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Notes to Accounts of Hindustan Motors Ltd.

Sep 30, 2013

1.0 Nature of Operation:

Hindustan Motors Limited having its manufacturing facilities at Uttarpara, Tiruvallur and Pithampur, is primarily engaged in the manufacture and sale of Vehicles, Spare Parts of Vehicles, Steel Products and Components. The Company is also engaged in Trading of Vehicles and Spare Parts of Vehicles.

1.1 Basis of Preparation:

The financial statements have been prepared to comply in all material respects with the accounting principles generally accepted in India, including mandatory Accounting Standards notified under the Companies (Accounting Standard) Rules, 2006 (as amended) under the historical cost convention and on an accrual basis. The accounting policies, in all material respects, have been consistently applied by the Company and are consistent with those used in the previous year.

2. Estimated amount of contracts remaining to be executed on capital account and other Commitments and not provided for (Net of advances.) 215.21 1327.11

3. Contingent Liabilities not provided for in respect of :

(a) Claims & Government demands against the Company not acknowledged as debts

i) Excise Duty 3062.13 6397.44

ii) Sales Tax 3843.80 726.12

iii) Customs Duty 373.50 370.72

iv) Service Tax 911.83 797.49

v) Others 738.59 740.01

The Company does not expect any major impact to arise out of the above claims /demands. Against the above claims / demands, payments have been made under protest and / or debts have been withheld by the respective parties, to the extent of Rs. 454.32 lacs (Rs. 452.59 lacs).

Included in the above are contingent liabilities to the extent of Rs. 1187.20 lacs (Rs. 1617.57 lacs) relating to the pre-transfer period of the erstwhile Power Unit Plant and Power Products Division of the Company, which were transferred to AVTEC Limited in June 2005. However, demands to the extent of Rs. 667.29 lacs (Rs. 1171.54 lacs) are covered by counter guarantees by the customers.

(b) Outstanding Bank Guarantees for import of materials and other accounts. 527.42 521.36

(c) Bonus for the years 1963-64 to 1967-68 at Uttarpara unit is under adjudication (amount indeterminate). The Company contends that no liability exists in this regard under the Payment of Bonus Act, 1965.

(d) Demands for incremental Dearness Allowance during the years 2001 to 2007 at Uttarpara Unit are under adjudication (amount not ascertained). However, majority of the employees unions have filed joint petition for withdrawal of the case.

(e) The Company is under Corporate Debt Restructuring Scheme. In view of recent circular about "windfall profit / extra ordinary income" triggering the right of recompense and the Company''s sale of property at Halol, Gujarat, the Lenders of the Company have quantified the claim of recompense of interest at Rs. 6554 lacs. The Company has requested the Lenders to take a reasonable view based on Company''s financial position and past track record, which the Lenders have agreed to consider. Pending final decision in the matter, the Company had paid a sum of Rs. 1500 lacs to the Lenders in April 2011, which was accounted for under Interest Expense during the year 2010-11. In view of the above, no further provision there against is considered necessary by the Management.

(f) The Company had sold 314 acres of land at Hindmotor, West Bengal, in earlier years, in pursuance of a development agreement, after taking prior approval from Government of West Bengal (GoWB) and in accordance with the Government Order issued by the GoWB.

The GoWB has alleged that the Company has realized an excess sum of Rs. 19447 lacs from the sale of said land and it should refund the said amount along with interest thereon. The Company is of the view that it has not committed any default of the said Government Order. The Company has also been legally advised that there is no liability on the Company to make any payment against the alleged demand. Accordingly, the Company has denied and disputed the allegations Since the contentions of GoWB are being contested by the Company, including in the proceedings for demerger initiated by the Company, no provision is considered necessary by the management against the said claim.

4. Derivative instruments, which are not intended for trading or speculation but hedge for underlying transactions and forward exchange contract outstanding as at period end are as follows :

(i) JPY / USD of JPY 430.00 lacs (JPY / USD of JPY 4569.50 lacs). (ii) USD / INR of USD 6.55 lacs (USD / INR of USD 29.10 lacs).

The above forward contracts have been taken to cover the exchange risk on import payment liabilities of the Company.

5. As the Company''s business activity falls within a single primary business segment viz, "Automobiles" and there is no reportable secondary segment i.e. geographical segment, the disclosure requirement of Accounting Standard-17 "Segment Reporting" as notified by Companies (Accounting Standards) Rules, 2006 (as amended) is not applicable.

6. The operating results for the current period have been adversely affected due to adverse market conditions as well as adverse exchange rate of US $ / Japanese Yen. The Management is in the process of taking necessary measures to augment the net worth and to improve the operating results including but not limited to sale of non-core assets, introduction of new variants of vehicles and sale of certain manufacturing facilities. The Management is confident that these measures are expected to result in sustainable cash flows and accordingly the Company continues to present its financial statements on a "Going Concern" basis.

7. The Board of Directors in its meetings held on January 10, 2013 and February 9, 2013 approved a scheme of arrangement for demerger of the "Chennai Car Plant" of the Company to its wholly owned subsidiary namely Hindustan Motor Finance Corporation Limited w.e.f. April 1, 2012. The scheme is subject to requisite approvals, including sanction of the High Court. Pending the same, no accounting adjustment thereof has been made in the financial statements. The following statement shows the revenue and expenses of discontinuing operations:

8. The accounting year 2012-13 has been extended by six months till September 30, 2013 and as such, current period''s figures being for eighteen months are not comparable with previous period''s figures being for twelve months.

9. Previous year''s figures have been regrouped / rearranged wherever necessary.


Mar 31, 2012

Nature of Operation:

Hindustan Motors Limited having its manufacturing facilities at Uttarpara, Tiruvallur and Pithampur, is primarily engaged in the manufacture and sale of Vehicles, Spare Parts of Vehicles, Steel Products and Components. The Company is also engaged in Trading of Vehicles and Spare Parts of Vehicles.

Basis of Preparation :

The financial statements have been prepared to comply in all material respects with the accounting principles generally accepted in India, including mandatory Accounting Standards notified under the Companies (Accounting Standard) Rules, 2006 (as amended) under the historical cost convention and on an accrual basis. The accounting policies, in all material respects, have been consistently applied by the Company and are consistent with those used in the previous year, except for changes in the presentation and disclosures of the financial statements as described in Note nos. 1(i) and 49 below.

a) Terms / Rights attached to Equity Shares

The Company has only one class of equity shares issued and subscribed of face value of Rs 5 per share. Each holder of equity share is entitled to one vote per share.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive assets of the Company remaining after settlement of all liabilities. The distribution will be in proportion to the number of equity shares held by the shareholders. In the event of declaration of dividend by the Company, approval of shareholders will be required in its Annual General Meeting. As the Company is under Corporate Debt Restructuring Scheme, declaration of dividend would also require approval of the Lenders.

b) During the year, the Company's promoter/promoter group companies were allotted 1,18,00,000 Equity Shares of face value of Rs 5 each on preferential basis, at a premium of Rs 7.25 per share on 12th March, 2012 which are locked in up to 11th March, 2015 i.e. for a period of three years from the date of allotment. The existing holding of such promoter/promoter group companies to the extent of 1,20,30,106 Equity Shares are also locked in up to 25th September, 2012 i.e. for a period of six months from the date of allotment.

a) Term Loans Rs 1758.66 lacs (Rs 1758.66 lacs) from the Financial Institutions and Banks together with interest and other charges thereon, are secured by a mortgage on a part of the Company's land with other immovable assets thereon, both present and future, and by way of a hypothecation charge over all the movable assets including book debts of the Company. These charges along with those referred to in Note 8 rank pari- passu amongst various Financial Institutions and Banks and are yet to be additionally secured by way of pledge of 45,50,000 equity shares of HM Export Ltd., a subsidiary company.

b) Term Loans from Banks carry interest @ 10.897% p.a. on monthly rest. These Loans are due for repayment during the year 2013-14 in equal monthly installments.

c) Term Loans from Financial Institutions carry interest @11% p.a. on quarterly rest. These Loans are due for repayment during the year 2013-14 in equal quarterly installments.

d) Sales Tax Deferral Credit is interest free and payable in 6 quarterly installments asper payment schedule, from April 2013 to July 2014. Amount of remaining installments range between < 50.00 lacs to Rs 279.00 lacs per quarter.

a) Cash Credits facilities from Banks Rs 268.25 lacs (Rs 302.45 lacs) and buyers credit Rs 1493.24 lacs (Rs 1387.63 lacs) together with interest and other charges thereon, are secured by a mortgage on a part of the Company's land together with other immovable assets thereon, both present and future, and by way of a hypothecation charge over all the movable assets including book debts of the Company. Cash Credit is repayable on demand and carries interest @ 10.897% p.a. on monthly rest. Buyers credit is taken for period ranging from 3to6 months and carries interest ranging from Libor plus 0.45 % to 3.5 % p.a.

In respect of non-cancellable operating leases taken by the Company, the significant leasing agreements relating to certain premises are renewable on expiry of mutually acceptable terms. Such lease payments of Rs 37.36 lacs (Rs 72.97 lacs) are recognized in the Statement of Profit and Loss as rent and the particulars of future lease payment are as follows:

1. Contingent Liabilities not provided for in respect of :

(a) Claims & Government demands against the Company not acknowledged as debts.

i) Excise Duty 6397.44 6291.39

ii) Sales Tax 726.12 802.25

iii) Customs Duty 370.72 373.50

iv) Service Tax 797.49 958.99

v) Others 740.01 734.60

The Company does not expect any major impact to arise out of the above claims / demands. Against the above claims / demands, payments have been made under protest and / or debts have been withheld by the respective parties, to the extent of Rs 452.59 lacs (Rs 426.19 lacs).

Included in the above are contingent liabilities to the extent of Rs 1617.57 lacs (Rs 1638.17 lacs) relating to the pre transfer period of the erstwhile Power Unit Plant and Power Products Division of the Company, which were transferred to AVTEC Limited in June 2005. However, demands to the extent of Rs 1171.54 lacs (Rs 1171.54 lacs) are covered by counter guarantees by the customers.

(b) Outstanding Bank Guarantees for import of materials and other accounts. 521.36 544.92

(c) Differential Duty on import of Capital goods under Export Promotion Capital Goods Scheme is Rs 25.07 lacs (Rs 21.80 lacs).

(d) Bonus for the years 1963-64 to 1967-68 at Hindmotor Unit which is under adjudication (amount indeterminate). The Company contends that no liability exists in this regard under the Payment of Bonus Act, 1965.

(e) Demands for incremental Dearness Allowance during the years 2001 to 2007 at Hindmotor Unit which are under adjudication (amount not ascertained). However, majority of the employees unions have filed joint petition for withdrawal of the case.

(f) The Company is under Corporate Debt Restructuring Scheme. In view of recent circular about "windfall profit / extra ordinary income" triggering the right of recompense and the Company's sale of property at Halol, Gujarat, the Lenders of the Company have quantified the claim of recompense of interest at Rs 6554 lacs. The Company has requested the Lenders to take a reasonable view based on Company's financial position and past track record, which the Lenders have agreed to consider. Pending final decision in the matter, the Company has paid a sum of Rs 1500 lacs to the Lenders in April 2011, which was accounted for under Interest Expense during the year 2010-11. In view of the above, no further provision there against is considered necessary by the Management.

2. On 12th March, 2012 the Company has allotted 1,18,00,000 Warrants to promoter/promoter group companies on preferential basis with each Warrant convertible into one Equity Share of face value of Rs 5 each at a premium of Rs 7.25 per share at the option of the Warrant holder at any time within a period of 18 months from the date of allotment on payment of balance consideration. The Company has already received 25% consideration for such Warrants aggregating to Rs 361.38 lacs during the year.

3. Derivative instruments, which are not intended for trading or speculation but hedge for underlying transactions, Forward exchange contract outstanding as at year end are as follows :

(i) JPY / USD of JPY 4569.50 lacs (JPY / USD of JPY 750 lacs).

(ii) USD / INR of USD 29.10 lacs (USD / INR of USD 22.25 lacs).

The above forward contracts have been taken to cover the exchange risk on import payment liability of the Company.

B. Defined Benefit Plan

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets Gratuity on terms not lower than the amount payable under the Payment of Gratuity Act, 1972. The aforesaid scheme is funded with an Insurance Company. The following table summarises the components of net benefit expenses recognised in Statement of Profit & Loss and the funded status and amount recognised in the Balance Sheet for the respective plan.

Note :

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

b) The Company expects to contribute Rs 120.00 lacs (Rs 120.00 lacs) to Gratuity fund in 2012-2013.

c) Experience adjustment on plan assets & liabilities has been considered in the valuation report as certified by the actuary.

During the year, Mr. Manoj Jha resigned as Managing Director of the Company with effect from 1st February, 2012. Pursuant to his resignation, the post of Managing Director of the Company remained vacant for the period from 1st February, 2012 to 31st March, 2012. The Company appointed Mr. Uttam Bose as Managing Director with effect from 2nd April, 2012.

4. The Company had sold 314 acres of land at Uttarpara, West Bengal in earlier years, in pursuance of a development agreement, after taking prior approval from Government of West Bengal. As per the Order issued by the Government of West Bengal, the Company has committed to make capital expenditure of Rs 70 crores for revival of the Uttarpara Plant.

5. As the Company's business activity falls within a single primary business segment. Viz; "Automobiles" and there is no reportable secondary segment i.e. geographical segment, the disclosure requirement of Accounting Standard-17 "Segment Reporting" as notified by Companies (Accounting Standards) Rules, 2006 (as amended) is not applicable.

6. The operating results for the current year have been adversely affected due to adverse exchange rate of US $ /Japanese Yen as well as market conditions. The Management is in the process of taking necessary measures to augment the net worth and to improve the operating results including but not limited to preferential issue of capital to promoter/promoter group companies, sale of non-core assets and introduction of new variants of cars. The Management is confident that these measures are expected to result in sustainable cash flows and accordingly, the Company continues to present its financial statements on a "Going Concern" basis.

7. Previous year figures :

During the year ended 31st March 2012, revised Schedule VI notified under the Companies Act, 1956 became applicable to the Company, for preparation and presentation of its financial statements. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. The Company has also reclassified the previous year figures in accordance with the requirements applicable in the current year.


Mar 31, 2011

Nature of Operation:

Hindustan Motors Limited having its manufacturing facilities at Uttarpara, Tiruvallur and Pithampur, is primarily engaged in the manufacture & sale of Motor Vehicles, Spare Parts & accessories thereof and Components, Steel Products etc. The Company is also engaged in Trading of Motor vehicles, Spare parts and Components.

Rs. in lacs March 31,2011 March 31,2010

2. Contingent Liabilities not provided for in respect of :

(a) Claims & Government demands against the Company not acknowledged as debts.

i) Excise Duty 6291.39 5987.69

ii) Sales Tax 802.25 10408.09

iii) Customs Duty 373.50 362.87

iv) Service Tax 958.99 350.46

v) Others 734.60 837.30

The Company does not expect any major impact to arise out of the above claims/demands.

Against the above claims / demands, payments have been made under protest and / or debts have been withheld by the respective parties, to the extent of Rs. 426.19 lacs (Rs. 2531.80 lacs).

Included in the above are contingent liabilities to the extent of Rs. 1638.17 lacs (Rs. 1571.17 lacs) relating to the pre transfer period of the erstwhile Power Unit Plant and Power Products Division of the Company, which were transferred to AVTEC Limited in June 2005. However, demands to the extent of Rs. 1171.54 lacs (Rs. 1171.54 lacs) are covered by counter guarantees by the customers.

(b) Outstanding Bank Guarantees for import of materials and other accounts. 544.92 598.52

(c) Differential Duty on import of Capital goods under Export Promotion Capital Goods Scheme is Rs. 21.80 lacs (Rs. 18.96 lacs).

(d) Bonus for the years 1963-64 to 1967-68 at Hindmotor unit which is under adjudication (amount indeterminate). The Company contends that no liability exists in this regard under the Payment of Bonus Act, 1965.

(e) Demands for incremental Dearness Allowance during the years 2001 to 2007 at Hindmotor Unit which are under adjudication (amount not ascertained). However, majority of the employees unions have filed joint petition for withdrawal of the case.

(f) The Company is under Corporate Debt Restructuring Scheme. In view of recent circular about "windfall profit / extra ordinary income" triggering the right of recompense and the Companys sale of property at Halol, Gujarat, the Lenders of the Company have quantified the claim of recompense of interest at Rs. 6554 lacs. The Company has requested the Lenders to take a reasonable view based on Companys financial position and past track record, which the Lenders have agreed to consider. Pending final decision in the matter, the Company has paid a sum of Rs. 1500 lacs to the Lenders in April 2011, which has been accounted for under Interest expense, in these accounts. In view of the above, no further provision there against is considered necessary by the Management.

3. (a) Term Loans Rs. 1758.66 lacs (Rs. 1758.66 lacs) from the Financial Institutions and Banks together with interest and other charges thereon, are secured by a mortgage on a part of the Companys land with other immovable assets thereon, both present and future and by way of a hypothecation charge over all the movable assets including book debts of the Company.

(b) Cash Credit facilities from Banks Rs. 302.45 lacs (Rs. 301.05 lacs), and buyers credit Rs. 1387.63 lacs (Rs. Nil) together with interest and other charges thereon are secured by a mortgage on a part of the Companys land together with other immovable assets thereon, both present and future, and by way of a hypothecation charge over all the movable assets including book debts of the Company.

(c) Short Term Loan Rs. Nil (Rs. 1009.56 lacs) from a Bank together with interest thereon, is secured by way of a hypothecation charge over all the movable assets including book debts of the Company.

(d) Short Term Loan Rs. 604.10 lacs (Rs. Nil) from a Bank together with interest thereon, is secured by way of subservient charge on all the movable fixed assets and the current assets of the Company.

(e) The Charges referred to in (a), (b) and (c) above rank pari-passu amongst various Financial Institutions and Banks, and (a) & (b) are yet to be additionally secured by way of pledge of 4550000 equity shares of HM Export Ltd., a subsidiary company.

4. The break-up of net deferred tax liability as on 31st March 2011 is as under :

In terms of accounting policy disclosed vide Note No. 1 (XVI) above, Deferred tax assets of Rs. 2879.30 lacs (Rs. 3188.82 lacs) arising on account of carried forward unabsorbed business losses have not been recognised in he accounts.

5. Derivative contracts outstanding as at year end are as follows :

(i) In respect of cross currency JPY / USD of JPY 750 lacs (JPY / USD of JPY 6400 lacs).

(ii) Forward cover of USD / INR of USD 22.25 lacs (USD / INR of USD 66 lacs).

The above derivative / forward contracts have been taken to cover the exchange risk on import payment liability of the Company.

6. Consumption of Raw materials, stores and spare parts includes profit / loss on sale thereof.

7. In certain cases, excise duty on items transferred from one division to another for captive use has been accounted for based on actual payments at provisional rates. Additional liability, if any, in this regard will be accounted for on determination of the final rates, but it will have no impact on the Companys profitability, since the same will be claimable as Cenvat benefit by the transferee unit.

8. Excise duty on stocks represents differential excise duty on opening and closing inventories.

9. Shareholders of the Company have approved Capital reduction on 16th November, 2010 through postal ballot which was duly confirmed by the Honble High Court at Calcutta vide its Order dated 15th December, 2010 and Certificate of Registration of the said Order was issued by the Registrar of Companies, West Bengal on 11th January, 2011. Pursuant to this, debit balance in Profit & Loss Account as on 31st March, 2010 has been reduced by Rs. 8375.88 lacs by reducing the paid up value of the Equity Shares from Rs. 10/- each to Rs. 5/- each with effect from 11th January, 2011 resulting in reduction of Rs. 8058.60 lacs in the Subscribed and Paid up Equity Share Capital from Rs. 16117.20 lacs (16,11,71,993 Equity Shares of Rs. 10/- each) to Rs. 8058.60 lacs (16,11,71,993 Equity Shares of Rs. 5/- each) and adjusting the Securities Premium Account to the extent of Rs. 317.28 lacs.

10. The movement in Provisions for Warranties during the year is as follows:

A Provision is recognized for expected warranty claims on products based on managements estimate of present obligation in this regard during the warranty period, computed on the basis of past experience of the level of repairs.

11. Disclosure under Accounting Standard-15 (Revised) on Employee Benefits

B. Defined Benefit Plan

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets Gratuity on terms not lower than the amount payable under the Payment of Gratuity Act, 1972. The aforesaid scheme is funded with an Insurance Company. The following table summarises the components of net benefit expenses recognised in profit & loss account and the funded status and amount recognised in the balance sheet for the respective plan.

Note:

a) The estimates of future salary increase considered in actuarial valuation, takes account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market

b) The Company expects to contribute Rs. 120.00 lacs (Rs. 120.00 lacs) to Gratuity fund in 2011-2012.

c) Experience adjustment on plan assets & liabilities has been considered in the valuation report as certified by the actuary

12. Related Party Disclosures:

(a) Name of the related parties:

Subsidiary Companies HM Export Ltd.

Hindustan Motor Finance Corporation Ltd.

Hindustan Motors Ltd., U.S.A.

Associate Company AVTEC Limited

Key Management Personnel Mr. R. Santhanam, Managing Director (Upto 18th May 2010)

Mr. Manoj Jha, Managing Director (From 19th May 2010)

13. As the Companys business activity falls within a single primary business segment. Viz; Automobiles in India, the disclosure requirement of Accounting Standard-17 "Segment Reporting" as notified by Companies (Accounting Standards) Rules, 2006(as amended) is not applicable.

14. Quantitative Information :

(a) Includes excise duty, sales tax, export incentives, insurance claims, transportation & delivery charges and after adjusting incentives / discounts and returns against sales made in earlier years Rs. 76.74 lacs

(Rs. 77.20 lacs) and including items capitalised Rs. 97.64 lacs (Rs. 298.27 lacs).

(b) The installed capacity of the plants is not balanced in different manufacturing stages. As a result, in many stages, the capacity is more whereas in some stages, it is less than that mentioned above.

(c) Includes Alloy Steel and Mild Steel Forgings & Grey Iron Castings.

(d) Including 1423 Tonnes (1746 Tonnes) used for own consumption and for different end-products.

(e) At estimated sale value.

(f) Sales value of own manufactured spare parts being unascertainable, the same have been grouped under this head.

(g) Installed Capacities are certified by the Management and accepted as correct by the Auditors. (h) Licensed Capacity has not been given above in view of the delicensing of various products.

15. Previous years figures (including those which are in brackets) have been regrouped / rearranged wherever necessary


Mar 31, 2010

Nature of Operation:

Hindustan Motors Limited having its manufacturing facilities at Uttarpara, Tiruvallur and Pithampur, is primarily engaged in the manufacture & sale of Motor Vehicles, Spare Parts & accessories thereof and Components, Steel Products etc. The Company is also engaged in Engineering Services, Trading of Motor vehicles, Spare parts and Components.

Rupees in lacs

March 31,2010 March 31, 2009

2. Contingent Liabilities not provided for in respect of :

(a) Claims & Government demands against the Company not acknowledged as debts.

i) Excise Duty 5987.69 4619.53

ii) Sales Tax 10408.09 9311.94

iii) Customs Duty 362.87 409.69

iv) Others 1187.76 985.82

The Company does not expect any major impact to arise out of the above claims/demands.

Against the above claims / demands, payments have been made under protest and / or debts have been withheld by the respective parties, to the extent of Rs.2531.80 lacs (Rs. 2565.31 lacs).

Included in the above are contingent liabilities to the extent of Rs.1571.17 lacs (Rs. 1604.07 lacs) relating to the pre transfer period of the erstwhile Power Unit Plant and Power Products Division of the Company, which were transferred to AVTEC Limited in June 2005. However, demands to the extent of Rs.1171.54 lacs (Rs.1171.54 lacs) are covered by counter guarantees by the customers.

(c) Duty on import of Capital goods under Export Promotion Capital Goods Scheme is Rs.18.96 lacs (Rs.l6.481acs).

(d) Bonus for the years 1963-64 to 1967-68 at Hindmotor unit which is under adjudication (amount indeterminate)! The Company contends that no liability exists in this regard under the Payment of Bonus Act, 1965.

(e) Demands for incremental Dearness Allowance during the years 2001 to 2007 at Hindmotor Unit which are under adjudication (amount not ascertained) However, majority of the employees unions have filed joint petition for withdrawal of the case.

3. (a) Term Loans Rs.1758.66 lacs (Rs. 3314.11 lacs) from the Financial Institutions and Banks together with interest and other charges thereon, are secured by a mortgage of a part of the Companys land with other immovable assets thereon, both present and future, and by way of a hypothecation charge over all the movable assets including book debts of the Company.

(b) Cash Credit facilities from Banks Rs.301.05 lacs ( Rs.729.07 lacs ), together with interest and other charges thereon, are secured by a mortgage of a part of the Companys land together with other immovable assets thereon, both present and future and by way of a hypothecation charge over all the movable assets including book debts of the Company.

(c) Short Term Loan Rs.1009.56 lacs (Rs.Nil) from a Bank together with interest thereon, is secured by way of a hypothecation charge over all the movable assets including book debts of the Company.

(d) The Charges referred to in (a), (b) and (c) above rank pari passu amongst various Financial Institutions andBanks.

4. The Companys agreement with workmen of Hindmotor unit has expired on 31st March, 2003. The Companys liability, if any, towards additional salaries / wages, being presently^ascertainable, would be accounted for after finalisation of the said agreement.

5. Total Derivative contracts in respect of cross currency forward covers of JPÂ¥ 6400 lacs (JPÂ¥ 1680 lacs) are outstanding at the balance sheet date.

6. Finance Lease agreement for assets valuing Rs.45.11 Lacs has already expired. However these assets are yet to be transferred to the Company by the lessor pending compliance of necessary formalities.

7. Consumption of Raw materials, stores and spare parts includes profit / loss on sale thereof.

8. In certain cases, excise duty on items transferred from one division to another for captive use has been accounted for based on actual payments at provisional rates. Additional liability, if any, in this regard will be accounted for on determination of the final rates, but it will have no impact on the Companys profitability, since the same will be claimable as Cenvat benefit by the transferee unit.

9. Excise duty on stocks represents differential excise duty on opening and closing inventories.

10. In terms of a Development Agreement entered by the Company, the Company has duly transferred the balance land measuring 62.791 acres (62.80 acres ) at Hindmotor by handing over physical possession thereof against payment to thl developer, and profit of Rs 5136.58 lacs ( Rs. 5631.75 lacs ) thereon has been included under The head "Other Income" in Schedule 15.

The Company has given a non-compete undertaking to the developer for a period of five years from the date of agreement or three years from the date of the completion of the development of the property, whichever is earlier, for which it would receive non-compete fee @ 4 % of the sale proceeds of the developed property as and when sold by the developer.

11. Related Party Disclosures:

(a) Name of the related parties:

Subsidiary Companies HM Export Ltd.

Hindustan Motor Finance Corporation Ltd.

Hindustan Motors Ltd., U.S.A. Associate Company AVTEC Limited

Key Management Personnel Mr. R. Santhanam, Managing Director

12. Previous years figures (including those which are in brackets) have been regrouped / rearranged wherever necessary.



 
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