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Notes to Accounts of Force Motors Ltd.

Mar 31, 2015

1. CONTINGENT LIABILITIES AND COMMITMENTS

(to the extent not provided for)

As at 31st As at 31st March, 2015 March, 2014 Rs. Rs.

(a) Contingent Liabilities

(i) Taxes & Duties 46,73,90,719 29,66,45,603

(ii) Others (Court cases pending) 32,94,43,302 29,19,19,172

(b) Commitments

Estimated amount of contracts remaining to be executed on 76,42,58,903 77,94,02,336 capital account and not provided for

(c) As reported earlier, a foreign company has initiated legal proceedings in a foreign court, in respect of notional and unfounded claims for damages, without there being any enforceable agreement, relating to export business. The Company has obtained opinion from a Senior Counsel, in respect of these alleged claims against the Company. The Company has been advised that such notional/unfounded claims are Not as per the applicable law nor these claims, if any, can be enforced in the Court of Law in India. This information is being disclosed as per the provisions of Schedule III to the Companies Act, 2013, only to indicate the alleged claims made against the Company and the developments in respect thereof. Moreover, considering the period lapsed, since the conclusion of the said legal proceedings, the Company does not expect any impact of this litigation on its financial position.

2. As of 31st March, 2015, the Company has not received any intimation, except in few cases, as to the status as Micro, Small or Medium Enterprises from suppliers of the Company along with a copy of the Memorandum, filed by the said suppliers, as per the provisions of Section 8 of the Micro, Small & Medium Enterprises Development Act, 2006 (the Act). The proceedings initiated by one of the suppliers, claiming to be a small scale enterprise, as per the provisions of Section 18 of the Act, culminated into an award of claim for Rs. 1,56,61,877 with interest. The Company has not accepted the said liability. The Company has a major counter-claim against the said supplier amounting to about Rs. 9,06,40,899, which being unearned income, is not accounted. The award is challenged by the Company, as per the provisions of the Act and proceedings are pending before the Hon'ble District Judge, Pune, and before the Hon'ble High Court of Judicature at Bombay.

3. LEASES

Operating Leases :

(a) Assets taken on Lease :

The Company has taken 10 vehicles on operating lease for a period of 4 years. Lease rentals are recognised in the Statement of Profit and Loss.

(b) Assets given on Lease :

(i) Industrial Shed at Chakan :

The Company has entered into a Lease Agreement for Industrial Shed for a period of 10 years.

The said agreement provides for progressive increase in rentals during the tenure of the agreement.

The Lessee is entitled to terminate the Lease Agreement after the expiry of 60th month from the date of agreement. The Lessor is also entitled to terminate the Lease Agreement, if the Lessee defaults the terms and conditions of the Lease Agreement.

The Lease income has been recognised in Statement of Profit and Loss.

4. RELATED PARTY DISCLOSURES (As identified by the Management)

(A) Name of the related parties and nature of related party relationship where control exists are as under :

(a) Subsidiary Company : Tempo Finance (West) Private Limited

(b) Key Management : Mr. Abhaykumar Firodia, Chairman. Personnel : Mr. Prasan Firodia, Managing Director

(c) Relatives of Key Management Personnel

(i) Mr. Abhaykumar Firodia : Mr. Prasan Firodia : Son

(ii) Mr. Prasan Firodia : Mr. Abhaykumar Firodia : Father

(d) Other related parties : Jaya Hind Industries Ltd.

: Jaya Hind Investments Pvt. Ltd. : Jaya Hind Montupet Pvt. Ltd.

5. The Consortium of Banks has sanctioned working capital limits - both fund based and non-fund based - to the Company. These limits are secured by hypothecation of Company's stock of raw materials, work-in-progress, finished goods, consumable stores, spares, bills receivable and book debts, both present and future, situated at Company's factories or at any other place.

The fund based limits, if utilised, are payable on demand to the Banks. During the year 2014-15, the Company has not utilised any fund based limits.

6. All amounts which became due, for transfer to the Credit of Investor Education and Protection Fund, as of 31st March, 2015, have been transferred to that fund, except a sum of Rs. 60,000 being amount of 5 (five) fixed deposits and interest thereon amounting to Rs. 25,051. In view of the directives received from the Government Authorities, these amounts are not transferred to the Fund, being Involved in an investigation.

7. As per the Accounting Standard AS 26 - Intangible Assets, the Company has recognised Intangible Assets arising out of in-house Research and Development activities of the Company amounting to Rs. 6,07,27,190 (Rs. 11,73,96,866), in the development phase of a new model Multipurpose Vehicles, Monocoque Bus (Project T2) and TD 2650 CRDI BS IV version of the SUV. As the development activity is continued, the said asset is considered as Capital Work-in-progress, and will be amortized over the period of its life, after completion of the development phase.

8. During the year under report the eligibility and method of availing, various incentives, granted by the Government of Madhya Pradesh, as per the Industrial Promotion Policy, being clarified, the Company recognised a sum of Rs. 20,73,01,099 (Rs. 29,15,86,018) in the Statement of Profit & Loss as "Industrial Investment Promotion Assistance". These incentives are now accounted on accrual basis. These incentives are available as per the Industrial Promotion Policy of the Government of Madhya Pradesh, based on the investment made by the Company, in eligible assets, for eligible products, in the State of Madhya Pradesh. These incentives are monetary incentives.

9. The Company has spent Rs. 88,00,000 towards Corporate Social Responsibility (CSR) activities, which is included in "Miscellaneous Expenses"[ Note No. 26 (n)]to the Notes to Account.

10. The Company is operating in a Single Segment.

11. Previous year/period's figures are re-arranged wherever necessary and shown in brackets.


Mar 31, 2014

1. CONTINGENT LIABILITIES AND COMMITMENTS (to the extent not provided for)

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

(a) Contingent Liabilities

(i) Taxes & Duties 29,66,45,603 23,97,54,153

(ii) Others (Court cases pending) 29,19,19,172 26,07,24,115

(b) Commitments

Estimated amount of contracts remaining to be executed on 77,94,02,336 91,44,14,860 capital account and not provided for

(c) As reported earlier, a foreign company has initiated legal proceedings in a foreign court, in respect of notional and unfounded claims for damages, without there being any enforceable agreement, relating to export business. The Company has obtained opinion from a Senior Counsel, in respect of these alleged claims against the Company. The Company has been advised that such notional / unfounded claims are not as per the applicable law nor these claims, if any, can be enforced in the Court of Law in India. This information is being disclosed as per the provisions of Schedule VI to the Companies Act, 1956, only to indicate the alleged claims made against the Company and the developments in respect thereof.

2. As of 31st March, 2014, the Company has not received any intimation, except in few cases, as to the status as Micro, Small or Medium Enterprises from suppliers of the Company along with a copy of the Memorandum, filed by the said suppliers, as per the provisions of Section 8 of the Micro, Small & Medium Enterprises Development Act, 2006 (the Act). The proceedings initiated by one of the suppliers, claiming to be a small scale enterprise, as per the provisions of Section 18 of the Act, culminated into an award of claim for Rs. 1,56,61,877 with interest. The Company has not accepted the said liability. The Company has a major counter-claim against the said supplier amounting to about Rs. 9,06,40,899, which being unearned income, is not accounted. The award is challenged by the Company, as per the provisions of the Act and proceedings are pending before the Hon''ble District Judge, Pune, and before the Hon''ble High Court of Judicature at Bombay.

3. The amount of net exchange differences included in the Profit / Loss for the year on Revenue account is Rs. 3,94,14,600 Debit (Rs. 38,03,005 Credit) and on Capital account is Rs. 78,83,835 Debit (Rs. 17,58,239 Credit).

4. LEASES

Operating Leases :

(a) Assets taken on Lease :

The Company has taken 10 vehicles on operating lease for a period of four years. Lease rentals are recognised in the Statement of Profit and Loss.

(b) Assets given on Lease :

(i) Industrial Shed at Chakan :

The Company has entered into a Lease Agreement for Industrial Shed for a period of 10 years.

The said agreement provides for progressive increase in rentals during the tenure of the agreement.

The Lessee is entitled to terminate the Lease Agreement after the expiry of 60th month from the date of agreement. The Lessor is also entitled to terminate the Lease Agreement, if the Lessee defaults the terms and conditions of the Lease Agreement.

(ii) Freehold land at Akurdi :

Out of the freehold land at Akurdi, 2700 sq. mtrs. (cost ~ 1,374) of land has been given on lease to Maharashtra State Electricity Distribution Company Limited for 99 years, w.e.f. 1st August, 1989. Lease rentals are recognised in the Statement of Profit and Loss

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

The Liability for Earned Leave, for Temporary Employees (short term) has been provided on actual basis, amounting to -6,23,220 (-11,86,953).

5. RELATED PARTY DISCLOSURES (As identified by the Management)

(A) Name of the related parties and nature of related party relationship where control exists are as under :

(a) Subsidiary Company : Tempo Finance (West) Private Limited

(b) Key Management : Mr. Abhaykumar Firodia, Chairman.

Personnel : Mr. Prasan Firodia, Managing Director

(c) Relatives of Key Management Personnel

(i) Mr. Abhaykumar Firodia : Mr. Prasan Firodia : Son

(ii) Mr. Prasan Firodia : Mr. Abhaykumar Firodia : Father

(d) Other related parties : Jaya Hind Industries Ltd.

: Jaya Hind Investments Pvt. Ltd.

6. The Consortium of Banks has sanctioned working capital limits - both fund based and non-fund based - to the Company. These limits are secured by hypothecation of Company''s stock of raw materials, work-in-progress, finished goods, consumable stores, spares, bills receivable and book debts, both present and future, situated at Company''s factories or at any other place.

The fund based limits, if utilised, are payable on demand to the Banks. During the year 2013-14, the Company has not utilised any fund based limits.

7. All amounts which became due, for transfer to the Credit of Investor Education and Protection Fund, as of 31st March, 2014, have been transferred to that fund, except a sum of Rs. 60,000 being amount of 5 (five) fixed deposits and interest thereon amounting to Rs. 25,051. In view of the directives received from the Government Authorities, these amounts are not transferred to the Fund, being involved in an investigation.

8. As per the Accounting Standard AS 26 - Intangible Assets, the Company has recognised Intangible Assets arising out of in-house Research and Development activities of the Company amounting to Rs. 11,73,96,866 (Rs. 6,65,42,452), in the development phase of a new model Multipurpose Vehicles, Monocoque Bus (Project T2) and TD 2650 CRDI BS IV version of the SUV. As the development activity is continued, the said asset is considered as Capital Work-in-progress, and will be amortized over the period of its life, after completion of the development phase.

9. During the year under report the eligibility and method of availing, various incentives, granted by the Government of Madhya Pradesh, as per the Industrial Promotion Policy, being clarified, the Company recognised a sum of Rs. 29,15,86,018 in the Statement of Profit & Loss as "Industrial Investment Promotion Assistance". These incentives are now accounted on accrual basis. These incentives are available as per the Industrial Promotion Policy of the Government of Madhya Pradesh, based on the investment made by the Company, in eligible assets, for eligible products, in the State of Madhya Pradesh. These incentives are monetary incentives.

10. The Company is operating in a Single Segment.

11. Previous year/period''s figures are re-arranged wherever necessary and shown in brackets.


Mar 31, 2013

1. CONTINGENT LIABILITIES AND COMMITMENTS (to the extent not provided for)

As at 31st As at 31st March'' 2013 March'' 2012

(a) Contingent Liabilities

(i) Taxes & Duties 23''97''54''153 21''54''37''011

(ii) Others (Court cases pending) 26''07''24''115 23''69''33''376

(b) Commitments

Estimated amount of contracts remaining to be executed on 91''44''14''860 113''24''30''846 capital account and not provided for

Part of the estimated amount of commitments supported by letter(s) of credit issued by a Bank NIL (Rs. 18''24''05''604). The Bank holds charge on the assets of the Company'' as a security'' enforceable in case of default'' being made by the Company.

(c) As reported earlier'' a foreign company has initiated legal proceedings in a foreign court'' in respect of notional and unfounded claims for damages'' without there being any enforceable agreement'' relating to export business. The Company has obtained opinion from a Senior Counsel'' in respect of these alleged claims against the Company. The Company has been advised that such notional / unfounded claims are notasper the applicable law nor these claims'' if any'' can be enforced in the Court of LawinIndia. This information is being disclosedas per the provisions ofSchedule VI to the Companies Act'' 1956'' only to indicate the alleged claims made against the Company and the developments in respect thereof.

2. As of 31st March'' 2013'' the Company has not received any intimation'' except in few cases'' as to the status as Micro'' Small or Medium Enterprises from suppliers of the Company along with a copy of the Memorandum'' filed by the said suppliers'' as per the provisions of Section 8 of the Micro'' Small & Medium Enterprises Development Act'' 2006 (the Act). The proceedings initiated by one of the suppliers'' claiming to be a small scale enterprise'' as per the provisions of Section 18 of the Act'' culminated into an award of claim with interest for Rs. 1''56''61''877. The Company has not accepted the said liability. The Company has a major counter-claim against the said supplier amounting to about Rs. 9''06''40''899'' which being unearned income'' is not accounted. The award is challenged by the Company'' as per the provisions of the Act and proceedings are pending before the Hon''ble District Judge'' Pune'' and before the Hon''ble High Court ofJudicatureat Bombay.

3. The amount of net exchange differences included in the Profit / Loss for the year on Revenue account is Rs. 38''03''005 Credit (Rs. 2''34''23''178/-Credit)andonCapital accountisRs. 17''58''239/- Credit.(Rs.29''23''553/-Credit).

4. LEASES :

Operating Leases :

(a) Assets taken on Lease :

The Company has taken 10 vehicles on operating lease for a period of four years. Lease rentals are recognised in the Statement of Profit & Loss.

(b) Assets given on Lease :

(i) Industrial Shed at Chakan :

The Company has entered into a Lease Agreement for Industrial Shed for a period of 10 years.

The said agreement provides for progressive increase in rentals during the tenure of the agreement.

The Lessee is entitled to terminate the Lease Agreement after the expiry of 60th month from the date of agreement. The Lessor is also entitled to terminate the Lease Agreement'' if the Lessee defaults the terms and conditions of the Lease Agreement.

5. RELATED PARTY DISCLOSURES (As identified by the Management) :

(A) Name of the related parties and nature of related party relationship where control exists are as under :

(a) Subsidiary Company : Tempo Finance (West) Private Limited

(w.e.f. 14th August'' 2012)

(b) Key Management : Mr. Abhaykumar Firodia'' Chairman. Personnel : Mr. Prasan Firodia'' Managing Director

(c) Relatives of Key Management Personnel

(i) Mr. Abhaykumar Firodia : Mr. Prasan Firodia : Son

(ii) Mr. Prasan Firodia : Mr. Abhaykumar Firodia : Father

(iii) Other related parties : Jaya Hind Industries Ltd.

: Jaya Hind Investments Pvt. Ltd.

6. The Consortium of Banks has sanctioned working capital limits - both fund based and non-fund based - to the Company. These limits are secured by hypothecation of Company''s stock of raw materials'' work-in-progress'' finished goods'' consumable stores'' spares'' bills receivable and book debts'' both present and future'' situated atCompany''s factories orat any other place.

The fund based limits'' if utilised'' are payable on demand to the Banks. During the year 2012-13'' the Company has not utilised any fund based limits.

7. All amounts which became due'' for transfer to the Credit of Investor Education and Protection Fund'' as of 31st March'' 2013'' have been transferred to that fund'' except a sum of Rs. 60''000/- being amount of 5 (five) fixed deposits and interest thereon amounting to Rs. 5''580/-. In view of the directives received from the Government Authorities'' these amounts are not transferred to the Fund'' being involvedinan investigation.

8. As per the Accounting Standard AS 26 - Intangible Assets'' the Company has recognised Intangible Assets arising out of in- house Research and Development activities of the Company amounting to Rs. 6''65''42''452/-'' in the development phase of a new model Multipurpose Vehicles. As the development activity is continued'' the said asset is considered as Capital Work-in- progress'' and will beamortized over the period ofits life'' after completion ofthe development phase.

9. The Companyis operatinginaSingle Segment.

10. Previous year/period''s figures are re-arranged wherever necessary and showninbrackets.


Mar 31, 2012

(a) Terms/rights attached to equity shares :

The Company has issued equity shares. All equity shares issued rank pari passu in respect of distribution of dividend and repayment of capital. 13,032,914 equity shares are quoted equity shares with no restriction on transfer of shares. 27,600 equity shares are A' equity shares which are transferrable only to permanent employees of the Company. 1,15,748 equity shares are Second A' equity shares which are transferrable to permanent employees, who have put in five years of service with the Company.

(b) The Board of Directors has recommended a dividend of Rs.10/- (Rs. 5/-) per share on 1,31,76,262 (1,31,76,262) equity shares of Rs.10/- each fully paid up.

(c) In the event of liquidation of the Company, the holders of equity shares 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.

(d) Shares held by holding/ultimate holding company and/or their subsidiaries/associates

The Company is not a subsidiary of any other company.

(i) The Term Loan availed from Banks was payable in twenty equal quarterly installments along with accrued interest till the date of payment of installment. These loans were secured by a first charge, by way of equitable mortgage, over the immovable properties of the Company and second charge on the stock of material, book debts (whether present or future) and situated at Companies factories at Akurdi, Dist. Pune, Maharashtra and Pithampur, Dist. Dhar, Madhya Pradesh. The charge created in favour of various banks ranked pari passu inter-se. The Company has prepaid the outstanding term loan amounting toRs.11,30,00,000 before 31st March, 2012.

(ii) Deposits included deposits accepted from the Promoters. These deposits were payable based on understanding with the Promoters, which have been repaid before the balance sheet date.

(iii) Other deposits accepted by the Company are for a period ranging between 1 to 3 years from the date of acceptance of each deposits.

The Consortium of Banks, have sanctioned working capital limits - both fund based and non-fund based - to the Company. These limits are secured by hypothecation of Company's stock of raw materials, work-in-progress, finished goods, consumable stores, spares, bills receivable and book debts, both present and future, situated at Company's factories or at any other place.

As of 31st March, 2012, the Company has not utilized any fund based limit. Non-fund based limits were utilized to the extent of Rs. 43,69,55,973. The fund based limits, if utilized, are payable on demand to the Banks.

(i) The Term Loan availed from Banks was payable in twenty equal quarterly installments along with accrued interest till the date of payment of installment. These loans were secured by a first charge, by way of equitable mortgage, over the immovable properties of the Company and second charge on the stock of material, book debts (whether present or future) and situated at Companies factories at Akurdi, Dist. Pune, Maharashtra and Pithampur, Dist. Dhar, Madhya Pradesh. The charge created in favour of various banks ranked pari passu inter-se. The Company has prepaid the outstanding term loan amounting to Rs. 11,30,00,000.

(ii) Deposits accepted by the Company are for a period ranging between 1 to 3 years from the date of acceptance of each deposits.

1. EXCEPTIONAL ITEMS

As reported earlier, during the year underreport, Company as per the terms and conditions of the contractual arrangement with MAN Truck and Bus AG, Germany (MAN), sold and transferred 5,57,97,100 equity shares of MAN FORCE Trucks Private Limited (the said company), now known as MAN Trucks India Private Limited, to MAN for a consideration of Euro 15,00,00,000 (equivalent amount received in Rs. 1016,50,65,000). With the transfer of these shares of the said company, the said company ceases to be a Joint Venture between the Company and MAN. The Company will continue to support the said company by rendering services for limited period. The gain arising out of sale and transfer of the shares of the said company has been treated as an exceptional item.

2. CONTINGENT LIABILITIES AND COMMITMENTS

(to the extent not provided for) As at 31st As at 31st March, 2012 March, 2011

(a) Contingent Liabilities

(i) Taxes & Duties 21,54,37,011 19,89,82,542

(ii) Others (Court cases pending) 23,69.33,376 21,75,49,955

(b) Commitments

Estimated amount of contracts remaining to be executed on 113.24,30,846 47,98,62,487 capital account and not provided for

Part of the estimated amount of commitments, referred above, being Rs. 18,24,05,604 is secured by a letter of credit issued by a Bank. The Bank holds charge on the assets of the Company, as a security, enforceable in case of default, being made by the Company.

(c) As reported earlier, a foreign company has initiated legal proceedings in a foreign court, in respect of notional and unfounded claims for damages, without there being any enforceable agreement, relating to export business. The Company has obtained opinion from a Senior Counsel, in respect of these alleged claims against the Company. The Company has been advised that such notional / unfounded claims are not as per the applicable law nor these claims, if any, can be enforced in the Court of Law in India. This information is being disclosed as per the provisions of Schedule VI to the Companies Act, 1956, only to indicate the alleged claims made against the Company and the developments in respect thereof.

3. As of 31st March, 2012, the Company has not received any intimation, as to the status as a Micro, Small or Medium Enterprises from any of the suppliers, with a copy of the Memorandum filed as per the provisions of Section 8 of the Micro, Small and Medium Enterprises Development Act, 2006 (the Act). One of the suppliers initiated proceedings, under Section 18 of the Act, which were converted into arbitration proceedings as per the provisions of Section 18(3) of the Act. These proceedings culminated in an arbitration award, awarding a claim of Rs.1,56,61,877 including interest. Out of the said sum, a sum of Rs. 40,41,660 is part of the trade payables disclosed at Sr. No. 3(b) of the Balance Sheet as at 31st March, 2012. The amount of interest has not been provided by the Company, as the Company has not accepted the liability. Moreover, the Company has a counter-claim on the said supplier amounting to about Rs. 9,06,40,899, which being an unearned income is not accounted. The Company is seeking legal advice for initiating appropriate proceedings, including before the Hon'ble High Court of Judicature at Bombay, for challenging the award and/or the procedure followed by the Micro and Small Enterprises Facilitation Council, (the Arbitrator), as may be advised.

4. LEASES :

Operating Leases :

(a) Assets taken on Lease :

The Company has taken 10 vehicles on operating lease for a period of four years.

Lease rentals are recognised in the Statement of Profit & Loss.

(b) Assets given on Lease :

(i) Industrial Shed at Chakan :

The Company has entered into a Lease Agreement for Industrial Shed for a period of 10 years.

The said agreement provides for progressive increase in rentals during the tenure of the agreement.

The Lease is entitled to terminate the Lease Agreement after the expiry of 60th month from the date of agreement. The Lessor is also entitled to terminate the Lease Agreement, if the Lease defaults the terms and conditions of the Lease Agreement.

The Lease income has been recognised in Statement of Profit & Loss.

On termination of lease, due to exercise of the option by the Lessee, at the end of 60 months, the Lessee shall be liable to pay a sum ofRs. 2,00.00,000/-.

(ii) Freehold land at Akurdi :

Out of the freehold land at Akurdi, 2700 sq. mtrs. (costRs. 1,374/-) of land has been given on lease to Maharashtra State Electricity Distribution Company Limited for 99 years, w.e.f. 1st August, 1989. Lease rentals are recognised in the Statement of Profit & Loss.

5. As reported earlier, during the year under report, Company as per the terms and conditions of the contractual arrangement with MAN Truck and Bus AG, Germany (MAN), sold and transferred 55,797,100 equity shares of MAN FORCE Trucks Private Limited (the said company), now known as MAN Trucks India Private Limited, to MAN for a consideration of Euro 15,00,00,000 (equivalent amount received in Rs. 1016,50.65,000). With the transfer of these shares of the said company, the said company ceases to be a Joint Venture between the Company and MAN. The Company will continue to support the said company by rendering services for limited period. The gain arising out of sale and transfer of the shares of the said company has been treated as an exceptional item.

6. All amounts which became due, for transfer to the Credit of Investor Education and Protection Fund, as of 31 st March, 2012, have been transferred to that fund, except a sum of Rs. 60,000/- being amount of 5 (five) fixed deposits and interest thereon amounting to Rs. 25,051 /-. In view of the directives received from the Government Authorities, these amounts are not transferred to the Fund, being involved in an investigation.

7. The Company is operating in a Single Segment.

8. Previous year/period's figures are re-arranged wherever necessary and shown in brackets.


Mar 31, 2011

1. (a) The Company's Income-tax and Wealth-tax assessments have been completed upto the accounting year 2007-2008.

(b) The Company is registered as a dealer under various State Sales Tax Laws. The Company's Sales-tax assessments have been completed upto the accounting year 2004-2005 of Akurdi Plant & 2008-2009 of Pithampur Plant.

2. Contingent Liability in respect of :

31-3-2011 31-3-2010

Rs. Rs.

(a) Letters of Credit and Bank Guarantees outstanding 28,64,21,365 16,77,31,479

(b) Taxes and Duties 19,89,82,542 17,70,06,859

(c) Others 21,75,49,955 20,86,22,597

(d) As reported earlier, a foreign company has initiated legal proceedings in a foreign court, in respect of notional and unfounded claims for damages, without there being any enforceable arrangement, relating to export business. The Company has obtained opinion from a Senior Counsel, in respect of these alleged claims against the Company. The Company has been advised that such notional / unfounded claims are not as per the applicable law nor these claims, if any, can be enforced in the Court of Law in India. This information is being disclosed as per the provisions of Schedule VI to the Companies Act, 1956, only to indicate the alleged claims made against the Company and the developments in respect thereof.

3. As of 31st March, 2011, the Company has not received any intimation as to the status as a Micro, Small & Medium Enterprises from any of the suppliers, with a copy of the Memorandum filed as per the provisions of Section 8 of the Micro, Small and Medium Enterprises Development Act, 2006.

4. Leases :

Operating Leases :

(a) Assets taken on Lease :

The Company has taken office / residential premises (including furniture fittings therein as applicable), guest houses and vehicles for the use by its employees / business use, on Operating Lease.

Lease terms in respect of office / residential premises are on the basis of individual agreements entered into with the landlord.

The lease term in respect of vehicles is for 4 years.

Lease rent payments are recognised in the Profit & Loss Account.

(b) Assets given on Lease :

The Company has entered into a Lease Agreement for Industrial Shed for a period of 10 years.

The said arrangement provides for progressive increase in rentals during the tenure of the agreement.

The Lessee is entitled to terminate the Lease Agreement after the expiry of 60th month from the date of agreement. The Lessor is also entitled to terminate the Lease Agreement, if the Lessee defaults the terms and conditions of the Lease Agreement.

The estimates of the future salary increases, considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors, such as demand and supply in the employment market. The Liability for Earned leave, for Temporary Employees (short term) has been provided on actual basis, amounting to Rs. 14,13,732/- (Rs. 10,34,864/-). 21. Related party disclosures ( As identified by the Management )

(A) Name of the related parties and nature of related party relationship where control exists are as under :

(a) Joint Venture Company : MAN FORCE TRUCKS Private Limited

(b) Key Management Personnel : Mr. Abhay Firodia

Chairman

: Mr. Prasan Firodia Managing Director

(c) Relatives of Key Management Personnel :

(i) Mr. Abhay Firodia : Mr. Prasan Abhay Firodia : Son

: Mrs. Sunanda Sudhir Mehta : Daughter

: Mrs. Kamla Bansilal Bhandari : Sister

(ii) Mr. Prasan Firodia : Mr. Abhay Navalmal Firodia : Father

: Mrs. Sunanda Sudhir Mehta : Sister

(d) Other Related Parties : Jaya Hind Investments Pvt. Ltd.

: Jaya Hind Industries Ltd.

: Pinnacle Industries Limited

5. No amount as on 31st March, 2011, became due for transfer to the credit of the Investors Education and Protection Fund.

6. Sundry Debtors include Rs. 78,54,35,038/- being the amount receivable from MAN FORCE TRUCKS Private Limited.

7. The Company is operating in a Single Segment.

8. Previous year's figures are re-arranged wherever necessary and shown in brackets.


Mar 31, 2010

1. (a) The Companys Income-tax and Wealth-tax assessments have been completed upto the accounting year 2006-2007.

(b) The Company is registered as a dealer under various State Sales Tax Laws. The Companys Sales-tax assessments have been completed up to the accounting year 2004-2005 of Akurdi Plant & 2006-2007 of Pithampur Plant.

2. Contingent Liability in respect of : Rupees Rupees

(a) Letters of Credit and Bank Guarantees outstanding 16,77,31,479 (11,51,92,204)

(b) Taxes and Duties 17,70,06,859 (14,04,13,794)

(c) Others 20,86,22,597 (18,31,75,443)

Based on the allegation that Education Cess is payable on Automobile Cess, the Central Excise Department, Pithampur, issued four Show Cause Notices in respect of Excise Duty paid by utilising Cenvat Credit availed by the Company demanding duty of Rs. 275,03,92,760/-. The very basis of this alleged demand does not survive, in view of the subsequent decision of the Excise Authorities at Pithampur that the Education Cess is not payable on Automobile Cess.

(d) A foreign company has initiated legal proceedings in a court, having no jurisdiction, claiming notional and unfounded damages, relating to export business, which was not entered into by the Company. The Company has not submitted to the jurisdiction of the foreign court, as advised. This information is disclosed as per the provisions of Schedule VI to the Companies Act, 1956 only to indicate the alleged claims made against the Company.

3. As of 31st March, 2010, the Company has not received any intimationastothe statusasaMicro, Small &Medium Enterprises from any of the suppliers, with a copy of the Memorandum filed as per the provisions of Section 8 of the Micro, Small andMedium Enterprises Development Act, 2006.

Considering the increase in turnover of the Company, profits for the year ended on 31st March, 2010, growth in the sale of types of products being manufactured and sold by the Company, the Board of Directors of the Company is of the opinion that the Deferred Tax Asset arising out of expenses incurred, provisions made being timing difference and the Deferred Tax Asset in respect of carry forward business losses, as on 31st March, 2009 after considering the profit for the financial year ended on that day need to be recognised as per the provisions of Accounting Standard 22 being part of the Companies (Accounting Standards) Rules, 2006. Accordingly, the Companyhas recognised the Deferred TaxAssetsofRs.22,64,16,649,asdetailed above.

The estimates of the future salary increases, considered in actuarial valuation, takes into account inflation, seniority, promotion and otherrelevant factors, suchasdemand and supplyinthe employment market. The Liability for Earned leave, for Temporary Employees (short term) has been provided on actual basis, amounting to Rs. 10,34,864/-(Rs. 1,59,316/-).

4. Related party disclosures(As identified by the Management )

(A) Name of the related parties and nature of related party relationship where control exists are asunder :

(a) JointVentureCompany : MANFORCETRUCKSPrivateLimited

(b) Key Management Personnel : Mr. Abhay Firodia

Chairman

: Mr. Prasan Firodia Managing Director

(c) RelativesofKey Management Personnel :

(i) Mr. Abhay Firodia : Mr. Prasan Abhay Firodia : Son

: Mrs. Sunanda Sudhir Mehta : Daughter

: Mrs. Kamla Bansilal Bhandari : Sister

(ii) Mr. Prasan Firodia : Mr. Abhay Navalmal Firodia : Father

: Mrs. Sunanda Sudhir Mehta : Sister

(d) Other Related Parties : Jaya Hind Investments Pvt. Ltd.

: Jaya Hind Industries Ltd. : Pinnacle Industries Limited

5. (a) As reported earlier, the Company obtained Licenses, in respect of Technology and Know-how, for manufacture of Gear Boxes. The Company was in discussion with the Licensor viz. ZF Friedrichshafen AG, Germany, in respect of exhaustive arrangement connected with these licensed products, but as the Company and the Licensor could not reach an agreement in respect of various aspects of technology and business, as agreed, the licensor permitted to retain part of the advance received by the Company. This arrangement; thus has resulted in gain arising out of the Licensing Agreement. The said gain of Rs. 21,11,10,000 has been treated as a non-revenue gain and exceptional item as it relates to intangible assets ownedbythe Company.

(b) During the year under report, the Company sold 4,22,050 equity shares of Rs. 10 each of Tempo Finance (West) Private Limited,erstwhile subsidiaryofthe Company, and madeagainofRs. 54,86,650.

(c) As per the provisionsofScheduleVIofthe Companies Act, 1956 and guidance note issued bythe Institute of Chartered Accountants of India, the above gains have been credited to the Profit & loss Account for the financial year 2009-10.

6. No amount, as on 31st March, 2010, became due for transfer to the credit of the Investors Education and Protection Fund.

7. Sundry Debtors include Rs.91,01,96,865, being the amount receivablefrom MAN FORCE TRUCKS Pvt. Ltd.

8. The Company is operating in a Single Segment.

The Companys interest in the Joint Venture is reported as Long Term Investments (Schedule 6)and stated at cost. The Companys share of each of the assets, liabilities, income and expenditure (each without elimination of, the effect of transactions between the Company and the joint venture), contingent liabilities and capital commitments as at 31st March, 2010 are as under :

III. Contingent Liabilities

9. Previous year / periods figures are re-arranged wherever necessary and shown in brackets. As per our separate report of even date attached

 
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