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Notes to Accounts of Elecon Engineering Company Ltd.

Mar 31, 2014

1. BASIS OF PREPARATION

The Company maintains its accounts on accrual basis following the historical cost convention in accordance with generally accepted accounting principles ["GAAP"] except for the revaluation of certain fixed assets, in compliance with the provisions of the Companies Act, 1956 and the Accounting Standards as specified in the Companies (Accounting Standards) Rules, 2006, prescribed by the Central Government. However, certain escalation and other claims, which are not ascertainable/acknowledged by customers, are not taken into account.

The preparation of financial statements in conformity with GAAP requires that the management of the Company makes estimates and assumptions that affect the reported amounts of income and expenses of the periods, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as of the date of the financial statements. Examples of such estimates include the useful life of tangible and intangible fixed assets, provision for doubtful debts/advances, future obligations in respect of retirement benefit plans, etc. Difference, if any, between the actual results and estimates is recognized in the periods in which the results are known.

2. CONTIGENT LIABILITIES AND COMMITMENTS (to the extent not provided for) (Rs. in Lacs)

As at As at 31st March, 2014 31st March, 2013

(a) Contingent Liabilities:

Claims against the Company not acknowledged as debt

(i) Disputed Excise Duty & Service Tax against Demand Notices received 329.83 407.97

(ii) Disputed Income Tax Demand-Disputed by Company 333.44 638.26

(iii) Disputed Income Tax Demand-Disputed by Income Tax Authorities 320.10 15.99

(iv) Sales Bills Discounted under LC with Banks 283.55 1,209.26

(v) NexGen Energy Partners, LLC of USA has fled a case bearing no. 2011 Unascer -tained Unascer -tained

CV 0066, against Reflecting Blue Technologies (RBT) of USA and the Company, in the court of Ohio, USA on account of non performing of Wind Mill supplied through Reflecting Blue Technologies (RBT). The matter is pending in the court of Ohio, USA and amount of claim is unascertainable.

(vi) The Company has provided Corporate Guarantee to Bank of Baroda, 24,134.26 21,322.41 Dubai to the tune of GBP 7,216,000 and US$ 282,99,876 as a security for repayment of Financial facility availed by Elecon Transmission International Limited, Mauritius, a wholly owned subsidiary of the Company.

(vii) The Company has received assessment order for the year 2008-09 under the 90.93 90.93 Central Sales (Gujarat) Tax Act with a demand of Rs.90.93 Lacs. The Company has deposited Rs. 90.93 Lacs and the Company has preferred to go for appeal against the said order.

(viii) The Company has received assessment order for the year 2009-10 under the 109.17 - central sales (Gujarat) act with a demand of Rs. 293.54 Lacs. The Company has deposited Rs. 184.37 Lacs and Company has preferred to go for appeal against this order. However Company has not provided for the differential amount.

(ix) The Company has provided Corporate Guarantee to SBI, Consortium 90,000.00 - to the tune of Rs. 90,000.00 Lacs as a security for repayment of Financial facilities availed by Elecon EPC Projects Ltd., a subsidiary of the Company.

Guarantees

(i) Guarantees issued by Company''s Bankers 5,241.76 7,321.96

(ii) Corporate Guarantee provided to Swedish Pension Authority to the tune of 1,380.00 1,246.91 SEK 15.00 Million as a security, in replacement of earlier guarantee given by erstwhile owner, for the purchase of pension insurances relating to the pension commitments on behalf of AB Benzlers Sweden, step-down subsidiary of Elecon Transmission International Limited, Mauritius, a Wholly -owned Subsidiary of the Company.

(b) Commitments:

(i) Estimated amount of contracts remaining to be executed on capital account 1,436.57 - and not provided for

(ii) Liability for Export Obligation under Export Promotion Credit Guarantee 7,556.95 9,239.51

a. The rate of escalation in Salary (P.A.) considered in actuarial valuation is worked out after taking into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market. Mortality rates are obtained from the relevant data of Life Insurance Corporation of India.

b. The liability for the gratuity Rs. 176.81 Lacs (Previous year Rs. 168.27 Lacs). as shown in the balance sheet is after adjusting the Fair value of plan assets (Invested with LIC/SBI) as at March 31, 2014 of Rs. 448.72 Lacs (Previous year Rs. 717.07 Lacs).

ii) Liability in respect of Superannuation benefits extended to eligible employees is contributed by the Company to Life Insurance Corporation of India against a Master Policy @ 15% of the basic Salary of all the eligible employees subject to Maximum of Rs. 1.00 Lac. The Company is providing for the outstanding Liability amount allocable to the broken period beyond Annual Renewal date of the Scheme.

iii) The Company''s contributions paid/payable for the year to Provident Fund is charged to the Statement of Profit and Loss for the year of Rs. 202.63 Lacs (Previous year Rs. 152.78 Lacs).

3. SEGMENT INFORMATION

a) W.e.f. 1st April, 2012, after giving effect of the Scheme, the Company operates in a solitary business segment i.e. "Transmission Equipment". AS 17 requires Segment information to be prepared on the basis of Consolidated Financial Statements. Accordingly, segment information is disclosed in Consolidated Financial Statements.

4. RELATED PARTY TRANSACTIONS

Related Party Disclosures as required by Accounting Standard (AS) 18 are given below:

A) Name of the related parties and nature of relationships :

a) Subsidiary Company

(i) Elecon EPC Projects Limited

(ii) Elecon Transmission International Limited, Mauritius

(iii) Elecon Singapore Pte. Limited

(iv) Elecon Middle East FZCO

b) Step Down Subsidiaries

(i) Benzlers Systems AB, Sweden

(ii) Radicon Transmission UK Limited, U.K.

(iii) AB Benzlers, Sweden

(iv) Elecon USA Transmission Limited, USA

(v) Benzlers Transmission A.S., Denmark

(vi) Benzlers Antriebstechnik GmbH, Germany

(vii) Benzlers TBA B.V., Netherlands

(viii) Benzlers Antriebstechnik Gesmbh, Austria

(ix) Oy Benzlers AB, Finland

(x) Benzlers SDN BDH Malaysia

(xi) Benzlers Italia s.r.l.

c) Associates and Joint Ventures

(i) Eimco Elecon (India) Limited (Joint Venture)

(ii) Elecon Australia Pty. Limited (Associate)

(iii) Elecon Africa Pty. Limited (Associate)

(iv) Elecon Engineering (Suzhou) Co. Ltd., China (Associate)

(v) Elecon Peripherals Limited (Associate)

d) Individual having control/signification fence

(i) Shri Prayasvin B. Patel

e) key Management Personnel

(i) Shri Prayasvin B. Patel

(ii) Shri Prashant C. Amin

f) Enterprises over which (d) or (e) above have significant influence

(i) Bipra Investments & Trusts Private Limited

(ii) Devkishan Investments Private Limited

(iii) K. B. Investments Private Limited

(iv) Elecon Information Technology Limited

(v) Emtici Engineering Limited

(vi) Prayas Engineering Limited

(vii) Specialty Wood Pack Private Limited

(viii) Power Build Limited

(ix) Kirloskar Power Build Gears Limited

(x) Akaaish Mechatronics Limited

(xi) Madhubhan Prayas Resorts Limited

(xii) Wizard Fincap Limited

(xiii) Eimco Elecon Electricals Limited

(xiv) Excel EPC Projects Private Limited

5. DISCLOSURES SPECIFIED BY THE MSMED ACT

The company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence, disclosure relating to amounts unpaid as at the year end together with interest paid/payable under this Act could not been given.

6. The Ministry of Corporate Affairs, Government of India, vide General Circular No. 2 and 3 dated 8th February 2011 and 21st February 2011 respectively has granted a general exemption from compliance with section 212 of the Companies Act, 1956, subject to fulfilment of conditions stipulated in the circular. The Company has satisfied the conditions stipulated in the circular and hence is entitled to the exemption. Necessary information relating to the subsidiaries has been included in the Consolidated Financial Statements.

7. PROPOSED DIVIDEND

The Board of Directors have proposed equity dividend of Rs. 1/- (Previous year Rs. 1/-) per equity share of Rs. 2/- each.

The aggregate amount of equity dividend proposed to be distributed is Rs. 1,187.27 Lacs (Previous year Rs. 1,274.50 Lacs) Including Dividend

Distribution Tax of Rs. 97.91 Lacs (Previous year Rs. 185.14 Lacs)

8. Figures of previous year are regrouped and recast wherever necessary.

9. Note 1 to 40 form an integral part of the financial statements.


Mar 31, 2013

1. BASIS OF PREPARATION

The Company maintains its accounts on accrual basis following the historical cost convention in accordance with generally accepted accounting principles [''GAAP''] except for the revaluation of certain fxed assets, in compliance with the provisions of the Companies Act, 1956 and the Accounting Standards as specifed in the Companies (Accounting Standards) Rules, 2006, prescribed by the Central Government. However, certain escalation and other claims, which are not ascertainable/acknowledged by customers, are not taken into account.

The preparation of fnancial statements in conformity with GAAP requires that the management of the Company makes estimates and assumptions that afect the reported amounts of income and expenses of the periods, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as of the date of the fnancial statements. Examples of such estimates include the useful life of tangible and intangible fxed assets, provision for doubtful debts/ advances, future obligations in respect of retirement beneft plans, etc. Diference, if any, between the actual results and estimates is recognized in the periods in which the results are known.

2 Scheme of Arrangement

As per Order dated 21st December, 2012, the Hon''ble High Court of Gujarat has approved the Scheme of Arrangement ("the Scheme") between the Company, Prayas Engineering Ltd. (PEL) and Emtici Engineering Ltd. (EMTICI), Elecon EPC Projects Ltd. and their respective Shareholders and Credito''

The Appointed Date of the Scheme was 1st April, 2012.

The Scheme became efective from 1st April, 2013. This fnancial statements have been prepared after giving efect of the Scheme from its Appointed Date i.e. 1st April, 2012.

Scheme of Arrangement included the follolwing : i) Slump Sale of MHE Undertaking :

Pursuant to "the Scheme", MHE Business undertaking of the Company comprising the business activity of manufacture of Material Handling Equipment along with all related assets (excluding Land, Building, Investment)., liabilities, employees has been transferred by way of slump sale to Elecon EPC Projects Ltd. for consideration of Rs. 12,732.44 Lacs.

The exceptional item of Rs. 2,668.29 Lacs shown in Statement of Proft & Loss represents the Loss on account of this arrangement which has been computed as under :-

iii) Merger of EMTICI Gear Undertaking into Company:

Pursuant to "the Scheme", EMTICI Gear Undertaking (Marketing & Servicing business related to Company & EMTICI Gear business) along with all related assets (excluding Land & Building), liabilities was merged into the Company on going concern basis.

(a) Pursuant to the said Scheme the Company on 12th April, 2013 has allotted 39 (Thirty nine) Equity Shares of the face value of Rs. 2/- each against 4(Four) Equity Shares having face value of Rs. 10/- each held by shareholders of Emtici Engineering Ltd.

iv) In view of the above Scheme of Arrangement, the current year fgures are not comparable with previous year fgures.

3. SEGMENT INFORMATION

a) W.e.f. 1st April, 2012, after giving efect of the Scheme, the Company operates in a solitary business segment i.e. "Transmission Equipment". AS 17 requires Segment information to be prepared on the basis of Consolidated Financial Statements. Accordingly, segment information is disclosed in Consolidated Financial Statements.

4. RELATED PARTY TRANSACTIONS

Related Party Disclosures as required by Accounting Standard (AS) 18 are given below:

A) Name of the related parties and nature of relationships :

a) Subsidiary Company

(i) Elecon EPC Projects Limited (1st April, 2012) (ii) Elecon Transmission International Limited, Mauritius (iii) Elecon Singapore Pte. Limited (1st April, 2012) (iv) Elecon Middle East FZCO (1st April, 2012)

b) Step Down Subsidiaries

(i) Benzlers Systems AB, Sweden

(ii) Radicon Transmission UK Limited, U.K.

(iii) AB Benzlers, Sweden

(iv) Elecon USA Transmission Limited, USA

(v) Benzlers Transmission A.S., Denmark

(vi) Benzlers Antriebstechnik GmbH, Germany

(vii) Benzlers TBA B.V., Netherlands

(viii) Benzlers Antriebstechnik Gesmbh, Austria

(ix) OY Benzlers AB, Finland

(x) Benzlers SDN BDH Malaysia

(xi) Benzlers Italia s.r.l.

c) Associates and Joint Ventures

(i) Eimco Elecon (India) Limited (Joint Venture)

(ii) Elecon Australia Pty. Limited (Associate)

(iii) Elecon Africa Pty. Limited (Associate)

(iv) Elecon Engineering (Suzhou) Co. Ltd., China (Associate)

(v) Elecon Peripherals Limited (Associate)

d) Individual having control/ signifcant infuence

(i) Shri Prayasvin B. Patel

e) key management Personnel

(i) Shri Prayasvin B. Patel (ii) Shri Prashant C. Amin

f) Enterprises over which (d) or (e) above have signifcant infuence

(i) Bipra Investments & Trusts Private Limited

(ii) Devkishan Investments Private Limited

(iii) K. B. Investments Private Limited

(iv) Elecon Information Technology Limited

(v) Emtici Engineering Limited

(vi) Prayas Engineering Limited

(vii) Speciality Wood Pack Private Limited

(viii) Power Build Limited

(ix) Kirloskar Power Build Gears Limited

(x) Akaaish Mechatronics Limited

(xi) Madhuban Prayas Resorts Limited

(xii) Wizard Fincap Limited

(xiii) Eimco Elecon Electricals Limited

(xiv) Excel EPC Projects Private Limited

5. DISCLOSURES SPECIFIED BY THE MSMED ACT

The Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence, disclosure relating to amounts unpaid as at the year end together with interest paid/payable under this Act could not been given.

6. The Ministry of Corporate Afairs, Government of India, vide General Circular No. 2 and 3 dated 8th February 2011 and 21st February 2011 respectively has granted a general exemption from compliance with section 212 of the Companies Act, 1956, subject to fulfllment of conditions stipulated in the circular. The Company has satisfed the conditions stipulated in the circular and hence is entitled to the exemption. Necessary information relating to the subsidiaries has been included in the Consolidated Financial Statements.

7 PROPOSED DIVIDEND

The Board of Directors have proposed equity dividend of Rs. 1/- (Previous Year Rs. 1.80) per equity share of Rs. 2/- each. The aggregate amount of equity dividend proposed to be distributed is Rs. 1274.50 Lacs (Previous Year Rs. 1942.67 Lacs) Including Dividend Distribution Tax of Rs. 185.14 Lacs (Previous Year Rs. 271.16 Lacs).

8 In view of the Scheme of Arrangement as stated in Note 3, the current year fgures are not comparable with previous year fgures.

9 Note 1 to 41 form an integral part of the fnancial statements.


Mar 31, 2012

1. BASIS OF PREPARATION

The Company maintains its accounts on accrual basis following the historical cost convention in accordance with generally accepted accounting principles ["GAAP'] except for the revaluation of certain fixed assets, in compliance with the provisions of the Companies Act, 1956 and the Accounting Standards as specified in the Companies (Accounting Standards) Rules, 2006, prescribed by the Central Government. However, certain escalation and other claims, which are not ascertainable/acknowledged by customers, are not taken into account.

The preparation of financial statements in conformity with GAAP requires that the management of the Company makes estimates and assumptions that affect the reported amounts of income and expenses of the periods, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as of the date of the financial statements. Examples of such estimates include the useful life of tangible and intangible fixed assets, provision for doubtful debts/advances, future obligations in respect of retirement benefit plans, etc. Difference, if any, between the actual results and estimates is recognized in the periods in which the results are known.

(ii) Rights preferences and restrictions attached to equity shares :

The company has only one class of Equity Shares having a par value of Rs 2/- per share. Each shareholder is eligible for 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, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

(a) Nature of Securities

i) Term Loans [(a) above] obtained from Bank of Baroda, Axis Bank Ltd., ICICI Bank Ltd., Citi Bank N.A., Vijaya Bank, Inducing Bank Limited & DBS Bank Limited is secured by exclusive charge by way of Hypothecation on specific assets for which payments were made out of the term loan.

(ii) Corporate Loans [(b) above] granted by Consortium of Banks consisting of State Bank of India (As Lead Bank), Bank of Baroda, Exim Bank and Axis Bank Ltd. are secured by an equitable mortgage on the immovable properties and hypothecation of movable plant and machinery and assets of the Company's Materials Handling Equipment Division and Gear Division excluding certain assets specifically/ exclusively charged to other banks/ financial institutions but including the whole of the Company's Currents Assets, Inventories, Receivables and Book Debts ranking pari passu inter se in respect of working capital facilities and guarantees issued by them in favour of various clients of the Company.

(iii) Capital assets acquired on HP Loans from Banks [(c) above] are secured by exclusive charge on respective assets purchased through those loans.

(i) Nature of Securities {(a) Loans repayable on demand}

Working Capital Loans from banks (secured) granted by Consortium of Banks consisting of State Bank of India (As Lead Bank), Bank of Baroda, Exim Bank, HDFC Bank Ltd., IDBI Bank Ltd., Axis Bank Limited and Standard Chartered Bank are secured by an equitable mortgage on the immovable properties and hypothecation of movable plant and machinery and assets of the Company's Materials Handling Equipment Division and Gear Division excluding certain assets specifically/ exclusively charged to other banks/ financial institutions but including the whole of the Company's Currents Assets, Inventories, Receivables and Book Debts ranking pari passu inter se in respect of working capital facilities and guarantees issued by them in favour of various clients of the Company.

2. CONTIGENT LIABILITIES AND COMMITMENTS (Rs.in Lacs)

(to the extent not provided for)

As at As at

31 st March 2012 31st March 2011

(a) Contingent Liabilities:

Claims against the Company not acknowledged as debt

(i) Disputed Excise Duty & Service Tax against Demand Notices received 233.20 269.38

(ii) Disputed Sales Tax/Works Contract Tax 347.55 347.55

(iii) Disputed Income Tax Demand-Disputed by Company 928.54 1,079.65

(iv) Disputed Income Tax Demand- Disputed by Income Tax Authorities 14.89 22.47

(v) Service Tax disputed & paid under Protest 191.92 -

(vi) Sales Bills Discounted under LC with Banks 6,151.32 3,713.74

(vii) NexGen Energy Partners, LLC of USA has filed a case bearing no. 2011 Unascertained Unascertained CV 0066, against Reflecting Blue Technologies (RBT) of USA and the company, in the court of Ohio, USA on account of non performing of Wind Mill supplied through Relfec ting Blue Technologies (RBT). The matter is pending in the court of Ohio, USA and amount of claim is unascertainable.

(viii) The Company has provided Corporate Guarantee to Bank of Baroda, 20,280.74 - Dubai to the tune of GBP 7,216,000 and US$ 282,99,876 as a security for repayment of financial facility availed by Elecon Transmission International Limited, Mauritius, a Wholly-Owned Subsidiary of the Company.

a. The rate of escalation in Salary (p.a.) considered in actuarial valuation is worked out after taking into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market. Mortality rates are obtained from the relevant data of Life Insurance Corporation of India.

b. The liability for the gratuity Rs 396.60 Lacs (Previous Year Rs 516.20 Lacs) as shown in the balance sheet is after adjusting the Fair value of plan assets (Invested with LIC/SBI) as at March 31, 2012 of Rs 756.37 Lacs (Previous Year Rs 590.80 Lacs).

ii) Liability in respect of Superannuation benefits extended to eligible employees is contributed by the Company to Life Insurance Corporation of India against a Master Policy @ 15% of the basic Salary of all the eligible employees subject to Maximum of Rs 1.00 Lac. The Company is providing for the outstanding Liability amount allocable to the broken period beyond Annual Renewal date of the Scheme.

iii) The Company's contributions paid/payable for the year to Provident Fund is charged to the Statement of Profit and Loss for the year of Rs 157.80 Lacs (Previous Year Rs 126.37 Lacs).

a) Since, the figures of Alternate Energy Division (AED) are not reportable segment, as per the requirements of AS - 17, they are not shown separately.

b) The Company has disclosed Business Segment as primary segment.

c) Segments have been identified and reported taking into account the nature of products and services, the differing risks and returns, the organization structure and the internal financial reporting systems.

d) The Segment Revenue, Results, Assets and Liability include the respective amounts identifiable to each of the segment and amounts allocated on a reasonable basis.

e) Inter Segment Transfer Pricing Policy - the Gear supplied to Material Handling Equipment Division is based on cost.

3. RELATED PARTY TRANSACTIONS

Related Party Disclosures as required by Accounting Standard (AS) 18 are given below: A) Name of the related parties and nature of relationships :

a) Subsidiary Company

(i) Elecon Transmission International Limited, Mauritius

b) Step Down Subsidiaries

(i) Benzlers Systems AB, Sweden

(ii) Radicon Transmission UK Limited, U.K.

(iii) AB Benzlers, Sweden

(iv) Elecon USA Transmission Limited, USA

(v) Benzlers Transmission A.S., Denmark

(vi) Benzlers Antriebstechnik GmbH, Germany

(vii) Benzlers TBA B.V., Netherlands

(viii) Benzlers Antriebstechnik Gesmbh, Austria

(ix) OY Benzlers AB, Finland

(x) Benzlers Malaysia

(xi) Benzlers Italia s.r.l.

c) Associates and Joint Ventures

(i) Eimco Elecon (India) Limited

(ii) Elecon Australia Pty. Limited

(iii) Elecon Africa Pty. Limited

(iv) Elecon Singapore Pte. Limited

(v) Elecon Middle East FZCO

(vi) Elecon Engineering (Suzhou) Co. Ltd., China

(vii) Elecon Peripharals Limited

d) Individual having control/ significant influence

(i) Shri Prayasvin B. Patel

e) Key management Personnel

(i) Shri Prayasvin B. Patel

(ii) Shri Prashant C. Amin

f) Enterprises over which (d) or (e) above have significant influence

(i) Bipra Investments & Trusts Private Limited

(ii) Devkishan Investment Private Limited

(iii) K. B. Investments Private Limited

(iv) Elecon Information Technology Limited

(v) Emtici Engineering Limited

(vi) Prayas Engineering Limited

(vii) Specialty Wood Pack Private Limited

(viii) Power Build Limited

(ix) Kirloskar Power Build Gears Limited

(x) Akaaish Mechatronics Limited

(xi) Madhuban Prayas Resorts Limited

(xii) Narmada Travels Limited

(xiii) Wizard Fincap Limited

4. DISCLOSURES SPECIFIED BY THE MSMED ACT

The Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence, disclosure relating to amounts unpaid as at the year end together with interest paid/payable under this Act could not been given.

5. PROPOSED DIVIDEND

The Board of Directors have proposed equity dividend of Rs 1.80 (Previous Year Rs 1.80) per equity share of Rs 2.00 each.

The aggregate amount of equity dividend proposed to be distributed is 1942.67 (Previous Year Rs 1942.67) Including Dividend distribution tax of Rs 271.16 (Previous Year Rs 271.16 Lacs).

6. The Ministry of Corporate Affairs, Government of India, vide General Circular No. 2 and 3 dated 8th February 2011 and 21st February 2011 respectively has granted a general exemption from compliance with Section 212 of the Companies Act, 1956, subject to fulfillment of conditions stipulated in the circular. The Company has satisfied the conditions stipulated in the circular and hence is entitled to the exemption. Necessary information relating to the subsidiaries has been included in the Consolidated Financial Statements.

7. PREVIOUS YEAR FIGURES

During the year ended 31st March, 2012, the Revised Schedule VI notified under The Companies Act, 1956 has become applicable to the Company for preparation and presentation of its financial statement. The adoption of Revised Schedule VI does not impact recombination and measurement principles followed for preparation of financial statements. However, it has significant impact on presentation and disclosures made in the financial statement. The Company has also reclassified the previous year's figures in accordance with the requirements applicable in the current year. In view of this reclassification, certain figures of current year are not strictly comparable with those of the previous year.

8. Note 1 to 40 form an integral part of the financial statements.


Mar 31, 2011

1. The loans referred to in Schedule 3 are secured as under

i) Fund Based and Non Fund Based Working Capital Facilities [3A(a) & (b)(ii)] granted by Consortium of Banks consisting of State Bank of India (As Lead Bank), Bank of Baroda, Exim Bank, Axis Bank Ltd., HDFC Bank Ltd., IDB1 Bank Ltd.,

and Standard Chartered Bank are secured by an equitable mortgage on the immovable properties and hypothecation of movable plant and machinery and assets of the Company's Materials Handling Equipment Division and Gear Division excluding certain assets specifically/ exclusively charged to other barks/ financial institutions but including the whole of the Company's Currents Assets, inventories, receivables and book debts ranking pari passu inter se in respect of working capital facilities and guarantees issued by them in favour of various clients of the Company. Standard Chartered Bank was inducted in consortium on 28-09-2010 and documentation was made on 30-04-2011.

ii) Term Loans (3A(b)(i)] obtained from Bank of Baroda, Exim Bank, Axis Bank Ltd., 1C1C1 Bank Ltd., Citi Bank N.A. and Vijaya Bank is secured by exclusive charge by way of Hypothecation on specific assets for which payments were made out of the term loan.

iii) Capital Assets acquired on HP Loans from Banks [3B(a)| are secured by exclusive charge on respective assets purchase through those loans.

2. Contingnet Liabilities

No provision has been made in the accounts in respect of the following:

a) Disputed Excise Duty Rs. 269.38 Lacs (Previous Year Rs. 159.36 Lacs), against demand notices received so far.

b) Disputed Sales Tax/ Works Contract Tax Rs. 347.55 Lacs (Previous Year Rs. 347.55 Lacs).

c) In respect of disputed Income Tax demands:

(i) Disputed by CompanyRs. 1079.65 Lacs (Previous Year Rs. 1254.61 Lacs)

(ii) Disputed by Income Tax Authorities Rs. 22.47 Lacs (Previous Year Rs. 52.62 Lacs)

d) Guarantees issued by the Company's Bankers Rs. 45,082.46 Lacs (Previous Year Rs. 42,854.59 Lacs)

e) Liability for export obligation under Export Promotion Credit Guarantee Rs. 11,544.10 Lacs (Previous Year Rs. 11,759.25 Lacs).

f) Sales Bills discounted under LC with Banks Rs. 3,713.74 Lacs (Previous Year Rs. 2,961.27 Lacs).

g) Corporate Guarantees given on account of advance received from customers Rs. 257.06 Lacs (Previous Year Rs. 641.72 Lacs) and on account of performance Rs. 357.74 Lacs (Previous Year Rs. 573.59 Lacs)

h) Unascertained amount in respect of a suit filed against the Company by a foreign collaborator for royalty and other allied matters.

i) NexGen Energy Partners, LLC of USA has filed a case bearing no. 2011 CV 0066, against Reflecting blue Technologies (RBT) of USA and the Company, in the court of Ohio, USA on account of non performing of Wind Mill supplied through Relfecting blue Technologies (RBT). The Company is in the process of filing the reply suitably in consultation with the lawyer. Since the matter is in preliminary stage, amount of claim is unascertainable.

3. The Company has provided Corporate Guarantee to Swedish Pension Authority to the tune of SEK 15.00 Million (Rs. 1,057.73 Lacs) as a security, in replacement of earlier guarantee given by erstwhile owner, for the purchase of pension insurances relating to the pension commitments on behalf of AB Benzlers Sweden, a step-down subsidiary of Elecon Transmission International Limited, Mauritius, a Wholly-owned Subsidiary of the Company.

4. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 11,897.12 Lacs (Previous Year Rs. 2,275.82 Lacs).

5. Technical Know how fees paid to Overseas Collaborators in pursuance of different Technology Know How Agreements during earlier years including current year has been treated as Miscellaneous Expenditure, and to be written off over a period of 6 years. In this account there was an opening balance ofRs. 260.48 Lacs (Previous Year Rs. 168.88 Lacs). During the year Rs. 176.57 Lacs have been paid and have been treated as Deferred. Out of total Rs. 437.05 Lacs, Rs. 92.58 Lacs (Previous Year Rs. 66.15 Lacs) has been charged to Profit & Loss Account.

6. Profit on sale of investment shown under the head of other income in Profit & Loss Account includes an amount of Rs. 2,069.60 Lacs (Previous Year Rs. 1,595.81 Lacs) pertaining to profit on sale of long term investment.

7. Sundry Debtors includes retention money not due amounting to Rs. 15,738.40 Lacs retained by various customers against big turnkey contracts as per the terms of agreement, and are receivable after satisfactory completion of the respective contracts.

8. The Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosure relating to amounts unpaid as at the year end together with interest paid/payable under this Act could not been given.

9. a) The sales are shown net of VAT/CST amounting to Rs. 2,525.61 Lacs (Previous Year Rs. 2,062.54 Lacs).

b) The Sales figure includes Deemed Export Sales of ^ 7,900.67 Lacs (Previous Year Rs. 3,888.07 Lacs). The Gross Export Sales for the year is Rs. 5,578.45 Lacs (Previous Year Rs. 6,364.92 Lacs).

Notes

a. Since, the figures of Alternate Energy Division (AF.D) are not reportable segment, as per the requirements of AS - 17, they are not shown separately.

b. The Company has disclosed Business Segment as primary segment.

c. Segments have been identified and reported taking into account the nature of products and services, the differing risks and returns, the organization structure and the internal financial reporting systems.

d. The Segment Revenue, Results, Assets and Liability include the respective amounts identifiable to each of the segment and amounts allocated on a reasonable basis.

e. Inter Segment Transfer Pricing Policy - the Gear supplied to Material Handling Equipment Division is based on cost.

10. Deferred Taxation

Deferred Tax Assets and Liabilities are recognized as per Accounting Standard AS-22 on Accounting for Taxes on Income, issued by the Institute of Chartered Accountants of India.

11. Related Party Disclosure

Related Party Disclosure as required by AS-18, are given below:

i) Relationship:

a-1) Subsidiary of the Company:

- Elecon Transmission International Limited, Mauritius

a-2) Step down Subsidiaries

- David Brown Systems Sweden AB, Sweden

- Radicon Transmission UK Limited, U.K.

- AB Benzlers, Sweden

- Elecon USA Transmission Limited, USA

- Benzlers Transmission A.S., Denmark

- Benzlers Antriebstechnik GmbH, Germany

- Benzlers TBA B.V, Netherlands

- Benzlers Antriebstechnik Gesmbh, Austria

- OY Benzlers AB, Finland

- Benzlers Malaysia

b) Associates and Joint Ventures

- Ringspann Elecon (I) Limited

- Eimco Elecon (India) Limited

- DRA (India) Limited

- Elecon Australia Pty. Limited

- Elecon Africa Pty. Limited

- Elecon Singapore Pte. Limited

- Elecon Middle East FZCO

- Elecon Engineering (Suzhou) Co. Ltd., China

- Elecon Windfarm Developers (Motagunda-Vinzalpur) Limited

c) Individual having control / significant influence

- Shri Prayasvin B. Patel

d) Key Management Personnel

- Shri Prayasvin B. Patel

e) Enterprises over which (c) or (d) above have significant influence

- Bipra Investments & Trusts Private Limited

- Devkishan Investment Private Limited

- K. B. Investments Private Limited

- Elecon Information Technology Limited

- Emtici Engineering Limited

- Prayas Engineering Ltd.

- Speciality Wood Pack Private Limited

- Power Build Limited

- Kirloskar Power Build Gears Limited

- Akaaish Mechatronics Limited

- Madhuban Prayas Resorts Limited

- Narmada Travels Limited

- Wizard Fincap Limited

12. Figures of previous year are regrouped and recast wherever necessary.

13. Schedules 1 to 17 form an integral part of Balance Sheet and Profit & Loss Account.


Mar 31, 2010

1. The loans referred to in Schedule 3 are secured as under

i) Fund Based and Non Fund Based Working Capital Facilities [3A(a)] granted by Consortium of Banks consisting of State Bank of India (As Lead Bank), Bank of Baroda, Exim Bank, Axis Bank Ltd., Citi Bank N.A., HDFC Bank Ltd. and IDBI Bank Ltd. are secured by an equitable mortgage on the immovable properties and hypothecation of movable plant and machinery and assets of the Companys Materials Handling Equipment Division and Gear

Division excluding certain assets specifically/ exclusively charged to other banks/ financial institutions but including the whole of the Companys currents assets, inventories, receivables and book debts ranking pari passu inter se in respect of working capital facilities and guarantees issued by them in favour of various clients of the Company.

ii) Term Loans [3A(b)] obtained from State Bank of India, Bank of Baroda, Exim Bank, Axis Bank Ltd., ICICI Bank Ltd. & Citi Bank N.A. is secured by exclusive charge by way of hypothecation on specific assets for which payments were made out of the term loan.

iii) Capital assets acquired on HP Loans from Banks [3B(c)] are secured by exclusive charge on respective assets purchased through those loans.

2. Contingnet Liabilities

No provision has been made in the accounts in respect of the following:

a) Disputed Excise Duty Rs. 159.36 Lacs (Previous Year Rs. 229.70 Lacs), against demand notices received so far.

b) Disputed Sales Tax/ Works Contract Tax Rs. 347.55 Lacs (Previous Year Rs. 347.55 Lacs).

c) In respect of disputed Income Tax demands:

(i) Disputed by Company Rs. 1254.61 Lacs (Previous Year Rs. 87.67 Lacs) (ii) Disputed by Income Tax Authorities Rs. 52.62 Lacs (Previous Year NIL)

d) Guarantees issued by the Companys Bankers Rs. 42,854.59 Lacs (Previous Year Rs. 41,730.85 Lacs)

e) Liability for export obligation under Export Promotion Credit Guarantee Rs. 11,759.25 Lacs (Previous Year Rs. 12,985.21 Lacs).

f) Sales Bills discounted under LC with Banks Rs. 2,961.27 Lacs (Previous Year Rs. 2,435.66 Lacs).

g) Corporate Guarantees given on account of advance received from customers Rs. 4,747.54 Lacs (Previous Year Rs. 656.14 Lacs) and on account of performance Rs. 2,200.93 Lacs (Previous Year Rs. 2,342.83 Lacs).

h) Unascertained amount in respect of a suit filed against the Company by a foreign collaborator for royalty and other allied matters.

3. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 2,275.82 Lacs (Previous Year Rs. 7,225.70 Lacs).

4. Technical Know How fees paid to Overseas Collaborators in pursuance of different Technology Know How Agreements during earlier years including current year has been treated as Deferred Revenue Expenditure and to be written off over a period of 6 years. In this account there was an opening balance of Rs. 168.88 Lacs (Previous Year Rs. 97.12 Lacs). During the year Rs. 157.75 Lacs have been paid and have been treated as Deferred. Out of total Rs. 326.63 Lacs, Rs 66.15 Lacs (Previous Year Rs. 39.86 Lacs) has been charged to Profit & Loss Account.

5. Profit on sale of investments shown under the head of other income in Profit & Loss Account includes an amount of Rs. 1,595.81 Lacs pertaining to profit on sale of long term investments.

6. Sundry Debtors more than six months includes retention money amounting to Rs. 11,663.72 Lacs retained by various customers against big turnkey contracts as per the terms of agreement and are receivable after satisfactory completion of the respective contracts.

7. The Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosure relating to amounts unpaid as at the year end together with interest paid/payable under this Act could not been given.

8. The Company has received only a few Income Tax orders based on Supreme Court judgment going against the Company. However the aforesaid Income Tax orders are erroneous and incomplete. In view of above the Company has filed objections before the Income Tax authorities and has also preferred an appeal to Income*Tax department to issue fresh orders in place of above orders as advised by Company counsel with all information required as per law and for the full period covered in the aforesaid Supreme Court judgment. Therefore the exact liability on account of Income Tax could not be quantified and hence no provision in the books has been made.

The above figures do not include Service Tax of Rs. 2.24 Lacs (Previous Year Rs. 2.22 Lacs)

Over & above the aforesaid payments an amount of Rs. 3.31 Lacs (Previous Year Rs. 1.83 Lacs) has been paid to a firm in which one of the partners of auditors firm is interested.

9. a) The sales are shown net of Sales Tax amounting to Rs. 2,062.54 Lacs.

b) The sales figure includes Deemed Export Sales of Rs. 274.80 Lacs (Previous Year Rs. 527.93 Lacs). The Gross Export Sales for the year is Rs. 6,364.92 Lacs (Previous Year Rs. 4,064.98 Lacs).

Notes

a. Since, the figures of Alternate Energy Division (AED) are not reportable segment, as per the requirements of AS - 17, they are not shown separately.

b. The Company has disclosed Business Segment as primary segment.

c. Segments have been identified and reported taking into account the nature of products and services, the differing risks and returns, the organization structure and the internal financial reporting systems.

d. The Segment Revenue, Results, Assets and Liability include the respective amounts identifiable to each of the segment and amounts allocated on a reasonable basis.

e. Inter Segment Transfer Pricing Policy - the Gear supplied to Material Handling Equipment Division is based on cost.

10. Deferred Taxation

Deferred Tax Assets and Liabilities are recognized as per Accounting Standard AS-22 on Accounting for Taxes on Income, issued by the Institute of Chartered Accountants of India.

11. Related Party Disclosure

Related Party Disclosure as required by AS-18, are given below:

i) Relationship:

a) Subsidiary of the Company:

- NIL

b) Associates and Joint Ventures

- PWH Materials Handling Limited - Ringspann Elecon (India) Limited - Eimco Elecon (India) Limited - DRA (India) Limited

c) Individual having control/ significant influence

- Shri Prayasvin B. Patel

d) Key Management Personnel

- Shri Prayasvin B. Patel

e) Enterprises over which (c) or (d) above have significant influence

- Bipra Investments & Trusts Private Limited - Devkishan Investment Private Limited - K. B. Investments Private Limited - Elecon Information Technology Limited - Emtici Engineering Limited - Prayas Engineering Ltd. - Speciality Wood Pack Private Limited - Power Build Limited - Kirloskar Power Build Gears Limited - Akaaish Mechatronics Limited - Madhuban Prayas Resorts Limited - Narmada Travels Limited - Elecon Australia Pty. Limited - Elecon Africa Pty. Limited - Elecon Singapore Pte. Limited - Elecon Middle East FZCO - Elecon Engineering (Suzhou) Co. Ltd., China - Wizard FincaD Limited

12. Figures of previous year are regrouped and recast wherever necessary.

13. Schedules 1 to 17 form an integral part of Balance Sheet and Profit & Loss Account.

 
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