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Notes to Accounts of Escorts Ltd.

Mar 31, 2016

1. Corporate Information

"Escorts Limited is a public limited company domiciled in India and incorporated under the provisions of the Companies Act, 1956.The Company''s shares are listed with Bombay Stock Exchange Limited, National Stock Exchange of India Limited and Delhi Stock Exchange Limited. The Company is engaged in the business of manufacturing of agricultural tractors, engines for agricultural tractors, construction, earth moving and material handling equipments, round and flat tubes, heating elements, double acting hydraulic shock absorbers for railways coaches, center buffer couplers, automobile shock absorbers, telescopic front fork & Mcpherson struts, brake block, internal combustion engine and all types of brake used by railway''s. It also trades in oils & lubricants, implements, trailers, Tractors, compressor accessories and spares, construction, earth moving and material handling equipments and aero business."

2. Basis of Preparation

These financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis (except for certain plant & machinery, land and building which are carried at revalued amounts). GAAP comprises mandatory accounting standards as prescribed under Section 133 of the Companies Act, 2013 (''Act'') read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

3a. During the period 2004-05, Escorts Limited (EL) sold its entire shareholding in Escorts Heart Institute & Research Center Limited (EHIRCL) vide Share Purchase Agreement dated September 25, 2005. There were certain pending disputed Income Tax Demands of Rs.52.33 crores and interest thereon amounting to Rs.29.16 crores on EHIRCL and in terms of the agreement EL has undertaken to indemnify the purchaser to the extent of Rs.64.99 crores plus one-third of any amount in excess of Rs.64.99 crores, upon the final adjudication of the demand in law or finally settled in terms of the provisions of the said Share Purchase Agreement. For this purpose and in terms of said Share Purchase Agreement an amount of Rs.64.99 crores has been kept in an Escrow Account as fixed deposit, which after renewal (s) amounts to Rs.118.20 crores as on March 31, 2016. A provision of Rs.65.00 crores has been made on prudent basis to meet this liability, if and when the same arises.

NOTE 4: INVESTMENT IN JOINT VENTURE

During the year, the Company subscribed 60,00,000 (Previous Year - Nil) equity shares for total consideration of Rs.6.00 crores (Previous Year - Nil) in Adico Escorts Agri Equiments Private Limited, which is a jointly controlled entity with an 40:60 equity participation with Rajkot based Amul Group for manufacturing speciality tractors.

NOTE 5:

The Company has realigned the remaining useful life of its helicopter engine in accordance with the provisions of component accounting prescribed under Schedule II to the Companies Act, 2013. Consequently, the carrying value of the helicopter engine which has completed its useful life amounting to Rs.1.16 crores (net of deferred tax Rs.0.62 crores) has been adjusted to General Reserve.

NOTE 6:

During 2008 the Haryana State Government introduced Haryana Tax on Entry of Goods into Local Area Act, 2008 ("Entry Tax") by repealing the Haryana Local Area Development Tax Act, 2000 ("HLADT"). The said Act was held unconstitutional by the Hon''ble Punjab & Haryana High Court in their judgment dated October 1, 2008. The State Government of Haryana has preferred an appeal before the Hon''ble Supreme Court which is pending for adjudication before the Constitutional Bench. Based on the legal advice received by the Company no further provision on this account is considered necessary after March 31, 2008.

NOTE 7:

The Company has executed an agreement to sell for transfer of 25 acres of land at Plot No. 219, Sector 58, Balabhgarh, Haryana for a consideration of Rs.9.00 crores. The said transfer is subject to necessary approval from HUDA and accordingly the consideration amount of Rs.9.00 crores is being treated as advance.

NOTE 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 have not been given.

NOTE 9:

The Scheme of Compromise and Arrangement pending before the Delhi High Court to bail out the fixed deposit holders of Escorts Finance Limited stands disposed-off vide order dated March 4, 2011. On the interim directions of the said High Court, fixed deposit liability of Rs.130.32 crores has already been discharged by the Hardship Committee constituted under the directions of the said High Court for discharging the unclaimed deposit, balance 2,401,050 shares have been transferred to Escorts Benefit Trust (Trust) and the Hardship Committee has been dissolved. The Hon''ble High Court has confirmed that Escorts Limited has no outstanding liability towards payment to Escorts Finance Limited deposit holders.

NOTE 10:

Escorts Benefit & Welfare Trust (the Trust) holds 37,300,031 lacs equity share of Escorts Limited. Escorts Limited is the sole beneficiary of the Trust. The Dividend received by the Trust on Escorts Limited shares is recognised as income in "Surplus in the Statement of Profit & Loss" in Note No. 4 - Reserves & Surplus.

NOTE 11:

Accounting for Leases (AS-19). Details as per Annexure - II

NOTE 12:

Figures have been rounded off to the nearest lakh rupees. Previous period figures regrouped/rearranged wherever necessary


Mar 31, 2015

1. CORPORATE INFORMATION

Escorts Limited is a public limited company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The Company''s shares are listed with Bombay Stock Exchange Limited, National Stock Exchange of India Limited and Delhi Stock Exchange Limited. The Company is engaged in the business of manufacturing of agricultural tractors, engines for agricultural tractors, round and flat tubes, heating elements, double acting hydraulic shock absorbers for railways coaches, center buffer couplers, automobile shock absorbers, telescopic front fork and Mcpherson struts, brake block, internal combustion engine and all types of brake used by railway''s, construction, earth moving and material handling equipments.

It also trades in oils and lubricants, implements, trailers, tractors, compressor accessories and spares, construction, earth moving and material handling equipments and aero business.

2. BASIS OF PREPARATION

These financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis (except for certain plant and machinery, land and building which are carried at revalued amounts). GAAP comprises mandatory accounting standards as prescribed under Section 133 of the Companies Act, 2013(Act'') read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

3. Terms/Rights Attached to Equity Shares

The Company has only one class of shares, i.e., equity shares having a face value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. Dividend is paid in Indian Rupees. The final dividend @ Rs. 1.20 per share, recommended by the Board of Directors is subject to the approval of the shareholders at the ensuing Annual General Meeting. In the event of liquidation of the Company, equity shareholders will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

4. DISCLOSURE REQUIRED BY ACCOUNTING STANDARD (AS) 29 ''PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS'':

Contingent Liabilities*

Rs. Crores

As At As At 31.03.2015 31.03.2014

I) Estimated amounts of contracts remaining to be executed on capital account and not provided for 32.52 33.85

II) Claims not acknowledged as debts 0.55 0.55

III) There is a contingent liability of :

(a) Excise Duty/ Customs Duty/Service 15.94 15.04 Tax demands not acknowledged as liability

(b) ESI additional demand not 5.55 4.14 acknowledged as liability

(c) Sales Tax and other demands 35.94 10.90 not acknowledged as liability

(d) Pending legal cases - Personnel 4.33 3.79 - Others 89.58 89.91

(e) Demand raised by Faridabad Municipal Corporation for external development charges where the company channel finance program and bill discounting

(g) LC/Guarantees executed in 47.41 22.38 favour of others

(h) Demand raised by Income Tax Department, disputed by the Company and pending in appeal (Against demand the Company has deposited a sum of Rs. 0.28 crores (Previous period Rs. 25.89 crores) under protest) 0.81 136.94

(i) Eiability towards surety bond in favour of Governor of Haryana for sales tax registration under VAT 4.46 3.50

* The amounts indicated as contingent liability or claims against the Company only reflect the basic value. Interest, penalty if any or legal costs, being indeterminable are not considered.

5. During the period 2004-05, Escorts Limited (EL) sold its entire shareholding in Escorts Heart Institute and Research Center Limited (EHIRCL) vide Share Purchase Agreement dated September 25, 2005. There were certain pending disputed Income Tax Demands of Rs. 52.33 crores and interest thereon amounting to Rs. 29.16 crores on EHIRCL and in terms of the agreement EL has undertaken to indemnify the purchaser to the extent of Rs. 64.99 crores plus one-third of any amount in excess of Rs. 64.99 crores, upon the final adjudication of the demand in law or finally settled in terms of the provisions of the said Share Purchase Agreement. For this purpose and in terms of said Share Purchase Agreement an amount of Rs. 64.99 crores has been kept in an Escrow Account as fixed deposit, which after renewal (s) amounts to Rs. 109.57 crores as on March 31, 2015. A provision of Rs. 65.00 crores has been made on prudent basis to meet this liability, if and when the same arises.

(ii) Nature of Provision:

Product Warranties: The Company gives warranties on certain products and undertakes to repair or replace them if these fail to perform satisfactorily during the free warranty period. Such provision represents the amount of expected cost of meeting the obligations of such rectification/replacement. The timing of the outflows is expected to be within a period of one year.

6. The Company has revised its policy of providing depreciation on fixed assets effective April 1, 2014. Depreciation is now provided on a straight line basis for all assets as against the policy of providing on written down value basis for some assets and straight line basis for others. As a result of these changes, the differential depreciation effect relating to the period prior to April 1, 2014 has been included in ''Exceptional Item'' in the statement of profit and loss.

Had the Company continued to use the earlier methods of depreciation, the profit after tax for the current year would have been lower by the like amount.

Further the Company has also realigned the remaining useful life of its fixed assets in accordance with the provisions prescribed under Schedule II to the Companies Act, 2013. Consequently, the carrying value of those assets which have completed their useful life in accordance with the life prescribed under Schedule II to the Act, as on April 1, 2014 amounting to Rs. 94.48 crores (net after deferred tax Rs. 21.75 Crores) has been adjusted to the retained earnings and in case of the other assets the carrying value is being depreciated over the revised remaining useful life.

7. During 2008 the Haryana State Government introduced Haryana Tax on Entry of Goods into Local Area Act, 2008 ("Entry Tax") by repealing the Haryana Local Area Development Tax Act, 2000 ("HLADT"). The said Act was held unconstitutional by the Hon''ble Punjab and Haryana High Court in their judgment dated October 1, 2008. The State Government of Haryana has preferred an appeal before the Hon''ble Supreme Court which is pending for adjudication before the Constitutional Bench. Based on the legal advice received by the Company no further provision on this account is considered necessary after March 31, 2008.

8. The Company has executed an agreement to sell for transfer of 25 acres of land at Plot No. 219, Sector 58, Balabhgarh, Haryana for a consideration of Rs. 9.00 crores . The said transfer is subject to necessary approval from HUDA and accordingly the consideration amount of Rs. 9.00 crores is being treated as advance.

9. 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 have not been given.

10. The Scheme of Compromise and Arrangement pending before the Delhi High Court to bail out the fixed deposit holders of Escorts Finance Limited stands disposed-off vide order dated March 4, 2011. On the interim directions of the said High Court, fixed deposit liability of Rs. 130.32 crores has already been discharged by the Hardship Committee constituted under the directions of the said High Court for discharging the unclaimed deposit, balance 2,401,050 shares have been transferred to Escorts Benefit Trust (Trust) and the Hardship Committee has been dissolved. The Hon''ble High Court has confirmed that Escorts Limited has no outstanding liability towards payment to Escorts Finance Limited deposit holders.

11. Escorts Benefit and Welfare Trust holds 37,300,031 equity share of Escorts Limited, the sole beneficiary of which is the company. The Dividend received by the Trust on these shares is recognised in the statement of profit and loss account in Notes No: 4 - Reserves and Surplus

12. RELATED PARTY DISCLOSURES (as identified and certified by the management)

Related party disclosures as required under Accounting Standard - 18 on "Related Party Disclosures" issued by the Institute of Chartered Accountants of India are given hereunder:

(i) Subsidiary Companies Domestic

Escorts Securities Limited Escorts Asset Management Limited EDDAL Credit Limited

Overseas

Beaver Creeks Holdings LLC, USA Farmtrac Tractors Europe Sp. Z.o.o, Poland Farmtrac North America LLC, USA (formerly Long Agri Business LLC, USA)

(ii) Joint Ventures and Associates

Hughes Communications India Limited

Escorts Motors Limited

Escorts Consumer Credit Limited

(iii) Key Management personnel and their relatives

Mr. Rajan Nanda Mrs. Ritu Nanda Mr. Nikhil Nanda Ms. Nitasha Nanda Mrs. Shweta Nanda

(iv) Others

Rimari India Private Limited

Tashaka India Private Limited AAA Portfolios Private Limited

Niky Tasha Energies Private Limited

Rimari IT Solutions Private Limited

Breeze Trading Private Limited Niky Tasha Electronics Limited

Escorts Investment Trust Limited Sun & Moon Travels (India) Private Limited

Sharak Healthcare Private Limited

Raksha TPA Private Limited

Ritu Nanda Insurance Service Private Limited

Sun & Moon Advisory Services Private Limited Big Apple Clothing Private Limited

Escolife IT Services Private Limited Academy of Management and Financial Planing Private Limited Escorts Employees Welfare Limited Escorts Benefit and Welfare Trust

Charak Ayurvedic Treatments Private Limited

Crystal Care Advisors Private Limited Momento Communications Private Limited

Rakshak Health Service Private Limited

Har Parshad And Company Private Limited Sietz Technologies India Private Limited Niky Tasha Communications Private Limited Escorts Skill Development

(v) Related Party Transactions - Refer Annexure - I

13. Accounting for Leases (AS-19). Details as per Annexure - II

14. Figures have been rounded off to the nearest lakh rupees. Previous period figures regrouped/rearranged wherever necessary.

15. The previous accounting period is for 18 months (from October 1,2012 to March 31,2014) and is not comparable with the current year.


Mar 31, 2014

NOTE 1 : THE OUTSTANDING DERIVATIVE INSTRUMENTS AS AT MARCH 31, 2014.

The Export Receivables of the Company as at period end have not been Hedged by Forward Contract (Previous Year Nil) The foreign currency exposure not hedged by a derivative instrument or otherwise as on March 31, 2014 are as follows:

NOTE 1 : DISCLOSURE REQUIRED BY ACCOUNTING STANDARD (AS) 29 ''PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS'':

1a Contingent Liabilities*

Rs Crores

As At As At 31.03.2014 30.09.2012

I) Estimated amounts of contracts remaining to be executed on capital account and not provided for 33.85 48.30

II) Claims not acknowledged as debts 0.55 0.55

III) There is a contingent liability of :

(a) Excise Duty/ Customs Duty /Service Tax demands not acknowledged as liability 15.04 12.66

(b) ESI additional demand not acknowledged as liability 4.14 4.14

(c) Sales Tax and other demands not acknowledged as liability 10.90 13.50

(d) Pending legal cases - Personnel 3.79 4.06

- Others 89.91 23.41

(e) Demand raised by Faridabad Municipal Corporation for external development charges where the Company is in litigation 2.38 2.38

f) Guarantees given to banks under channel finance program and billis counting 32.70 26.98

(g) LC/Guarantees executed in favour of others 22.38 19.54 (h) Demand raised by Income Tax Department, disputed by the Company and pending in appeal (Against demand the Company has deposited a sum of Rs25.89 crores (Previous year H25.89 crores) under protest) 136.94 136.94

(i) Liability towards surety bond in favour of Governor of Haryana for sales tax registration under VAT 3.50 3.50

*The amounts indicated as contingent liability or claims against the Company only reflect the basic value. Interest, penalty if any or legal costs, being indeterminable are not considered.

34b During the period 2004-05, Escorts Limited (EL) sold its entire shareholding in Escorts Heart Institute and Research Center Limited (EHIRCL) vide Share Purchase Agreement dated September 25, 2005. There were certain pending disputed Income Tax Demands of H52.33 crores and interest thereon amounting to H29.16 crores on EHIRCL and in terms of the agreement EL has undertaken to indemnify the purchaser to the extent of H64.99 crores plus one-third of any amount in excess of H64.99 crores, upon the final adjudication of the demand in law or finally settled in terms of the provisions of the said Share Purchase Agreement. For this purpose and in terms of said Share Purchase Agreement an amount of H64.99 crores has been kept in an Escrow Account as fixed deposit, which after renewal (s) amounts to H101.13 crores as on March 31, 2014. A provision of H65.00 crores has been made on prudent basis to meet this liability, if and when the same arises.

(ii) Nature of Provision:

Product Warranties :The Company gives warranties on certain products and undertakes to repair or replace them if these fail to perform satisfactorily during the free warranty period. Such provision represents the amount of expected cost of meeting the obligations of such rectification/replacement. The timing of the outflows is expected to be within a period of one year.

NOTE 2 :

The Company revalued its freehold land and buildings as on April 01, 2009 and amount added on revaluation is H672.72 crores, the revaluations was carried out by reputed independent valuer.

Note 3 :

During 2008 the Haryana State Government introduced Haryana Tax On Entry Of Goods InTo Local Areas Act, 2008 ("Entry Tax") by repealing the Haryana Local Area Development Tax Act, 2000 ("HLADT"). The said Act was held unconstitutional by the Hon''ble Punjab and Haryana High Court in their judgment dated October 01, 2008. The State Government of Haryana has preferred an appeal before the Hon''ble Supreme Court which is pending for adjudication before the Constitutional Bench. Based on the legal advice received by the Company no further provision on this account is considered necessary after March 31, 2008.

Note 4 :

The Company has executed an Agreement to Sell for transfer of 25 acres of land at Plot No. 219, Sector 58, Balabhgarh, Haryana for a consideration of H9.00 crores . The said transfer is subject to necessary approval from HUDA and accordingly the consideration amount of H9.00 crores is being treated as advance.

Note 5 :

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 period end together with interest paid / payable under this Act and as required by Schedule VI of Companies Act, 1956 have not been given.

Note 6 :

The Scheme of Compromise and Arrangement pending before the Delhi High Court to bail out the fixed deposit holders of Escorts Finance Limited stands disposed-off vide order dated March 04, 2011. On the interim directions of the said High Court, fixed deposit liability of H130.32 crores has already been discharged by the Hardship Committee constituted under the directions of the said High Court for discharging the unclaimed deposit, balance 24,01,050 shares have been transferred to Escorts Benefit Trust (Trust) and the Hardship Committee has been dissolved. The Trust shall, in due course and in terms of the directions of the High Court, discharge the unclaimed deposits. No further instructions have received from the Court during the period.

Note 7 :

Escorts Benefit and Welfare Trust holds 3,73,00,031 Lacs equity shares of Escorts Limited, the sole beneficiary of which is the Company. The Dividend received by the Trust on these shares is recognised in the Statement of Profit and Loss Account in Note No: 4 - Reserves and Surplus.

Note 8 : RELATED PARTY DISCLOSURES (as identified and certified by the management)

Related party disclosures as required under Accounting Standard - 18 on "Related Party Disclosures" issued by the Institute of Chartered Accountants of India are given hereunder:

(i) Subsidiary Companies

Domestic Overseas

Escorts Securities Limited Beaver Creeks Holdings LLC, USA

Escorts Asset Management Limited Farmtrac Tractors Europe Sp. Z.o.o, Poland

EDDAL Credit Limited Farmtrac North America LLC, USA (formerly Long Agri Business LLC, USA)

(ii) Joint Ventures and Associates

Hughes Communications India Limited Escorts Motors Limited

(iii) Key Management Personnel (whole-time directors) and their relatives Mr. Rajan Nanda (Chairman and Managing Director) Mr. Nikhil Nanda (Managing Director) Mrs. Ritu Nanda Mrs. Shweta Nanda Ms. Nitasha Nanda

(iv) Others

Har Parshad and Company Private Limited Big Apple Clothing Private Limited

Raksha TPA Private Limited Niky Tasha Communications Private Limited

Rimari India Private Limited Niky Tasha Energies Private Limited

Momento Communications Private Limited Sun and Moon Travels (India) Private Limited

AAA Portfolios Private Limited Sharak Health Care Private Limited(Previously named Raksha MedicarePrivate Limited)

(v) Related Party Transactions - Refer Annexure - I

Note 8

Accounting for Leases (AS-19). Details as per Annexure - II

Note 9

Figures have been rounded off to the nearest lakh rupees. Previous year figures regrouped/rearranged wherever necessary.

Note 10

The accounting year of the Company has been extended by six months, i.e. upto March 31, 2014, as approved by the board of directors in their meeting held on October 02, 2013 and by registrar of the Companies vide its letter dated October 07, 2013. Therefore, current accounting period is for 18 months (from October 01, 2012 to March 31, 2014) and is not comparable with the previous year.

Note:

1. Cash and cash equivalents include cash in hand, demand deposits with banks and short term highly liquid investments.

2. Previous years figures have been regrouped wherever necessary.

3. Figures in bracket shows cash outflow


Sep 30, 2012

1. Corporate Information

Escorts Limited is a public limited company domiciled in India and incorporated under the provisions of Companies Act, 1956. The Company''s shares are listed with Bombay Stock Exchange Limited, National Stock Exchange of India Limited and Delhi Stock Exchange Limited. The Company is engaged in the business of manufacturing of agricultural tractors, engines for agricultural tractors, round end flat tubes, heating elements, double acting hydraulic shock absorbers for railways coaches, center buffer couplers, automobile shock absorbers, telescopic front fork and Mcpherson struts, break block, internal combustion engine and all types of breaks used by railway''s, construction, earth moving and material handling equipments. It also trades in oils and lubricants, implements, trailers, compressor accessories and spares,construction, earth moving and material handling equipments and aero business.

2. Basis of Preparation

The financial statements of the Company have been prepared and presented under the historical cost convention (except for land, building and plant & machinery acquired before 1st April, 2003 which are carried at revalued amounts) on the accrual basis of accounting in accordance with generally accepted accounting principles in india (GAAP) and comply with the accounting standard notified under the Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956.

(a) Terms/Rights Attached to Equity Shares

The Company has only one class of share, i.e., equity shares having the face value of Rs. 10 per share. Each holder of equity share is entitled to one vote per share.

Dividend is paid in Indian Rupees. The dividend recomended by the Board of Directors is subject to the approval of the shareholders at the ensuing Annual General Meeting. In the event of liquidation of the Company, equity shareholders will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

In addition, the company has issued total 298,000 (Previous Year 298,000) Equity Share to employees (through Escorts Employees Benefit & Welfare Trust) on exercise of option granted under the Employee Stock Option Scheme 2006, wherein part consideration was received in form of emplyee service.

(b) Share Reserved for Issued Under option

For details of share reserved for issue under the Employee Stock Option Plan (ESOP) of the Company - (Refer Note 36).

Nature of Security

Cash Credit/Export Packing Credit and Working Capital Demand Loans from Banks are secured against First charge on current assets and second charge on movable fixed assets excluding assets specifically charges to the term landers and repayable on demand and carries interest @ 11-13% per annum.

3. The outstanding Derivative Instruments as at 30th September, 2012

The Export receivables of the Company as at year end have not been hedged by forward contract (Previous Year: Nil)

4. Disclosure required by Accounting Standard (AS) 29 ''Provisions, Contingent Liabilities and Contingent Assets'':

Rs. Crores

Year Ended Year Ended 30.09.2012 30.09.2011

a. Contingent Liabilities

I) Estimated amounts of contracts remaining to be executed on capital account and not provided for 48.30 61.91

II) * Claims not acknowledged as debts 0.55 0.51

III) There is a Contingent liability of:

* (a) Excise duty/ Customs duty demands not acknowledged as liability 12.66 8.98

* (b) ESI additional demand not acknowledged as liability 4.14 4.14

* (c) Sales Tax & Other demands not acknowledged as liability 13.50 6.73

* (d) Pending Legal Cases - Personnel 4.06 3.21

- Others 23.41 79.87

* (e) Demand raised by Faridabad Municipal Corporation for external 2.38 2.38 development charges where the Company is in litigation

(f) Guarantees given to banks under Channel Finance Program 26.98 28.18

(g) LC/Guarantees executed in favour of Others 19.54 9.59

(h) Demand raised by Income Tax Department, disputed by the Company and pending in appeal 111.05 130.52

(i) Liability towards Surety Bond in favour of Governor of Haryana for Sales Tax registration under VAT 3.50 -

* The amounts indicated as contingent liability or claims against the Company only reflect the basic value. Interest, penalty if any or legal costs, being indeterminable are not considered.

IV) During the period 2004-05, Escorts Limited (EL) sold its entire share holding in Escorts Heart Institute & Research Center Limited (EHIRCL) vide Sale Purchase Agreement dated 25th September, 2005. There were certain pending disputed Income Tax Demands of Rs. 52.33 crores and interest thereon amounting to Rs. 29.16 crores on EHIRCL and in terms of the agreement EL has undertaken to indemnify the purchaser to the extent of Rs. 65 crores plus one-third of any amount in excess of Rs. 65.00 crores, on final determination of such demands as a result of adjudication by assessment/appellate authorities. For this purpose and in terms of Share Purchase Agreement an amount of Rs. 64.99 crores has been kept in an Escrow Account as fixed deposit, which after renewal (s) amounts to Rs. 82.80 crores as on 30th September, 2012. A provision of Rs. 65 crores has been made on prudent basis to meet this liability, if and when the same arises.

(ii) Nature of provision:

Product Warranties: The Company gives warranties on certain products and undertakes to repair or replace them if these fail to perform satisfactorily during the free warranty period. Such provision represents the amount of expected cost of meeting the obligations of such rectification/replacement. The timing of the outflows is expected to be within a period of one year.

5. The Company revalued its freehold land and buildings as on 01st April, 2009 and amount added on revaluation is Rs. 672.72 crores, the revaluations was carried out by reputed independent valuer.

6. During 2008 the Haryana State Government introduced Haryana Tax on Entry of Goods into Local Area Act, 2008 ("Entry Tax") by repealing the Haryana Local Area Development Tax Act, 2000 ("HLADT"). The said Act was held unconstitutional by the Hon''ble Punjab & Haryana High Court in their judgment dated 1st October, 2008.

The State Government of Haryana has preferred an appeal before the Hon''ble Supreme Court which is pending for adjudication before the Constitutional Bench. Based on the legal advice received by the Company no further provision on this account is considered necessary.

7. The Company has executed an Agreement to Sell for transfer of 25 acres of land at Plot No. 219, Sector 58, Balabhgarh, Haryana for a consideration of Rs. 9.00 crores. The said transfer is subject to necessary approval from HUDA and accordingly the consideration amount of Rs. 9.00 crores is being treated as advance.

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 and as required by Schedule VI of Companies Act, 1956 have not been given.

9. Pursuant to the Scheme of Arrangement (Scheme) under Sections 391 to 394 which has been approved by the Hon''ble High Court of Punjab & Haryana vide its Order dated 17th September 2009, an amount of Rs. 369.79 crores on account of, receivables, fixed assets, inventories, loans & advances which is doubtful of recovery/ realization has been provided for/written off and adjusted through Business Reconstruction Reserve.

Had the Scheme not prescribed for the aforesaid accounting treatment as approved by the Hon''ble High Court, the balance sheet (including reserves & surplus) and the statement of profit and loss would have been impacted to that extent.

Further, the balance amount of Rs. 70.28 crores lying in Business Reconstruction Reserve has been transferred to General Reserve.

10. A Scheme of Arrangement and Amalgamation under Section 391 to 394 of the Companies Act, 1956 was approved by the shareholders and the unsecured creditors of Escorts Limited on 20th May, 2012 for the amalgamation of Escorts Construction Equipment Limited (''ECEL''), Escotrac Finance and Investments Private Limited (''Escotrac'') and Escorts Finance Investments and Leasing Private Limited (EFILL) (together ''Transferor Companies'') with Escorts Limited (''Escorts'' or Company'') (hereinafter referred to as ''the Scheme''), with effect from the Appointed Date of 1st October, 2011, The Scheme has been sanctioned by the Hon''ble High Court of Punjab and Haryana at Chandigarh vide its order dated 9th August, 2012.

Upon necessary filings with the respective Registrar of Companies by the Transferor Companies and Transferee Company, the Scheme has become effective on 12th October, 2012 and the effect thereof has been given in the financial statements from 1st October, 2011. Consequently in terms of the Scheme,

1. The entire business undertaking of the Transferor Companies including all assets and liabilities, as a going concern, stands transferred to and vested in the Company with effect from 1st October, 2011 being the merger appointed date.

2. The Transferor Companies which were engaged in the business of manufacture of construction equipment and investment activities have been dissolved without being wound up.

3. In consideration of the amalgamation, the Company has issued:

- 1,68,83,629 equity shares of Rs. 10 each aggregating to Rs. 16.88 crores in the ratio of 4 (four) fully paid up Equity Shares of the face value of Rs. 10/- each of the Company for every 27 (Twenty Seven) fully paid-up equity shares of Rs. 10/- each held in ECEL

- 44,444 equity shares of Rs. 10 each aggregating to Rs. 0.04 crores in the ratio of 4 (four) fully paid up Equity Shares of the face value of Rs. 10/- each of the Company for every 27 (Twenty Seven) fully paid up equity shares of Rs. 10/- each held in Escotrac

- 30,769 equity shares of Rs. 10 each aggregating to Rs. 0.03 crores in the ratio of 4 (four) fully paid up Equity Shares of the face value of Rs. 10/- each of the Company for every 39 (Thirty Nine) fully paid up equity shares of Rs. 10/- each held in EFILL

4. Pursuant to the above, the issued share capital of the Company increased from Rs. 105.62 crores to Rs. 122.58 crores. Further, pursuant to the Scheme, the authorized share capital of the Company stands enhanced to Rs. 1289 crores.

5. Further, equity investments held by Escotrac and by EFILL in the share capital of the Company and equity investment held by Escotrac and by EFILL in the share capital of Escorts Finance Limited, ultimately transferred to the Escorts Benefit and Welfare Trust. The beneficiary interest in the Escorts Benefit and Welfare Trust, has been accounted for as an Investment by the Company in the manner prescribed in the Scheme.

6. The amalgamation has been accounted for under the "Pooling of Interest Method" in accordance with Accounting Standard (AS) -14 on Accounting for Amalgamations. Accordingly, all the assets and liabilities of the Transferor Companies have been taken at their respective book values as appearing in the books of the Transferor Companies.

Further, as envisaged in the Scheme, all outstanding intercompany balances including inter-company investments (other than referred to in point 5 above) stands cancelled. Furthermore, pursuant to the scheme, Rs.97.40 crores, being the difference between the net assets of the transferor companies and the purchase consideration issued by the company is adjusted in reserves of the Company.

11. The Company had allotted 10,505,306 equity shares for an amount of Rs. 154.30 crores in the name of Members of Hardship Committee constituted by Hon''ble High Court of Delhi (High Court) pursuant to the Scheme of Arrangement and Compromise filed before it to Bail out FD holders of Escorts Finance Ltd. On the interim directions of the said High Court, fixed deposit liability of Rs. 130.32 crores has already been discharged by the Hardship Committee constituted under the directions of the said High Court. For discharging the remaining unclaimed deposit, 2,401,050 shares of Escorts Limited have been transferred to Escorts Benefit Trust (Trust) and the Hardship Committee has been dissolved.

(ii) Assets purchased/capitalised for Research & Development Centres (as certified by the management)*

- Tractors Rs. 7.97 crores (Previous Year Rs. 7.39 crores)

- Construction Equipment Rs. 1.80 crores *Doesn''t include capital advance/capital work-in-progress

(iii) Expenses on Research & Development as percentage to gross turnover is:

- Tractors 1.45% (Previous Year 1.03%)

- Construction Equipment 1.22%

12(a). Accounting for Leases (AS-19). Details as per Annexure - II

13. The current year figures have been reported as per revised Schedule VI notified under the Companies Act, 1956. The company has reclassified the previous year figures to confirm this year''s classification. Further pursuant to scheme of amalgamation and its effect on the financial statements, current year figures are not compairable with the figures of previous year.

Figures have been rounded off to the nearest lac rupees.


Sep 30, 2011

Contingent liability is disclosed in the case of

a) a present obligation arising from the past event, when it is not probable that an outflow of resources will be required to settle the obligation

b) a possible obligation, unless the probability of outflow of resources is remote. Contingent assets are neither recognised nor disclosed.

Provisions, Contingent Liabilities are reviewed at each Balance Sheet date.

1 The Outstanding Derivative Instruments as at 30th September, 2011

The Exports receivables of the Company as at year end have been hedged by forward contracts USD $ 1.92 Million (Previous year : USD $ 3 Million)

* The amounts indicated as contingent liability or claims against the Company only reflect the basic value. Interest, penalty if any or legal costs, being indeterminable are not considered. Iv) During the period 2004-05, Escorts Limited (EL) sold its entire share holding in Escorts Heart Institute & Research Center Limited (EHIRCL) vide Sale Purchase Agreement dated 25th September, 2005. There were certain pending disputed Income Tax Demands of Rs. 52.33 crores and interest thereon amounting to Rs. 29.16 crores on EHIRCL and in terms of the agreement EL has undertaken to indemnify the purchaser to the extent of Rs. 65 crores plus one-third of any amount in excess of Rs. 65.00 crores, in case the appeal is decided against EHIRCL. In view of the above, in terms of Share Purchase Agreement an amount of Rs. 64.99 crores has been kept in an Escrow Account as fixed deposit, which after renewal amounts to Rs. 82.80 crores as on 30th September 2011.

(ii) Nature of provision

Product Warranties: The Company gives warranties on certain products and undertakes to repair or replace them if these fail to perform satisfactorily during the free warranty period. Such provision represents the amount of expected cost of meeting the obligations of such rectification/replacement. The timing of the outflows is expected to be within a period of one year.

2 The Scheme of Compromise and Arrangement pending before the Delhi High Court to bail out the fixed deposit holders of Escorts Finance Limited stands disposed-off vide order dated 4th March, 2011. On the interim directions of the said High Court, fixed deposit liability of Rs.130.32 crores has already been discharged by the Hardship Committee constituted under the directions of the said High Court. For discharging the unclaimed deposit, balance 2,401,050 shares have been transferred to Escorts Benefit Trust (Trust) and the Hardship Committee has been dissolved. The trust shall, in due course and in terms of the directions of the High Court, discharge the unclaimed deposits.

3 The Company revalued its freehold land as on 1st September, 2006 and amount added on revaluation was Rs. 387.64 crores, further the Company has revalued it's all land & buildings as on 1st April, 2009 and amount added on revaluation is Rs. 672.72 crores. Both revaluations were carried out by reputed independent valuer.

4 The Company has issued 3,611,612 Equity Shares of Rs. 10 each fully paid up at a price of Rs. 84.50 per share (including premium of Rs. 74.50 per share) in favor of the trustees of Escorts Employees Benefit & Welfare Trust under Employee Stock Option Scheme, 2006 on 9th November, 2009. Accordingly the Company has so far granted 629,500 options to its employees, in accordance with the guidelines issued by SEBI, out of which 221,500 options have been forfeited till 30th September, 2011 and balance 298,000 options have been exercised leaving 110,000 options pending for exercise.

5 During 2008 the Haryana State Government introduced Haryana Tax on Entry of Goods into Local Area Act, 2008 ("Entry Tax") by repealing the Haryana Local Area Development Tax Act, 2000 ("HLADT"). The said Act was held unconstitutional by the Hon'ble Punjab & Haryana High Court in their judgment dated 1st October, 2008. The State Government of Haryana has preferred an appeal before the Hon'ble Supreme Court which is pending for adjudication before the Constitutional Bench. Based on the legal advice received by the Company no further provision on this account is considered necessary.

6 The Company has executed an Agreement to Sell for transfer of 20 acres of land at Plot No. 219, Sector 58, Balabhgarh, Haryana for a consideration of Rs. 7.00 crores. The said transfer is subject to necessary approval from HuDA and accordingly the consideration amount of Rs. 7.00 crores is being treated as advance.

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 & as required by Schedule VI of Companies Act, 1956 have not been given.

8 Pursuant to the order of the Hon'ble High Court of Punjab & Haryana dated 17th September, 2009 an amount of Rs. 32.53 crores on account of exports receivables from Farmtrac Tractors Europe Sp. Z.o.o., Poland, which is doubtful of recovery and exports incentives availed thereon to be refunded, has been provided for and adjusted through Business Reconstruction Reserve. Had the Scheme not prescribed for the aforesaid accounting treatment as approved by the Hon'ble High Court, the balance sheet (including reserve & surplus) and the profit and loss account would have been impacted to that extent.

(ii) Assets purchased/capitalised for Research & Development Rs. 7.39* crores (Previous year Rs. 2.87 crores)

(iii) Expenses on Research & Development as percentage to turnover is 1.03% (Previous year 0.83%)

*Doesn't include capital advance/capital work in progress

9 Clause 32 disclosure - Details as per Annexure - II

10 Accounting for Leases (AS-19). Details as per Annexure - III

11 Figures have been rounded off to the nearest lakh rupees. Previous year figures have been regrouped/rearranged wherever necessary.

NOTES :

*(a) As certified by the management and not verified by the auditors, being a technical matter.

(b) Sales and production pertain to finished goods only. Opening and Closing stocks include partly executed contracts but exclude stocks held by the consuming/selling divisions.

(c) In item no. 3 Installed capacities and actual production are in meters, rest are in numbers.

**(d) Opening and Closing stocks of items of Research and Development have been excluded.

(e) Opening and Closing stocks are inclusive of Work-in-Progress.

(f) Item no. 2 is not included in trading/finished stock.

NOTES :

1. Opening and Closing balances include partly executed sales contracts but do not include goods - in - transit and Job-in-Progress

NOTE : Raw Materials and components consumed include sale of raw materials and components

NOTES :

1. Cash and Cash equivalents include Cash in hand, demand deposits with banks and short term highly liquid investments.

2. Previous year's figures have been regrouped wherever necessary.

3. Figures in bracket shows Cash Outflow


Sep 30, 2010

1. Consequent to an agreement dated 31st March, 2000 between the Company and ICICI Bank Ltd (ICICI), the company sold 3,450,000 equity shares of Hughes Communication India Limited (HCIL) to Escorts Motors Limited (EML), ICICI thereafter subscribed to the equity share capital of EML to hold 49 % of its total equity share capital. Under the terms of the agreement, the Company had given an assurance to ICICI of a minimum return compounded annually for a period of four years. Subsequent to 31st March, 2004, the Company has in terms of earlier agreement agreed to puchase the 49% holding in EML from ICICI and had advanced Rs. 68 crores. The transfer of the shares in favour of the Company is awaited pending final settlement with ICICI.

2. The Scheme of Arrangement and Compromise filed before the Honble Delhi High Court to bail out the fixed deposit holders and creditors of Escorts Finance Limited (EFL) is still pending. The Honble High Court, Delhi had constituted a Hardship Committee to settle payments to fixed deposit holders of EFL who are facing hardship such as medical, marriage, education and others. On 24th May, 2010 the High Court has directed the Hardship Committee to offer maturity value of fixed deposit amount as stated in the face of fixed deposit receipt (Maturity Value) in full and final settlement of the fixed deposit liability of EFL towards the FD Holders. Accordingly Hardship Committee had sent letters to all FD Holders on 7th June, 2010 and also reminder letter on 20th July, 2010, 30th September, 2010 and also given public notice in the News paper on 23rd October, 2010 asking FD holders to submit documents so that Maturity value of their FD maybe paid. In accordance with the directions of the Honble High Court of Delhi on 24th May 2010 your Company has also allotted 6,601,050 equity shares to Hardship Committee for the purpose of selling the same in the open market, realising the proceeds thereof and its distribution to the FD holders to settle their outstanding liability (Maturity Value).

The Hardship Committee is in the process of paying the FD holders in accordance with these directions.

3. The Company revalued its freehold land as on 1st September, 2006 and amount added on revaluation was Rs.387.64 crores, further the Company has revalued its all land & buildings as on 1st April, 2009 and amount added on revaluation is Rs. 672.72 crores. Both revaluations were carried out by reputed independent valuer.

4. During 2008 the Haryana State Government introduced Haryana Tax on Entry of Goods into Local Area Act, 2008 ("Entry Tax") by repealing the Haryana Local Area Development Tax Act, 2000 ("HLADT"). The said Act was held unconstitutional by the Honble Punjab & Haryana High Court in their judgment dated 1st October, 2008. The State Government of Haryana has preferred an appeal before the Honble Supreme Court which is pending for adjudication before the Constitutional Bench. Based on the legal advice received, the Company has written-back an amount of Rs. 15.53 Crores in respect of the provisions made towards Entry Tax in earlier years and no further provision on this account is considered necessary.

5. The Company has issued 3,611,112 Equity Shares of Rs. 10 each fully paid up at a price of Rs. 84.50 per share (including premium of Rs. 74.50 per share) in favour of the trustees of Escorts Employees Benefit & Welfare Trust under Employee Stock Option Scheme, 2006 on 9th November, 2009. Accordingly the Company has so far granted 554,500 options to its employees, in accordance with the guidelines issued by SEBI, out of which 221,500 options have been forfeited till 30th September, 2010 and balance 268,000 options have been exercised leaving 65,000 options pending for exercise.

6. The Company has executed an Agreement to Sell for transfer of 20 acres of land at Plot No. 219, Sector 58, Balabgarh, Haryana for a consideration of Rs. 7.00 crores. The said transfer is subject to necessary approval from HUDA and accordingly the consideration amount of Rs. 7.00 crores is being treated as advance.

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 & as required by Schedule VI of Companies Act, 1956 have not been given.

8. Clause 32 disclosure - Details as per Annexure - II

9. Accounting for Leases (AS-19). Details as per Annexure - III

10. Figures have been rounded off to the nearest lac rupees. Previous year figures have been regrouped/rearranged wherever necessary.

 
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