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Notes to Accounts of FIEM Industries Ltd.

Mar 31, 2015

1. (Amount in Rs)

Particulars 31.03.2015 31.03.2014

2. Contingent Liabilities

(A) Claims against the Company/disputed liabilities not acknowledged as debts (See Note–1)

(i) Income Tax

(a) Case decided in the Company's favour by CIT (Appeal) in respect of

A.Y. 2011–12 for which the department has filed further appeal (See Note–2) 61,745,248 62,866,893

(ii) Custom Duty

(a) Import Duty Demand towards imported capital goods which were sold to the customer in relation to nil import duty being paid at the time of import of said capital goods as a 100% EOU unit for which the company has filed

an appeal with Commissioner of Central Excise, Chennai (Net of deposit) 4,340,527 4,340,527

(b) Liability of Import Duty towards Export obligation undertaken by the Company under EPCG Licenses 5,613,810 644,567

(iii) Excise Duty & Service Tax

(a) Excise Duty Demand on Modvat Credit taken on raw material for which the Company has filed an appeal with CESTAT, New Delhi (Net of deposit) 2,457,076 2,457,076

(b) Excise Duty Demand on Cenvat Credit taken on input and Capital goods for which the Company has filed an appeal with CESTAT, Chennai (Net of deposit) 1,952,730 -

(c) Service Tax Demand on Cenvat Credit taken on input services for which the Company has filed an appeal with CESTAT, Chennai (net of deposit) 201,052 -

(iv) Sales Tax

(a) Entry Tax for certain inter–state purchase in Rajasthan for which matter is sub–judice in superior Courts. 797,786 689,236

(b) Sales Tax Demand for A.Y. 2010–11 for which company has filed appeal with First Appellate Authority (net of deposit) 2,000,000 –

(B) Other Money for which the Company is contingently liable

(a) Liability in respect of bill of exchange discounted from bank 275,863,699 218,798,894

Note:–1 Based on the advice taken by the company, the company believes that it has good case in respect of all the items under (i) to (iv) above and hence no provision is considered necessary against the same.

Note:–2 The appeal has been preferred by the department against the order of the CIT (Appeal) in relation to disallowances of loss on account of foreign exchange derivative contracts entered for hedging of underlying exports.

Particulars 31.03.2015 31.03.2014

3. Capital & Other Commitments

(i) Estimated amount of contracts remaining to be executed on capital account

and not provided, (net of advances) 189,484,358 62,327,836

(ii) Estimated amount of contracts remaining to be executed on traded moulds &

others not provided,(net of advances) 63,284,955 99,208,872

(iii) Uncalled Liability for investment in 50:50 Joint Venture - 2,477,295

(iv) Lease Commitments (non–cancellable in nature) (See Note–37) 19,562,400 3,680,000

4. Segment Reporting

Business Segments:–

The Company is primarily engaged in the business of manufacture of various type of auto components and LED luminaries. The segment of the LED luminaries is not reportable segment as it does not exceeds the quantitative thresholds as laid down in AS–17 " Segment reporting". Since the Company's business activity falls within a single business segment, there are no additional disclosures to be provided under Accounting Standard–17 'Segment Reporting'.

Geographical Segments:–

The geographical segment comprises of domestic and overseas market. The following tables shows the distribution of the Company's Consolidated sales by geographical market, regardless of where the goods were produced.

5. Pursuant to the Companies Act 2013 ("The Act"), the Company has revised depreciation rates on certain fixed assets as per the revised useful life specified in Schedule II of the Act. Due to this based on transitional provision as per note 7(b) of the Schedule II, an amount of Rs. 1,93,57,338 (net of deferred tax of Rs. 99,67,518) have been adjusted with the retained earnings. Further, depreciation charge for the year ended 31st March, 2015 is higher by Rs. 7,85,69,460.

6. Previous year's figures have been regrouped/reclassified wherever necessary to correspond with the current year's classification/disclosure.


Mar 31, 2014

Corporate Information

Fiem Industries Limited (''The Company'') is a public limited company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The Company''s registered office is in New Delhi and it has several manufacturing plants and depots across the country. Its shares are listed on National Stock Exchange and Bombay Stock Exchange in India. It has one wholly owned foreign subsidiary-Fiem Industries Japan Co., Limited located in Japan. The Company has also entered into a 50:50 Joint Venture with Horustech Lighting SRL Italy and incorporated a Joint Venture Company, namely ''Centro Ricerche Fiem Horustech SRL'' for setting up a design centre during the year. The Company has research and development facilities located at Rai, Sonepat, Haryana which has been approved by Department of Science & Industrial Research, Ministry of Science & Technology. The Company is in the business of manufacturing and supply of auto components comprising of automotive lighting & signalling equipments, rear-view mirror, prismatic mirror, plastic moulded parts and sheet metal components for motorised vehicles, and LED luminaries comprising of indoor and outdoor lighting, display panels etc.

(Amount in Rs) Particulars 31.03.2014 31.03.2013

2 Contingent Liabilities

I.Bill of Exchange Discounted from Bank 218,798,894 216,843,142

II.Income Tax Demand in respect ofAssessment Year 2011–12 for which company has filed an appeal with CIT (Appeal) 62,866,893 –

III.Import Duty Demand towards imported capital goods which were sold to the customer in relation to nil import duty being paid at the time of import of said capital goods as a 100% EOU unit for which the company has filed an appeal with Commissioner of Central Excise, Chennai (Net of deposit) 4,340,527 –

IV.Excise Duty Demand on Modvat Credit taken on raw material for which the Company has filed an appeal with CESTAT, New Delhi (Net of deposit) 2,457,076 2,457,076

V.Entry Ta x for certain inter–state purchase in Rajasthan for which matter is sub–judice in superior Courts. 689,236 639,693

VI.Liability of Import Duty (For which Bonds executed in favour of Custom Authorities of Rs. 10,00,000) towards Import of Capital Goods without payment of duty for use in the manufacture of specific excisable goods. 414,414 414,414

VII.Liability of Import Duty towards Export obligation undertaken by the Company under EPCG Licenses 644,567 10,162,659

Note:– The appeal has been preferred against the order of the Assessing Officer in relation to disallowances of loss on account of foreign exchange derivative contracts entered for hedging of underlying exports.

Based on the advice taken by the company, the company believes that it has good case in respect of all the items under (ii) to (iv) above and hence no provision is considered necessary against the same.

3 Deferred Tax Liabilities (Net)

The components of deferred tax liability (net) recognized in the financial statements and deferred tax recognized in the statement of profit & loss are as under-

4 Lease Transaction

The company has taken commercial premises under non–cancellable operating lease. Minimum lease payments in respect of assets taken on non–cancellable operating lease are as follows:–

5 Segment Reporting

Business Segments:–

The Company is engaged in the business of manufacture of various type of auto components and LED luminaries. The segment of the LED luminaries is not reportable segment as it does not exceeds the quantitative thresholds as laid down in AS–17 " Segment reporting". Since the Company''s business activity falls within a single business segment, there are no additional disclosures to be provided under Accounting Standard–17 ''Segment Reporting''.

Geographical Segments:–

The geographical segment comprises of domestic and overseas market. The following tables shows the distribution of the Company''s Consolidated sales by geographical market, regardless of where the goods were produced.

Note:–1.The Company has common assets for producing goods for Domestic market and overseas market. Hence, separate figures for fixed assets can not be furnished.

Note:–2. Sales Revenue by geographical market Outside India includes indirect export.

6 Mat Credit Entitlement

The Assets of Rs. 3,14,57,986 (Previous Year Rs. 4,22,54,023 shown under ''Long Term Loans & Advances'' See note–13) Recognized by the Company as ''MAT Credit Entitlement'' under ''Short Term Loans and Advances'' (See Note–18) represents that portion of MAT liability, which can be recovered and set–off in subsequent year based on provisions of Section 115JAA of the Income Ta x Act , 1961. The management, based on present trend of profitability and also the future profitability projections, is of the view that there would be sufficient taxable income in subsequent year, which will enable the Company to utilize MAT Credit assets.

7 Related Party Disclosures

Name of Related Parties, Transactions and Balances at Reporting date are as follows

Name of Related Party

(i) Key Management Personnel

Jagjeevan Kumar Jain Chairman and Managing Director

Seema Jain Whole Time Director

Aanchal Jain Whole Time Director

Rahul Jain Whole Time Director

JSS Rao Whole Time Director

Kashi Ram Yadav Whole Time Director

(ii) Related Parties Controlled by Key Management personnel

Fiem Auto Private Limited Entity Controlled by Key Management Personnel

Jagjeevan Kumar Jain (HUF) Entity Controlled by Key Management Personnel

Fiem Auto & Electrical Entity Controlled by Key Management Industries Personnel

(iii) Subsidiary Company Fiem Industries Japan 100% Subsidiary Company incorporated Co.Ltd in Japan

(iv) Joint Venture Centro Ricerche Fiem 50% ownership interest held by Horustech SRL company incorporated in Italy

Defined Benefit Plans

Disclosure requirement as per Accounting Standard on Employee Benefit-AS (15)-As per actuarial valuation as on 31.03.14 are as follows:

1. The estimates of future salary increases; considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

2. The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

8 Foreign Exchange Currency Exposure Outstanding as on Reporting Date (Not Hedged)

The year end foreign currency exposures that have not been hedged by derivatives instruments or otherwise are as follows:

9 Details of Research and Development Expenses

The Company has incurred following expenses on its Research and Development Unit situated at Rai, Sonepat, Haryana (India).

10 Joint Venture Company

The Company has entered into a joint venture agreement with ''Horustech Lighting SRL Italy'' on 2nd December 2013 for forming a joint venture company to set–up a design centre at Italy. Accordingly, a company ''Centro Ricerche Fiem Horustech SRL.'' a jointly controlled Entity has been formed on 12th December 2013. The company has invested a sum of Rs. 8,41,200/–(Euro 10,000) towards capital contribution in said Joint Venture Company as on the date of balance sheet.

The company''s interest in joint venture is reported as Non Current Investment (Refer Note 12) and is stated at cost.

(a) Pursuant to Accounting Standard–27, "Financial Reporting of Interests in Joint Ventures" notified under the Companies (Accounting Standards) Rules, 2006 (as amended) disclosure in respect of the said Joint Venture are given below:

Name of joint Venture Centro Ricerche Fiem Horustech SRL

Description of Interest Jointly Controlled Entity

Country of Incorporation Italy

Proportion of Ownership 50% Interest as at March 31,2014

(b) In respect of jointly control entity, the company''s share of assets, liabilities, incomes and expenses are as follows–

11 Previous year''s figures have been regrouped/reclassified wherever necessary to correspond with the current year''s classification/ disclosure.


Mar 31, 2013

Corporate Information

The Company is in the business of manufacturing and supply of auto components comprising of automotive lighting & signalling equipments, rear-view mirror, prismatic mirror, plastic moulded parts and sheet metal components for motorised vehicles.

During the year, the company has made diversification into LED Luminaries. It has started the production of LED luminaries comprising of indoor and outdoor lighting, display panels etc. The company''s registered office is in New Delhi and it has several manufacturing plants and depots across the country. The research and development unit is situated at Rai, Sonepat, Haryana. It has one wholly owned foreign subsidiary in Japan. Its shares are listed on National Stock Exchange and Bombay Stock Exchange in India.

1 Lease Transaction

Certain factory/depot premises, guesthouse premises and plant & machinery are obtained on operating leases. There are no contingent rents in the lease agreements. The lease terms are for 1-3 years and are renewable at the mutual agreement of the both the parties. There are no restrictions imposed by lease arrangements. There are no subleases and all the leases are cancelable in nature.

2 Segment Reporting

Business Segments:-

The Company''s operations are manufacture of various types of automotive lighting and accessories. Since the Company''s business activity falls within a single business segment, there are no additional disclosures to be provided under Accounting Standard-17 ''Segment Reporting''.

Geographical Segments:-

The geographical segment comprises of domestic and overseas market. The following tables shows the distribution of the Company''s Consolidated sales by geographical market, regardless of where the goods were produced.

3 Ministry of Corporate Affairs, Government of India through Circular No. 25/2012 dated 9th August 2012 has clarified that para 6 of Accounting Standard AS-11 and para 4 (e) of AS-16 shall not apply to a Company which is applying para 46-A of AS-11. Consequently, exchange differences, arising on settlement/ translation of foreign currency loan to the extent regarded as an adjustment to interest cost as per para 4(e) of AS-16 and charged to statement of Profit and Loss, have now been adjusted by the company in the cost of related fixed assets. As a result exchange loss amounting to Rs. 28,684,487 representing interest differential up to 31.03.2012 previously expensed has been reversed and corresponding adjustment has been made to the cost of Fixed Assets.

4 The Assets of Rs. 42,254,023 (Previous Year Rs. 32,864,655) Recognized by the Company as ''MAT Credit Entitlement'' under ''Long Term Loans and Advances'' (See Note-13) represents that portion of MAT liability, which can be recovered and set-off in subsequent years based on provisions of Section 115JAA of the Income Tax Act, 1961. The management, based on present trend of profitability and also the future profitability projections, is of the view that there would be sufficient taxable income in foreseeable future, which will enable the Company to utilize MAT Credit assets.

5 Related Party Disclosures

Name of Related Parties, Transactions and Balances at Reporting date are as follows

Name of Related Party

(i) Key Management Personnel

Jagjeevan Kumar Jain Chairman and Managing Director

Seema Jain Whole Time Director

Aanchal Jain Whole Time Director

Rahul Jain Whole Time Director (W.e.f. 01.10.2012)

JSS Rao Whole Time Director

Kashi Ram Yadav Whole Time Director

(ii) Related Parties Controlled by Key Management personnel

Fiem Auto Private Limited Entity Controlled by Key Management Personnel

Jagjeevan Kumar Jain (HUF) Entity Controlled by Key Management Personnel

Fiem Auto & Electrical Industries Entity Controlled by Key Management Personnel

(iii) Subsidiary Company

Fiem Industries Japan Co. Limited 100% Subsidiary Company Incorporated in Japan

6 Foreign Exchange Derivatives and Exposure outstanding at end of the year

Cross Currency Swap & Forward Currency Option

The Company uses Cross-currency swaps (principal only swaps and interest rate swaps) and forward currency option contracts to hedge its exposure in foreign currency and interest rates. The counter party is bank. These contracts are for a period between four to five years. All the contracts have been settled during the year and there is no pending contract as on 31.03.2013. The instruments wise information on derivative instruments as on 31.03.2013 is as follows.

7 Previous year''s figures have been regrouped/reclassified wherever necessary to correspond with the current year''s classification/disclosure.


Mar 31, 2012

A) Terms/rights attached to equity shares

The company has only one class of shares referred to as equity shares having a par value of Rs 10 each. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual general Meeting except in case of interim dividend. In the event of liquidation of the company, the holders of equity shares will be entitled to receive any of the remaining assets of the company, after distribution of all preferential amounts. However, no such preferential amount exist currently. The distribution will be in proportion to the number of the equity shares held by the shareholders.

b) Aggregate number of bonus shares issued, share issued for consideration other than cash during the period of five years immediately preceding the reporting date.

1,04,065 fully paid up equity shares of Rs l0/- each allotted during 2007-08 to the shareholders of M/s Fiem Sung san (India) Limited Pursuant to its Amalgamation without payment being received in cash.

Indian Rupee Loan from Bank includes

a) From Citibank N.A. has tenor of 5 years with 16 equal quarterly repayments beginning from the end of 15 months from drawdown. Interest is payable on monthly basis . The loan carries fixed interest rate of 12% and is secured against exclusive charge on all movable assets procured out of the term loan and secured against First Pari Passu Charge on movable fixed assets of kundli unit and Unit -2 at Hosur with Axis Bank.

b) From Standard Chartered Bank :- The Loan is for 5/4.5 years with 16 /I7/I4 equal quarterly repayment beginning from the end of 15 months from the drawdown. Interest is monthly payable. The loan carries fixed interest rate of 9.65% to 10% The Loan is secured against Exclusive charge on land and building at Hosur Unit-3 situated at Kelamangalam Road, Hosur, Tamilnadu and Exclusive charge on land and Building of corporate office in Mansarover Garden, New Delhi and Parri passu charge on moveable Fixed assets both present and future including plant and machinery at Hosur unit-3, kelamangalam road.

c) From State bank of Patiala :- The loan is for 6 years with 24 quarterly repayment beginning from the end of 15 months from the drawdown. Interest is monthly payable. The loan carries floating interest rate of 11.75% and 12.75% . The Loan is Secured against First Pari Passu charge with Axis Bank over movable and Immovable fixed assets of Rai Unit ( Present and future) including equitable mortgage of Factory Land and Building at Rai, Sonepat and Parri passu charge on movable fixed assets of Hosur unit- III (tamilnadu) with Standard Chartered Bank and First Charge on movable fixed assets of Mysore unit -IV Karnataka and Second charge over the entire fixed assets of unit VI nalagarh Unit (first charge with Citibank).

d) From Axis Bank :- The loan is for 4 years and 7 years and has Half yearly and quarterly repayment beginning after moratorium period of 6 and I2 months from the drawdown. Interest is monthly payable. The loan carries floating interest rate of 11.75% and 12.25%. The Loan is Secured against First Pari Passu charge on the movable and immovable fixed assets of Rai Unit including equitable mortgage of Factory Land and Building of Rai Unit with State Bank of Patiala and secured against First Pari Passu Charge on movable fixed assets of kundli unit and Unit -2 at Hosur with Citibank and Term loan of Rs 1.58 crore is secured on exclusive charge on assets financed out of the term loan.

e) Vehicle loan from banks and others are secured against hypothecation of the respective vehicles acquired out of proceeds thereof. The Loans carries interest rate between 10% to 12%.

Foreign currency Loan from Bank includes

a) From Standard Chartered Bank - ECB -I:- The loan is for 5 years with I6 equal quarterly repayment beginning from the end of I5 months from the drawdown. Interest rate 3 month LIBOR PLUS 225 BSP p.a. payable quarterly. The loan is secured against Equitable mortgage on land and building at Tapukara, Rajasthan Unit on Exclusive basis and Specific charge on Plant and machinery at Tapukara, Rajasthan Unit

b) From Standard Chartered Bank ECB -2:- The loan is for 5 years with I6 equal quarterly repayment beginning from the end of I5 months from the drawdown. Interest is quarterly payable. The loan carries fully hedged interest cost of 8.50% p.a. The Loan is secured against Equitable mortgage on land and building at Tapukara, Rajasthan Unit on Exclusive basis and Specific charge on Plant and machinery at Tapukara, Rajasthan Unit

Indian Rupee Loan includes

a) From Citibank NA :- Loan outstanding as at 31st March 2012 Rs 23,78,14,029 (Previous Year Rs 25,15,03,586 ) Interest is payable with monthly rest on the last date of each month in each year or at such other rest as determined by the bank. The rate of interest is based on relevant circumstances, including market conditions which currently is 13%. The loan is secured against First Pari Passu Charge with Standard Chartered Bank on all present and future receivables, stocks/Inventories and on all fixed assets of the company(excluding assets specifically purchased out of term loans from Citibank and other term loan lenders ) including equitable mortgage charge on first pari passu basis on Land and Building situated at Kundli, Haryana & Thally Road Hosur, Tamilnadu with Standard Chartered Bank.

b) From Standard Chartered Bank :- Loan outstanding as at 31st March 2012 Rs 10,38,37,440 (Previous Year Rs 6,96,15,026 ) Interest is monthly payable. Interest is payable at base rate plus margin basis which may be agreed with bank from time to time which currently is 13.45%. The loan is secured against First Pari Passu charge with Citibank on Stocks & Book Debts, and Equitable mortgage charge on First Pari Passu basis on land and building situated at Kundli unit Haryana & Thally Road Hosur, Tamilnadu and first pari passu charge over all present and future movable fixed assets of the company with Citibank (excluding assets specifically financed by other term lenders)

Foreign currency Loan includes

a) From Citibank NA :- Loan outstanding as at 31st March 2012 Rs 10,00,00,000 (Previous Year Rs 6,00,00,000 ) at Fully hedged cost (interest principal) is fixed at 11.60% p.a. (p.y. 10.75% p.a.) The loan is fully repayable within 360 days from drawdown. The loan is secured against First Pari Passu Charge with Citibank on all present and future receivables, stocks/Inventories and on all fixed assets of the company(excluding assets specifically purchased out of term loans from Citibank and other term loan lenders ) including equitable mortgage charge on first pari passu basis on Land and Building situated at Kundli, Haryana & Thally Road Hosur, Tamilnadu with Citibank.

Considering the company has been extended credit period upto 45 days by its vendors and payments being released on a timely basis, there is no liability towards interest on delayed payments under "The Micro, Small and Medium Enterprises Development Act 2006" during the year.

There is also no amount of outstanding interest in this regard, brought forward from previous years. The above information is on basis of intimation received, on requests made by the company, with regards to vendors registration under the said Act.

Proposed Dividend

During the year ended 31.03.12, the amount of Rs 3.00 per share as dividend recognized for distributions to equity shareholders (Previous Year Rs 2.50 per share)

Provision for warranties

The company gives warranties on certain products and services, undertaking to repair and replace the items that fails to perform satisfactorily during the warranty period. Provision made as at 31.03.12 represents the amount of the expected cost of meeting such obligation of rectification or replacement. The timing of the outflow is expected to be within warranty period. (Amount in Rs)

Particulars 31.03.2012 31.03.2011

1. Contingent Liabilities

i. Bill of Exchange Discounted from Bank 255,953,416 258,381,802

ii. Service Tax demand on credit taken on Outdoor catering for which the Company has filed an appeal with CESTAT, Chennai 1,313,248 -

iii. Excise Duty Demand on Modvat Credit taken on raw material for which the Company has filed an appeal with CESTAT, New Delhi 2,507,076 2,507,076

iv. Entry Tax for certain inter-state purchase in Rajasthan for which matter is sub-judice in superior Courts. 535,777 -

v. Claim against the Company not acknowledged as debts, being disputed by the Company 500,000 500,000

2 Lease Transaction

Certain factory/depot premises, guesthouse premises and plant & machinery are obtained on operating leases. There are no contin- gent rents in the lease agreements. The lease terms are for 1-3 years and are renewable at the mutual agreement of the both the parties. There are no restrictions imposed by lease arrangements. There are no subleases and all the leases are cancelable in nature.

3 Segment Reporting Business Segments:-

The Company's operations are manufacture of various types of automotive lighting and accessories. Since the Company's business activity falls within a single business segment, there are no additional disclosures to be provided under Accounting Standard-17 'Segment Repoting'.

Geographical Segments:-

The geographical segment comprises of domestic and overseas market. The following tables shows the distribution of the Company's Consolidated sales by geographical market, regardless of where the goods were produced.

1. The estimates of future salary increases; considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

2. The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

3. Information relating to experience adjustment on Plan Assets and Plan Liability in the actuarial valuation of gratuity as required by Para 120 (n)(ii) of the Accounting standard 15 (Revised) on Employee benefits is not available with the company.

4. The company's expected contribution to the fund in the next year is not presently ascertainable and hence, the contribution expected to be paid to the plan during the annual period beginning after the balance sheet date as required by Para 120 (o) of the Accounting standard 15 (Revised) on Employee benefits is not disclosed.

5 Foreign Exchange Derivatives and Exposure outstanding at end of the year Cross Currency Swap & Forward Currency Option

The Company uses Cross-currency swaps (principal only swaps and interest rate swaps) and forward currency option contracts to hedge its exposure in foreign currency and interest rates. The counter party is bank. These contracts are for a period between four to five years. The instruments wise information on derivative instruments as on 31.03.2012 is as follows.

6 Details of Research and Development Expenses

The Company has incurred following expenses on its Research and Development Unit situated at Rai, Sonepat, Haryana (India). The Unit is Recognised by Department of Science and Industrial Research, Ministry of Science and Technology w.e.f 23/12/2011. The approval for said Recongnised R&D Unit is awaited.

7 The figures appearing in brackets pertains to previous year.

8 The financial statements for the year ended 31 March 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act, 1956 the financial statements for the year ended 31 March 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been re-classified to conform to this' classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of financial statements.


Mar 31, 2011

1. Nature of Operation

The company is in the business of manufacturing and suppliers of auto components, mainly, automotive lighting & signally equipments, Rear- view mirror, prismatic mirror, sheet metal parts and moulds, block & dies etc for two-wheeler and four wheeler applications. It has entered into a technical assistance agreement with Ichikoh Industries Limited, Japan.

2. Reclassified/Reworking of Previous year Figures

The previous year's figures have been reworked, regrouped, rearranged and reclassified wherever necessary. Accordingly, amount and other disclosures for the preceding year are included as an integral part of the current financial statement and are to be read in relation to the amounts and other disclosure relating to the current year.

3. Contingent Liabilities:

(Amount in Rs.)

Sr. No. Particulars 31.03.2011 31.03.2010

a. Performance and Financial Guarantees given by Banks on behalf of the Company Guarantee given to Custom & Excise Authorities 18,30,570 18,30,570

Guarantee given to Commercial Tax Officers 3,85,000 3,25,000

Guarantee given to Himachal Pradesh Electricity Board H.P. 18,30,000 12,00,000

Guarantee given to Original Equipment Buyer (OEM) 2,50,04,900 89,81,025

against supply of moulds & dies within the stipulated time Guarantee given to Haryana State Pollution Control Department 20,16,135 20,16,135

Guarantee given to Dept of Indigenization /DGEME Ministry of Defence New Delhi against supply of Automotive lights within the stipulated time. 45,077 45,077

Guarantee given to APSRTC Hydrabad against supply of Automotive lights within the stipulated time. 1,00,000 -

b. Disputed Liabilities in appeal

Excise duty demand on account of availing excess CENVAT credit on input procured from a 100% Export oriented undertaking and penalty equal to excise duty taken 25,07,076 25,07,076

Income Tax matters under dispute in respect of Assessment Year 2006-07 for which Company has filed appeal with CIT (Appeals), New Delhi - 4,77,395

c. Sales Bill Discounted from Banks

Sales Bill Discounted from Bank Not Matured up to reporting date 25,83,81,802 19,09,19,068

4. Related Party Disclosures

Name of Related Parties, Transactions and Balances at Reporting date are as follows: Name of Related Party

Key Management Personnel

Jagjeevan Kumar Jain Chairman and Managing Director

Seema Jain Whole Time Director

Aanchal Jain Whole Time Director

JSS Rao Whole Time Director

Kashi Ram Yadav Whole Time Director

Relative of Key Management Personnel

Rahul Jain Son of Jagjeevan Kumar Jain-Chairman and Managing Director and Seema Jain-Whole

time Director, Brother of Aanchal Jain-Whole Time Director

Related Parties Controlled by Key Management personnel

Fiem Auto Private Limited Entity Controlled by Key Management Personnel

Jagjeevan Kumar Jain (HUF) Entity Controlled by Key Management Personnel

Fiem Auto & Electrical Industries Entity Controlled by Key Management Personnel

Subsidiary Company

Fiem Industries Japan Co. Ltd. 100% Subsidiary Company Incorporated in Japan

5. Earning Per Share

As required by Accounting Standard (AS-20) "Earning Per Share" the numerators and denominators used to calculate Basic Earning Per Share are follows. For the purpose of weighted average number of equity shares, the share issued within the month has been taken full month.

6. Segment Reporting

Business Segments:

The Company's operations are manufacture of various types of automotive lighting system and accessories. Since the Company's business activity falls within a single business segment, there are no additional disclosures to be provided under Accounting Standard-17 'Segment Reporting '.

7. Lease Transaction

Certain factory/depot premises, guesthouse premises and plant & machinery are obtained on operating leases. There are no contingent rents in the lease agreements. The lease terms are for 1-3 years and are renewable at the mutual agreement of the both the parties. There are no restrictions imposed by lease arrangements. There are no subleases and all the leases are cancelable in nature.

8. Disclosures required by Accounting Standard (AS)-29

I. Nature of Provisions: The Company gives warranties on certain products and services, undertaking to repair or replace the items that fails to perform satisfactory during the warranty period. Provision made as at 31st March 2011 represents the amount of the expected cost of meeting such obligations of rectification/replacement. The timing of the outflows is expected to be within warranty period.

9. Foreign Exchange Derivatives and Exposure outstanding at end of the year

A. Cross Currency Swap & Forward Currency Option:

The Company uses Cross-currency swaps (principal only swaps and interest rate swaps) and forward currency option contracts to hedge its exposure in foreign currency and interest rates. The counter party is bank. These contracts are for a period between four to five years. The instruments wise information on derivative instruments as on 31.03.2011 is as follows.

B. Target Redemption Forward Contracts

The company uses Target Redemption Forward Contract to hedge its exposure in foreign currency receivables. The counter party is bank. These contracts are for a period of three years.

1. One of the Target Redemption Contracts consists of a total 36 foreign exchange ("FX") transactions and the final settlement date was 12th October 2010. At each expiry date, the reference exchange rate is compared to the strike rate. If the reference exchange rate is more than or equal to strike rate, then the notional amount of USD 1,25,000 is applicable. On the other hand, if the reference exchange rate is less than the strike rate, then the notional amount is USD 2,50,000 is applicable. The entire Target Redemption Contract is subject to knock out conditions. This contract has been finally settled during the year and has resulted in a loss of Rs. 10,71,23,712 (Previous Year: This contract was fair valued as on 31.03.2010 and resulted in a notional loss of Rs. 4,48,37,275).

2. The other Target Redemption Contracts consists of a total 36 foreign exchange ("FX") transactions and the final settlement date was 22nd February 2011. At each expiry date, the reference exchange rate is compared to the strike rate. If the reference exchange rate is more than or equal to strike rate, then the notional amount of USD 1,25,000 is applicable. On the other hand, if the reference exchange rate is less than the strike rate, then the notional amount is USD 2,50,000 is applicable. The entire Target Redemption Contract is subject to knock out conditions. This contract has been finally settled during the year and has resulted in a loss of Rs. 6,99,27,961 (Previous Year: This contract was fair valued as on 31.03.2010 and resulted in a notional loss of Rs. 1,70,24,238).

C. Movement in Hedging Reserve Account

The movement in Hedging Reserve Account during the year ended March 31, 2011, for derivative transactions.

D. Foreign Exchange Currency Exposure Fully Hedged

During the year, the Company has taken FCNR Based loan for 360 days against cash existing credit facility with CITIBANK N.A., which are fully protected against the currency and interest movements in the market. The basic details are as follows.

Purpose To Finance working capital requirement of the Company

Amount USD 13,15,789.47 equivalent to INR 6,00,00,000

Booking Date February 2, 2011

Maturity Date January 27, 2012

Interest Rate USD LIBOR 1.25% p.a. payable monthly

Additional Interest Cost for Hedged INR 51,61,316/- (Fully Hedged @10.75% p.a.)

(Payable at the time of Maturity Date)

10. Transfer to General Reserve

The Company has transferred Rs. 1,25,00,000 (Previous Year Rs. 1,10,00,000) to General Reserve from Profit and Loss Account as per Companies (Transfer of Profits to Reserves) Rules, 1975.

11. The figures appearing in brackets pertains to previous year

12. Figures have been rounded off to the nearest rupee.


Mar 31, 2010

1. Nature of Operation

The company is in the business of manufacturing and suppliers of auto components, mainly, automotive lighting & signally equipments, Rear- view mirror, prismatic mirror, sheet metal parts and moulds, block & dies etc for two-wheeler and four wheeler applications. It has entered in to a license and technical assistance agreement with Ichikoh Industries Limited, Japan and Batz S. Coop, Spain.

2. Reclassified/Reworking of Previous year Figures

The previous years figures have been reworked, regrouped, rearranged and reclassified wherever necessary. Accordingly, amount and other disclosures for the preceding year are included as an integral part of the current financial statement and are to be read in relation to the amounts and other disclosure relating to the current year.

3. Related Party Disclosures

Name of Related Parties with whom Transactions were carried out during the year

a. Key Management Personnel (KMP)

-* Mr. Jagjeevan Kumar Jain-Managing director

- Mrs. Seema Jain-Whole time director

- Ms. Aanchal Jain-Whole time director

- Mr. JSS Rao-Whole time director

- Mr. Kashi Ram Yadav-Whole time director

b. Relative of Key Management Personnel (KMP)

- Mr. Rahul Jain

c. Related Parties Controlled by KMP

- Fiem Auto Private Limited

- Jagjeevan Kumar Jain (HUF)

- Fiem Auto & Electrical Industries (KMP is the Sole Proprietor)

d. Subsidiary Company

- Fiem Industries Japan Co., Ltd.

4. Contingent Liabilities (Amount in Rs.)

Particulars 31.03.2010 31.03.2009

Guarantee/security given to Custom & Excise Authorities (Margin for guarantee provided Rs. 170,000-PY Rs. 1,70,000) 17,00,000 17,00,000

Guarantee/security given to Himachal Pradesh State Electricity Board (Margin for guarantee provided Rs. 1,20,000- Previous year Rs. 1,20,000) 12,00,000 12,00,000 Excise duty demand matters under dispute (in respect of which appeal has been filed and for which security of Rs. 50,000 has been deposited with the department.) 25,07,076 25,07,076 Guarantee/security given to OEM against supply of moulds & dies (Margin for guarantee provided Rs. 8,98,103 Previous year Rs. Nil) 89,81,025 - Guarantee/security given to Haryana State Pollution Control (Margin for guarantee provided Rs. 2,01,613 Previous year Rs. Nil) 20,16,135 - Guarantee/security given to DTE of Indigenisation/DGEME Ministry of Defence New Delhi (Margin for guarantee provided Rs. 4,508 Previous year Rs. Nil) 45,077 - Income Tax matters under dispute in respect of Assessment Year 2006-07 for which Company has filed appeal with CIT (Appeals), New Delhi 4,77,395 4,77,395

Bill Discounted from Bank (Not Matured) 19,09,19,068 -

5. Segment Reporting

The companys operations predominantly are manufacture of automotive parts and accessories. The company is managed organizationally as a unified entity and all its assets other than export debtors are located in India.

6. Lease Transaction

Lease payment under Operating Lease have been accounted for in accordance with AS-19 of the ICAI "Accounting for Leases" and accordingly lease payment under operating lease have been recognized as an expenses in the profit and loss account over the lease term.

Certain office/factory premises, guesthouse premises and plant & machinery (DG Set) are obtained on operating leases. There are no contingent rents in the lease agreements. The lease terms is for 1-3 years and are renewable at the mutual agreement of the both the parties. There are no restrictions imposed by lease arrangements. There are no subleases and all the leases are cancelable in nature

7. Disclosures required by Accounting Standard (AS)-29

I. Nature of Provisions: The Company gives warranties on certain products and services, undertaking to repair or replace the items that fails to perform satisfactory during the warranty period. Provision made as at 31st March 2010 represents the amount of the expected cost of meeting such obligations of rectification/replacement. The timing of the outflows is expected to be within warranty period.

B. Target Redemption Forward Contracts

The Company uses Target Redemption Forward Contract to hedge its exposure in foreign currency receivables. The counter party is bank. These contracts are for a period of three years.

One of the Target Redemption Contracts consists of a total 36 foreign exchange ("FX") transactions with 7 transactions outstanding as on 31st March 2010 and final settlement date is 12th October 2010. At each expiry date, the reference exchange rate is compared to the strike rate. If the reference exchange rate is more than or equal to strike rate, then the notional amount of USD 1,25,000 is applicable. On the other hand, if the reference exchange rate is less than the strike rate, then the notional amount is USD 2,50,000 is applicable. The entire Target Redemption Contract is subject to knock out conditions.

The other Target Redemption Contracts consists of a total 36 foreign exchange ("FX") transactions with 11 transactions outstanding as on 31st March 2010 and final settlement date is 22nd February 2011. At each expiry date, the reference exchange rate is compared to the strike rate. If the reference exchange rate is more than or equal to strike rate, then the notional amount of USD 1,25,000 is applicable. On the other hand, if the reference exchange rate is less than the strike rate, then the notional amount is USD 2,50,000 is applicable. The entire Target Redemption Contract is subject to knock out conditions.

The change in fair value of the Target Redemption Contracts resulted in to notional loss of Rs. 6,18,61,513. This fair value is based on marked to market valuation at balance sheet date.

8. Transfer to General Reserve

The Company has transferred Rs. 1,10,00,000 (Previous Year Rs. 50,00,000) to General Reserve from Profit and Loss Account as per Companies (Transfer of Profits to Reserves) Rules, 1975.

9. The figures appearing in brackets pertains to previous year

10. Figures have been rounded off to the nearest rupee.

 
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