,400) options are outstanding at year end. During the year, 15,400 (Nil) equity shares were issued and allotted as fully paid up at an exercise price of Rs. 1,411 (including premium of Rs. 1,401 each) per equity share.

e. 1,08,200 (1,08,200) options on May 6, 2011, exercisable over a period of seven years after vesting on May 6, 2014 at an exercise price of Rs. 1,162 (including premium of Rs. 1,152) per option out of which 60,200 (1,08,200) options are outstanding at year end. During the year, 48,000 (Nil) equity shares were issued and allotted as fully paid up at an exercise price of Rs. 1,162 (including premium of Rs. 1,152 each) per equity share. During the year, Nil (24,000) options were forfeited.

f. 5,400 (5,400) options on February 11, 2012, exercisable over a period of seven years after vesting on February 11, 2015 at an exercise price of Rs. 1,770 (including premium of Rs. 1,760) per option are outstanding as at year end. During the year, Nil (7,200) options were forfeited.

g. 5,000 (5,000) options on December 16, 2013, exercisable over a period of seven years after vesting on December 15, 2016 at an exercise price of Rs. 4,915 (including premium of Rs. 4,905) per option are outstanding as at year end.

h. 22,500 (Nil) options on August 11, 2014, exercisable over a period of seven years after vesting on August 11, 2017 at an exercise price of Rs. 8,477.50 (including premium of Rs. 8,467.50) per option are outstanding as at year end.

i. 5,400 (Nil) options on November 12, 2014, exercisable over a period of seven years after vesting on November 12, 2017 at an exercise price of Rs. 12,993.65 (including premium of Rs. 12,983.65) per option are outstanding as at year end.

j. Each option entitles the holders thereof to apply for and be allotted one equity share of the face value of Rs. 10 each.

2. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 139.79 crores (Rs. 62.49 crores).

The Company has other commitments, for purchase/sales orders which are issued after considering requirements per operating cycle for purchase /sale of goods and services, employee''s benefits including union agreement in normal course of business. The Company does not have any long term commitments or material non-cancellable contractual commitments/contracts, which might have material impact on the financial statements.

3. Research and development expenses:

Revenue expenditure on research and development incurred and expensed off during the year through the appropriate heads of account aggregate Rs. 19.26 crores (Rs. 20.88 crores). The capital expenditure incurred during the year for research and development purposes aggregate Rs. 14.75 crores (Rs 10.89 crores). The details of capital expenditure and revenue expenditure are as below:

4. Contingent liabilities not provided for:

Rs. in crores

Particulars As at As at December 31, 2014 December 31, 2013

a) In respect of following:

- Excise duty matters 54.98 54.98

- Sales tax matters 5.06 6.87

- Service tax matters 0.39 0.40

- Income tax matters 4.26 6.79

b) Claims against the Company not acknowledged as debts 6.13 5.51

All the above matters are subject to legal proceedings in the ordinary course of business. The legal proceeding when ultimately concluded will not, in the opinion of management, have a material effect on the result of operations or the financial position of the Company.

5. Disclosures under Accounting Standard 15 (Revised):

The details of various employee benefits provided to employees are as under:

a. Employee plans

Out of the total contribution made for employees'' provident fund, Rs. 1.44 crores (Rs. 1.14 crores) is made to Eicher Executive Provident Fund Trust, while the remainder contribution is made to government administered provident fund.

The total plan liabilities under the Eicher Executive Provident Fund Trust as at March 31, 2014 is Rs. 78.21 crores as against the total plan assets of Rs. 78.90 crores. The funds of the trust have been invested under various securities as prescribed under the rules of the trust.

* includes Rs. 0.07 crore (Rs. Nil) capitalised during the year and Rs. 0.05 crore (Rs. 0.03 crore) considered in pre-operative expenditure (pending allocation).

6. Segment reporting:

As the Company''s business activities falls within a single primary business segment viz. “Automobile products and related components" and is a single geographical segment, the disclosure requirements of Accounting Standard - 17 “Segment Reporting" notified under the Companies (Accounting Standards) Rules, 2006 are not applicable.

7. Disclosure in respect of operating leases:

(A) Assets taken on lease:

The Company has taken certain premises under various operating lease agreements. The total lease rental recognize as expense aggregate to Rs. 12.59 crores (Rs. 10.60 crores).

Future minimum lease payments under non-cancellable operating leases in the aggregate and for each of the following year:

(B) Assets given on lease:

The Company has given assets under operating lease agreement to its joint venture company "Eicher Polaris Private Limited" . The total lease rental recognize as income aggregate to Rs. 2.49 crores (Rs. 1.20 crores).

Future minimum lease payments under non-cancellable operating leases in the aggregate and for each of the following year:

8. The Company has a joint venture with Polaris Industries, Inc., U.S.A., Eicher Polaris Private Limited (EPPL) with an investment of Rs. 130.50 crores (including advance for equity Rs. 25.00 crores) (investment of Rs. 55.00 crores (including advance for equity Rs. 30.00 crores)) as at December 31, 2014, representing 50% shareholding in EPPL.

9. Figures in brackets represent previous year''s figures.

10. Previous year''s figures have been recast/regrouped, wherever necessary to confirm the current year''s presentation.


Dec 31, 2013

1. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 318.63 crores (Rs. 361.43 crores) (includes share of joint venture Rs. 27.52 crores (Rs. Nil)). The Company has other commitments, for purchase/sales orders which are issued after considering requirements per operating cycle for purchase /sale of goods and services, employee''s benefits including union agreement in normal course of business. The Company does not have any long term commitments or material non-cancellable contractual commitments/contracts, which might have material impact on the financial statements.

2. Research and development expenses: Revenue expenditure on research and development incurred and expensed off during the year through the appropriate heads of account aggregate Rs. 90.69 crores (Rs. 90.83 crores). The capital expenditure incurred during the year for research and development purposes aggregate Rs. 129.75 crores (Rs 137.34 crores).

3. Contingent liabilities not provided for in respect of:

Rs. in crores

Particulars As at December 31, 2013 As at December 31, 2012

a) In respect of demands contested by the Company :

- Excise duty matters 54.98 54.99

- Sales tax matters 6.87 10.43

- Service tax matters 0.40 0.77

- Income tax matters 6.79 8.80

b) Claims against the Company not acknowledged as debts 5.51 5.00

All the above matters other than bills discounted are subject to legal proceedings in the ordinary course of business. The legal proceeding when ultimately concluded will not, in the opinion of management, have a material effect on the result of operations or the financial position of the Company.

4. Segment reporting:

As the Company''s, its subsidiaries'' and joint venture business'' activities falls within a single primary business segment viz. "Automobile products and related components" and is a single geographical segment, the disclosure requirements of Accounting Standard – 17 "Segment Reporting" notified under the Companies (Accounting Standards) Rules, 2006 are not applicable.

5. Pursuant to revised Schedule VI to the Companies Act, 1956, being applicable on the Company from the previous year ended on December 31, 2012, Dividend for the year ended December 31, 2012 declared by its subsidiary company i.e. VE Commercial Vehicles Limited (VECVL) after the date of balance sheet has been recognised in the current year when the right to receive dividends was established as per AS-9 ''Revenue Recognition''. However, Dividend declared by VECVL for the year ended December 31, 2011 was recognised as Dividend income in the year ended December 31, 2011 itself per requirement of Old Schedule VI to the Companies Act 1956. This has resulted into no Dividend income being recognised in the previous year ended December 31, 2012.

6. Figures in brackets represent previous year''s figures.

7. Previous year''s figures have been recast/regrouped, wherever necessary to confirm the current year''s presentation.


Dec 31, 2012

(i) Employee stock option plan

a. I,77,000 (I,77,000) options on september 30, 2006, exercisable over a period of seven years after vesting on October 1, 2009 at an exercise price of Rs.297 (including premium of Rs 287) per option, out of which 6,400 (6,400) options are outstanding at year end. during the year, Nil (8,000) equity shares were issued and allotted as fully paid up at an exercise price of Rs. 297 (including premium of Rs. 287 each) per equity share.

b. 2,08,900 (2,08,900) options on October 22, 2007, exercisable over a period of seven years after vesting on October 23, 20I0 at an exercise price of Rs.462 (including premium of Rs. 452) per option, out of which 63,500 (7I,900) options are outstanding at year end. during the year, 8,400 (46,800) equity shares were issued and allotted as fully paid up at an exercise price of Rs. 462 (including premium of Rs. 452 each) per equity share.

c. 40,000 (40,000) options on April 29, 20I0, exercisable over a period of seven years after vesting on April 29, 20II at an exercise price of Rs. 695 (including premium of Rs. 685) per option are outstanding as at year end.

d. 15,400 (I5,400) options on November 8, 20I0, exercisable over a period of seven years after vesting on November 8, 20I3 at an exercise price of Rs.I,4II (including premium of Rs. I,40I) per option are outstanding as at year end.

e. 1,32,200 (I,35,200) options on May 6, 20II, exercisable over a period of seven years after vesting on May 6, 20I4 at an exercise price of Rs. I,I62 (including premium of Rs. I,I52) per option are outstanding as at year end. during the year, 3,000 (Nil) equity shares were forfeited.

f. 12,600 (Nil) options on February II, 20I2, exercisable over a period of seven years after vesting on February II, 20I5 at an exercise price of Rs. I,770 (including premium of Rs.I,760) per option are outstanding as at year end.

g. Each option entitles the holders thereof to apply for and be allotted one equity share of the face value of Rs. I0 each.

2. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 3I.95 crores (Rs. 26.50 crores).

The company has other commitments, for purchase/sales orders which are issued after considering requirements per operating cycle for purchase/sale of goods and services, employee''s benefits including union agreement in normal course of business. The company does not have any long term commitments or material non-cancellable contractual commitments/ contracts, which might have material impact on the financial statements.

3. Research and development expenses:

Revenue expenditure on research and development incurred and expensed off during the year through the appropriate heads of account aggregate Rs. I6.75 crores (Rs. I0.45 crores). The capital expenditure incurred during the year for research and development purposes aggregate Rs. 3.95 crores (Rs. 5.55 crores). The details of capital expenditure and revenue expenditure are as below:

4. contingent liabilities not provided for in respect of: Rs. in crores

Particulars As at As at December 31, 2012 December 31, 2011

a) in respect of demands contested by the company:

- Excise duty matters 54.99 54.99

- sales tax matters 10.43 10.38

- service tax matters 0.77 0.76

- income tax matters 8.80 14.15

b) claims against the company not acknowledged as debts 5.00 4.59

c) Guarantees given to:

A subsidiary, for certain receivables transferred - 0.06 pursuant to Business Purchase Agreement signed by the company with subsidiary company

All the above matters other than guarantees are subject to legal proceedings in the ordinary course of business. The legal proceeding when ultimately concluded will not, in the opinion of management, have a material effect on the result of operations or the financial position of the company.

Out of the total contribution made for employees'' provident fund, Rs. 0.69 crores (Rs. 0.34 crores) is made to Eicher Executive Provident Fund Trust, while the remainder contribution is made to government administered provident fund. The total plan liabilities under the Eicher Executive Provident Fund Trust as at March 3I, 20I2 is Rs. 45.50 crores as against the total plan assets of Rs. 45.64 crores. The funds of the trust have been invested under various securities as prescribed under the rules of the trust.

5. Segment reporting:

As the company''s business activities falls within a single primary business segment viz. ''Automobile products and related components" and is a single geographical segment, the disclosure requirements of Accounting standard - I7 "segment Reporting" notified under the companies (Accounting standards) Rules, 2006 are not applicable.

6. The company has taken certain premises under various operating lease agreements. The total lease rental recognize as expense aggregate to Rs. 6.69 crores ( Rs. 3.59 crores).

7. Hitherto in terms of Old schedule Vi to the companies Act, I956, the company was recognising income from dividend declared by its subsidiary company, i.e. VE commercial Vehicles Limited (VEcVL) even after the date of the Balance sheet if they were pertaining to the period on or before the Balance sheet date. This requirement no longer exists in the Revised schedule Vi. Accordingly, the company as per As - 9 ''Revenue Recognition'' has decided to recognise dividend from subsidiary companies as income only when the right to receive dividends is established as on the Balance sheet date. Had the company recognised dividend from VEcVL as income as per Old schedule Vi, the profit for the year would have been higher by Rs. 40.80 crores.

8. Figures in brackets represent previous year''s figures.

9. The revised schedule Vi has become effective for the accounting year commencing on or after I April, 20II for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year''s figure have been regrouped/reclassified wherever necessary to correspond with the current year''s classification/disclosure.


Dec 31, 2010

1. In 2008, the Commercial Vehicles business along with Components (including Gears) and Engineering Design Services business of the Company together with related assets, the discontinued operations (collectively hereinafter referred to as "CV Business") had been transferred by way of a Slump Sale as defi ned under Section 2(42C) of Income Tax Act, 1961 on a "going concern" basis to VE Commercial Vehicle Limited (VECVL, subsidiary of the Company) as per the Business Purchase Agreement (BPA) signed between VECVL and the Company.

2. The Composite Scheme of Arrangement ("the Scheme") between Eicher Goodearth Investment Limited (EGIL) and Eicher Goodearth Private Limited (EGPL) and Eicher Motors Limited (the Company) under section 391 to section 394 of the Companies Act, 1956, was approved by the High Court of Delhi vide its order dated October 27, 2009, and had become effective on November 12, 2009 on fi ling of certifi ed copy of the Order of High Court in the office of Registrar of Companies, NCT of Delhi. Consequent to effectuation of the Scheme in the previous year, the investment held by Residual EGIL in the equity share capital of the Company stood cancelled and accordingly the issued, subscribed and paid up share capital of the Company stood reduced to the extent of Rs. 140.3 millions being the face value of 14032762 equity shares held by Residual EGIL in the Company as on the appointed date. Further, since the shares had not been allotted till December 31, 2009, an amount of Rs.140.3 millions representing the aggregate nominal value of such shares had been included in the previous year under the head "Capital suspense" in the balance sheet. During the year, on January 5, 2010, the Company has issued and allotted 14032764 shares of Rs. 10 each (rounded off to the nearest integer in terms of the Scheme) aggregating Rs.140.3 millions to the members of Residual EGIL in the proportion in which they held equity shares in Residual EGIL.

3. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 56.0 millions (Rs. 67.0 millions).

4. Contingent liabilities not provided for in respect of:

Rs. in millions

Particulars As at As at December 31, 2010 December 31, 2009

a) In respect of demands contested by the Company:

Sales tax matters 111.0 115.3

Excise duty matters 585.6 580.1

Income tax matters 88.8 56.7

Service tax matters 9.5 9.5

b) Claims against the Company not acknowledged as debts 9.2 9.5

c) Guarantees given to:

VECVL, a subsidiary, for certain receivables transferred pursuant to BPA signed by the 2.1 12.3 Company with VECVL (refer note 2 above)

All the above matters other than guarantees are subject to legal proceedings in the ordinary course of business. The legal proceedings when ultimately concluded will not, in the opinion of management, have a material effect on the result of operations or the financial position of the Company.

5. Segment reporting:

As the Companys business activities falls within a single primary business segment viz. "Automobile products and related components" and is a single geographical segment, the disclosure requirements of Accounting Standard - 17 "Segment Reporting" notifi ed under the Companies (Accounting Standards) Rules, 2006 are not applicable.

6. Related party disclosure:

a. Name of related parties and their relationship

Name of related party Nature of relationship

VE Commercial Vehicles Ltd. (VECVL) Subsidiary Company

Eicher Engineering Solutions, Inc., U.S.A. (EES, Inc.) Subsidiary Company of VECVL

Hoff Automotive Design (Beijing) Co. Ltd (Hoff Beijing) 100% subsidiary company of EES, Inc.

Hoff Auto Design (Shanghai) Co. Ltd. (Hoff Shanghai) 100% subsidiary company of EES, Inc.

Eicher Goodearth Investment Limited* (EGIL) Part for which the Company is Associate

* Ceased to exist w.e.f. January 1, 2009 (refer to note 3 above).

b. Key management personnel

Mr. Siddhartha Lal Managing Director

Transactions with the above key management personnel:

Refer to note 9 for managerial remuneration in respect of the above personnel

7. Excise duty on sales has been deducted from gross sales on the face of profit and loss account. Increase / (decrease) in excise duty on finished goods has been shown under the head Materials consumed in schedule 10.

8. a) Figures in brackets represent previous years figures. b) Previous years figures have been recast/ regrouped where necessary.

9. Schedules 1 to 12 and the statement of additional information form an integral part of the accounts.


Dec 31, 2009

1. a) During the previous period, the Commercial Vehicles business along with Components (including Gears) and Engineering Design Services business of the Company together with related assets (collectively hereinafter referred to as “CV Business”) has been transferred by way of a Slump Sale as defi ned under Section 2(42C) of Income Tax Act, 1961 on a “going concern” basis to VE Commercial Vehicles Limited (VECVL, subsidiary of the Company) as per the Business Purchase Agreement (BPA) signed between

b) Expenses for contractual liability represent indemnifi ed loss on account of certain receivables pertaining to erstwhile Commercial Vehicle business.

2. Pursuant to the Composite Scheme of Arrangement (“the Scheme”) between Eicher Goodearth Investment Limited (EGIL) and Eicher Goodearth Private Limited (EGPL) and Eicher Motors Limited (the Company) under section 391 to section 394 of the Companies Act, 1956, approved by the High Court of Delhi vide its order dated October 27, 2009, which became effective on November 12, 2009 on fi ling of certifi ed copy of the Order of High Court in the offi ce of Registrar of Companies, NCT of Delhi:

ii) Consequent to effectuation of the Scheme;

a) the investment held by residual EGIL in the equity share capital of the Company stands cancelled and accordingly the issued and paid up share capital of the Company stands reduced to the extent of Rs. 140.3 millions being the face value of 14032762 equity shares held by Residual EGIL in the Company as on the appointed date;

b) the Company, subsequent to the year end, on January 5, 2010, has issued and allotted 14032764 shares of Rs. 10 each (round- ed off to the nearest integer in terms of the Scheme) aggregating Rs.140.3 millions to the members of residual EGIL in the proportion in which they held equity shares in Residual EGIL. Since the shares had not been allotted till December 31, 2009, an amount of Rs.140.3 millions representing the aggregate nominal value of such shares has been included in these accounts as ‘Capital suspense’ under the head ‘Shareholders fund’;

c) in accordance with Accounting Standard (AS) – 14 “Accounting for Amalgamations”, the merger of Residual EGIL with the Company has been accounted for under the ‘Pooling of interest’ method. In terms of the Scheme, all the assets and liabilities, including reserves and profi t and loss of Residual EGIL have vested in the Company at their book values as appearing in the books of account of Residual EGIL;

d) the excess of net assets (after adjusting for the cancellation of investments held in the Company) of Residual EGIL over the value of share capital to be issued to the shareholders of Residual EGIL amounting to Rs. 0.4 million has been credited to General reserve account in schedule 2 ‘ Reserves and surplus’.

3. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 67.0 millions (Rs. 30.7 millions).

4. Contingent liabilities not provided for in respect of:

Rs. in millions

Particulars As at December As at December 31, 2009 31, 2008

a) In respect of demands contested by the Company:

- Sales tax matters 115.3 93.7

- Excise duty matters 580.1 558.2

- Income tax matters 56.7 42.1

- Service tax matters 9.5 4.8

b) Claims against the Company not acknowledged as debts 9.5 10.1

c) Guarantees given:

i) to certain finance companies and banks for recovery of their 350.0 360.0 dues against auto finance business of VECVL, a subsidiary

- Dues outstanding in the books of VECVL - 3.4

(ii) to VECVL, a subsidiary, for certain receivables transferred 12.3 183.8 pursuant to BPA signed by the Company with VECVL

All the above matters other than guarantees are subject to legal proceedings in the ordinary course of business. The legal proceedings when ultimately concluded will not, in the opinion of management, have a material effect on the result of operations or the fi nancial position of the Company.

5. Segment reporting

As the Company’s business activities falls within a single primary business segment viz. “Automobile products and related components” and is a single geographical segment, the disclosure requirements of Accounting Standard – 17 “Segment Reporting” specifi ed in the Companies (Accounting Standards) Rules, 2006 are not applicable.

6. Related party disclosure:

a. Name of related parties and their relationship:

Name of related party Nature of relationship

Eicher Goodearth Investments Limited* (EGIL) Party for which the Company is Associate

VE Commercial Vehicles Ltd. (VECVL) Subsidiary Company

Eicher Engineering Solutions, Inc., U.S.A. (EES, Inc.) Subsidiary Company of VECVL

Royal Enfield Motorcycles Limited (REML) Significant influence of key management personnel

ECS Limited** (ECS) Significant influence of key management personnel

Eicher Goodearth Private Limited (EGPL) Significant influence of key management personnel

* Ceased to exist w.e.f January 1, 2009. (refer to note 3 above)

** Ceased to be a related party w.e.f December 24, 2008

b. Key management personnel:

Mr. Siddhartha Lal Managing Director

Transactions with the above key management personnel:

Refer to note 9 for managerial remuneration in respect of the above personnel

7. ‘Excise duty’ on sales has been deducted from gross sales on the face of profi t and loss account. ‘Increase/ (decrease) in excise duty on fi nished goods’ has been shown under the head ‘Materials consumed’ in schedule 10.

8. In terms of shares buy back scheme approved by the shareholders of the Company on December 28, 2008 to buy back upto 1408969 equity shares of its own fully paid up equity shares of Rs.10 each from its existing shareholders on a proportionate basis through ‘Tender Offer Route’ at a fi xed price of Rs.691.68 (including premium of Rs. 681.68) per share from March 12, 2009 to March 26, 2009, the Company has completed the buy back of 1408969 equity shares at the mentioned price on April 16, 2009.

9. The figures for the current year are for a period of twelve months from January 1, 2009 to December 31, 2009, whereas the corresponding previous period fi gures are for a period of nine months from April 1, 2008 to December 31, 2008. Further, the previous period fi gures included fi gures upto June 30, 2008 of CV Business which was transferred under a slump sale (refer note 2 above). As such, corresponding fi gures for the previous period are not comparable with those of current year.

10. a) Figures in brackets represent previous year’s figures.

b) Previous year’s figures have been recast/regrouped where necessary.

11. Schedule 1 to 12 and the statement of additional information form an integral part of the accounts.