Notes to Accounts of Hinduja Foundries Ltd.

Mar 31, 2016

A) Rights, preferences and restrictions in respect of equity shares and Global Depository Receipts ) ("GDRs") issued by the Company

The Equity share holders are entitled to receive dividends as and when declared; a right to vote in proportion to holding etc. and their rights, preferences and restrictions are governed by / in terms of their issue under the provisions of the Companies Act, 2013.

The rights, preferences and restrictions of the GDR holders of the GDRs issued during the year 2016 are governed by the terms of their issue, and the provisions of the Companies Act, 2013. Holder of such GDR is entitled to receive 12,000 equity shares of Rs.10 each, per GDR, and are entitled to receive dividends as and when declared in proportion to holding but will have no voting rights of a equity shareholder with respect to the shares represented by these GDRs. These GDRs are listed on the Euro MTF Market of the Luxembourg Stock Exchange.

The rights, preferences and restrictions of the GDR holders of the GDRs issued during the year 2008 are governed by the terms of their issue. Holder of this GDR is entitled to receive 1 equity share of Rs.10 each, per 3 GDRs, and are entitled to receive dividends as and when declared in proportion to holding but will have no voting rights of a equity shareholder with respect to the shares represented by these GDRs. These GDRs are listed on the Euro MTF Market of the Luxembourg Stock Exchange.

b) Rights, preferences and restriction attached to preference shares

1,500,000 10% Redeemable non-convertible cumulative preference shares of Rs.100/- each issued to Ashok Leyland Limited on March 19, 1999 were redeemable at par during the period April 2011 to April 2013.

Redemption due on April 2011 and April 2012 was initially rescheduled to April 2013 and April 2015. The Company has sought and obtained a further extension from the preference shareholder and the redemption has been rescheduled to April 2017.

1.000.000 6% Redeemable non-convertible cumulative preference shares of Rs.100/- each issued to Ashok Leyland Limited on November 12, 2003 were redeemable at par during the period April 2008 to April 2010. Out of the above, an amount of Rs. 333.33 has been redeemed in April 2008. Redemption due on April 2009 and April 2010 was initially rescheduled to April 2013 and April 2015. The Company has sought and obtained a further extension from the preference shareholder and the redemption of the balance of Rs.666.67 Lakhs has been rescheduled to April 2017.

7.500.000 9% Redeemable non-convertible cumulative preference shares of Rs. 100/- each issued to Ashok Leyland Limited on September 29, 2012 were redeemable at par within a period of two years from the date of allotment. The Company has sought and obtained a further extension from the preference shareholder and the redemption has been rescheduled to September 2016.

7.500.000 9% Redeemable non-convertible cumulative preference shares of Rs. 100/- each issued to Ashok Leyland Limited on October 19, 2012 were redeemable at par within a period of two years from the date of allotment. The Company has sought and obtained a further extension from the preference shareholder and the redemption has been rescheduled to October 2016.

15.000.000 9% Redeemable non-convertible cumulative preference shares of Rs.100/- each issued to Ashok Leyland Limited on March 20, 2013 were redeemable at par within a period of two years from the date of allotment. The Company has sought and obtained a further extension from the preference shareholder and the redemption has been rescheduled to March 2017.

a) The aforesaid loans are under fixed/floating rate (benchmarked to Libor) with different bankers. As at March 31, 2016, the rate of interest based on such arrangements ranged from 5.55% p.a. to 11.50% p.a.

Secured

b) Term loan of Rs. 10,000 Lakhs (September 30, 2014 : Nil ) and Rs. 10,000 Lakhs (balance as at March 31, 2016 : Rs. 9,375 Lakhs (September 30, 2014 : Nil)) from Yes Bank is secured by equitable mortgage and first charge over all the fixed assets of the Company including movable properties and immovable properties (both present and future) and second charge on the current assets of the Company. The first said loan is repayable in 20 quarterly installments commencing from June 2017 to March 2022 and the second loan is repayable in 16 quarterly installments commencing from March 2016 to December 2019 respectively.

c) Term loan of Rs.19,844.84 Lakhs (September 30, 2014 : Rs.19,026.60 Lakhs) from Bank of Baroda is secured by equitable mortgage and first charge over all the fixed assets of the Company including movable properties and immovable properties (both present and future) and second charge on the current assets of the Company. The said loan is repayable in 12 equal quarterly installments commencing from April 2017 to April 2019.

d) Foreign currency term loan as at March 31, 2016, of Rs. 5,306.40 Lakhs (September 30, 2014 : Rs.8,625.89 Lakhs) from DBS Bank is secured by first pari passu charge over all the fixed assets of the Company including movable properties and immovable properties (both present and future). The said loan is repayable in 10 equal half-yearly installments commencing from August 2013.

e) The Company has not met some of the financial covenants as set out in the agreements with bankers. The Company in the process of obtaining necessary waivers from compliance with such covenants. Based on past experience, the Company is confident of obtaining the relevent approvals. Accordingly the loan balances have continued to be classified as non - current to the extent they are not due to be settled with in 12 months after the reporting date.

3 Employee benefits Defined benefit plans Gratuity

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure.

The following tables summaries the components of net benefit expense recognised in the profit and loss account and the funded status and amounts recognised in the balance sheet for the respective plans.

4 Segment Reporting

The Company''s business is confined to only castings. Accordingly, the Company operates in a single business segment. Further, the Company markets its products primarily in the domestic markets. Hence there are no reportable geographical segments.

5 Dues to micro and small suppliers

The management has identified enterprises which have provided goods and services to the Company and which qualify under the definition of micro and small enterprises, as defined under Micro, Small and Medium Enterprises Development Act, 2006. Accordingly, the disclosure in respect of the amounts payable to such enterprises as at March 31, 2016 has been made in the financial statements based on information received and available with the Company and relied upon by auditors. Further in the view of the management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act is not expected to be material.

6 Derivative instruments

During the period (eighteen months period) ended September, 30 2012, the Company adopted the Accounting Standard (AS)-32 "Financial Instruments: Disclosures" as issued by ICAI, to the extent that the adoption does not conflict with existing mandatory accounting standards and other authoritative pronouncements, Company law and other regulatory requirements.

i Hedges of highly probable forecasted transactions

The Company classifies its derivative contracts that hedge interest rate risk associated with highly probable forecasted transactions as cash flow hedges and measures them at fair value. The effective portion of such cash flow hedges is recorded as part of reserves and surplus within the Company''s "hedging reserve", and re-classified in the statement of profit and loss as revenue in the period corresponding to the occurrence of the forecasted transactions. The ineffective portion is immediately recorded in the statement of profit and loss. In respect of the aforesaid hedges of highly probable forecasted transactions, the Company has recorded, in reserves and surplus, a net profit of Rs.162.61 Lakhs (September 30, 2014: Rs.297.52 Lakhs) for the period (eighteen months period) ended March 31, 2016. The net carrying amount of the Company''s "hedging reserve" was a loss of Rs. 119.34 Lakhs (September 30, 2014: Rs.281.95 Lakhs) as at March 31, 2016.

7 During the current period the Company has rasied equity share capital of Rs. 39,984 Lakhs (comprising 134,400,000 equity shares of Rs.10/- each at a premium of Rs.19.75/- per equity share) through issue of 11,200 Global Depositary Receipts (GDR). As per the offer document, the proceeds from the aforesaid GDR net of share issue expenses of Rs. 210.5 Lakhs (includes Rs. 19.5 Lakhs paid to statutory auditors) have been utilized for repayment of a portion of its outstanding debt, for capital expenditures, for working capital and for general corporate purposes as may be permissible under applicable law.

During the previous period, the Company has raised equity share capital of Rs.8,092.68 Lakhs (comprising 26,105,417 equity shares of Rs.10/- each at a premium of Rs.21/- per equity share) through Qualified Institutional Placement (QIP). Further, the Company has raised Rs.6,085 Lakhs (comprising 17,818,448 equity shares of Rs.10/- each at a premium of Rs.24.15/- per equity share) through preferential allotment of shares to the promoters'' group. As per the offer document, the proceeds from the aforesaid QIP and private placement net of share issue expenses of Rs.81.77 Lakhs (includes Rs.15 Lakhs paid to statutory auditors) have been utilized for augmenting the resources of the Company, funding the various capital expansion plans, long term working capital requirements and debt rationalisation other purposes as may be permissible under applicable law.

8 The Company had acquired a piece of land from APIIC (Andhra Pradesh Industrial and Infrastructure Corporation Limited) and the registration of the land in favor of the Company would be completed upon the Company commencing commercial production before March 31, 2012. Whilst steps are being taken to implement the project on such land, the Company has not been able to do so in view of the delays in basic infrastructural facilities (electricity, water supply etc.) being made available to the Company. The Company has been seeking extension of time from the Government Authorities to implement the project.

The Telangana State Industrial Infrastructure Corporation Limited (pursuant to the formation of the state of Telangana) vide its letter dated September 29, 2015 (and its earlier correspondence) has sought to cancel the allotment of the aforesaid land and has requested the Company to surrender the possession of the vacant land by October 07, 2015 for which the Company sought a further extension of time up to March 2016 and requested for revocation of the resumption proceeding. Based on legal advice, the Company believes that it has adequate grounds to defend its position on retaining the possession of the land. Pending the resolution of the aforesaid matter, the above said land has been carried at cost as at March 31, 2016 after write down of related project expenditure.

9 Pursuant to the restructuring initiatives undertaken to improve the overall profitability and performance, the Company had announced voluntary retirement scheme (VRS) at one of its manufacturing units (DCU, Hyderabad), which was approved by the Board of Directors. The scheme was accepted by substantially all the employees of the unit leading to the subsequent discontinuance of the unviable business operations at the unit. Exceptional items include Rs.2,716.88 ( September 30, 2014 : Rs. 1,129.53) towards such VRS arrangements and also includes expenses on impairment losses and provisions in respect of non-recoverability towards assets pursuant to such restructuring/discontinuance of business operations. The freehold land at DCU, Hyderabad has been classified as "Fixed asset classified as held for sale" under other current assets.

10 The Company has taken various steps to improve its operational performance and liquidity to address the significant erosion of its networth by the accumulated losses as at March 31, 2016. Based on the business plans, availability of bank and other funding arrangements, recent increase in capital and in view of the continued support by the promoters, the Company is confident that it would be able to improve on its performance and networth.

11 Transfer pricing

The Company had transactions with related parties. As required by the relevant provisions of the Income-tax Act, 1961 the Company has a policy of maintaining documents to prove that these transactions are at arm''s length and believes that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

12 Prior period comparatives

Previous period figures have been regrouped /reclassified, wherever necessary, to conform to current period''s classification. The Company''s previous financial year was for a period of 18 months ended September 30, 2014. Pursuant to the change of year -end , the current financial year ended March 31, 2016 is also for a period of 18 months.

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Sep 30, 2014

1 Employee Benefits

Defined Benefit Plans

Gratuity

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure.

The following tables summaries the components of net benefit expense recognised in the profit and loss account and the funded status and amounts recognised in the balance sheet for the respective plans.

The fund is administered by Life Insurance Corporation of India. The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

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

2 Contingent Liabilities and Commitments (to the extent not provided for)

Particulars September March 30, 2014 31, 2013 Commitments

Estimated amount of contracts remaining to be 480.35 744.11 executed

on capital account and not provided for 20,013.73 18,120.17 Export obligations

Contingent liabilities

Dividend on Redeemable preference shares 6,834.56 1,487.07

Sales tax, income tax and excise related 2,286.45 2,060.85 matters

The Tamil Nadu Government has issued notification levying additional charge on High Tension Industries, having Arc furnaces at 25% of the power consumption effective from 1st December 2001 till 15th March 2003. Though the Company has not received any demand in this regard, the notification has been challenged by the Company before the High Court of Madras. The High Court has granted interim stay.Subsequently, TNERC passed an order imposing 15 % Arc furnace additional charge effective from March 16, 2003. The Company also filed an affidavit stating that it had installed in 1999, harmonic filters to contain the harmonic levels. The Hon''ble Madras High Court after hearing the case on October 8, 2003, directed TNEB to verify the installation of harmonic filters by the Company and report back the status.Though the verification is done, TNEB has not filed the report in the High Court and the case is yet to come up for further hearing. The Management believes that the final impact is not ascertainable pending the receipt of report from TNEB. In the opinion of the management, no provision is considered necessary for the disputes mentioned above on the grounds that there are reasonable chances of successful outcome of appeals.

3 Related Party Disclosure

List of parties where control exists

Holding Company Hinduja Automotive Limited (formerly ''LRLIH Ltd'') UK (upto 29 January 2014)

Entities having Hinduja Foundries Holding Limited (from 30 significant January 2014)

influence Hinduja Automotive Limited (formerly ''LRLIH Ltd''), UK (from 30 January 2014)

Fellow Subsidiary Ashok Leyland Limited (upto 29 January 2014)

Associate Company Ashok Leyland Wind Energy Limited

Entity under common Nissan Ashok Leyland Powertrain Limited control (upto 29 January 2014)

Mr. G R V Rajan, Managing Director (w.e.f. 17th July 2013) Key Managerial Mr. B Swaminathan, Managing Director. Personnel (Upto 17th July 2013)



As the future liabilities of gratuity and leave encashment are provided on an actuarial basis for the Company as a whole, the amounts pertaining to the Managing Director is not ascertainable separately and therefore not included above.

4 Segment Reporting

The Company''s business is confined to only castings. Accordingly, the Company operates in a single business segment. Further, the Company markets its products primarily in the domestic markets. Hence there are no reportable geographical segments.

5 Dues to Micro and Small Suppliers

The management has identified enterprises which have provided goods and services to the Company and which qualify under the definition of micro and small enterprises, as defined under Micro, Small and Medium Enterprises Development Act, 2006. Accordingly, the disclosure in respect of the amounts payable to such enterprises as at March 31, 2013 has been made in the financial statements based on information received and available with the Company and relied upon by auditors. Further in the view of the management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act is not expected to be material.

6 Derivative Instruments

During the period (eighteen months period) ended 30 September 2012, the Company adopted the Accounting Standard (AS)-32 "Financial Instruments: Disclosures" as issued by ICAI, to the extent that the adoption does not conflict with existing mandatory accounting standards and other authoritative pronouncements, Company law and other regulatory requirements.

i Hedges of highly probable forecasted transactions

The Company classifies its derivative contracts that hedge interest rate risk associated with highly probable forecasted transactions as cash flow hedges and measures them at fair value. The effective portion of such cash flow hedges is recorded as part of reserves and surplus within the Company''s "hedging reserve", and re-classified in the statement of profit and loss as revenue in the period corresponding to the occurrence of the forecasted transactions. The ineffective portion is immediately recorded in the statement of profit and loss. In respect of the aforesaid hedges of highly probable forecasted transactions, the Company has recorded, in reserves and surplus, a net profit of Rs.297.52 lakhs (March 31, 2013: Rs.99.13 lakhs) for the period (eighteen months period) ended September 30, 2014The net carrying amount of the Company''s "hedging reserve" was a loss of Rs. 281.95 lakhs (March 31, 2013: Rs.579.47 lakhs) as at September 30, 2014.

7 Qualified Institutional Placement and Preferential allotment of equity shares

During the period, the Company has rasied equity share capital of Rs.8,092.68 lakhs (comprising 26,105,417 equity shares of Rs.10/- each at a premium of Rs.21/- per equity share) through Qualified Institutional Placement (QIP). Further, the Company has raised Rs.6,085 lakhs (comprising 17,818,448 equity shares of Rs. 10/-each at a premium of Rs.24.15/- per equity share) through preferential allotment of shares to the promoters''group. As per the offer document, the proceeds from the aforesaid QIP and private placement net of share issue expenses of Rs.81.77 lakhs (includes INR15 lakhs paid to statutory auditors) have been utilized for augmenting the resources of the Company, funding the various capital expansion plans, long term working capital requirements and debt rationalisation other purposes as may be permissible under applicable law.

8 The Company had acquired a piece of land from APIIC (Andhra Pradesh Industrial and Infrastructure Corporation Limited) and the registration of the land in favour of the Company would be completed upon the Company commencing commercial production before March 31, 2012. Whilst steps are being taken to implement the project on such land, the Company has not been able to do so in view of the delays in basic infrastructural facilities (electricity, water supply etc) being made available to the Company. The Company has been seeking extension of time from the Government Authorities to implement the project.

The Telengana State Industrial Infrastructure Corporation Limited (pursuant to the formation of the state of Telengana) has sought to cancel the allotment of the aforesaid land and has requested the Company to surrender the possession of the vacant land by October 20, 2014 for which the Company sought a further extension of time up to September 2015. The Company has also communicated the tentative timelines for implementation of the project. Based on legal advice, the Company believes that it has adequate grounds to defend its position on retaining the possession of the land. Pending the resolution of the aforesaid matter, the associated project costs incurred to date aggregating to Rs.1,658 lakhs (excluding land cost) have been carried at cost as at September 30, 2014. Also refer note 2(a).

9 Transfer Pricing

The Company had transactions with related parties. As required by the relevant provisions of the Income-tax Act, 1961 the Company has a policy of maintaining documents to prove that these transactions are at arm''s length and believes that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

10 Prior period comparatives

Previous year figures have been regrouped /reclassified, wherever necessary, to conform to current period''s classification. The Company''s previous financial year was for a period of 6 months ended March 31, 2013. Pursuant to the change of year -end , the current financial year ended September 30, 2014 is for a period of 18 months. Accordingly, current period''s figures are not comparable with that of the previous year which is for a period of 6 months.

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Mar 31, 2013

1. Company Overview

Hinduja Foundries Limited was incorporated in the year 1959 and commenced commercial production in the year 1961. The Company is a part of the Hinduja group of companies and is listed in the Bombay, Madras and National Stock Exchanges. The Company is primarily engaged in the business of manufacture of grey iron and aluminum gravity die-castings for automobiles, compressors, industrial engines, power generators and tractors, as well as for defence and marine applications.

2 Employee Benefits Defined Benefit Plans Gratuity

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days basic salary (based on last drawn remuneration) for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The following tables summaries the components of net benefit expense recognised in the profit and loss account and the funded status and amounts recognised in the balance sheet for the respective plans.

3 Contingent Liabilities and Commitments (to the extent not provided for)

Particulars March 31, 2013 September 30, 2012

Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for Export obligations 18,120.17 18,673.32

Contingent liabilities

Dividend on Redeemable preference shares 1,487.07 622.90

Sales tax, income tax and excise related matters 2,060.85 2,031.28

The Tamil Nadu Government has issued notification levying additional charge on High Tension Industries, having Arc furnaces at 25% of the power consumption effective from 1st December 2001 till 15th March 2003. Though the Company has not received any demand in this regard, the notification has been challenged by the Company before the High Court of Madras. The High Court has granted interim stay. Subsequently, TNERC passed an order imposing 15 % Arc furnace additional charge effective from March 16, 2003. The Company also filed an affidavit stating that it had installed in 1999, harmonic filters to contain the harmonic levels. The Hon''ble Madras High Court after hearing the case on October 8, 2003, directed TNEB to verify the installation of harmonic filters by the Company and report back the status. Though the verification is done, TNEB has not filed the report in the High Court and the case is yet to come up for further hearing. The Management believes that the final impact is not ascertainable pending the receipt of report from TNEB. In the opinion of the management, no provision is considered necessary for the disputes mentioned above on the grounds that there are reasonable chances of successful outcome of appeals.

As the future liabilities of gratuity and leave encashment are provided on an actuarial basis for the Company as a whole, the amounts pertaining to the Managing Director is not ascertainable separately and therefore not included above.

4 Segment Reporting

The Company''s business is confined to only castings. Accordingly, the Company operates in a single business segment. Further, the Company markets its products primarily in the domestic markets. Hence there are no reportable geographical segments.

5 Dues to Micro and Small Suppliers

The management has identified enterprises which have provided goods and services to the Company and which qualify under the definition of micro and small enterprises, as defined under Micro, Small and Medium Enterprises Development Act, 2006. Accordingly, the disclosure in respect of the amounts payable to such enterprises as at March 31, 2013 has been made in the financial statements based on information received and available with the Company and relied upon by auditors. Further in the view of the management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act is not expected to be material.

6 In respect of the previous financial year, physical verification of inventory had resulted in difference between book stock and physical stock (physical stock being lower than book stock) aggregating to Rs. 82.95 Crores. Such differences had been fully reckoned appropriately in the statement of profit and loss for the financial year ended September 30, 2012 (as part of increase/decrease in work-in-progress/ finished good and/or consumption of materials as the case may be), and as such, the physically verified stocks were considered in the financial statements for the period ended September 30, 2012. A special committee appointed by the Board of Directors analyzed the aforesaid differences and identified that such differences were predominantly due to ineffective process standards and inadequate documentation and controls in connection with recording and usage of rejections and consumption of materials in the Company''s factories. The committee has ascertained that on consideration of such differences in the application of input/output ratios, the resultant ratios are within the normal range prevalent in the industry and there were no related unaccounted dispatches. Further, the Company has initiated adequate action to strengthen its internal controls in respect of maintenance of inventory records through ERP, improved controls on rejections and implementation of perpetual inventory count system etc.

7 Derivative Instruments

During the year (eighteen months period) ended 30 September 2012, the Company adopted the Accounting Standard (AS)-32 "Financial Instruments: Disclosures" as issued by ICAI, to the extent that the adoption does not conflict with existing mandatory accounting standards and other authoritative pronouncements, Company law and other regulatory requirements. i Hedges of highly probable forecasted transactions

The Company classifies its derivative contracts that hedge interest rate risk associated with highly probable forecasted transactions as cash flow hedges and measures them at fair value. The effective portion of such cash flow hedges is recorded as part of reserves and surplus within the Company''s "hedging reserve", and re-classified in the statement of profit and loss as revenue in the period corresponding to the occurrence of the forecasted transactions. The ineffective portion is immediately recorded in the statement of profit and loss. In respect of the aforesaid hedges of highly probable forecasted transactions, the Company has recorded, in reserves and surplus, a net profit of Rs.99.13 lakhs for the year (six months period) ended March 31, 2013The net carrying amount of the Company''s "hedging reserve" was a loss of Rs. 579.47 lakhs as at March 31, 2013.

8 The Company had acquired a piece of land from APIIC (Andhra Pradesh Industrial and Investment Corporation ) and the registration of the land in favour of the Company would be completed upon the Company commencing commercial production before March 31, 2012. Whilst, the Company has been taking steps to implement the project on such land, the basic infrastructural facilities viz adequate electricity , water supply, etc., have not been made available to the Company. The company has sought extension of time and has also examined alternative locations as suggested by Andhra Pradesh Government. The State Government has sought to cancel the allotment of the aforesaid land in respect of which the Company has obtained a stay from the High Court of Andhra Pradesh for maintaining status quo with regard to possession (which is currently operative). Pending this, the associated project costs incurred to date aggregating to Rs.1,658 lakhs have been carried at cost as at March 31, 2013. Also, refer note 2 (a).

9 Transfer Pricing

The Company has transactions with related parties. As required by the relevant provisions of the Income-tax Act, 1961 the Company has a policy of maintaining documents to prove that these transactions are at arm''s length and believes that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation

10 Prior year comparatives

Previous year figures have been regrouped /reclassified, wherever necessary, to conform to current period''s classification. The Company''s previous financial year was for a period of 18 months ended September 30, 2012. Pursuant to the change of year -end , the current financial year ended March 31, 2013 is for a shorter period of 6 months. Accordingly, current period''s figures are not comparable with that of the previous year which is for a period of 18 months.

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Mar 31, 2011

1.0 Contngent liabilites Rs. Lakhs

2010-11 2009-10

(a) Revision in property tax contested by the Company in the High Court of - 21.30 Madras

(b) Surcharge on self generaton of power 44.46 40.73

(c) Dividend on 6% Redeemable preference shares 391.66 130.00

(d) Sales tax, income tax and excise related maters 1324.82 683.41

(e) The Tamil Nadu Government has issued notfcaton levying additonal charge on High Tension Industries, having Arc furnaces at 25% of the power consumpton efectve from 1st December 2001 tll 15th March 2003. Pursuant to this notfcaton all companies which have an arc furnace will have to pay additonal surcharge on their power consumpton when these furnaces emit efuents exceeding certain thresholds. Though the Company has not received any demand in this regard, the notfcaton has been challenged by the Company before the High Court of Madras. The High Court has granted interim stay.

Subsequently, TNERC passed an order imposing 15 % Arc furnace additonal charge efectve from March 16, 2003. The Company also fled an afdavit statng that it had installed in 1999, harmonic flters to contain the harmonic levels. The Hon'ble Madras High Court afer hearing the case on October 8, 2003, directed TNEB to verify the installaton of harmonic flters by the Company and report back the status.

Though the verifcaton is done, TNEB has not fled the report in the High Court and the case is yet to come up for further hearing. The Management believes that the fnal impact is not ascertainable pending the receipt of report from TNEB. In the opinion of the management, no provision is considered necessary for the disputes mentoned above on the grounds that there are reasonable chances of successful outcome of appeals.

2.0 Related Party disclosure

List of partes where control exists

Holding Company : Hinduja Automotve Limited (formerly 'LRLIH Ltd'), UK

Fellow Subsidiary : Ashok Leyland Limited

Associate Company : AL Wind Energy Limited

Entty under common control Nissan Ashok Leyland Powertrain Limited

Other related party

Key Managerial Personnel : Mr. V Mahadevan, Managing Director.

3.0 Segment Reportng

The Company's business is confned to only castngs. Accordingly, the Company operates in a single business segment. Further, the Company markets its products primarily in the domestc markets. Hence there are no reportable geographical segments.

3.1 Gratuity

The Company has a defned benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days basic salary (based on last drawn remuneraton) for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The following tables summaries the components of net benefit expense recognised in the Profit and loss account and the funded status and amounts recognised in the balance sheet for the respectve plans.

3.2 Disclosure of Revenue from Sales Transactons as per Para 10 of Accountng Standard 9.

The total excise duty for the year excluding the excise duty related to diference between the closing stock and opening stock has been disclosed as a reducton from turnover. Excise duty related to diference between the closing stock and opening stock has been disclosed in Schedule 2.6 "expenses".

3.3 Prior period items

Prior period items represents borrowing cost erroneously not capitalized relatng to earlier years aggregatng to Rs. 307.62 lakhs.

3.4 Previous year comparatves

Prior period figures have been reclassified / regrouped wherever necessary to conform to the current year's classificaton to the extent of informaton available/retrievable. Prior year financial statements have been audited by frms other than B S R and Company.

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Mar 31, 2010

1.1 Background of the Company

The Company was incorporated in the year 1959 and commenced commercial production in the year 1961. The Company is a part of the Hinduja group of companies and is listed in the Bombay, Madras and National Stock Exchanges. The Company is engaged in the business of manufacture of grey iron and aluminum gravity die-castings for automobiles, compressors, industrial engines, power generators and tractors, as well as for defence and marine applications.

1.2 Rights issue

Consequent to the approval of the members in their meeting held on July 29, 2009, the Company has offered for subscription 10,055,749 equity shares of Rs.10/- each at a premium of Rs 40/- per share aggregating to Rs. 5027.87 lakhs, to the existing shareholders on a rights basis, in the ratio of 7 equity shares for every 13 fully paid up equity shares. The offer was open for subscription from March 27, 2010 to April 10, 2010.

The issue was oversubscribed by 22 % and the basis of allotment has been finalized in consultation with the Bombay Stock Exchange.

1.3 Related Party disclosure

List of parties where control exists

Holding Company: Hinduja Automotive Limited (formerly LRLIH Ltd), UK

Fellow Subsidiary: Ashok Leyland Limited

Entity under common control Nissan Ashok Leyland Powertrain Limited Other related party

Key Managerial Personnel: Mr. V Mahadevan, Managing Director.

1.4 Segment Reporting

The Companys business is confined to only castings. Accordingly, the Company operates in a single business segment. Further, the Company markets its products primarily in the domestic markets. Hence there are no reportable geographical segments.

1.5 Gratuity

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days basic salary (based on last drawn remuneration) for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The following tables summaries the components of net benefit expense recognised in the profit and loss account and the funded status and amounts recognised in the balance sheet for the respective plans.

1.6 Disclosure of Revenue from Sales Transactions as per Para 10 of Accounting Standard 9.

The total excise duty for the year excluding the excise duty related to difference between the closing stock and opening stock has been disclosed as a reduction from turnover. Excise duty related to difference between the closing stock and opening stock has been disclosed in Schedule 2.6 "expenses".

1.7 Previous year comparatives

Figures for the previous year have been regrouped wherever necessary to conform to the classification for the year.