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Notes to Accounts of Indo Tech Transformers Ltd.

Mar 31, 2016

Notes:

a Income tax - The Company has received income-tax assessment orders raising demand of Rs, 5,129,608 and Rs, 7,487,550 for AY 2008-09 and AY 2009-10 respectively in the earlier years. Any liability in respect of these orders will be met by the ex-promoters to the benefit of the Company. b Sales tax - During the year 2011-2012, the Company had received sales tax assessment orders raising demand of Rs, 1,421,332 and Rs, 1,441,276 for FY 2005-06 and FY 2006-07 respectively. The Company had paid Rs, 2,500,000 (under protest) against these orders. Any liability in respect of these orders will be met by the ex-promoters to the benefit of the Company.

1 Segment reporting

The Company considers its business segment as its primary segment. The Company is engaged into the business of manufacture and sale of transformers and there are not more than one reportable segment as envisaged by Accounting Standard 17 - Segment Reporting (AS-1 7). Accordingly, amounts appearing in these financial statements relates to only manufacture and sale of transformers.

Further, the operations primarily cater to the needs of the domestic market. Accordingly, there are no separate reportable segments according to AS-17.

2. Transfer pricing

The Company has transactions with related parties. For the financial year 2014-15, the Company has obtained the Accountant''s Report from a Chartered Accountant as required by the relevant provisions of the Income-tax Act, 1961 and has filed the same with the tax authorities. For the financial year 2015 -16, the management confirms that it maintains documents as prescribed by the Income-tax Act, 1961 to prove that these transactions are at arm''s length considering the economic scenario, prevailing market conditions etc. and 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.

3 Monies held in trust

Monies held in trust amounting to Rs, 13,538,376, represents money transferred from the Sellers'' Escrow account (expromoters), on behalf of Prolec GE during the year 2011-2012. The said money was transferred to the Company''s account, as the holding company had no office in India to do the documentation to transfer the funds on the date of settlement to their account in Mexico and the Escrow Account was closed in November 2011. During the year the entire amount of Rs, 13,538,376 has been remitted back to Prolec GE after obtaining appropriate approvals from Reserve Bank of India.

4. Related party transactions

a) Names of related parties and nature of relationship are as follows:

Nature of relationship Name of the related party

Ultimate holding company Xignux S.A. de C.V., Mexico

Holding Company Prolec GE Internacional, S.de R.L. de C.V., Mexico

Fellow subsidiary Prolec S.A. de C.V., Mexico

Key management personnel Mr. Sridhar Gokhale (Manager) (Upto May 27, 2015)

Mr. Ajay Kumar Sinha (CEO) (From May 27, 2015)

5. During the year ended March 31, 2015, vide an agreement dated July 1, 2014, the Company has received subvention (voluntary, non-repayable financial grant) of US$ 25 million (Rs. 1,491,250,000) from the holding company, Prolec GE. The grant had been utilized for repayment of all the short term borrowings.

6. During the year ended March 31, 2015, the management has reassessed the remaining useful life of the assets with effect from April 1, 2014 as required under Schedule II to the Companies Act, 2013. In respect of assets whose life had already exhausted as on April 1, 2014, depreciation of Rs. 6,522,787 (net of deferred tax impact of Rs. Nil) has been adjusted in Reserves and Surplus in accordance with the requirements of Schedule II to the Companies Act, 2013.

7. During the year ended March 31, 2015, the Company has entered into an agreement with Prolec GE, whereby Prolec GE has assured the Company that they would make good the loss to the benefit of the Company in case certain identified customers do not pay or default in the payment of outstanding dues. In the earlier years, the Company had recorded provision on a portion of the total balance receivable from these identified customers. Based on the agreement, the provision (amounting to Rs. 51,929,844), pertaining to these receivables has been reversed during the year ended March 31, 2015 and the balance outstanding from these customers has been presented as ''secured debtors''.

8. The Company had entered into a Memorandum of Understanding (''MOU'') dated March 2, 2015 with a buyer for sale of one of its freehold land, included in assets held for sale and had received Rs. 20,000,000 as advance under the MOU as at March 31, 2015. During the current year, the aforesaid land has been sold.


Mar 31, 2015

1 Company overview

Indo Tech Transformers Limited (''Indo Tech'' / ''the Company'') is engaged in the business of manufacturing power and distribution transformers and various special application transformers, mobile sub-station transformers and sub-stations. The Company has manufacturing plants located at Chennai and Kancheepuram in Tamil Nadu.

2 Contingent liabilities and Commitments Particulars As at As at March 31, 2015 March 31, 2014

Contingent liabilities:

a) Commitments in respect of bank guaran tees and letters of credit issued by 358,096,301 343,770,763 Company''s bankers

b) Disputed sales tax / income tax / service tax (refer Note a and b) 10,099,772 10,099,772

Notes:

a Income tax - The Company has received income-tax assessment orders raising demand of Rs. 5,129,608 and Rs. 7,487,550 for AY 2008-09 and AY 2009-10 respectively in the earlier years. Any liability in respect of these orders will be met by the ex-promoters to the benefit of the Company.

b Sales tax - During the year 2011-2012, the Company had received sales tax assessment orders raising demand of Rs. 1,421,332 and Rs. 1,441,276 for FY 2005-06 and FY 2006-07 respectively. The Company had paid Rs. 2,500,000 (under protest) against these orders. Any liability in respect of these orders will be met by the ex-promoters to the benefit of the Company.

3 Segment reporting

The Company considers it''s busines segment as it''s primary segment. The Company is engaged into the business of manufacture and sale of transformers and there are not more than one reportable segment as envisaged by Accounting Standard 17 - Segment Reporting (AS-17). Accordingly, amounts appearing in these financial statements relates to only manufacture and sale of transformers.

Further, the operations primarily cater to the needs of the domestic market. Accordingly, there are no separate reportable segments according to AS-17 issued under the Companies (Accounting Standards) Rules, 2006.

The Company assesses these assumptions with the projected long-term plans of growth and prevalent industry standards. Note:

(i) Plan assets comprise of contribution to Group Gratuity Scheme of Life Insurance Corporation of India.

(ii) The gratuity expenses have been recognised in ''Contribution to provident and other funds'' under Note 23 to the financial statements.

4 Transfer pricing

The Company has transactions with related parties. For the financial year 2013-14, the Company has obtained the Accountant''s Report from a Chartered Accountant as required by the relevant provisions of the Income-tax Act, 1961 and has filed the same with the tax authorities. For the financial year 2014 -15, the management confirms that it maintains documents as prescribed by the Income-tax Act, 1961 to prove that these transactions are at arm''s length considering the economic scenario, prevailing market conditions etc. and 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.

5 Monies held in trust

Monies held in trust amounting to INR 13,538,376, represents money transferred from the Sellers'' Escrow account (ex- promoters), on behalf of Prolec GE during the year 2011-2012. The said money was transferred to the Company''s account, as the holding company had no office in India to do the documentation to transfer the funds on the date of settlement to their account in Mexico and the Escrow Account was closed in November 2011. Since, this amount should have gone to Prolec GE, the Company is trying to remit the same to Prolec GE ever since it was received by the Company. During the year pursuant to a compounding application filed by the Company with Reserve Bank of India (RBI), RBI has compounded the matter. However, the money can be remitted back to Prolec GE only after RBI completes the compounding formalities with the ex-promoters. The entire amount of INR 13,538,376 has been kept intact (i.e. not utilised and set aside for remitting back to Prolec GE) by the Company.

6 During the year ended March 31, 2015, vide an agreement dated July 1, 2014, the Company has received subvention (voluntary, non-repayable financial grant) of US$ 25 million (Rs. 1,491,250,000) from the holding company, Prolec GE. The grant has been utilized for repayment of all the short term borrowings.

7 During the year ended March 31, 2015, the management has reassessed the remaining useful life of the assets with effect from April 1, 2014 as required under Schedule II to the Companies Act, 2013. In respect of assets whose life had already exhausted as on April 1, 2014, depreciation of Rs. 6,522,787 (net of deferred tax impact of Rs. Nil) has been adjusted in Reserves and Surplus in accordance with the requirements of Schedule II to the Companies Act, 2013.

8 During the year, the Company has entered into an agreement with Prolec GE, whereby Prolec GE has assured the Company that they would make good the loss to the benefit of the Company in case certain identified customers do not pay or default in the payment of outstanding dues. In the earlier years, the Company had recorded provision on a portion of the total balance receivable from these identified customers. Based on the agreement, the provision (amounting to Rs. 51,929,844), pertaining to these receivables has been reversed during the year and the balance outxstanding from these customers has been presented as ''secured debtors'' as at March 31, 2015.

9 Subsequent event:

The Company has entered into a Memorandum of Understanding (''MOU'') dated March 2, 2015 with a buyer for sale of one of its freehold land, included in assets held for sale as at the balance sheet date and has received Rs. 20,000,000 as advance under the MOU. Subsequent to the balance sheet, the sale of such land has been completed.

10 Previous year''s figures in statement of profit and loss are not comparable since the same was drawn up for a period of nine months. However, for the current year statement of profit and loss is drawn for twelve months from April 1, 2014 to March 31, 2015.

Previous period''s figures have been regrouped / reclassified, wherever necessary, to conform to current year''s classification. Previous year financial statements were audited by a firm other than B S R & Co. LLP.


Mar 31, 2014

1 Company overview

Indo Tech Transformers Limited (''Indo Tech'' / ''the Company'') is engaged in the business of manufacturing power and distribution transformers and various special application transformers, mobile sub-station transformers and sub-stations. The Company has manufacturing plants located at Palakkad in Kerala, Chennai and Kancheepuram in Tamil Nadu.

(All amounts are in Indian Rupees, except share data or as stated)

2 Contingent liabilities and commitments

As at As at Particulars March 31, 2014 June 30, 2013

Contingent liabilities:

a) Commitments in respect of Bank guarantees and Letters of credit issued by Company''s 343,770,763 269,913,995 bankers

b) Disputed Sales Tax / Income Tax / Service Tax / Labour case (refer Note a and b) 10,099,772 10,122,841

Notes:

a Income tax - The Company has received income-tax assessment orders raising demand of Rs. 3,669,549, Rs. 5,129,608 and Rs. 7,487,550 for AY 2005-06, 2008-09 and AY 2009-10 respectively in the earlier years. Any liability in respect of these orders will be met by the ex-promoters to the benefit of the Company.

b Sales tax - During the year 2011-2012, the Company had received sales tax assessment orders raising demand of Rs. 1,421,332 and Rs. 1,441,276 for FY 2005-06 and FY 2006-07 respectively. The Company had paid Rs. 2,500,000 (under protest) against these orders. Any liability in respect of these orders will be met by the ex-promoters to the benefit of the Company.

3 Transfer pricing

The Company has transactions with related parties. For the financial year 2012-13, the Company has obtained the Accountant''s Report from a Chartered Accountant as required by the relevant provisions of the Income-tax Act, 1961 and has filed the same with the tax authorities. For the financial year 2013 -14, the management confirms that it maintains documents as prescribed by the Income-tax Act, 1961 to prove that these transactions are at arm''s length considering the economic scenario, prevailing market conditions etc. and 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.

4 Monies held in trust

Monies held in trust amounting to INR 13,538,376, represents money transferred from the Sellers'' Escrow account (ex- promoters), on behalf of Prolec GE during the year 2011-2012. The said money was transferred to the Company''s account, as the holding Company had no office in India to do the documentation to transfer the funds on the date of settlement to their account in Mexico and the Escrow Account was closed in November 2011. Further, during the period ended June 30, 2013, the Company had received an amount of Rs. 1,000,000 being the security deposit paid by Prolec GE. Since, these amounts should have gone to Prolec GE, the Company is trying to remit the same to Prolec GE ever since it was received by the Company. The Company is discussing this matter with the authorised dealers / Reserve Bank of India (''RBI'') and are trying to remit the amount to Prolec GE at the earliest.The entire amount of INR 14,538,376 has been kept intact (i.e. not utilised and set aside for remitting back to Prolec GE) by the Company.


Jun 30, 2013

1 Company overview

Indo Tech Transformers Limited (''Indo Tech'' / ''the Company'') is engaged in the business of manufacturing power and distribution transformers and various special application transformers, mobile sub-station transformers and sub-stations. The Company has manufacturing plants located at Palakkad in Kerala and Chennai and Kancheepuram in Tamil Nadu.

2 Contingent liabilities and commitmens

As at As at Particulars june 30, 2013 March 31, 2012

Contingent liabilities:

a) Commitments in respect of Bank guarantees and Letters of credit issued by Company''s bankers 269,913,995 371,267,421

b) Penalty levied by Joint Director General of Foreign Trade, Chennai (JDGFT) - Refer Note a below

c) Disputed Sales Tax / Income Tax / Service Tax / Labour case (refer Note b and 10,122,841 36,613,305 Commitments:

a) Estimated amount of contracts remaining to be executed on capital account (net of ~ _ _ capital advances) and not provided for

Notes:

a Export obligations - A demand of Rs. 29,395,120 was raised in an earlier year, by JDGFT, Chennai towards non- compliance of certain export obligation. The Company made a provision of Rs. 7,500,000 towards this demand, of which, Rs. 6,351,219 was paid during the year. The excess provision not required has been written back during the period. The Company has received the Redemption letter dated September 27, 2012 from )DGFT and dated September 28, 2012 from Customs authorities.

b Income tax - The Company has received income-tax assessment orders raising demand of Rs. 7,487,550 for AY 2009- 10 during the year ended March 31, 2012 and Rs. 3,669,549 and Rs. 5,129,608 for AY 2005-06 and AY 2008-09 respectively in the earlier period. Any liability in respect of these orders will be met by the ex-promoters to the benefit of the Company.

c Sales tax - During the year 2011-2012, the Company had received sales tax assessment orders raising demand of Rs. 1,420,332 and Rs. 1,441,276 for FY 2005-06 and FY 2006-07 respectively. The Company had provided Rs. 383,528 in the books and had also paid Rs. 2,500,000 (under protest) against these orders. Any liability in respect of these orders will be met by the ex-promoters to the benefit of the Company.

3 Segment reporting

The Company considers its business segment as its primary segment. The Company is engaged into the business of manufacture and sale of transformers and there are not more than one reportable segment as envisaged by Accounting Standard 17. Accordingly, amounts appearing in these financial statements relates to only manufacture and sale of transformers. Secondary segment information

The Company operates mainly in two geographical areas, India and Rest of the world. Management has reviewed those geographical areas vis-a-vis the risk and retruns that encompass them. While arriving at this, management has reviewed the similarity of the economic and political conditions, relationship between operations in these geographical areas, proximity of operations, and special risks if any associated with operations in these areas.

4 Dues to micro and small enterprises

Based on the information received and available, the management believes that there are no 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, if any to such enterprises as at June 30, 201 3 has been made in the financial statements based on information received and available with the Company, to the extent identified by the management and relied upon by the auditors.

5 Retirement benefits

Gratuity Plan

Based on actuarial valuation necessary provision has been created in the books to meet the liability as per Accounting Standard 15 (Revised).

The following table sets out the status of the gratuity plan as required under Accounting Standard 15 (Revised 2005). Reconciliation of opening and closing balances of the present value of the defined benefit obligation.

6 Transfer pricing

The Company has transactions with related parties. For the financial year 2011 -1 2, the company has obtained the Accountant''s Report from a Chartered Accountant as required by the relevant provisions of the Income-tax Act, 1961 and has filed the same with the tax authorities. For the financial year 201 2 -1 3, the management confirms that it maintains documents as presetibed by the Income-tax Act, 1961 to prove that these transactions are at arm''s length considering the economic scenario, prevailing market conditions etc. and 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.

7 Monies held in trust

Monies held in trust amounting to INR 13,538,376, represents money transferred from the Sellers'' Escrow account (ex- promoters), on behalf of Prolec GE during the year 2011 -201 2. The said money was transferred to the Company''s account, as the holding Company had no office in India to do the documentation to transfer the funds on the date of settlement to their account in Mexico and the Escrow Account was closed in November 2011. Further, during the period ended ]une 30, 201 3, the Company has received an amount of Rs. 1,000,000 being the security deposit paid by Prolec GE. Since, these amounts should have gone to Prolec GE, the Company is trying to remit the same to Prolec GE ever since it was received by the Company. The Company is discussing this matter with the authorised dealers and are trying to remit the amount to Prolec GE at the earliest.The entire amount of INR 14,538,376 has been kept intact (i.e. not utilised and set aside for remitting back to Prolec GE) by the Company.


Mar 31, 2012

1 BACKGROUND

Indo Tech Transformers Limited ('Indo Tech'/ 'the Company') is engaged in the business of manufacturing power and distribution transformers and various special application transformers, mobile sub-station transformers and sub-stations. The Company has four manufacturing plants located at Palakkad in Kerala and Chennai and Kancheepuram in Tamil Nadu.

a Terms/rights attached to equity shares

The Company has only one class of shares referred to as equity shares having a par value of Rs. 10. Each holder of equity shares is entitled to one vote per share. The Company declares dividend in Indian Rupees and pays dividend to shareholders outside India in foreign currency based on the rates prevailing on the date of such remittances, with respect to other shareholders, dividend is paid in Indian Rupees.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders. During the year ended March 31, 2012, the Company has not declared any dividend.

2 LONG-TERM BORROWINGS

a) Assets acquired under finance lease are secured by hypothecation of vehicles. The loan is repayable in 36 monthly instalments starting from the date of loan. The loans were taken in the month of August 2009 and November 2009.

b) The sales tax deferral loan is repayable in the 10th year from the date of availment of loan along with the tax liability for the corresponding month. The last deferral payment shall be made in the financial year ending March 31, 2013.

3 Short-term borrowings

a) Cash credit facilities are secured by pari passu first hypothecation charge over current assets (inventory, receivables and other current assets), first charge over the land and building at Thirumazhisai, equitable mortgage over land with electric generator at Radhapuram, equitable mortgage over land and building at Palakkad and second charge on pari passu basis with Standard Chartered Bank, Bank of Baroda and Citibank over all the present and future fixed assets, machinery and equipments and 9.16 acres of land at Kancheepuram etc.

4 OTHER CURRENT LIABILITIES

a) The term loans from Standard Chartered Bank is secured by first charge on all the present and future fixed assets, machinery and equipments and 9.16 acres of land at Kancheepuram. The loan was repayable in 12 quarterly instalments starting from August 2008 and July 2009.

a) There are no amount due and outstanding to be credited to the Investor Education and Protection Fund.

5 AMALGAMATION OF INDO TECH ELECTRIC COMPANY LIMITED ('ITECL' / 'TRANSFEROR') WITH THE COMPANY

Pursuant to a scheme of amalgamation approved by the Hon'ble High Court of Madras on September 30, 2005. ITECL was amalgamated with the Company with effect from April 1, 2003. The amalgamation was accounted under the purchase method in the earlier year. During the previous year, the management has noted that the sanctioned scheme qualified to be given effect as amalgamation in the nature of merger and accordingly, such amalgamation should have been accounted in accordance with the 'pooling of interest method' prescribed by AS - 14. Necessary accounting effect was given in the financial statements for the previous year under the 'pooling of interest method' instead of 'purchase method'. Consequently, general reserve was increased by Rs. 10,737,933 with a corresponding effect to Capital Reserve and profit and loss account for Rs. 9,219,605 and Rs. 1,518,328 respectively in the previous year ended March 31, 2011.

6 STATE SUBSIDY

During the financial year 1998-99, the Company had received a Government Grant of Rs. 1,500,000 as investment subsidy towards setting up a Power Transformer plant at its Thirumazhisai factory in SIDCO Industrial Estate, Chennai. The Company had adopted the capital approach prescribed under Accounting Standard- 12 (AS - 12) 'Accounting for Government Grants' and had accounted the grant as 'State Subsidy' under 'Reserves and Surplus.

Management noted that as the grant was received towards plant and machinery, the grant should have been treated as deferred income to be recognized in the statement of profit and loss on a systematic and rational basis over the useful life of the asset as prescribed by 'income approach' in AS - 12. Since the estimated useful life had expired in an earlier period the subsidy amount was transferred to statement of profit and loss as a prior period item in the previous year ended March 31, 2011.

7 LAND AND BUILDING

a) The Company is in the process of registering land measuring 0.132 acres and DP-36 land at SIDCO Industrial Estate, Thirumazhisai Chennai.

b) During the previous year, in respect of building at NIDA, Kanjikode amounting to Rs. 2,518,083 a Memorandum of understanding was entered to transfer the building. The Company is in the process of getting the refund of the balance land cost of Rs. 67,279, after adjustments for certain interest costs.

8 CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES

Particulars Year ended Year ended March 31, 2012 March 31, 2011

(i) Estimated amount of contracts remaining to be executed on capital account (net of capital advances) and not provided for 253,280 1,515,366

(ii) Commitments in respect of Bank guarantees and Letters of credit issued by Company's bankers 371,267,421 486,660,686

(iii) Penalty levied by Joint Director General of Foreign Trade, Chennai (JDGFT) Refer Note Refer Note a below a below

(iv) Disputed Sales Tax/ Income Tax/Service Tax/ Labour case (Also refer Note b and c) 36,613,305 36,613,305

Notes:

a Export obligations - A demand of Rs. 29,395,120 was raised in an earlier year, by JDGFT, Chennai towards non-compliance of certain export obligation. The Company has made a provision of Rs. 7,500,000 towards this demand, of which, Rs. 3,973,636 was paid during the year. Any liability in excess of the provision will be met by the ex-promoters to the benefit of the Company.

b Income tax - The Company has received income-tax assessment orders raising demand of Rs. 7,487,550 for AY 2009-10 during the year and Rs. 3,669,549 and Rs. 5,129,608 for AY 2005-06 and AY 2008-09 respectively in the earlier period. Any liability in respect of these orders will be met by the ex-promoters to the benefit of the Company.

c Sales tax - During the year, the Company has received sales tax assessment orders raising demand of Rs. 1,420,332 and Rs. 1,441,276 for FY 2005-06 and FY 2006-07 respectively. The Company has provided Rs. 383,528 in the books and has also paid Rs. 2,500,000 (under protest) against these orders. Any liability in respect of these orders will be met by the ex-promoters to the benefit of the Company.

9 SEGMENT REPORTING

The Company is engaged into only one business namely manufacture of transformers and the operations primarily cater to the needs of the domestic market. Accordingly there are no separate reportable segments according to AS 17 'Segment Reporting' issued under the Companies (Accounting Standards) Rules, 2006.

10 MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006

Based on the information received and available, the management believes that there are no 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, if any to such enterprises as at March 31, 2012 has been made in the financial statements based on information received and available with the Company, to the extent identified by the management and relied upon by the auditors.

11 RETIREMENT BENEFITS

Gratuity Plan

Based on actuarial valuation necessary provision has been created in the books to meet the liability as per Accounting Standard 15 (R).

The following table sets out the status of the gratuity plan as required under AS 15 (Revised 2005). Reconciliation of opening and closing balances of the present value of the defined benefit obligation.

Note:

(i) Plan assets comprise of contribution to Group Gratuity Scheme of Life Insurance Corporation of India. (ii) The gratuity expenses have been recognised in 'Contribution to provident and other funds' under Schedule 25 to the notes.

12 TRANSFER PRICING

The Company has international transactions with related parties. For the financial year 2010-11, the company has obtained the Accountant's Report from a Chartered Accountant as required by the relevant provisions of the Income Tax Act, 1961 and has filed the same with the tax authorities. For the financial year 2011 -12, management confirms that it maintains documents as prescribed by the Income-tax Act, 1961 to prove that these international transactions are at arm's length considering the economic scenario, prevailing market conditions etc and 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.

13 MONIES HELD IN TRUST

Monies held in trust amounting to INR 13,538,376, represents money transferred from the Sellers' Escrow account (ex-promoters), on behalf of Prolec GE. The said money was transferred, as the holding Company had no office in India, to do the documentation to transfer the funds on the date of settlement, to their account in Mexico, as the Escrow Account was closed in November 2011. Subsequent to the balance sheet date, on April 25, 2012, the Company, through its authorized dealer, has made necessary application to RBI seeking approval to remit this money to the holding Company.

14 RECEIVABLE FROM PROLEC GE INTERNACIONAL S. DE R.L. C.V., THE HOLDING COMPANY

Prolec GE had seconded some employees to the Company, who are on the payroll of the Company. Prolec GE has agreed to re-imburse costs pertaining to salaries and other expenses of these employees. For the current year Rs. 93,025,710 has been agreed to be re-imbursed by Prolec GE.

15 RELATED PARTY TRANSACTIONS

a) Names of related parties and nature of relationship are as follows:

Nature of relationship Name of the related party

Ultimate holding company Xignux S.A. de C.V.

Holding Company Prolec GE Internacional, S.de R.L. de C.V.

Fellow subsidiaries Prolec S.A. de C.V.

Key management personnel Mr. Manuel Hernandez Bravo, Manager (w.e.f. December 1, 2010)

16 PRIOR PERIOD COMPARATIVES

Prior year comparatives have been regrouped wherever necessary to conform to current year's classification.


Mar 31, 2011

(All amounts are in Indian Rupees, except share data and as stated)

a. Background of the Company

Indo Tech Transformers Limited (Indo Tech / the Company) is engaged in the business of manufacturing power and distribution transformers and various special application transformers and mobile sub-station transformers. The Company has four manufacturing plants located at Pallakad in Kerala and Chennai and Kancheepuram in Tamil Nadu.

i) Amalgamation of Indo Tech Electric Company Limited (ITECL / Transferor) with the Company

Pursuant to a scheme of amalgamation approved by the Honble High Court of Madras on September 30, 2005, ITECL was amalgamated with the Company with effect from April 1, 2003. The amalgamation was accounted under the purchase method in the earlier year. During the year, the management has noted that the sanctioned scheme qualified to be given effect as amalgamation in the nature of merger and accordingly, such amalgamation should have been accounted in accordance with the pooling of interest method prescribed by AS - 14. Necessary accounting effect has now been given in the financial statements for the current year under the pooling of interest method instead of purchase method. Consequently, general reserve has been increased by Rs. 10,737,933 with a corresponding effect to Capital Reserve and profit and loss account for Rs. 9,219,605 and Rs. 1,518,328 respectively.

ii) State Subsidy

During the financial year 1998-99, the Company had received a Government Grant of Rs. 1,500,000 as investment subsidy towards setting up a Power Transformer plant at its Thirumazhisai factory in SIDCO Industrial Estate, Chennai. The Company had adopted the capital approach prescribed under Accounting Standard- 12 (AS - 12) Accounting for Government Grants and had accounted the grant as State Subsidy under Reserves and Surplus.

Management noted that as the grant was received towards plant and machinery, the grant should have been treated as deferred income to be recognized in the profit and loss account on a systematic and rational basis over the useful life of the asset as prescribed by income approach in AS - 12. Since the estimated useful life had expired in an earlier period the subsidy amount has been transferred to Profit and Loss account as a prior period item.

iii) Land and Building

a) The Company is in the process of registering land measuring 0.132 acres and DP-36 land at SIDCO Industrial Estate, Thirumazhisai, Chennai.

b) During the year, in respect of building at NIDA, Kanjikode amounting to Rs. 2,518,083 a Memorandum of understanding has been entered to transfer the building. The Company is in the process of getting refund of the land cost of Rs. 271,500 from NIDA.

Note a: Export Obligations - A demand of Rs. 29,395,120 was raised in an earlier year, by JDCFT, Chennai towards non- compliance of certain export obligation. The Company has made a provision of Rs. 7,500,000 towards this demand. Any liability in excess of the provision will be met by the ex-promoters to the benefit of the Company.

Note b: Income Tax - During the year, the Company has received income-tax assessment orders raising demand of Rs. 3,669,549 and Rs. 5,129,608 for AY 2005-06 and AY 2008-09 respectively. Any liability in respect of these orders will be met by the ex-promoters to the benefit of the Company.

iv) Based on the information received and available, the management believes that there are no 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, if any to such enterprises as at March 31, 2011 has been made in the financial statements based on information received and available with the Company, to the extent identified by the management and rel ied upon by the auditors.

v) Segment Reporting

The Company is engaged into only one business namely manufacture of transformers and the operations primarily cater to the needs of the domestic market. Accordingly there are no separate reportable segments according to AS 17 Segment Reporting issued under the Companies (Accounting Standards) Rules, 2006.

vi) Transfer Pricing

The Company has international transactions with related parties. For the financial year 2009-10, the company has obtained the Accountants Report from a Chartered Accountant as required by the relevant provisions of the Income Tax Act, 1961 and has filed the same with the tax authorities. For the financial year 2010 -11, management confirms that it maintains documents as prescribed by the Income- tax Act, 1961 to prove that these international transactions are at arms length considering the economic scenario, prevailing market conditions etc and 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.

xxvi) Previous year figures have been regrouped wherever necessary to conform to current year classification. Previous years financial statements were audited by a firm other than B S R and Co.


Mar 31, 2010

01) Secured Loans

a) Term Loan from Standard Chartered Bank is secured by first and exclusive charge on Land (9.16 acres), Buildings, Plant & Machinery at Kancheepuram.

b) Working capital facilities from Bank of Baroda, State Bank of India, Standard Chartered Bank and Citi Bank NA are primarily secured by hypothecation of inventories, book debts and are collaterally secured by paripassu charge on Land, Factory Buildings and Plant & Machinery of the Company and further secured by second charge on paripassu basis on Land (9.16 acres), Buildings, Plant & Machinery at Kancheepuram.

Subject to the above, the Working Capital facilities from The Honkong and Shanghai Bank Corporation Limited are secured by paripassu charge with other banks on all movable fixed assets, immovable fixed assets & current assets.

02) Unsecured Loans

Interest free sales tax deferment loan shown under Un-secured loans is repayable in installments up to September 2012.

03) Fixed Assets:

a) Registration of documents in the Companys name in respect of leased land measuring 0.132 acres at SIDCO Industrial Estate, Thirumazhisai is in process.

b) In respect of the property at DP-36, SIDCO Industrial Estate, Thirumazhisai, the documents is in the process of execution.

c) In respect of land and factory building at NIDA, Kanjikode, the General Manager, District Industries Centre, Palakkad had passed orders resuming the allotment. Pending determination of compensation, no provision has been made in the accounts against the book value of the property at Rs.27,89,583.

04) Confirmation of balances:

Confirmations have been received from certain debtors, creditors and for certain advances and deposits which are under reconciliation.

05) Export Obligations - Penalty:

A demand for a sum of Rs.29,395,120/- was raised in an earlier year, by JDGFT, Chennai, towards non compliance of certain export obligations. The Company has made a provision of Rs.7,500,000/-towards this. Any liability in excess of this provision will be met by the ex promoters as per the Share Purchase Agreement between the ex-promoters and Prolec GE International, S de R.L. de C.V, and hence no further provision is considered necessary.

06) Fixed deposits in Banks include Rs. 8,75,76,277/- (Rs.8,35,86,647/-) lien marked towards margin for guarantees and letter of credit issued by the Banks.

07) Estimated amount of contracts remaining to be executed on capital account not provided for is Rs. Nil. (Rs.Nil)

8) Employee benefits:

Defined benefit plan:

The employees Gratuity fund scheme managed by Life Insurance Corporation of India is a defined Benefit plan. The present value of obligation is determined based on actuarial valuation using Projected Unit Credit method which recognizes each period of service as giving raise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

9) The Company does not have any reportable segments as required to be disclosed.

10) Related party disclosures

As identified by the company and relied upon by the Auditors, the related parties are as follows:-

Name of the related party Relationship

PROLEC-CE INTERNACIONAL, S. de R.L. de C.V Holding Company

GE INDIA INDUSTRIAL PRIVATE LIMITED Associate Company

GE INTERNATIONAL INC Associate Company

Sivasakthi Engineering & Fabricators - Upto 18th May 2009 Associate Firm

Key Management Personnel

Mr. Manuel Hernandez Bravo - Chief Executive Officer w.e.f. 18th May 2009 Mr. P.E.Subramanian - Chairman & Managing Director - Till 18th May 2009 Mr. P.S. Jagdish - Executive Director - Till 18th May 2009 Mr. P.S. Shekar - Director Operations - Till 18th May 2009

11) Sundry Creditors:

Micro, Small and Medium Enterprises under the Micro Small & Medium Enterprises Development (MSMED) Act 2006: Based on the information available with the company there was no creditors as on 31st March 2010 who had registered under MSMED Act. 12) Schedules 1 to 18 form an integral part of the Balance Sheet and Profit & Loss Account and have been duly authenticated.

13) Previous years figures have been regrouped wherever necessary to conform to current years classification.

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