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Notes to Accounts of Greaves Cotton Ltd.

Mar 31, 2017

1. RISK MANAGEMENT

2. Capital risk management

The Company manages its capital to ensure that it will be able to continue as a going concern while maximizing the returns to stakeholders. The company has no borrowings, except cash credit facilities.

3. Financial instruments

The significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income & expenses are recognized, in respect of each class of financial asset, financial liability and equity instrument are as disclosed in note no. 8, 9 & 18 to financial statements.

4. Financial and liquidity risk management objectives

5. The Company has a very conservative policy on investing surplus funds. The investments are in debt schemes of mutual funds and fixed deposits with banks and financial institutions. Highest rated portfolios of the mutual funds are selected with high liquidity.

6. The average payment terms of creditors (trade payables) is 76 days. In case of MSMED creditors the payment terms are within 45 days. Other financial liabilities viz. employee payments, dealer deposits are payable within one year.

7. Trade receivables are secured against letters of credit, bank guarantees and security deposits. At the end of the year, there is no significant concentration of credit risk for trade receivables as only three parties constitutes more than 5% of the total outstanding amount and is fully secured by letter of credit.

8. Of the total outstanding as at reporting date, 70% of the total debts are secured receivables. In case of unsecured receivables the company has a credit policy where the provision for debts outstanding is made based on provision matrix to compute the expected credit loss allowance taking into account historical experience of customers and the credit limit as determined by the management.

9. The products of the Company under engine segment include application of engines in farm equipment and genets. The products under other segment include products traded by International Business and After Market Business

10. Foreign currency risk management

The use of foreign currency forward contracts is governed by the Company''s strategy, approved by the Board of Directors, which provides principles on the use of such forward contracts consistent with the Company''s Risk Management Policy. The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and forecasted transactions for amounts in excess of natural hedge available on export realizations against import payments. The Company does not use forward contracts for speculative purposes.

11. This is mainly attributable to the exposure outstanding on foreign currency receivables and payables in the Company at the end of the reporting period.

12. The company hedges its net exposure in foreign currencies and as such the profit or loss of the company is not subject to foreign exchange fluctuation.

13. Credit risk management

The company has credit policy for its trade receivables. To minimise the risk company takes letters of credit, bank guarantees and security deposits from the customers based on the credit worthiness. Ongoing credit evaluation is performed on the financial condition of accounts receivable.

14. Fair value measurements

This note provides information about how the Company determines fair value of various financial asset and financial liabilities.

15. Fair value of the Company''s financial assets and financial liabilities that are measured at fair value on recurring basis:

Some of Company financial asset and financial liabilities are measured at fair value at end of the reporting period.

The following table gives information about how the fair value of these financial assets and liabilities are determined

35. SEGMENT INFORMATION segment identification:

Business segments have been identified on the basis of the nature of products/services, their risk-return profile, the organizational structure and the internal reporting system of the Company.

Reportable segments:

Reportable segments have been identified as per the aggregation criteria specified in Ind AS-108:''Operating Segments''

Segment Composition:

16. Engines include application of engines in farm equipment and gensets.

17. Others include products traded by International Business and After Market Business.

Operating segments:

18. The risk-return profile of the Company''s business is determined predominantly by the nature of its products and services.

19. In respect of geographical information, the Company has identified its geographical areas as (i) Domestic and (ii) Overseas.

The expenses and incomes which are not directly attributable to the business segments are shown as central administration costs. Unallocated assets mainly comprise of investments, cash and bank balances, advance tax and unallocated liabilities mainly include tax provisions and provisions for employee retirement benefits.

20. discontinued operations

21. plan to dispose of the manufacturing operations of construction Equipment (Infrastructure) Business

On 18th September 2014, the Company discontinued manufacturing operations of Construction Equipment (Infrastructure) business due to non-viability and accordingly the related assets are disclosed as assets held for sale.

22. Analysis of profit for the year from discontinued operations

The result of the discontinued operations included in the profit for the year are set out below. The comparative profit and cash flows from discontinued operations have been presented as if these operations were discontinued in the prior years as well.

23. Short Term Finance facilities from Banks and Cash Credit facilities (Nil balance as at Balance Sheet date) are secured by hypothecation of all inventory, spares, tools and book debts, present and future, of the Company. The charges on these assets also extend to letters of credit and bank guarantees up to Rs. 6.57 crore (previous year Rs. 2.49 crore) and Rs. 6.88 crore (previous year Rs. 3.14 crore) respectively.

24. The income tax assets (Net) under noncurrent assets represents the difference between the advance taxes paid for past years net of provisions.

25. The income tax liabilities (Net) under current liabilities represents the income tax liabilities for current and past years net of advance taxes paid.

26. RECENT ACCOUNTING PRONOUNCEMENTS - STANDARDS ISSUED BUT NOT YET EFFECTIVE:

In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7, ''Statement of cash flows'' and Ind AS 102, ''Share-based payment''. These amendments are in accordance with the recent amendments made by International Accounting Standards Board (IASB) to IAS 7, ''Statement of cash flows'' and IFRS 2, ''Share-based payment'', respectively. The amendments are applicable to the company from 1st April 2017.

Amendment to Ind AS 7:

The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement.

The company is evaluating the requirements of the amendment and its effect on the financial statements.

Amendment to Ind AS 102:

The amendments to Ind AS 102 provides specific guidance to measurement of cash-settled awards, modification of cash-settled awards and awards that include a net settlement feature in respect of withholding taxes.

The company does not expect this amendment to have any impact on its financial statements.

27. Adjustments to Statement of cash flows

There were no material differences between the Statement of Cash Flows presented under Ind AS and the previous GAAP.

28. Notes to first time adoption

29. Under the previous GAAP, dividends proposed by the Board of Directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend was recognized as a liability. Under Ind AS, such dividends are recognized when the same is approved by the Shareholders in the general meeting. Accordingly, the liability for proposed dividend of Rs. 29.53 crore as at 31st March 2016 (1st April 2015 - Rs. 32.15 crore) included under provisions has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity increased by an equivalent amount.

30. Under the previous GAAP, investments in equity instruments and mutual funds were classified as long-term investments or current investments based on the intended holding period and reliability. Long-term investments were carried at cost less permanent diminution in the value of such investments. Current investments were carried at lower of cost and fair value. Under Ind AS, these investments are required to be measured at fair value. The resulting fair value changes of these investments have been recognized in retained earnings as at the date of transition and subsequently in the profit or loss for the year ended 31st March 2016. This increased the retained earnings by Rs. 1.86 crore as at 31st March 2016 (1st April 2015 - Rs. 0.47 crore).

31. Under the previous GAAP, interest free lease security deposits (that are refundable in cash on completion of the lease term) are recorded at their transaction value. Under Ind AS, all financial assets are required to be recognized at fair value. Accordingly, the Company has fair valued these security deposits and under Ind AS. Difference between the fair value and transaction value of the security deposit has been recognized as prepaid rent. Consequent to this change, the amount of security deposits decreased by Rs. 0.13 crore as at 31st March 2016 (1st April 2015 - Rs. 0.26 crore). The prepaid rent increased by Rs. 0.12 crore as at 31st March 2016 (1st April 2015 - Rs. 0.25 crore). Total equity decreased by Rs. 0.01 crore as on 1st April 2015. The profit for the year and total equity as at 31st March 2016 decreased by Rs. 0.01 crore due to amortization of the prepaid rent of Rs. 0.13 crore which is partially off-set by the notional interest income of Rs. 0.12 crore recognized on security deposits.

32. Under Ind AS, investment property is required to be presented separately in the balance sheet and depreciation is charged on it. Accordingly, the carrying value of investment property as at 1st April 2015 of Rs. 4.28 crore and as at 31st March 2016 of Rs. 4.08 crore under previous GAAP has been reclassified to a separate line item on the face of the balance sheet. The Company has opted for the deemed cost exemption available to it in accordance with Ind AS 101. There was no impact on total equity or total comprehensive income due to this adjustment.

33. Under the previous GAAP, the premium or discount arising at the inception of forward exchange contracts entered into to hedge an existing asset / liability, is amortised as expense or income over the life of the contract. Exchange differences on such a contract are recognized in the statement of profit and loss in the reporting period in which the exchange rates change. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognized as income or as expense for the period.

Forward exchange contracts outstanding as at the year-end on account of firm commitment / highly probable forecast transactions are marked to market and the losses, if any are recognized in the statement of profit and loss and gains are ignored in accordance with the announcement by the Institute of Chartered Accountants of India on "Accounting for Derivatives" issued in March 2008.

Under Ind AS 109, derivatives which are not designated as hedging instruments are fair valued with resulting changes being recognized in statement of profit and loss. Consequent to this adjustment, the equity of the company increased by Rs. 0.16 crore as at 31st March 2016 (increased by Rs. 0.07 crore as at 1st April 2015).

34. Under Ind AS 19, re-measurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognized in other comprehensive income instead of statement of profit and loss. Under the previous GAAP, these re-measurements were forming part of the statement of profit and loss for the year. As a result of this change, the Statement of profit for the year ended 31st March 2016 decreased by Rs. 0.99 crore (Net of tax). There is no impact on the total equity as at 31st March 2016.

Under Ind AS, all items of income and expense recognized in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognized in profit or loss but are shown in the statement of profit and loss as ''other comprehensive income'' includes re-measurements of defined benefit plans. The concept of other comprehensive inco


Mar 31, 2016

Contingent liability is disclosed in the case of:

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

ii) a present obligation when no reliable estimate is possible, and

iii) a possible obligation, arising from past events where the probability of outflow of resources is not remote.

Contingent assets are neither recognized nor disclosed.

Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date and updated / recognized as appropriate.

d) Terms / Rights attached to equity shares

(i) The Company has only one class of equity shares having a face value of Rs,2 per share. The equity share rank pari pasu in all respects including voting rights and entitlement of dividend.

(ii) In the event of liquidation of the Company, the holder of equity shares will be entitled to receive the remaining assets of the Company, after distribution of all preferential amounts, if any, in proportion to the number of equity shares held by the shareholders.

*As at 1st April, 2015, in accordance with Schedule II to Companies Act, 2013 the company carried out exercise of componentization of fixed assets. The impact of additional depreciation (net of deferred tax benefit of Rs,0.47 crore) was adjusted against the opening balance of Retained Earnings.

In previous year it represents the written down value of fixed assets (net of residual value), which have no balance useful life in accordance with Schedule II to Companies Act, 2013 as at 1st April, 2014. These balances (net of deferred tax benefit of Rs,3.89 crore) have been adjusted against the opening balance of Retained Earnings.

The Company gives warranties for its products, undertaking to repair or replace the items that fail to perform satisfactorily during the warranty period. Provision made at the yearend represents the amount of expected cost of meeting such obligations of rectification / replacement. The timing of the outflows is expected to be within a period of eighteen months.

NOTES : (I) Net block of Freehold Land and Building includes Rs, 3.91 crore (Previous Period Rs, 3.91 crore) added on revaluation as on 31st May, 1987.

(II) Freehold Building includes Rs, 5.84 crore (Previous Period Rs, 5.94 crore) towards cost of ownership flats in Co-operative Housing Societies / Condominium and cost of Nil shares (Previous Period 5 shares) ofRs, 50/- each.

(III) *Represents the assets of dis-continued manufacturing operations of Construction Equipment (Infrastructure) Business, which are identified by management as ''Assets held for sale''.

(IV) **During the year, componentization of fixed assets was carried out in accordance with Schedule II to Companies Act, 2013 as at 1st April, 2015. The impact of additional depreciation isRs, 1.36 crore. It also includes the impairment of certain assetsRs,6.47 crore (net of impairment reversal of previous yearRs,0.36 crore).

Disclosure as required by Accounting Standard (AS)-15 (Revised) ''Employee Benefits'' :

1. Defined Contribution Plans:

The amount recognized as an expense during the year ended 31st March, 2016 towards Provident Fund (including admin charges), ESIC contribution and Superannuation is '' 6.27 crore (Previous Year Rs,7.06 crore), Rs,0.21 crore (Previous Year Rs,0.31 crore) and Rs,3.33 crore (Previous Year Rs,3.65 crore) respectively.

2. Defined Benefit Plans:

A) Gratuity & Excreta:

The Company has a defined benefit plan (the ''Gratuity Plan''), managed by trusts. The Gratuity Plan provides for a lump sum payment to vested employees at retirement or termination of employment, whichever is earlier, based on the respective employee''s last drawn salary and years of employment with the Company. The benefit vests after five years of continued service.

B) Compensated Absence:

The obligation for compensated absences is recognized in the same manner as gratuity and net charge to the Statement of Profit and Loss for the year is Rs,6.52 crore (Previous Year Rs,2.65 crore).

C) Retirement Pension Scheme:

For UK branch employees, based on the estimation given by the actuary, the Company has recognized a write back of Rs,0.94 crore, equivalent to GBP 96,700 (Previous year charge of Rs,0.58 crore, equivalent to GBP 62,300) towards present value of post retirement pension. The yearend balance amounts to Rs,Nil, equivalent to GBP Nil (Previous year Rs,3.25 crore, equivalent to GBP 352,000).

Note:

The estimates of future increase in salary, considered in the actuarial valuation, have been derived based on expected inflation, seniority changes, promotion and other relevant factors such as demand in the employment market.

Notes:

1) During the Year the company provided for permanent diminution in the value of its investment in Greaves Cotton Middle East FZC (''GCME'') as company decided to scale down the operations of GCME on account of continued losses.

2) During the year the company sold some of its immovable properties.

3) Based on the assessment of carrying value of some of the assets, its relisable value & the expected future economic benefits, the company provided for impairment on Land & Building at Gummidipoondi, Plant and Equipment at various locations.

No amounts are written off / written back during the year (Previous Year Nil). During the year, provision which was created in the previous year on amount due from Greaves Cotton Middle East FZC Rs,3.7 crore has been reversed Rs,3.7 crore.

Transactions when rounded off are lower than Rs,1 lac, are not disclosed in the above details.

Segment Identification, Reportable Segments and Segment Composition:

Segment Identification:

Business segments have been identified on the basis of the nature of products / services, the risk-return profile of individual divisions, the organizational structure and the internal reporting system of the Company.

Reportable Segments:

Reportable segments have been identified as per the quantitative criteria specified in Accounting Standard (AS)-17: ''Segment Reporting''

Segment Composition:

1. Engines include Agro products and Gensets.

2. Infrastructure Equipment comprises of equipment used in road construction, bridges, dams, mining, etc.

3. Others includes products traded by International and After Market Business.

Primary / secondary Segment:

1. The risk-return profile of the Company''s business is determined predominantly by the nature of its products and services. Accordingly, the business segments constitute the primary segments for disclosure of segment information.

2. In respect of secondary segment information, the Company has identified its geographical segments as (i) Domestic and

(ii) Overseas.

The expenses and incomes which are not directly attributable to the business segments are shown as unallowable income / expenditure. Unallowable assets mainly comprise of investments, cash and bank balances, advance tax and unallowable liabilities mainly include loan funds, tax provisions and provisions for employee retirement benefits.

b) Derivative Instruments:

The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and forecasted transactions. The use of foreign currency forward contracts is governed by the Company''s strategy, approved by the Board of Directors, which provides principles on the use of such forward contracts consistent with the Company''s Risk Management Policy. The Company does not use forward contracts for speculative purposes.

3. DUES TO MICRO AND SMALL ENTERPRISES:

The information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) has been determined to the extent such parties have been identified on the basis of information available with the Company.

4. Short Term Finance facilities from Banks and Cash Credit facilities (Nil balance as at Balance Sheet date) are secured by hypothecation of all inventory, spares, tools and book debts, present and future, of the Company. The charges on these assets also extend to letters of credit and bank guarantees upto Rs,2.49 crore (Previous Year Rs,4.59 crore) and Rs,3.14 crore (Previous Year Rs,4.05 crore) respectively.

5. Figures for the previous year have been regrouped / reclassified, wherever necessary.


Mar 31, 2014

1 General Information:

Greaves Cotton Limited (the ''Company'') is engaged in manufacturing of engines and construction equipment and trading of power tillers, motor graders etc. The Company has manufacturing facilities in the states of Maharashtra and Tamil Nadu. The products are mainly sold in India with some export to Middle East, Africa & South East Asia Region. The Company has one direct and two indirect subsidiaries having operations in India and Sharjah.

2. Defined Contribution Plans:

The amount recognised as an expense during the year ended 31st March 2014 towards Provident Fund (including admin charges), ESIC contribution and Superannuation is Rs. 7.34 crore (Previous Year Rs. 7.93 crore), Rs. 0.45 crore (Previous Year Rs. 0.60 crore) and Rs. 3.62 crore (Previous Year Rs. 3.03 crore) respectively.

3. Defined Benefit Plans:

A) Gratuity :

The Company has a defined Benefit plan (the ''Gratuity Plan''), managed by trusts. The Gratuity Plan provides for a lump sum payment to vested employees at retirement or termination of employment, whichever is earlier, based on the respective employee''s last drawn salary and years of employment with the Company. The Benefit vests after five years of continued service.

B) Compensated Absence:

The obligation for compensated absences is recognised in the same manner as gratuity and net charge to the Statement of Profit and Loss for the year is Rs. 1.17 crore (Previous Year Rs. 1.39 crore).

C) Retirement Pension Scheme:

For UK branch employees, based on actuarial valuation, the Company has recognised a charge of Rs. Nil, equivalent to GBP Nil (Previous year Rs. 1.36 crore, equivalent to GBP 157,350) towards present value of post retirement pension. The year end balance amounts to Rs. 3.35 crore, equivalent to GBP 335,800 (Previous year Rs. 3.17 crore, equivalent to GBP 381,900).

a) i) Greaves Auto Limited (GAL), wholly owned subsidiary of the Company was liquidated as at 10th April 2014 using the Fast

Track Exit Mode as prescribed in the Guidelines for Fast Track Exit Mode for defunct companies under section 560 of the Companies Act, 1956 - The liquidation loss in relation to this investment was accounted in the books of account. There were no operations in GAL since its inception.

ii) The Company''s wholly owned subsidiary, Greaves Cotton Netherlands BV (GCN), held 100% stake in Greaves Farymann Diesel GmbH (GFD). The Company had provided Corporate Guarantee on behalf of GFD in the past. To meet the conditions of such Corporate Guarantee and also to enable GFD to settle its outstanding liabilities, the Company made further investment in GCN, which in turn invested the proceeds in GFD. GCN divested its stake in GFD in October 2013 at a loss. In December 2013, liquidation proceedings for GCN were initiated, which concluded in March 2014. The management has accounted for both impairment and liquidation loss in relation to its investments in GCN in the books of account as at 31st March 2014.

b) During the year, the management of the Company carried out an exercise of rationalisation of manpower at few locations. It offered separation scheme to the employees and paid compensation for the same.

c) During the year, the Company sold two of its residential properties and earned profit thereon.

d) During the year, the Company closed its foundry. The fixed asset impairment on closure is recognised in the books by writing down the asset values to their estimated realisable value.

No amounts are written of / written back during the year except for Investment in Greaves Cotton Netherlands B.V of Rs. 67.32 crore (Previous year Rs. Nil) and Trade receivables from Greaves Farymann Diesel GmbH of Rs. 3.07 crore (Previous year Rs. Nil).

Transactions when rounded of are lower than Rs. 1 lac, are not disclosed in the above details.

IV. Key Management Personnel (KMP):

Remuneration to Managing Director Rs. 2.22 crore (Previous Year Rs. 1.90 crore).

Segment Identification:

Business segments have been Identified on the basis of the nature of products/services, the risk-return Profile of individual divisions, the organisational structure and the internal reporting system of the Company.

Reportable Segments:

Reportable segments have been Identified as per the quantitative criteria specified in Accounting Standard (AS)-17:'' Segment Reporting''

Segment Composition:

1. Engines include Agro products and Gensets.

2. Infrastructure Equipment comprises of equipment used in road construction, bridges, dams, mining, etc.

3. Others includes products traded by International and After Market Business.

Primary / secondary Segment:

1. The risk-return Profile of the Company''s business is determined predominantly by the nature of its products and services. Accordingly, the business segments constitute the primary segments for disclosure of segment information.

2. In respect of secondary segment information, the Company has Identified its geographical segments as (i) Domestic and (ii) Overseas.

The expenses and incomes which are not directly attributable to the business segments are shown as unallocable income/ expenditure. Unallocable assets mainly comprise of investments, cash and bank balances, advance tax and unallocable liabilities mainly include loan funds, tax provisions and provisions for employee retirement Benefits.

4. Details of Lease Transactions:

a) Certain properties, computers & vehicles are taken on non-cancellable operating lease. These lease agreements are normally renewed on expiry.

b) Rent expense in respect of operating lease, for year ended, 31st March 2014, was Rs. 10.39 crore (Previous Year Rs. 9.93 crore).

c) The lease agreements provide for an option to the Company to renew the lease at the end of the non-cancellable period. There are no exceptional / restrictive covenants in the lease agreements.

b) Derivative Instruments:

The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and forecasted transactions. The use of foreign currency forward contracts is governed by the Company''s strategy, approved by the Board of Directors, which provides principles on the use of such forward contracts consistent with the Company''s Risk Management Policy. The Company does not use forward contracts for speculative purposes.

5. Details on Borrowing costs:

Disclosure as required by Accounting Standard (AS)-16 ''Borrowing Costs'' No borrowing costs have been capitalised during the year

6. Management has evaluated the need for impairment of assets as required by Accounting Standard (AS)-28 '' Impairment of Assets'' and on the basis of such evaluation, management has provided for necessary impairment as at 31st March 2014.

7. Figures for the previous year have been regrouped / reclassified, wherever necessary.


Mar 31, 2013

1 General Information:

Greaves Cotton Limited (the ''Company'') is engaged in manufacturing of engines and construction equipment and trading of power tillers, motor graders etc. The Company has manufacturing facilities in the states of Maharashtra and Tamil Nadu. The products are mainly sold in India with some export to Middle East, Africa & South East Asia Region. The Company has four direct and two indirect subsidiaries having operations in India, Netherlands, Germany and Sharjah.

2. Details of Lease Transactions:

a) Certain plant & machinery, computers and vehicles are taken on non-cancellable operating lease. These lease agreements are normally renewed on expiry.

b) Rent expense in respect of operating lease, for year ended, 31st March 2013, was Rs. 9.93 crore (Previous Year Rs. 8.51 crore). Contingent rent recognised in Statement of profit and loss is Rs. Nil ( Previous Year Rs. Nil).

c) The lease agreements provide for an option to the Company to renew the lease at the end of the non-cancellable period. There are no exceptional / restrictive covenants in the lease agreements.

3. Details of Derivative Instruments & Unhedged Foreign Currency Exposures:

a) The year end foreign currency exposures that were not hedged by a derivative instrument or otherwise are given below:

i) Amount receivable in foreign currency on account of the following:

b) Derivative Instruments:

The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and forecasted transactions. The use of foreign currency forward contracts is governed by the Company''s strategy, approved by the Board of Directors, which provides principles on the use of such forward contracts consistent with the Company''s Risk Management Policy. The Company does not use forward contracts for speculative purposes.

4. Dues to Micro and Small Enterprises:

The information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) has been determined to the extent such parties have been identified on the basis of information available with the Company.

5. Management has evaluated the need for impairment of assets as required by Accounting Standard (AS)-28 '' Impairment of Assets'' and on the basis of such evaluation, management has provided for neccessary impairment as at 31st March 2013.

6. Figures for the previous year have been regrouped / reclassified, wherever necessary.


Mar 31, 2012

1 General Information: Greaves Cotton Limited (the 'Company') is engaged in manufacturing of engines and construction equipment and trading of power tillers, motor graders etc. The Company has manufacturing facilities in the states of Maharashtra and Tamil Nadu. The products are mainly sold in India with some export to Middle East, Africa & South East Asia Region. The Company has four direct and two indirect subsidiaries having operations in India, Netherlands, Germany and Sharjah.

As at As at 31.03.2012 31.03.2011 Rs Crore Rs Crore

2. Contingent Liabilities:

a) Sales Tax liability that may arise in respect of matters in appeal 6.41 7.44

b) Excise Duty liability that may arise in respect of matters in appeal 2.31 2.21

c) Income Tax liability that may arise in respect of matters in appeal 2.84 2.84

d) Claims made against the Company, not acknowledged as debts 14.80 13.98

e) Wage demand not acknowledged by the Company in respect of matter in appeal - 3.37

f) Bonds executed in favour of Collector of Customs/Central Excise 8.89 8.88

g) Guarantees given on behalf of a subsidiary company 13.91 13.01

Notes:

1. The Company does not expect any reimbursement in respect of the above contingent liabilities.

2. It is not practical to estimate the timing of cash outflows, if any, in respect of matters (a) to (e) above, pending resolution of the appellate proceedings.

1. Defined Contribution Plans:

The amount recognised as an expense during the year ended 31st March 2012 towards Provident Fund (including admin charges) ESIC contribution and Superannuation is Rs 6.11 crore (Previous Period Rs 4.30 crore) and Rs 0.82 crore (Previous Period Rs 0.53 crore) and Rs 2.42 crore (Previous Period Rs 1.45 crore) respectively.

2. Defined Benefit Plans:

A) Gratuity :

The Company has a defined benefit plan (the Gratuity Plan), managed by trusts.The Gratuity Plan provides for a lump sum payment to vested employees at retirement or termination of employment, whichever is earlier, based on the respective employee's last drawn salary and years of employment with the Company. The benefit vests after five years of continued service.

B. Compensated Absences:

The obligation for compensated absences is recognised in the same manner as gratuity and net charge to the statement of profit and loss for the period is Rs 0.45 crore (Previous Period Rs 0.28 crore).

C. Retirement Pension Scheme :

For UK branch employees, based on actuarial valuation , the Company had recognised liability of Rs 4.36 crore (equivalent GBP 5,92,000) in the year 2009-2010, towards present value of post retirement pension and the same is now funded appropriately.

Note:

The estimates of future increase in salary, considered in the actuarial valuation, have been derived based on expected inflation, seniority changes, promotion and other relevant factors such as demand in the employment market.

a) During the year, the Company sold land and building situated at Thoraipakkam, Tamil Nadu. Till 2008-09, the Company had its Farm Equipment Business's manufacturing facility situated there at. In 2008-09, the same was relocated to Gummidipoondi, Tamil Nadu.

b) During the year, the Company carried out an extensive exercise to identify obsolete inventory arising out of design, model and technological changes. This charge represents the consequent devaluation arising out of the said exercise.

c) The Company's subsidiary, Greaves Cotton Netherlands B.V. (GCN), holds 100% stake in Greaves Farymann Diesel GmbH (GFD).Due to losses incurred in the past, the net worth of GFD has been fully eroded. The management has detailed plans in place to increase market share of GFD using the international network of the Company and through aggressive marketing efforts. GFD expects to generate earnings, which would contribute to the net worth and the management of GFD and the Company do not expect further impairment in the investments of GCN in GFD. Accordingly, the management of the Company has decided to impair the Company's investment in GCN to the extent of 50% of GCN's corresponding investment in GFD.

Segment Identification, Reportable Segments and Segment Composition :

Segment Identification:

Business segments have been identified on the basis of the nature of products/services, the risk-return profile of individual divisions, the organisational structure and the internal reporting system of the Company.

Reportable Segments:

Reportable segments have been identified as per the quantitative criteria specified in Accounting Standard (AS)-17:'Segment Reporting'

Segment Composition:

1. Engines comprises of single and multi cylinder engines.

2. Infrastructure Equipment comprises of equipment used in road construction, bridges, dams, mining, etc.

3. Others includes Power Tillers and other products traded by International Business.

Primary / secondary Segment:

1. The risk-return profile of the Company's business is determined predominantly by the nature of its products and services. Accordingly, the business segments constitute the primary segments for disclosure of segment information.

2. In respect of secondary segment information, the Company has identified its geographical segments as (i) Domestic and

(ii) Overseas.

The expenses and incomes which are not directly attributable to the business segments are shown as unallocable income/ expenditure. Unallocable assets mainly comprise of investments, cash and bank balances, advance tax and unallocable liabilities mainly include loan funds, tax provisions and provisions for employee retirement benefits.

b) Rent expense in respect of operating lease, for year ended, 31st March 2012, was Rs 8.51 crore (Previous Period Rs 5.07 crore). Contingent rent recognised in statement of profit and loss is Rs Nil ( Previous Period Rs Nil).

c) The lease agreements provide for an option to the Company to renew the lease at the end of the non-cancellable period. There are no exceptional / restrictive covenants in the lease agreements.

3. Management has evaluated the need for impairment of assets as required by Accounting Standard (AS)-28 ' Impairment of Assets' and on the basis of such evaluation, management has provided for neccessary impairment as at 31st March 2012. (Refer Note 35)

4. Figures for the corresponding period are for a period of nine months due to change in financial year end to 31st March during the previous period and hence are not comparable with the figures of the current year. Figures for the previous period have been regrouped / reclassified, wherever necessary.


Jun 30, 2010

2009-2010 2008-2009

Rs. Crore Rs. Crore

1 Contingent Liabilities

a) Sales Tax liability that may arise in respect of matters in appeals 8.45 8.35

b) Excise Duty liability that may arise in respect of matters in appeals 0.90 0.94

c) Income Tax liability that may arise in respect of matters in appeals 2.84 3.48

d) Claims made against the Company, not acknowledged as debt 14.52 13.88

e) Bonds executed in favour of Collector of Customs/Central Excise 8.98 9.08

f) Guarantees given on behalf of a subsidiary company 11.53 16.78

g) Wage demand not acknowledged by the Company in respect of matter in appeal 2.89 - Note:

1. The Company does not expect any reimbursement in respect of the above contingent liabilities.

2. It is not practical to estimate the timing of cash outflows, if any, in respect of matters at (a) to (d) and (g) above, pending resolution of the appeallate procedings.

b) Rental expenses in respect of operating lease was ? 1.92 crore(Previous Year ? 1.92 crore). Contingent rent recognised in Profit and Loss account is ? Nil.( Previous Year ^ Nil).

c) The lease agreements provide for an option to the Company to renew the lease at the end of the non-cancellable period. There are no exceptional/restrictive covenants in the lease agreements.

2 a) The year end foreign currency exposures that were not hedged by a derivative instrument or otherwise are given below:

b) Derivative Instruments

The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and forecasted transactions. The use of foreign currency forward contracts is governed by the Companys strategy approved by the Board of Directors, which provide principles on the use of such forward contracts consistent with the Companys Risk Management Policy. The Company does not use forward contracts for speculative purposes.

3 The tax year for the Company being the year ending 31st March, the provision for taxation for the financial year is the aggregate of the provision made for the nine months ended 31st March, 2010 and the provision based on the figures for the remaining three months upto 30th June, 2010, the ultimate tax liability of which will be determined on the basis of the figures for the period 1st April, 2010 to 31st March, 2011.

4 Disclosure as required by Accounting Standards (AS)-15 (Revised) Employee Benefits

a) Defined Benefit Plans

Gratuity:

b) Compensated absences :

The obligation for compensated absences is recognised in the same manner as gratuity and net charge to Profit and Loss account for the year is ? 0.66 crore (Previous Year ? 0.03 crore)

c) Retirement Pension Scheme :

In case of foreign branch employees, based on actuarial valuation, the Company has recognised liability of ? 4.36 crore (equivalent GBP 592,000), for present value of post retirement pension liability of which ? 1.79 crore (equivalent GBP 243,000) has been paid during the year. Notes:

1 The estimates of future increase in salary, considered in the actuarial valuation, have been taken on account of inflation, seniority, promotion and relevant factors such as demand in the employment market.

2 The amount shown against " Staff Expense" is net of excess of plan assets of prior year.

Business segments have been identified on the basis of the nature of products/services, the risk-return profile of individual divisions, the organisational structure and the internal reporting system of the Company.

Reportable Segments:

Reportable segments have been identified as per the quantitative criteria specified in Accounting Standard (AS)-17: Segment Reporting

Segment Composition:

1. Engines comprises of single and multi cylinder engines.

2. Infrastructure Equipments comprises of equipments used in road construction, bridges, dams, mining, etc.

3. Others includes traded products.

Primary/secondary segment reporting format:

1. The risk-return profile of the Companys business is determined predominantly by the nature of its products and services. Accordingly, the business segments constitute the primary segments for disclosure of segment information.

2. In respect of secondary segment information, the Company has identified its geographical segments as (i) Domestic and (ii) Overseas.

The expenses and incomes which are not directly attributable to the business segments are shown as unallocable income/ expenditure.

Unallocable assets mainly comprise of investments, cash bank, advance tax and unallocable liabilities include mainly loan funds, tax provisions and provision for employee retirement benefits. 20 Disclosures as required by Accounting Standard (AS)-18 Related Party Disclosures

I Relationships:

A) List of related parties over which control exists:

SI. Name of the Related Party Relationship

No.

1 Greaves Leasing Finance Limited Wholly Owned Subsidiary

2 Dee Greaves Limited Subsidiary of Greaves Leasing Finance Limited

3 Greaves Cotton Netherlands B.V. Wholly Owned Subsidiary

4 Greaves Farymann Diesel GmbH Subsidiary of Greaves Cotton Netherlands B.V.

5 Greaves Auto Limited Wholly Owned Subsidiary

B) Key Management Personnel:

Mr. Prabhakar Dev - Managing Director & CEO

C) List of related parties with whom transactions were carried out during the year and description of relatio:

Subsidiaries:

1 Greaves Leasing Finance Limited

2 Dee Greaves Limited 3 Greaves Cotton Netherlands B.V.

4 Greaves Farymann Diesel GmbH Key Management Personnel:

Mr. Prabhakar Dev - Managing Director & CEO

Other Related Parties:

1 Premium Energy Transmission Limited

2 Mr. Karan Thapar

IV Key Management Personnel (KMP):

Remuneration to Managing Director Rs. 1.04 crore (Previous year Rs. 2.53 crore, includes to former Managing Director upto 3rd May, 2009).

5 Management has evaluated impairment of assets as required by Accounting Standard (AS)-28 Impairment of Assets and on the basis of evaluation, management is of the opinion that there is no impairment of the Companies assets as at 30th June, 2010.

The Company gives warranties for its products undertaking to repair or replace the items that fail to perform satisfactorily during the warranty period. Provisions made at the year end represents the amount of expected cost of meeting such obligations of rectification / replacement. The timing of the outflows is expected to be within a period of eighteen months.

6 No borrowing costs have been capitalised during the year.

26 In case of one of the units of the Company the wage agreement with workers expired in December, 2006. The Company has appealed to the Division Bench of Madras High Court against the Tribunal Order. The Company has made the payments as per the Interim Order of the Division Bench. The Company has further recognized the liability in the books, based on the trend as existed in the industry for the location, over and above the amounts paid as per the Interim Order of the Madras High Court. Pending final order the liability is not fully ascertainable.(See schedule O, Note 1(g))

7 Sales is net of discount and includes direct sales compensation of Rs. 2.57 crore (Previous Year Rs. 1.48 crore).

8 The provision for Current Tax includes Wealth Tax Rs. 0.05 crore (Previous Year Rs. 0.06 crore) and is net of minimum alternate tax of Rs. 0.49 crore (Previous Year Rs. 3.82 crore)

9 Figures for the previous year have been regrouped/reclassified, wherever necessary.

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