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Hella India Lighting Ltd. Notes to Accounts, Hella India Lighting Ltd. Company
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Notes to Accounts of Hella India Lighting Ltd.

Mar 31, 2014

1. Rights, preferences and restrictions

Equity shares

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity share Is entitled to one vote per share. The paid-up equity shares of the Company rank pari-passu in all respects including dividend. The Company declares and pays dividend, if any, in Indian Rupees. The dividend, if any, proposed by the Board of Directors is subject to the approval of Shareholders in the ensuing Annual General Meeting.

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.

Preference shares

Preference shares issued by the Company are non-convertible, non-cumulative, non participating and redeemable. Preference shareholders are not entitled to vote.

Preference shareholders are entitled to 0.0000001 % dividend.

Preference shareholders have preference over equity shareholders for the payment of dividend and repayment of capital, in the event of liquidation of the Company.

Company overview

Hella India Lighting Limited, (''the Company'') is a public limited Company and Is incorporated under the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange and Delhi Stock Exchange. The Company is primarily engaged in manufacturing of automotive lights, switches, blinkers etc.

2. Contingent liabilities

The Company has received assessment orders for the Assessment Year 2001-02 and 2004-05 from the Income-tax authorities as a result of which demands have been raised against the Company. The Company has filed appeals with High Court against these assessment orders, details of which are as under:

Name of the Nature of dues Amount Period to which Statute involved (Rs.) the amount relates #

Income-tax Disallowance for foreign 3,119,228 2001-02 Act, 1961 exchange fluctuation

Income-tax Disallowance for foreign 3,958,969 2004-05 Act, 1961 exchange fluctuation

Name of the Forum where Statute dispute is pending

Income-tax Hon''ble High Court Act, 1961 of Delhi

Income-tax Hon''ble High Court Act, 1961 of Delhi

# Assessment year

3. Employee benefits

Disclosure in respect of employee benefits under Accounting Standard (AS) - 15 "Employee Benefits" prescribed by the Companies (Accounting Standards) Rules, 2006:

a) Defined Contribution Plans:

An amount of Rs. 5,762,088 (previous year Rs. 4,344,939) pertaining to employers'' contribution to Provident Fund and Employees'' State Insurance is recognised as an expense and included in "Employee benefit expense" in note no. 2.22.

b) Gratuity Plan (defined benefit plan)

The following table sets forth the status of the Gratuity Plan of the Company, and the amounts recognised in the Balance Sheet and Statement of Profit and Loss.

Actuarial assumptions

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotions and other relevant factors. Medical cost trend rates have no impact on actuarial valuation of the above defined benefit plan. Discount rate is based on market yields prevailing on government securities as at 31 March 2014 for the estimated term of the obligations.

4. The Company has obtained relevant information from its suppliers about their coverage under the Mico, Small and Medium Enterprises Development Act, 2006 (''the Act'') which came into force from 2 October 2006. Based on the information presently available with the management, following are the disclosures under the Micro, Small and Medium Enterprises Development Act, 2006 in respect of micro and small suppliers as defined in the Act:

5. Segment information

The Company is engaged in the business of manufacture and after sale support of auto components / accessories which is a primary segment for the Company which constitutes a single business segment and accordingly disclosure requirements of Accounting Standard 17, "Segment Reporting", prescribed by the Companies (Accounting Standard) Rules 2006 in relation to primary segment are not required to be given.

Segment accounting policies

The accounting principles consistently used in the preparation of the financial statements and consistently applied to record revenue and expenditure in individual segments are as set out in Note 1, Significant accounting policies. The description of segment assets and revenue and the accounting policies in relation to segment accounting are as under:

a) Segment revenue

Segment revenue excludes trade discounts, excise duty and exceptional item and includes other income. Segment revenue has been allocated to both the segments on the basis of specific identification.

b) Segment assets

Segment assets include all operating assets used by a segment and consist principally of fixed assets, capital work in progress, current assets and loans and advances.

6. The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing regulation under sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documentation for the international and domestic transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by the due date as required under law. The management is of the opinion that its international and domestic transactions are at arms length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of income tax expense and that of provision for taxation.

7. The promoters of the Company hold 81.85% of the total issued and subscribed equity capital of the Company and balance 18.15% stake is held by public shareholders. In 2005-06, the Company had applied for delisting from Delhi Stock Exchange (''DSE'') and Bombay Stock Exchange (''BSE''). While DSE allowed the Company to delist, BSE rejected the application vide letter dated 15 February 2006. On appeal, the Securities Appellant Tribunal (''SAT'') passed a favorable order for delisting of the Company. However, the said order of SAT was challenged before the Honourable Supreme Court of India by certain individual shareholders. The Supreme Court vide order dated 24 October 2008 stayed the delisting of the Company and the matter is currently sub- judice.

The management of the Company believes that pending such decision from the Hon''ble Supreme Court, the requirement of increasing /maintaining at least 25% of its equity shares with public by 3 June 2013, as required by Clause-40 A of the Listing Agreement read with rule 19(2) (B) of Securities Contract Regulation Rules, 1957 (''SCRR'') and related notifications in this regard, is not applicable to the Company. As a precautionary measure, vide letter dated 19 March 2013, the Company had written/ applied to SEBI seeking specific waiver to comply with the aforesaid conditions till the matter is sub-judice.

SEBI did not respond to the request of the Company and thereafter, issued notices to non-compliant companies vide order dated 4 June 2013. In a separate press release dated 4 June 2013, SEBI has also confirmed that notices were not issued to 3 companies as there matter are sub-judice.

Although the name of the Company have not been mentioned in the above referred list of non-compliant companies, the Company, as a matter of abundant caution, again sought a confirmation from CGM (Corporate Finance Department of SEBI) vide email dated 21 June, 2013 that they are one of those 3 companies where the matter is sub-judice, as mentioned in the Press Release. This understanding was confirmed by SEBI vide their email dated 16 July 2013.

Further to above, the case has appeared on ''list of curative'' and ''review petitions'' of Honourable Supreme Court.

In view of the above circumstances, the Company believes that there is no legal, regulatory and financial risk on the Company due to its inability to meet the requirements of Clause 40 A of the Listing agreement.

8.In view of continued losses incurred by the Company, during the year ended 31 March 2012, the management had done a detailed analysis to assess impairment of its fixed assets at the Derabassi factory, which is a separate cash generating unit. This analysis was based on future revenue growth and related expenditure and accordingly a provision of Rs. 424 lakhs had been created towards writing down the value of fixed assets to their recoverable amount in the year ended 31 March 2012. The recoverable amount was based on value in use which had been computed on the basis of discounted future cash flows projected by the management. This analysis had further been considered and taken on record by the Board of Directors in their meeting on 30 May 2012. Expense towards the impairment provision was included under the head Other expenses.

9. Previous period figures have been regrouped/ reclassified wherever necessary to confirm to current year''s classification.

As per our report of even date attached.


Mar 31, 2013

1. Company overview

Hella India Lighting Limited, (''the company'') is a public limited company and is incorporated under the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange and Delhi Stock Exchange. The Company is primarily engaged in manufacturing of automotive lights, switches, blinkers etc.

2.1.Contingent liabilities

The Company has received assessment orders for the Assessment Year 2001-02 and 2004-05 from the Income-tax authorities as a result of which demands have been raised against the Company. The Company has filed appeals with High Court against these assessment orders, details of which are as under:

2.2.Employee benefits

Disclosure in respect of employee benefits under Accounting Standard (AS) - 15 "Employee Benefits- prescribed by the Companies (Accounting Standards) Rules, 2006:

a) Defined Contribution Plans: An amount of Rs. 4,344,939 (previous year Rs. 2,691,687) pertaining to employers'' contribution to Provident Fund and Employees'' State Insurance is recognised as an expense and included in "Employee benefit expense" in note no. 2.21.

b) Gratuity Plan (defined benefit plan)

The following table sets forth the status of the Gratuity Plan of the Company, and the amounts recognised in the Balance Sheet and Statement of Profit and Loss.

2.3.The Company has obtained relevant information from its suppliers about their coverage under the Micro, Small nd Medium Enterprises Development Act, 2006 (''the Act'') which came into force from 2 October 2006. Based on the information presently available with the management, following are the disclosures under the Micro, Small and Medium Enterprises Development Act, 2006 in respect of micro and small suppliers as defined in the Act:

2.4. Segment information

The Company is engaged in the business of manufacture and after sale support of auto components/accessories which is a primary segment for the Company which constitutes a single business segment and accordingly disclosure requirements of Accounting Standard 17, "Segment Reporting", prescribed by the Companies (Accounting Standard) Rules 2006 in relation to primary segment are not required to be given.

As the Company exports its products, the secondary segment for the Company is based on the location of its customers. Information on the geographic segment is as follows:

Segmentaccounting policies

The accounting principles consistently used in the preparation of the financial statements and consistently applied to record revenue and expenditure in individual segments are as set out in Note 1, Significant accounting policies. The description of segment assets and liabilities and the accounting policies in relation to segment accounting are as under:

a) Segment revenue

Segment revenue excludes trade discounts, excise duty and exceptional item and includes other income. Segment revenue has been allocated to both the segments on the basis of specific identification.

b) Segment assets

Segment assets include all operating assets used by a segment and consist principally of fixed assets, capital work in progress, current assets and loans and advances.

2.5. Related party disclosures

The Company has entered into transactions with affiliated companies and its parent and key management personnel during the normal course of its business. The names of related parties of the Company and their relationship, are as follows:

Outside India

HellaFahrzeugteileAustria,Austria Hella Phil Inc., Philippines HellaAustraliaPty.Limited,Australia Hella Asia Singapore Pte. Limited, Singapore Beifang HellaAutomotive Lighting Ltd, China Hella Innenleuchten-Systeme Bratislava, Solakia Hella Japan Inc., Japan Hella Inc., United States of America Changchun HellaAutomotive Lighting Ltd., China Behr Hella Service GmbH, Germany Hella Fahrzeugkomponenten GmbH, Germany Hella Romania S.R.L., Romania Hella Trailer Systems GmbH, Germany Hella Satumus Slovenija D.O.O., Slovenia Hella Leuchten-Systeme GmbH, Germany Hella Lighting Finland Oy, Finaland Hella-New Zealand Ltd, New Zealand Docter Optics GmbH, Germany Hella (Xiamen)Automotive Electronics Co. Ltd., China HellaAutomotive South Africa Pty. Ltd., South Africa Hella Middle East FZE, Dubai 3. Key management personnel Mr. Rama ShankarPandey (Managing Director)

2.6 Operating leases

The Company has office and residential premises for its personnel under cancellable and non-cancellable operating leases. Operating lease rentals charged to the Statement of Profit and Loss during the year ended 31 March 2013 is Rs. 6,062,625(previous year Rs. 4,174,280). The future minimum lease expense in respect of non cancellable lease is as follows:

2.7. The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing regulation under sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documentation for the international transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by the due date as required under law. The management is of the opinion that its international transactions are at arms length so that the aforesaid legislation will not have any impact on the financial statements, particularly on theamountofincometaxexpense and that of provision fortaxation.

2.8. In view of continued losses incurred by the Company, during the year ended 31 March 2012, the management had done a detailed analysis to assess impairment of its fixed assets at the Derabassi factory, which is a separate cash generating unit. This analysis was based on future revenue growth and related expenditure and accordingly a provision of Rs. 424 lakhs had been created towards writing down the value of fixed assets to their recoverable amount in the year ended 31 March 2012. The recoverable amount was based on value in use which had been computed on the basis of discounted future cash flows projected by the management. This analysis had further been considered and taken on record by the Board of Directors in their meeting on 30 May 2012. Expense towards the impairment provision was included underthe head''Otherexpenses''.

2.9 The subsidiaries of the Company, namely, Bitoni Lamps Limited and Chetan Genthe and Co. Private Limited have been stricked-off from the register of companies with effect from 4 May 2012 and 8 June 2011 respectively and the companies stands dissolved. Consequently, the investment and advances recoverable (net of provision) have been knocked-offfrom the Company''s books of account.


Mar 31, 2012

1) Rights, preferences and restrictions Equity shares Each holder of equity shares is entitled one vote per share.

The Company declares and pays dividend, if any, in Indian Rupees. The dividend, if any, proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive the 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.

Preference shares

Preference shares issued by the Company are non-convertible, non-cumulative, non participating and redeemable. Preference shareholders are not entitled to vote.

Preference shareholders are entitled to 0.0000001% dividend.

Preference shareholders have preference over equity shareholders for the payment of dividend and repayment of capital, in the event of liquidation of the Company.

2) 13,000 (previous year 13,000) equity shares have been allotted as fully paid up bonus shares by capitalisation of reserves in earlier years.

3) The preference share are redeemable at par at any time after five years but prior to the expiry of twenty years from the date of allottment. Of these 500,000 preference shares have been alloted on 31 August 2006, 40,000 preference shares have been alloted on 18 March 2009 and 603,630 (by conversion of loan from the holding company) preference shares have been alloted on 16 March 2010.

(All amounts are in Rupees)

Notes forming part of the financial statements

1. Basis of preparation

The financial statements are prepared under the historical cost convention on the accrual basis of accounting, in accordance with the Indian Generally Accepted Accounting Principles (GAAP) and comply with the accounting standards, as prescribed by the Companies (Accounting Standards) Rules, 2006, and the provisions of the Companies Act, 1956, to the extent applicable, as adopted consistently by the Company. The financial statements have been prepared in Indian rupees.

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 reclassified to conform to this year's classification. Such reclassification of previous year figures does not impact recognition and measurement principles followed for preparation of financial statements.

1. Contingent liabilities

The Company has received assessment orders for the Assessment year 2001-02 and 2004-05 from the Income Tax authorities as a result of which demands have been raised against the Company. The Company had filed appeals against these demands and the cases has been decided in favour of the company at ITAT. Further, the department has filed appeals with High Court against these the orders of ITAT, details of which are as under:

Name of the Nature of dues Amount Period to Forum where Statute involved which the the dispute (Rs.) amount is pending relates

Income tax Act, Disallowance for 3,129,228 2001-02 Hon'ble High 1961 foreign exchange court of fluctuation Delhi

Income tax Act, Disallowance for 3,958,969 2004-07 Hon'ble High 1961 foreign exchange court of fluctuation Delhi



2. Employee benefits

Disclosure in respect of employee benefits under Accounting Standard (AS) - 15 "Employee Benefits" prescribed by the Companies (Accounting Standards) Rules, 2006:

a) Defined Contribution Plans: An amount of Rs. 2,691,687 (previous year Rs. 2,052,807) pertaining to employers' contribution to provident fund and employees' state insurance fund is recognised as an expense and included in "Personnel costs" in Schedule 11.

Enterprise best estimate of contribution during next year is Rs. 1,033,292.

Actuarial assumptions

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotions and other relevant factors. Medical cost trend rates have no impact on actuarial valuation of the above defined benefit plan. Discount rate is based on market yields prevailing on government securities as at 31 March 2012 for the estimated term of the obligations.

3. The Company has obtained relevant information from its suppliers about their coverage under the Micro, Small and Medium Enterprises Development Act, 2006 ('the Act') which came into force from 2 October 2006. Based on the information presently available with the management, following are the disclosures under the Micro, Small and Medium Enterprises Development Act, 2006 in respect of micro and small suppliers as defined in the Act:

4. Segment information

The Company is engaged in the business of manufacture of auto components/accessories which is a primary segment for the Company which constitutes a single business segment and accordingly disclosure requirements of Accounting Standard 17, "Segment Reporting", prescribed by the Companies (Accounting Standard) Rules 2006 in relation to primary segment are not required to be given.

As the Company exports its products, the secondary segment for the Company is based on the location of its customers. Information on the geographic segment is as follows:

Segment accounting policies

The accounting principles consistently used in the preparation of the financial statements and consistently applied to record revenue and expenditure in individual segments are as set out in Note 1, Significant accounting policies. The description of segment assets and liabilities and the accounting policies in relation to segment accounting are as under:

a) Segment assets

Segment assets include all operating assets used by a segment and consist principally of fixed assets, capital work in progress, current assets and loans and advances.

b) Segment revenue

Segment revenue excludes trade discounts, excise duty and exceptional item and includes other income. Segment revenue has been allocated to both the segments on the basis of specific identification.

5. Operating leases

The Company has office and residential premises for its personnel under cancellable and non-cancellable operating leases. Operating lease rentals charged to the profit and loss account during the year ended 31 March 2012 is Rs. 4,174,280 (previous year Rs. 3,315,431). The future minimum lease expense in respect of non cancellable lease is as follows:

6. Impairment of fixed assets

In view of continued losses incurred by the Company, management has done a detailed analysis to assess impairment of its fixed assets at the Derabassi factory, which is a separate cash generating unit. This analysis is based on future revenue growth and related expenditure and accordingly a provision of Rs. 42,400,000 has been created towards writing down the value of fixed assets to their recoverable amount. The recoverable amount is based on value in use which has been computed on the basis of future cash flows as projected by the management, discounted at the rate of 10%. This analysis has further been considered and taken on record by the Board of Directors in their meeting on 30 May 2012. Expense towards the impairment provision is included under the head 'Other expenses'.

7. The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing regulation under sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documentation for the international transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by the due date as required under law. The management is of the opinion that its international transactions are at arms length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of income tax expense and that of provision for taxation.

8. Prior period items

In earlier years, the Company had received a notice from a local authority whereby a demand of Rs. 10,200,000 was raised for increase in FAR (floor area ratio) in respect of land at Faridabad for one time development charges. The Company had created a provision in the books for the entire demand alongwith interest of Rs. 1,000,000 in the previous year. Based on management's reassessment of the Company's exposure with regard to such liability, the Company is of the firm belief that the above demand is not tenable and highly unlikely to be retained by the local authority. Accordingly, the Company has reversed this provision during the current year. This reversal is in the nature of a prior period adjustment and is included under the head 'Other income'.

9. The operations in M/s Chetan Genthe & Co. Pvt. Ltd. (Chetan) and M/s Bitoni Lamps Ltd. (Bitoni), subsidiaries of the Company had been discontinued since financial year2006-07. With effect from 8 June 2011, Chetan has been struck off from the Register of Companies (ROC) and that company stands dissolved. In case of Bitoni, based on the Company's correspondence with the ROC, it is of the opinion that the dissolution and striking off of this company by the ROC is imminent. The Company has accordingly decided not to consolidate the financial statements of Bitoni as required by the Listing Agreement with the stock exchange. It is further of the view that there is no material impact on the Company's consolidated turnover, consolidated net profit after tax and consolidated earnings per share for the year ended 31 March 2012 as compared to the stand alone turnover, net profit after tax and earnings per share of the Company.


Mar 31, 2011

1. Contingent liabilities

a. The Company has received assessment orders for the Assessment year 2001-02 and 2004-05 from the Income Tax authorities as a result of which demands have been raised against the Company. The Company has filed appeals with High Court against these assessment orders, details of which are as under:

I Name of Nature of Amount Period to Forum where the Statute dues involved which the dispute amount the amount is pending relates Income tax Disallowance 3,129,228 2001-02 Hon'ble Act, 1961 for foreign High Court exchange of Delhi fluctuation

Income tax Disallowance 3,958,969 2004-05 Hon'ble Act, 1961 for foreign High Court exchange of Delhi fluctuation

b. The Company has in the earlier years received a notice from Haryana Urban Development Authority towards payment of Rs. 5,102,580 as External Development charges in respect of its land at Faridabad.

The Company is of the firm belief that the above demands are not tenable and are highly unlikely to be retained and is therefore not carrying any provision in its books in respect of such demands.

2. Employee benefits

Disclosure in respect of employee benefits under Accounting Standard (AS) -15 "Employee Benefits" prescribed by the Companies (Accounting Standards) Rules, 2006:

a) Defined Contribution Plans: An amount of Rs. 2,052,807 (previous year Rs. 1,853,640) pertaining to employers' contribution to provident fund and employees' state insurance fund is recognised as an expense and included in "Personnel costs" in Schedule 11.

Actuarial assumptions

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotions and other relevant factors. Medical cost trend rates have no impact on actuarial valuation of the above defined benefit plan. Discount rate is based on market yields prevailing on government securities as at 31 March 2011 for the estimated term of the obligations.

Gratuity and leave encashment liability is based on actuarial valuations carried out on an overall company basis and is not separately available on an individual basis. The Comapny has obtained approval of the Central Government vide its letter dated 21 December, 2010 for payment of the above remuneration with effect from 1 January, 2010.

Segment accounting policies

The accounting principles consistently used in the preparation of the financial statements and consistently applied to record revenue and expenditure in individual segments are as set out in Note 1 to this schedule on significant accounting policies. The description of segment assets and liabilities and the accounting policies in relation to segment accounting are as under:

a) Segment assets

Segment assets include all operating assets used by a segment and consist principally of fixed assets, capital work in progress, current assets and loans and advances.

b) Segment revenue

Segment revenue excludes trade discounts, excise duty and exceptional item (refer note 19) and includes other income. Segment revenue has been allocated to both the segments on the basis of specific identification.

3. Related Party Disclosures

The Company has entered into transactions with affiliated companies and its parent and key management personnel during the normal course of its business. The names of related parties of the Company and their relationship, as required to be disclosed under Accounting Standard 18, are as follows:

a) Related parties and nature of related party relationship where control exists

Nature of the relationship Name of the Company/ Party

1. Ultimate holding company Hella KGaA Hueck & Co, Germany

2. Holding company Reinhold Poersch GmbH, Germany

b) Other related parties with whom transactions have taken place during the year: Nature of the relationship

Name of the Company/ Party

1. Subsidiary Companies Chetan Genthe & Company Private Limited Bitoni Lamps Limited

2. Fellow subsidiaries In India Hella India Electronics Private Limited Hella Engineering Private Limited

Outside India Hella Fahrzeugteile, Austria Hella Phil Inc., Philippines Hella Australia Pty. Limited Hella Asia Singapore Pte. Limited Beijing Hella Automotive Lighting Ltd Hella Innenleuchten-Systeme GmbH Hella Japan Inc. Hella Inc., USA Changchun Hella Automotive Lighting Ltd., China Behr Hella Service GmbH Hella Fahrzeugkomponenten GmbH Hella Romania S.R.L. Hella Trailer Systems GmbH

3. Key management personnel Mr. Stephan Gerres (Managing Director) (from 1 June 2008 to 31 Dec 2009) Mr. R. S. Pandey (Managing Director) (with effect from 1 Jan 2010)

4. The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing regulation under sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documentation for the international transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by the due date as required under law. The management is of the opinion that its international transactions are at arms length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of income tax expense and that of provision for taxation.

5. The Company had in earlier years applied to the Registrar of Companies (ROC) for dissolution and consequently striking off the names of its wholly owned subsidiaries, Chetan Genthe & Company Private Limited (Chetan) and Bitoni Lamps Limited (Bitoni), from the register of companies maintained by ROC. The operations of these companies had been discontinued since financial year 2006-07.

In respect of Chetan, the Company received a notice dated 22 November 2010 from the ROC stating that unless the Company presents a reason to the contrary Chetan would be dissolved and its name would be struck off from the register maintained by ROC within three months of receiving such notice.

In the case of Bitoni, the Company had received a letter from ROC dated 31 July 2009 stating that on the basis of the application of closure filed by the Company, the ROC is of the belief that Bitoni is not carrying on business and therefore unless the Company represents a reason to the contrary, the ROC would proceed further in accordance with provision of section 560 of the Companies Act, 1956 for dissolution and striking off Bitoni's name from the register of companies.

The Company has in both the above cases continued to maintain its stand on dissolution of its subsidiaries. It further does not have any other subsidiary, joint venture or associate company and has therefore decided not to present a consolidated set of financial statement. The company does not expect the non consolidation to have a material impact on the results of the stand alone financial statements.

6. The Company has during the year sold its land at Faridabad. It has also as part of this transaction disposed off fixed assets and capital work in progress lying on this land. The profit on sale of above amounting to Rs. 352,590,929 has been disclosed in the financial statements as an exceptional item.

7. During the previous year, the Company has entered into certain transactions for sale of capital goods aggregating Rs. 3,086,565 with a private company in which a director of the Company was a director. The Company inadvertently did not obtain a prior approval of the Central Government as envisaged under section 297 of the Companies Act, 1956, in respect of these transactions.

The Ministry of Corporate Affairs has vide its letter dated 5 January 2011 compounded the above offence based on application made to it by the Company.

 
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