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Notes to Accounts of Igarashi Motors India Ltd.

Mar 31, 2016

1 EMPLOYEE BENEFITS

Disclosure of employee benefits pursuant to Accounting Standard (AS) 15 "Employee Benefits"

(i) Defined benefit plans

Provision for Gratuity (defined benefit plan) and Leave encashment (Long-term employee benefit) represents provision made as per Actuarial valuation report.

2 RELATED PARTY DISCLOSURES PURSUANT TO ACCOUNTING STANDARD (AS) 18

(i) Names of related parties and related party relationship

(a) Related parties where control exists

1. Blackstone Capital Partners (Singapore)

VI FDI Three Pte.Limited -

Ultimate Holding Company upto July 29, 2015

2. Igarashi Electric Works Limited, Japan - Ultimate Holding Company from July 30, 2015

3. Agile Electric Sub Assembly Private Limited - Holding Company

(b) Related parties with whom transactions have taken place during the year

1. Agile Electric Sub Assembly Private Limited - Holding Company

2. Mr. P. Mukund, Managing Director - Key Management Personnel

3. Igarashi Electric Works Limited, Japan - Ultimate Holding Company from July 30, 2015

4. Igarashi Electric Works (HK) Ltd, Hong Kong - Fellow Subsidiary from July 30, 2015

5. Igarashi Electric Works International Ltd, Hong Kong - Fellow Subsidiary from July 30, 2015

6. Igarashi Motor Sales USA LLC, USA - Fellow Subsidiary from July 30, 2015

7. Igarashi Motoren Gmbh, Germany - Fellow Subsidiary from July 30, 2015

3 DISCLOSURES PURSUANT TO ACCOUNTING STANDARD (AS) 19 "LEASES"

(a) Finance Lease

(i) The Company has acquired certain plant and equipment on finance lease. The lease has a primary period which is fixed and non-cancellable. There are no exceptional / restrictive covenants in the lease agreement.

(ii) The minimum lease payments and the present value of minimum lease payments in respect of assets acquired under finance lease as at March 31, 2016 is as follows:

(iii) Lease payments recognised as expenses in the Statement of Profit and Loss for the year is Rs. 22,619,605/- (Previous year Rs. 22,741,067/-)

(iv) Contingent rent recognised in the Statement of Profit and Loss Rs Nil (Previous year Rs Nil)

(v) The Company has sub-leased the plant and equipment mentioned in (ii) (a) above on non-cancellable operating lease. The sub-lease rental income for the year is Rs. 22,360,596 /- (Previous year Rs. 22,360,596/-). There are no exceptional / restrictive covenants in the lease agreement.

(vi) Total of future minimum sub-lease rent expected to be received under non-cancellable sub-lease as on March 31, 2016 is Rs. 46,120,704/- (As at March 31, 2015 is Rs. 68,481,300/-)

4 DERIVATIVE CONTRACTS

(a) "In line with the Company''s risk management policy, the financial risks mainly relating to changes in the exchange rates are hedged by using forward contracts, besides natural hedges.

The Company follows the principles of hedge accounting as per the Accounting Standard (AS) 30 "Financial Instruments: Recognition and Measurement" in respect of those derivative transactions which are not covered by Accounting Standard (AS) 11. Accordingly, the Company has recognised a net gain of Rs 31,407,868/- (previous year net gain of Rs 1,270,000/-) arising out of fair valuation of outstanding derivative contracts in Statement of Profit and Loss for the year ended March 31, 2016."

(b) The particulars of derivative contracts entered into for hedging foreign currency exchange risks, which are outstanding as at March 31, 2016 are as under :

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


Mar 31, 2015

A) Terms / rights / restrictions attached to equity shares

(i) The Company has only one class of equity shares having a face value of Rs.10/- each. Each holder of equity share is entitled to one vote per share.

(ii) All shares issued carry equal rights for dividend declared by the Company. There are no restrictions attached to any of the shares.

(iii) The Company has not issued any securities with the right / option to convert the same into equity shares at a later date.

b) The Company has not bought back any shares or issued shares for consideration other than cash or issued

NOTES ACCOMPANYING THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2015 bonus shares during the five years immediately preceding the date of Balance Sheet.

Employee Stock Option Plan [ESOP]:

(I) Terms

(i) The Company has obtained approval of share holders through postal ballot on January 08, 2011 for grant of 1,250,000 options under the Employees Stock Option Plan, 2006 to its employees and Directors. The options have a vesting period of one year from the date of grant of the option. The exercise period is five years from the date of grant of option.

(ii) The grant of options to the employees under the employee stock option scheme is on the basis of their performance and other eligibility criteria. The options are vested equally over a period of one year, subject to the discretion of the management and fulfillment of certain conditions.

(III) During the year, the Company has amortised proportionate employee stock based compensation expense amounting to '' 90,466/- (previous year Rs. 544,534/-) which has been included in Note 21 "Employee benefits expense".

h) There are no other shares reserved for issue under options and contract / commitments for sale of share or disinvestment.

i) The Directors recommend payment of dividend of Rs. 4.44 per equity share of Rs. 10/- each on the number of shares outstanding as on the record date. Provision for dividend has been made in the books of account for 30,608,444 equity shares outstanding as at March 31,2015 amounting to Rs. 135,901,491/-

Terms and conditions of long-term borrowings

(a) Secured loans

Terms of repayment as at March 31,2015

(i) External commercial borrowing (ECB-I) is repayable in ten unequal quarterly installments ending in August 2017.

(ii) External commercial borrowing (ECB-III) is repayable in sixteen equal quarterly installments ending in November 2019.

(iii) Foreign currency term loan is repayable in five equal quarterly installments ending in April 2016.

Nature of security

(i) External commercial borrowing (ECB-I) is secured by first exclusive charge on the fixed assets of the Company created out of the ECB facility funded by the bank, both present and future, an equitable mortgage over the superstructures constructed by the Company and second ranking pari-passu charge on all the current assets of the Company, both present and future.

(ii) External commercial borrowing (ECB-III) is secured by first ranking pari-passu charge on the entire fixed assets, all right, title, interest, benefit, claims and demand of the Company, both present and future, an equitable mortgage over the superstructures constructed by the Company and a second ranking pari-passu charge on all the current assets of the Company, both present and future.

(iii) Foreign currency term loan is secured by first ranking pari-passu charge on all moveable fixed assets of the Company, both present and future, an equitable mortgage over the superstructures constructed by the Company and second ranking pari-passu charge on all the current assets of the Company, both present and future.

(b) Unsecured loan

(i) Finance lease obligations are repayable in sixty equated monthly installments from the date of respective lease finance.

(a) Working capital loans in the nature of packing credit and buyers'' credit are repayable within one year. They are secured by first ranking pari-passu charge on all current assets of the Company, both present and future, and a second ranking pari-passu on all fixed assets of the Company, both present and future after term loans from banks. The charge also extends to bills discounted amounting to Rs. 72,638,834/- (Previous year Rs. 38,330,811/-)

2 CONTINGENT LIABILITIES AND COMMITMENTS

a) Contingent liabilities As at As at 31.03.2015 31.03.2014

i) Bills discounted with banks 72,638,834 38,330,811

ii) Income tax liability that may arise in respect of matters for which the 11,829,833 10,164,183 Company is under appeal

iii) Employees State Insurance demand on dues for trainees 2,434,404 2,434,404

3 EMPLOYEE BENEFITS

Disclosure of employee benefits pursuant to Accounting Standard (AS) 15 "Employee Benefits"

(i) Defined benefit plans

Provision for Gratuity (defined benefit plan) and Leave encashment (Long-term employee benefit) represents provision made as per Actuarial valuation report.

e) All Investments in plan assets are managed by the Life Insurance Corporation of India.

f) Principal actuarial assumptions at the balance sheet date (expressed as weighted averages):

Attrition rate: 1-3% per annum, assumed to be independent of age and service.

Mortality rate : IALM (2006-08) Ultimate Table.

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

(h) General description of the defined benefit plan

The Company operates a funded defined benefit gratuity plan wherein every employee is entitled to a benefit equivalent to fifteen days last drawn salary for each completed year of sevice, subject to the maximum limit specified under the Payment of Gratuity Act, 1972, as amended from time to time. The same is payable on termination of service or retirement whichever is earlier. The benefit vests after five years of continuous service.

(ii) Defined contribution plans

Contribution to provident funds are made to the Regional Provident Fund office. Expenses recognised in the Statement of Profit and Loss is Rs. 6,290,139/- (previous year Rs. 5,228,801/-) Contribution to Employee State Insurance is made to the Employees'' State Insurance Corporation. Expense recognised in the Statement of Profit and Loss is Rs. 2,025,648/- (previous year Rs. 2,172,269/-)

4 DERIVATIVE CONTRACTS

(a) "In line with the Company''s risk management policy, the financial risks mainly relating to changes in the exchange rates are hedged by using forward contracts, besides natural hedges. The Company has adopted, during the year under review, the principles of hedge accounting as per the Accounting Standard (AS) 30 "Financial Instruments: Recognition and Measurement" in respect of those derivative transactions which are not covered by the existing Accounting Standard (AS) 11. This treatment has resulted in a net gain of Rs. 1,270,000/- arising out of fair valuation of outstanding derivative contracts which has been recognised in Statement of Profit and Loss. Consequently, profit before tax is higher by the same amount."

(b) The particulars of derivative contracts entered into for hedging foreign currency exchange risks, which are outstanding as at March 31,2015 are as under :

1 Cash flow statement has been prepared under the indirect method as set out in Accounting Standard (AS) -3

"Cash Flow Statements" as specified in section 133 of the Companies Act, 2013 read with Rule 7 of Companies (Accounts) Rules, 2014.

2. Purchase of fixed assets includes movement of capital work-in-progress, capital advances and liability for capital goods during the year.

3. Cash and cash equivalents comprise cash on hand and balance with banks on current accounts and fixed deposit accounts with maturity of less than 3 months and exclude unpaid dividend accounts, fixed deposits with more than 3 months maturity and margin money deposits. Refer Note 15 (i) for components of cash and cash equivalents.

4. Figures for the previous year have been regrouped/reclassified wherever applicable.


Mar 31, 2013

1 CONTINGENT LIABILITIES AND COMMITMENTS

a) Contingent Liabilities

As at As at 31.03.2013 31.03.2012 Rupees Rupees

1 Bills discounted 60,126,244 94,787,190

2 Income tax liability that may arise in respect of matters on appeal 49,325,883 10,164,183

3 Employees State Insurance demand on dues for trainees 2,434,404 2,434,404

4 Guarantees given on behalf of holding company 1,100,100,000

b) Other details regarding contingent liabilities

The Company does not expect any reimbursement in respect of the above contingent liabilities except bills discounted. It is not practicable to estimate the timing of outfl ows, if any, in respect of matters pertaining to (2) and (3) above, pending resolution of the appellate proceedings.

2 EMPLOYEE BENEFITS

Disclosure of employee benefi ts pursuant to Accounting Standard (AS) 15 "Employee Benefi ts"

(i) Defi ned benefi t plans

Provision for Gratuity and Leave encashment represents provision made as per Actuarial valuation report dated April 29, 2013

3 RELATED PARTY DISCLOSURES PURSUANT TO ACCOUNTING STANDARD (AS) 18

(i) Names of related parties and related party relationship

(a) Related parties where control exists

1. HBL Power Systems Limited - Ultimate Holding Company

2. Agile Electric Sub Assembly Private Limited - Holding Company [Refer Note 2 (c)]

(b) Related parties with whom transactions have taken place during the year

1. HBL Power Systems Limited - Ultimate Holding Company

2. Agile Electric Sub Assembly Private Limited - Holding Company [Refer Note 2 (c)]

3. Bosch Electrical Drives India Private Limited - Associate Company till 29.03.2012

4. Mr. P. Mukund, Managing Director - Key Management Personnel

4 LEASES

(a) Finance Lease:

i) The company has acquired certain plant and machinery on fi nance lease. The lease has a primary period which is fi xed and non-cancellable. There are no exceptional /restrictive covenants in the lease agreements.

ii) The minimum lease payments and the present value of minimum lease payments in respect of assets acquired under fi nance lease as at March 31, 2013 is as follows:

(b) Operating Lease:

i) The Company has taken certain premises and cars on cancellable operating lease. These leases agreements are normally renewed on expiry. Amount paid toward these leases are included in selling, administration and other expenses. There are no exceptional / restrictive covenants in these lease agreements.

ii) Lease rentals charged to the Statement of Profi t and Loss for the year is Rs.1,851,026/- (previous year Rs.1,717,324/-).

iii) Contingent rent recognised Rs. Nil (previous year Rs.Nil).

5 Figures for the previous year have been regrouped / reclassifi ed wherever necessary.


Mar 31, 2012

A) Employee Stock Option Scheme:

i) The Company has obtained approval of share holders through postal ballot on 08th January, 2011 for grant of 1,250,000 options under the Employees Stock Option Plan, 2006 to its employees and Directors. The Company had granted 235,700 options during the year (previous year 750,000 options), with a vesting period of one year from the date of grant of the option. The exercise period is five years from the date of issue.

ii) The grant of options to the employees under the employee stock option schemes is on the basis of their performance and other eligibility criteria. The options are vest equally over a period of one year, subject to the discretion of the management and fulfillment of certain conditions.

Terms and conditions of Long term borrowings Secured loans

(i) Term loans from banks are repayable in sixteen quarterly installments from March 31, 2012.

(ii) Working capital term loans from banks are repayable in twenty quarterly installments from March 31, 2012.

Term loan and Working capital term loan from banks are secured by, first pari-passu charge on all fixed assets of the Company, both present and future, excluding leasehold land and second pari- passu charge on all current assets of the Company, both present and future.

Unsecured loans

(i) Finance lease obligations are repayable in sixty equated monthly installments from the date of respective lease finance.

(ii) Vehicle loans are repayable in sixty equated monthly installments from the date of respective vehicle loan and are secured by charge of the related vehicles.

Note : Refer note no.4 supra for terms and conditions of the above borrowings.

(e) Working capital loans in the nature of packing credit and buyer's credit are repayable within one year. They are secured by first pari-passu charge on all current assets of the Company, both present and future and second pari-passu charge on all fixed assets of the Company both present and future, excluding leasehold land, after term loans. The charge also extends to bills discounted amounting to Rs. 94,787,190/- (Previous Year Rs. 83,406,368/-).

(f) The Company does not have any transaction with Micro and Small Enterprises covered under the Micro, Small and Medium Enterprises Development Act, 2006, identified on the basis of information available with the Company. Accordingly, disclosing details of overdue principal and interest thereon does not arise.

(g) The Company does not have taxable income under the conventional method of computation of income. Provision for Current tax represents Minimum Alternate Tax under section 115JB of the income tax Act, 1961.

(h) The Company does not have taxable wealth and hence no provision has been made for wealth tax under the provisions of Wealth Tax Act, 1957.

v) Factory building has been constructed on land taken on lease from May 1, 1991 for a period of fifteen years from Madras Export Processing Zone (MEPZ) and monthly rent paid has been recognized as an expense in the statement of Profit and Loss. The said lease has since been renewed for a further period of five years from May 2, 2011 and is renewable further thereafter at the option of the Company on mutually agreed terms with MEPZ. In the event of the Company deciding to vacate the premises, the less or (MEPZ) will compensate the Company a mutually agreed consideration for the sale of the factory building. Accordingly, depreciation has been provided at the rates prescribed in Schedule XIV of the Companies Act, 1956.

vi) Deduction of Intangible assets under development represents amounts written off as obsolescence on account of discontinuance of the product development.

vii) Impairment of assets

The Company has reviewed the future cash flows on the basis of value in use of its assets and has satisfied that the estimated recoverable amount of fixed assets is more than the amount carried in the books. Accordingly, no provision for impairment loss is required to be made in these financial statements.

Note : Bosch Electric Drives India Private Limited ceased to be an Associate Company during the year 2011-12.

1 Contingent liabilities and commitments

a) Contingent Liabilities :

1 Bills discounted 94,787,190 83,406,368

2 income tax liability that may arise in respect of 10164183 10 164 183 matters on appeal

Employees State insurance demand on dues for n .n. 32,434,404 2,434,404 trainees

Guarantees given on behalf of fellow subsidiary 41,100,100,000 1,060,100,000 company

b) other details regarding contingent liabilities

The Company does not expect any reimbursement in respect of the above contingent liabilities except bills discounted.

it is not practicable to estimate the timing of outflows, if any, in respect of matters at (a) (2) and (3) above, pending resolution of the appellate proceedings.

Note: Others represents sale of Drawn parts, stamping and sub assembly and trading sales.

Note: others represents work in progress of drawn parts, stamping and sub assembly.

Note: The above expenses include Auditor's remuneration and expenses charged to the statement of profit and loss as detailed below:

(i) Defined benefit plans

Provision for Gratuity and Leave encashment represents provision made as per Actuarial valuation report dated April 10, 2012

c) The changes in the present value of defined benefit obligation representing reconciliation of opening and closing balances thereof as follows:

e) All investments in plan assets are managed by the Life insurance Corporation of India.

f) Principal actuarial assumptions at the balance sheet date (expressed as weighted averages):

Attrition rate: 1-3% per annum, assumed to be independent of age and service.

Mortality rate : LiC 94 -96 rates

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

(ii) Defined contribution plans

Contribution to provident funds are made to the Regional Provident Fund office. Expenses recognized in the statement of Profit and Loss is Rs. 3,390,271/- (previous year Rs. 2,726,994/-)

(ii) Segment identification, reportable segments and definition of each reportable segment:

(a) secondary segment reporting format:

in respect of secondary segment information, the company has identified its geographical segments as (a) Domestic and (b) overseas. The secondary segment information has been disclosed accordingly.

(b) Reportable segments:

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

(iii) All tangible assets of the Company are located within India.

(iv) in view of inadequacy of profits, the Company has applied to the Central Government for approval of additional remuneration to the Managing Director. Pending approval from Central Government, the Company has not paid additional remuneration to the Managing Director.

( ) The Company has not written off or written back any amounts due from or due to related parties during ( ) the current financial year. (Previous year Nil)

2 Leases:

(a) Finance Lease:

i) The Company has acquired certain plant and machinery on finance lease. The lease is having a primary period of five years which is fixed and non cancellable. There are no exceptional /restrictive covenants in the lease agreement.

ii) The minimum lease rentals as at March 31,2012 and the present value as at March 31, 2012 of minimum lease payments in respect of assets acquired under Finance Lease is as follows:

(b) Operating Lease:

The Company has taken certain premises and cars on cancellable operating lease. These lease agreements are normally renewed on expiry. Amount paid towards these leases are included in selling, administration and other expenses. There are no exceptional/restrictive covenants in these lease agreements. Lease rentals charged to the Statement of Profit and Loss for the year is Rs.1,717,324/- (previous year Rs. 2,888,035/-). Contingent rent recognized Rs. Nil (previous year Rs.Nil).

3 Hitherto, the Company had adopted the Schedule Vi to the Companies Act, 1956 for the preparation and presentation of financial statements. However, from the current year, the Company has adopted the Revised Schedule Vi to comply with the notification made under the Companies Act, 1956. Accordingly, the Company has reclassified / regrouped the previous year figures to conform to current year's classification.

Notes :

1. Cash flow statement has been prepared under the indirect method as set out in Accounting Standard -3 as specified in Companies (Accounting Standards) Rules, 2006.

2. Purchase of fixed assets includes movements of Capital Work-in-progress between the beginning and end of the year.

3. Cash and cash equivalents represents cash and bank balances. Since unpaid dividend in bank is a restricted amount, the same has not been included in cash and cash equivalents.

4. Previous year's figures have been regrouped/reclassified wherever applicable.

The accompanying notes form an integral part of the financial statements

The Company has only one class of equity shares having a par value of Rs. 10/- each. Each holder of equity share is entitled to one vote per share. All shares issued carry equal rights for dividend declared by the company and there are no restrictions attached for any specific shareholder.

a) Employee Stock Option Scheme:

i) the company has obtained approval of share holders through postal ballot on 08th January, 2011 for grant of 1,250,000 options under the employees stock option Plan, 2006 to its employees and Directors. the company had granted 235,700 options during the year (previous year 750,000 options), with a vesting period of one year from the date of grant of the option. the exercise period is five years from the date of issue.

ii) the grant of options to the employees under the employee stock option schemes is on the basis of their performance and other eligibility criteria. the options are vest equally over a period of one year, subject to the discretion of the management and fulfillment of certain conditions.

iv) During the year, the company has amortized proportionate employee stock based compensation expense amounting to Rs. 12,154,530/- (previous year Rs. 8,189,671/-) which has been included in employee benefit expenses.

Terms and conditions of Long term borrowings Secured loans

(i) term loans from banks are repayable in sixteen quarterly installments from March 31, 2012.

(ii) working capital term loans from banks are repayable in twenty quarterly installments from march 31, 2012.

term loan and working capital term loan from banks are secured by, first pari-passu charge on all fixed assets of the company, both present and future, excluding leasehold land and second pari- passu charge on all current assets of the company, both present and future.

unsecured loans

(i) Finance lease obligations are repayable in sixty equated monthly installments from the date of respective lease finance.

(ii) vehicle loans are repayable in sixty equated monthly installments from the date of respective vehicle loan and are secured by charge of the related vehicles.

Note : refer note no.4 supra for terms and conditions of the above borrowings.

(e) working capital loans in the nature of packing credit and buyer's credit are repayable within one year. they are secured by first pari-passu charge on all current assets of the Company, both present and future and second pari-passu charge on all fixed assets of the Company both present and future, excluding leasehold land, after term loans. the charge also extends to bills discounted amounting to Rs. 94,787,190/- (Previous Year Rs. 83,406,368/-).

(f) the Company does not have any transaction with Micro and Small Enterprises covered under the Micro, Small and Medium Enterprises Development Act, 2006, identified on the basis of information available with the Company. Accordingly, disclosing details of overdue principal and interest thereon does not arise.

(g) the Company does not have taxable income under the conventional method of computation of income. Provision for Current tax represents Minimum Alternate tax under section 115JB of the income tax Act, 1961.

(h) the Company does not have taxable wealth and hence no provision has been made for wealth tax under the provisions of Wealth tax Act, 1957.

v) Factory building has been constructed on land taken on lease from May 1, 1991 for a period of fifteen years from Madras Export Processing Zone (MEPZ) and monthly rent paid has been recognized as an expense in the statement of Profit and Loss. The said lease has since been renewed for a further period of five years from May 2, 2011 and is renewable further thereafter at the option of the Company on mutually agreed terms with MEPZ. In the event of the Company deciding to vacate the premises, the lessor (MEPZ) will compensate the Company a mutually agreed consideration for the sale of the factory building. Accordingly, depreciation has been provided at the rates prescribed in Schedule XIV of the Companies Act, 1956.

vi) Deduction of Intangible assets under development represents amounts written off as obsolescence on account of discontinuance of the product development.

vii) Impairment of assets

The Company has reviewed the future cash flows on the basis of value in use of its assets and has satisfied that the estimated recoverable amount of fixed assets is more than the amount carried in the books. Accordingly, no provision for impairment loss is required to be made in these financial statements.

Note : Bosch Electric Drives India Private Limited ceased to be an Associate Company during the year 2011-12.

b) other details regarding contingent liabilities

the Company does not expect any reimbursement in respect of the above contingent liabilities except bills discounted.

it is not practicable to estimate the timing of outflows, if any, in respect of matters at (a) (2) and (3) above, pending resolution of the appellate proceedings.

Note: Others represents sale of Drawn parts, stamping and sub assembly and trading sales.

Note: others represents work in progress of drawn parts, stamping and sub assembly.

Note: the above expenses include Auditor's remuneration and expenses charged to the statement of profit and loss as detailed below:

(i) Defined benefit plans

Provision for Gratuity and Leave encashment represents provision made as per Actuarial valuation report dated April 10, 2012

e) All investments in plan assets are managed by the Life insurance Corporation of India.

Attrition rate: 1-3% per annum, assumed to be independent of age and service.

Mortality rate : LIC 94 -96 rates

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

(ii) defined contribution plans

Contribution to provident funds are made to the Regional Provident Fund office. Expenses recognized in the statement of Profit and Loss is Rs. 3,390,271/- (previous year Rs. 2,726,994/-)

(ii) Segment identification, reportable segments and definition of each reportable segment:

(a) secondary segment reporting format:

in respect of secondary segment information, the company has identified its geographical segments as (a) Domestic and (b) overseas. the secondary segment information has been disclosed accordingly.

(b) Reportable segments:

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

(iii) All tangible assets of the Company are located within India.

(Note: Figures in brackets represent corresponding amounts of the previous year)

(iv) in view of inadequacy of profits, the Company has applied to the Central Government for approval of additional remuneration to the Managing Director. Pending approval from Central Government, the Company has not paid additional remuneration to the Managing Director.

( ) the Company has not written off or written back any amounts due from or due to related parties during ( ) the current financial year. (Previous year Nil)

Finance Lease:

i) the Company has acquired certain plant and machinery on finance lease. the lease is having a primary period of five years which is fixed and non cancellable. there are no exceptional /restrictive covenants in the lease agreement.

(b) operating Lease:

the Company has taken certain premises and cars on cancellable operating lease. these lease agreements are normally renewed on expiry. Amount paid towards these leases are included in selling, administration and other expenses. there are no exceptional/restrictive covenants in these lease agreements. Lease rentals charged to the Statement of Profit and Loss for the year is Rs.1,717,324/- (previous year Rs. 2,888,035/-). Contingent rent recognized Rs. Nil (previous year Rs.Nil).

4 Hitherto, the Company had adopted the Schedule Vi to the Companies Act, 1956 for the preparation and presentation of financial statements. However, from the current year, the Company has adopted the Revised Schedule Vi to comply with the notification made under the Companies Act, 1956. Accordingly, the Company has reclassified / regrouped the previous year figures to conform to current year's classification.

Notes :

1. Cash flow statement has been prepared under the indirect method as set out in Accounting Standard -3 as specified in Companies (Accounting Standards) Rules, 2006.

2. Purchase of fixed assets includes movements of Capital Work-in-progress between the beginning and end of the year.

3. Cash and cash equivalents represents cash and bank balances. Since unpaid dividend in bank is a restricted amount, the same has not been included in cash and cash equivalents.]


Mar 31, 2011

As at As at 31.03.2011 31.03.2010 (Rupees) (Rupees)

1. Contingent Liabilities :

a) Bills discounted 83,406,368 104,376,085

b) Income Tax liability that may arise in respect of matters on appeal 10,164,183 8,360,134

c) Guarantees given on behalf of fellow subsidiary company 409,244,243 348,001,343

d) ESI Demand on dues for trainees 2,434,404 -

2. Deposit accounts with banks under cash and bank balances in Schedule G includes margin money deposit of Rs. 26,065,340/-(previous year Rs. 15,882,115/-), fixed deposit of Rs. 12,07,183/-(previous year Rs.11,33,747/-) and Rs.6,021/-(previous year Rs.6,021/-) pledged as security with sales tax department.

3. (a). In respect of Inter corporate deposit of Rs. 900,00,000 the Company has not obtained prior approval of the Central Government as required under section 295 of the Companies Act, 1956. The Company is taking necessary steps to regularise the matter and application is also being made to the Central Government.

(b). The Company has not obtained prior approval of the Central Government for transactions entered into with another company covered under Sec. 297 of the Companies Act, 1956. The Company is taking necessary steps to regularise the matter and application is also being made to the Central Government.

4. The Company does not have any transaction with Micro and small enterprises covered under the Micro, Small and Medium Enterprises Development Act, 2006, identified on the basis of information available with the Company.

5. Segment reporting :

(ii) Segment identification, reportable segments and definition of each reportable segment

(a) Secondary Segment reporting format

In respect of secondary segment information, the company has identified its geographical segments as (a) Domestic and (b) Overseas. The secondary segment information has been disclosed accordingly

(b) Reportable segments

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

(iii) All tangible assets of the Company are located within India.

6. Related party disclosures :

(i) The following enterprises are related to the company.

1. HBL Power Systems Ltd. - Ultimate Holding Company from 31.03.2011

2. Igarashi Electric Works Ltd, Japan - Holding Company till 24.01.2011 (through management control)

- Significant share holder from 25.01.2011 to 30.03.2011

3. Igarashi Electric Works (H K) Ltd. - Fellow Subsidiary Company till 24.01.2011

4. Igarashi Motor Sales LLC, USA - Fellow Subsidiary Company till 24.01.2011

5. Igarashi Motoren GMBH - Fellow Subsidiary Company till 24.01.2011

6. Agile Electric Drives Technologies and Holdings Pvt. Ltd. - Fellow Subsidiary Company till 24.01.2011

- Significant share holder from 25.01.2011 to 30.03.2011

- Holding Company from 31.03.2011

7. Agile Electric Sub Assembly Pvt. Ltd. - Associate Company till 30.03.2011

- Fellow Subsidiary Company from 31.03.2011

8. Bosch Electrical Drives India Pvt. Ltd. - Associate Company from 03.01.2011 (

ii) Key Management Personnel (KMP):

Mr. P. Mukund - Managing Director.

(v) No amount outstanding has been written off or written back during the year.

7. Factory building has been constructed on land taken on lease from 1st May 1991 for a period of fifteen years from Madras Export Processing Zone (MEPZ) and monthly rent paid has been charged in the accounts. The said lease has since been renewed for a further period of five years w.e.f 2nd May 2006 and is renewable further thereafter at the option of the Company on mutually agreed terms with MEPZ. In the event of the Company deciding to vacate the premises, the lessor (MEPZ) will compensate the company a mutually agreed consideration for the sale of the factory building. Accordingly depreciation has been provided at the rates prescribed in Schedule XIV of the Companies Act, 1956.

8. Leases:

(a) Finance Lease

i) During the year, the company has acquired certain plant & machinery on finance lease. The lease is having a primary period which is fixed and non cancellable. There are no exceptional /restrictive covenants in the lease agreement.

(b) Operating Lease:

The Company has taken certain premises on cancellable operating lease. These lease agreements are normally renewed on expiry. The company has taken cars on cancellable operating lease. Amount paid towards these leases are included in selling & administrative expenses. There are no exceptional / restrictive covenants in these lease agreements. Lease rentals charged to Profit and Loss account for the year is Rs.22,01,435/- (previous year Rs.29,08,488/-). Contingent rent recognised Rs. Nil (previous year Rs.Nil).

9 a) The Company does not have taxable income under the conventional method of computation of income and further is covered by the provisions of the Special Economic Zone Act, 2005 and accordingly not liable for Minimum Alternate Tax under section 115JB of the Income tax Act, 1961. Hence, no provision for Current tax has been made for the year.

b) The Company does not have taxable wealth and hence no provision has been made for wealth tax under the provisions of Wealth Tax Act, 1957.

10 Employee Stock Option Scheme:

a) The Company has granted 750,000 options under the Employees Stock Option Plan, 2006 to its employees and Directors on 27th August 2010, with a vesting period of one year from the date of grant of the option. The exercise period is five years from the date of issue.

b) The grant of options to the employees under the employees stock option scheme is on the basis of their performance and other eligibilty criteria. The options are vested equally over a period of one year, subject to the discretion of the management and fulfillment of certain conditions.

d) During the year, the Company has amortised proportionate employee stock based compensation expense amounting to Rs. 8,189,671/-, which has been included in staff expenses.

11 The Company has reviewed the future cash flows on the basis of value in use of its assets and has satisfied that the estimated recoverable amount is more than the amount carried in the books. Accordingly, no provision for impairment loss is required to be made in these accounts.

12 Employee Benefits

Provision for Gratuity and Leave encashment represents provision made as per Actuarial valuation report dated 14th May 2011.

e) All Investments in Plan Assets are managed by the LIC.

f) Principal actuarial assumptions at the balance sheet date (expressed as weighted averages):

Attrition rate: 1-3% per annum, assumed to be independent of age and service. The estimates of future salary increases, considered in actuarial valuation, take into account inflation, seniority promotion and other relevant factors, such as supply and demand in the employment market.

g) Contribution to provident funds are made to the Regional Provident Fund office.

13 (a) During the year, the Company has made preferential allotment of 6,500,000 equity shares of face value of Rs. 10/- each to Agile Electric Drives Technologies and Holdings Private Limited at a premium of Rs. 66.30/- with a lock-in period of one year from 25th January 2011 to 24th January 2012.

14 (a) The Investments in IJT Plastics & Tools Private Limited (" IJTPL") consisting of 7,430,000 equity shares of face value of Rs. 10/- each fully paid was replaced with 2,451,900 shares of Rs. 10/- each fully paid of Agile Electric Sub Assembly Private Limited (" AESPL") pursuant to merger of IJTPL with AESPL vide Order of the Honorable High Court of Madras Judicature CP No. 312/2010 dated 2nd March 2011, swap ratio being 33 equity shares of Rs. 10/- each fully paid up of AESPL for every 100 equity shares of Rs. 10/- each fully paid up of IJTPL.

(b) During the previous year 2009-10, the Company had pledged its investments in IJT Plastics & Tools Private Limited with bank as security for the credit facilities availed from bank by IJT Plastics & Tools Private Limited. Further to amalgamation mentioned in Note 26(a), the Company is in the process of creating a pledge on the investment in Agile Electric Sub Assembly Private Limited with the banker

(c) The Company has increased its investment in Bosch Electrical Drives India Private Limited ("Investee Company") on 3rd January 2011 to 26 %, thereby making the Investee Company, an Associate.

15 (a) Deduction of product development expenses under capital work in progress - intangible assets includes development expenditure amounting to Rs.2,840,537/- for a project in progress transferred at cost to a Fellow subsidiary during the year and Rs.2,862,425/- recovered from a customer towards product development.

(b) During the year, the Company has written off product development expenditure under Intangible asset amounting to Rs.7,872,278/-(net) as the same has been obsoleted due to discontinuance of the product development.

16 Subsequent events

The Company has obtained Central Government approval for payment of increased remuneration of Rs.9,600,000/-per annum to Mr. P.Mukund, Managing Director of the Company, for a period of one year from 01.04.2010 to 31.03.2011 vide letter no. B5040407/5/2011 -CL-VII dated 18.04.2011.

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


Mar 31, 2010

1. Deposit accounts with banks under cash and bank balances in schedule G includes Margin Money Deposit of Rs.15,882,115/-, Fixed deposit of Rs.1,133,747/- and Rs. 6,000/- pledged as security with sales tax department.

2. The Company has pledged its investments of Rs. 74,300,000 in the equity shares of IJT Plastics & Tools Private Limited as security for the credit facility availed from bank by IJT Plastics & Tools Private Limited, an associate company.

3. There are no Micro and Small Enterprises, to whom the Company owes dues, which are outstanding as at 31st March 2010. The information required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company on which the auditors have placed reliance.

4. Segment reporting :

(i) The Company is engaged in single segment of production of Micro motors and its accessories mainly for the Automotive sector. Hence giving of primary segment under Accounting Standard -17 segment reporting does not arise.

(ii) Segment identification, reportable segments and definition of each reportable segment

(a) Secondary Segment reporting format:

In respect of secondary segment information, the company has identified its geographical segments as (a) Domestic and (b) Overseas. The secondary segment information has been disclosed accordingly

(b) Reportable segments :

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

5. Related party disclosures :

(i) The following enterprises are related to the company

1. Igarashi Electric Works Ltd, Japan - Holding Company

(through management control)

2. Igarashi Electric Works (H K) Ltd - Fellow Subsidiary Company.

3. Igarashi Motor Sales LLC, USA. - Fellow Subsidiary Company.

4. Igarashi Motoren GMBH - Fellow Subsidiary Company.

5. Agile Electric Drives Technologies

and Holdings Pvt Ltd - Fellow

Subsidiary Company.

6.IJT Plastics & Tools Pvt. Ltd. - Associate

Company.

7. Agile Electric Sub Assembly Pvt,

Ltd. - Associate Company.

8. Agile Electric Technologies Pvt,

Ltd. - Associate Company. (ii)

Key Management Personnel (KMP) :

Mr. P Mukund - Managing Director.

6. Factory building has been constructed on land taken on lease from 01-05-1991 for a period of fifteen years from Madras Export Processing Zone (MEPZ) and monthly rent paid has been charged in the accounts.The said lease has since been renewed for a further period of five years w.e.f 2nd May 2006 and is renewable further thereafter at the option of the Company on mutually agreed terms with MEPZ. In the event of the Company deciding to vacate the premises, the lessor (MEPZ) will compensate the company a mutually agreed consideration for the sale of the factory building. Accordingly depreciation has been provided at the rates prescribed in Schedule XIV of the Companies Act, 1956.

7. The Company has taken certain premises on cancellable operating lease. These lease agreements are normally renewed on expiry. The company has taken cars on cancellable operating lease. Amount paid towards these leases are included in selling & administration expenses.There are no exceptional / restrictive convenants in these lease agreements.

8.a) The Company does not have taxable income under the conventional method of computation of income and further is covered by the provisions of the Special Economic Zones Act, 2005 and accordingly not liable for Minimum Alternate Tax under section 115JB of the Income tax Act, 1961. Hence, no provision for Current tax has been made during the year

b) The Company does not have taxable wealth and hence no provision has been made for wealth tax under the provisions of Wealth Tax Act, 1957.

9. The Company has reviewed the future cash flows on the basis of value in use of its assets and has satisfied that the estimated recoverable amount is more than the amount carried in the books. Accordingly, no provision for impairment loss is required to be made in these accounts.

10. Employee Benefits :

Provision for Gratuity and Leave encashment represents provision made as per LIC Group Gratuity renewal valuation report dated 6th March 2010 and Group Leave renewal valuation report dated 20th March 2010 under the LIC Group Gratuity Scheme and Group Leave Encashment Scheme which will be paid along with interest as per the scheme.

11. The Company has made investment of Rs. 19,000,000/- in Bosch Electrical Drives India Pvt Ltd during the year before obtaining prior approval of the share holders as required under section 72A of the Companies Act, 1956. However the Company has since obtained approval of the shareholders through postal ballot on 19th September 2009. Further, the Company is taking necessay steps to regularise the matter by making an application to the central government for its post-facto ratification.

12. Deductions / adjustments in Intangible Assets represents development program transferred to an Associate company during the year

13. The company does not have transactions covered under provisions of Accounting Standard (AS) 29 "Provisions, Contigent Liablities and Contingent Assets" and hence no reporting has been made.

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


Mar 31, 2000

1. Estimated amount of contracts remaining to be executed in capital account net of advances is Rs. 40,041,829/- (Previous year: Rs. 2,016,483/-).

2. Capital work-in-progress includes advances of Rs. 2,477,238/- (Previous year: Rs. 1,895,702/-).

3. Contingent Liability in respect of Bills discounted Rs. 71,184,126/- (Previous year Rs. 27,032,435/-).

4. The exchange difference arising on foreign currency transactions amounting to Rs. 31,74,188/- (net loss) (Previous year Rs.68,74,378) (net loss) has been adjusted in the carrying cost of fixed assets.

5. Current liabilities include Rsli,82,030/- representing excess share application money received from promoters.

6. Provision for Income tax represents tax on other income earned. The Income from operations are exempted under Sec 10(B) of the Income Tax Act 1961. No provision for wealth tax has been made for the year as there is no taxable wealth.

7. The Company hitherto, valued its loose tools under base stock method, During the year, to comply with the mandatory. Accounting Standards on Inventory (AS2), the opening balance of Rs.5,06,507/- has been charged off in the accounts and the company does not have any stock of loose tools as at 31st March 2000. The impact on the profit for the year is not material.

8. Amounts due to small scale industrial undertakings in excess of Rs.1 lac and outstanding for more than 30 days beyond the agreed credit period as on 31st March 2000 is Rs.Nil. Further overdue amounts to small scale industrial undertaking remaining unclaimed as on 31st March 2000 is Rs. Nil (Including interest of Rs.Nil).

9. Factory building has been constructed on land taken on lease from 01-05-1991 for a period of 15 years from Madras Export Processing Zone (MEPZ) and monthly rental charges paid has been charged in the accounts. The said lease is renewable for a further period of 15years and further thereafter at the option of the Company on a mutually agreed terms with MEPZ. In the event of the Company deciding to vacate the said premises the lessor (MEPZ) will compensate the Company a mutually agreed consideration for the sale of said factory building.

 
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