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Notes to Accounts of Ingersoll-Rand (India) Ltd.

Mar 31, 2016

(a) Shares reserved for issue under options

There are no shares reserved for issue under any option.

(b) Aggregate number of shares allotted as fully paid up by way of bonus shares/pursuant to contract(s) without payment being received in cash (during 5 years immediately preceding March 31, 2016):

During the period of fve years immediately preceding March 31, 2016, no shares are allotted as fully paid up by way of bonus shares or pursuant to contract(s) without payment being received in cash.

Provision for Litigations/Disputes

Provision for litigations/disputes mainly includes employees claiming damages towards termination of employment and are provided for based on estimates made by the Company. It is expected that this provision will be settled beyond twelve months.

Provision for Warranties

Warranties against manufacturing and other defects, as per terms of contract(s) with the customer, are provided for based on estimates made by the Company, except where the Company has back to back arrangement with the suppliers. It is expected that this provision will be settled in the remaining unexpired warranty period ranging from twelve to eighteen months.

Note: There are no amounts due for payment to the Investor Education and Protection Fund under Section 205C of the Companies Act, 1956 as at the year end.

* The loans advanced to fellow subsidiaries, on interest, are repayable on June 28, 2019 as per the loan agreements. These loans are backed by corporate guarantees issued to the Company by the ultimate holding company that are valid up to June 28, 2019.

(i) Considering the very nature of the disputes and the dependency on decisions pending with various forums, it is not practicable for the Company to estimate the timing of the cash outfows at this stage with respect to the above contingent liabilities.

(ii) Contingent liabilities does not include guarantees issued by banks on behalf of the Company against advances received for supply of products in connection with customer bids and guaranteeing performance of products sold or timely completion of contractual obligations by the Company of Rs.399.02 (March 31, 2015: Rs.343.62).

(*) The above amount is net of Rs.23.02 (March 31, 2015: Nil) recovered from IRCSPL

(a) Includes write back of provision for leave encashment (Net) Rs.0.25 [March 31, 2015: Rs.6.28].

(b) Defend Benefit Plan:

Gratuity: The Company operates a gratuity plan through the "Ingersoll-Rand Employees Gratuity Trust". Every employee is entitled to a benefit equivalent to fifteen days salary last drawn for each completed year of service in line with the Payment of Gratuity Act, 1972 subject to a maximum of Re.1. It is payable at the time of separation from the Company or retirement, whichever is earlier. The benefits vest after fve years of continuous service. In case of employees who joined the Company prior to April 1, 2006, the benefits given by the Company are more favourable than the Payment of Gratuity Act, 1972 depending upon the length of service.

Provident Fund: Provident fund for certain eligible employees is managed by the Company through the "Ingersoll-Rand Employees Provident Fund Trust". In line with the Provident Fund and Miscellaneous Provisions Act, 1952, the plan guarantees interest at the rate notified by the Provident Fund Authorities. The contribution by the employer and employee together with the interest accumulated thereon are payable to employees at the time of their separation from the company or retirement, whichever is earlier. Interest shortfall, if any, is met by the Company. The benefits vest immediately on rendering of the services by the employee.

(*) Bargain able employees: 3% for two years and 5% thereafter, Others: 10% for next two years and 8% thereafter.

Notes:

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

(b) The expected rate of return on assets is determined based on the assessment made at the beginning of the year on the return expected on its existing portfolio, along with the estimated increment to the plan assets and expected yield on the respective assets in the portfolio during the year.

(c) The discount rate is based on the prevailing market yield on Government securities as at the Balance Sheet date for the estimated term of obligation.

(d) Employee Share-based Payments

Certain executives of the Company are eligible to participate in the employee share based payment plans, as detailed below, of Ingersoll-Rand Company, New Jersey, USA, the holding company. The share based plans are assessed, managed and administered by the holding company. Based on a Confirmation received from the ultimate holding company in an earlier year, the cost related to such share based payments will not be recharged to the Company, hence no liability has been recorded in the financial statements. Accordingly, details of number of options granted/ forfeited/ exercised/ outstanding has not been disclosed. Details of share based plan are as follows: (i) Incentive Stock Option Plan of 1998 (1998 plan)

The stock options vest rateably over a period of three years and expire at the end of ten years, subject to conditions related to termination of employment. (ii) Stock Appreciation Rights Plan of 1998 (SAR 1998)

SARs generally vest rateably over a three-year period from the date of grant and expire at the end of ten years. All exercised SARs are settled with the holding company''s Class A common shares. (iii) Incentive Stock Option Plan of 2007 (2007 plan)

On June 6, 2007, the shareholders of the holding company approved the Incentive Stock Plan of 2007, which authorises the holding company to issue stock options and other share-based incentives. The plan replaces the 1998 plan which terminated in May 2007. The stock options vest rateably over a period of three years and expire at the end of ten years, subject to conditions related to termination of employment. (iv) Restricted Stock Unit (RSU)

Restricted Stock Unit (RSU) are share equivalents that are awarded to an employee with a promise to issue actual shares to holders of the RSU award at vesting. The RSU will vest in one-third instalments over three years. Once they vest, each unit is converted into a share of stock at current value.

Note: Pursuant to a technical evaluation carried out during the previous year, management had revised the estimated useful life of fixed assets, which aligns to the rates prescribed under Schedule II of the Companies Act, 2013. As per Note 7(b) to Schedule II - Part ''C'', as the remaining useful life of certain fixed assets as at April 1, 2014 was Nil, the carrying value of such assets, after retaining the residual value, was recognised in the opening balance of retained earnings aggregating to Rs.7.69.

1. Related Party Disclosures:

(a) Names of related parties and nature of relationship: (i) Where control exists

Ingersoll-Rand plc, Ireland Ultimate Holding Company

Ingersoll-Rand Company, New Jersey, USA Immediate Holding Company

(ii) Other related parties with whom transactions have taken place during the year: Fellow Subsidiaries:

GHH - Rand Schraubenkompressoren GmbH, Germany Ingersoll-Rand South East Asia (Pte) Ltd, Singapore

Hibon Inc.,Canada Ingersoll-Rand Technologies and Services Private Limited,

India

Ingersoll Rand (China) Investment Company Limited, China Nanjing Ingersoll-Rand Compressor Co. Ltd., China

Ingersoll Rand Italiana S.P.A., Italy Offcine Meccaniche Industriali SRL, Italy

Ingersoll Rand S.A. De C.V., Mexico Plurifter D.O.O, Slovenia

Ingersoll-Rand (Chang Zhou) Tools Co., Ltd.,China Reftrans, S.A., Spain

Ingersoll-Rand (China) Industrial Equipment Manufacturing Shanghai Ingersoll Rand Compressor Limited, China Co. Limited, China

Ingersoll-Rand Air Solutions Hibon Sarl, France Société Trane SAS, France

Ingersoll-Rand Climate Solutions Private Limited, India Thermo King European Manufacturing Limited, Ireland

Ingersoll-Rand Company South Africa (Pty) Limited, South Thermo King India Private Limited, India Africa

Ingersoll-Rand CZ s.r.o, Czech Republic Thermoking Corporation, USA

Ingersoll-Rand European Sales Limited, UK Trane Air Conditioning Systems (China) Co., Ltd., China

Ingersoll-Rand Global Holding Company Limited, USA Trane BVBA, Belgium

Ingersoll-Rand International (India) Private Limited, India Trane Exports LLC, USA

Ingersoll-Rand International Limited, Ireland Trane India Limited, USA

Ingersoll-Rand Malaysia Co. Sdn. Bhd., Malaysia Trane U.S. Inc, USA

Key Management Personnel

Amar Kaul, Vice President & General Manager G. Madhusudhan Rao, Vice President - Finance Prasad Y Naik, Vice President - IT

Note: Key Management Personnel cannot individually exercise significant infuence in the employee trust funds where they are the Trustees.

2. Leases

As a lessee: Operating Lease

The Company has significant operating leases for premises. These lease arrangements range for a period between 11 months and 10 years, which include both cancellable and non-cancellable leases (generally, for a period up to 84 months). Most of the leases are renewable for further period on mutually agreeable terms and also include escalation clauses. The Company has entered into certain sub-leases and all such sub-leases are cancellable and are for a period of 11 months, with an option of renewal on mutually agreeable terms.

3. During the previous year, pursuant to the ultimate holding company acquiring the ''Centrifugal Compressor Division (CC Division) of Cameron International Corporation, USA, the Company had acquired the CC Division of Cameron Manufacturing (India) Private Limited by way of an ''Asset Transfer'' arrangement with effect from January 1, 2015 for a net consideration of Rs.16.69 million.

4. The Company had a long standing dispute with the Department of Commercial Taxes, Government of Karnataka (the "Department"), in connection with the classification of certain road construction equipment manufactured and sold by the Company (that business has since been transferred/ sold to an independent third party as a part of global divestiture). The Department disputed the classification of the products under the Karnataka Sales Tax Act, 1957, and demanded sales tax at a higher rate than what was charged by the Company to its customers. The Company had remitted the differential tax "under protest", and charged the amounts to the Statement of Profit and Loss in the financial year 2002-03. The dispute, which was lying under appeal with various appellate authorities, was ruled in favour of the Company by the High Court of Karnataka in the year 2012-13 and thereafter the Company had filed an application to the Department seeking refund of tax in the year 2013-14.

The Company had received a recompilation statement from the Sales tax authorities Confirming the excess tax paid aggregating to Rs.96.35 (March 31, 2015: Rs.96.35), which was recognised as income and disclosed as an ''Exceptional Item'' in the Statement of Profit and Loss for the year ended March 31, 2015.

During the year, the Company realised Rs.73.62 (March 31, 2015: Nil) from the Department. Subsequent to March 31, 2016, the Company has received a letter from the Department stating that no further amounts are due to the Company. In light of this development subsequent to the year end, the Company has reassessed the recoverability of the remaining refund and provided for Rs.16.87 (March 31, 2015: Nil), which has been disclosed under ''Exceptional item'' in the Statement of Profit and Loss.

5. Discontinued Operations

At the meeting of the Board of Directors ("the Board") held on September 21, 2015, the Board decided to discontinue the operations at the Chennai Plant (i.e., Environment Solutions Business) on account of lack of orders from Ingersoll- Rand Climate Solutions Private Limited (IRCSPL), a fellow subsidiary. The Company entered into a Termination Agreement with IRCSPL, whereby IRCSPL has agreed to reimburse all losses and expenses directly or indirectly suffered or incurred by the Company up to the time all assets are sold and proceeds received by the Company. Hence, the resulting estimated net loss has been shown as recoverable from IRCSPL and therefore, there is no impact on the results for the year. The carrying value of the assets relating to the Environment Solutions business have been stated at lower of cost and estimated net realisable value.

6. Prior Year Figures

Prior year''s figures have been regrouped/ reclassified wherever necessary to conform to current year''s classification.


Mar 31, 2015

1 General Information

Ingersoll-Rand (India) Limited (the 'Company') is a public limited company incorporated in 1921 under provisions of the Companies Act, 1913 and existing under the provisions of the Companies Act, 1956/ Companies Act, 2013. The Company has a manufacturing plant in Naroda, Gujarat and is primarily engaged in the business of manufacturing and sales of Industrial air compressors of various capacities and related services. The Company also manufactures air conditioner package under contract manufacturing arrangement for its fellow subsidiary in India from a plant at Chennai. The Company sells air compressors primarily in India and also exports the products to North American, South American, Asian and European countries. The equity shares of the Company are listed on the Bombay Stock Exchange Limited, the National Stock Exchange of India Limited and the Ahmedabad Stock Exchange Limited.

2. Segment Reporting:

The Company has considered business segments as the primary reporting segment on the basis that risk and returns of the Company is primarily determined by the nature of products and services. Consequently, the geographical segment has been considered as a secondary segment. The business segments have been identified on the basis of the nature of products and services, the risks and returns, internal organisation and management structure and the internal performance reporting systems. The business segments comprise of the following:

(a) Air Solutions - comprising of reciprocating compressors, centrifugal compressors and system components

(b) Environment Solutions - relating to contract manufacturing of air conditioner packages for a fellow subsidiary.

Geographical segment is considered based on sales within India and outside India.

3. Leases

As a lessee:

Operating Lease The Company has significant operating leases for premises. These lease arrangements range for a period between 11 months and 10 years, which include both cancellable and non-cancellable leases. Most of the leases are renewable for further period on mutually agreeable terms and also include escalation clauses. The Company has entered into certain sub-leases and all such sub-leases are cancellable and are for a period of 11 months, with an option of renewal on mutually agreeable terms.

4. During the year, pursuant to the ultimate holding company acquiring the 'Centrifugal Compressor Division (CC Division) of Cameron International Corporation, USA, the Company has acquired the CC Division of Cameron Manufacturing (India) Private Limited by way of an 'Asset Transfer' arrangement with effect from January 1, 2015 for a net consideration of Rs.16.69 million.

5. The Company had a long standing dispute with the Department of Commercial Taxes, Government of Karnataka (the "Department"), in connection with the classification of certain road construction equipment manufactured and sold by the Company (that business has since been transferred/sold to an independent third party as a part of global divestiture). The Department disputed the classification of the products under the Karnataka Sales Tax Act, 1957, and demanded sales tax at a higher rate than what was charged by the Company to its customers. The Company had remitted the differential tax "under protest", and charged the amounts to the Statement of Profit and Loss in the financial year 2002-03. The dispute, which was lying under appeal with various appellate authorities, was ruled in favour of the Company by the High Court of Karnataka in the year 2012-13. The Company had filed an application to the Department seeking a refund in the year 2013-14.

Subsequent to the balance sheet date, the Company has received a recomputation statement from the Sales tax authorities confirming the excess tax paid aggregating to Rs.96.35 (March 31, 2014: Nil), which has been recognised as income and disclosed as an 'Exceptional Item' in the Statement of Profit and Loss.

6. Prior Year Figures

Prior year's figures have been regrouped/reclassified wherever necessary to conform to current year's classification.


Mar 31, 2014

1. General Information

Ingersoll-Rand (India) Limited (the ''Company'') is a public limited company incorporated in 1921 under provisions of the Companies Act, 1913 and existing under the provisions of the Companies Act, 1956. The Company has a manufacturing plant in Naroda, Gujarat and is primarily engaged in the business of manufacturing and sales of Industrial air compressors of various capacities. The Company also manufactures air conditioner package under contract manufacturing arrangement for its fellow subsidiary in India from the new plant at Chennai, which commenced commercial production in May 2013. The Company sells air compressors primarily in India and also exports to other South Asian countries and the United States. The equity shares of the Company are listed on the Bombay Stock Exchange Limited, National Stock Exchange of India Limited and Ahmedabad Stock Exchange Limited.

(a) Rights, preferences and restrictions attached to shares

Equity Shares: The Company has only one class of equity shares having a par value of Rs.10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, if any, in proportion to their shareholding.

(b) Shares reserved for issue under options

There are no shares reserved for issue under any option.

(c) Shares allotted as fully paid-up by way of bonus shares/pursuant to contract(s) without payment being received in cash (during 5 years immediately preceding March 31, 2014):

During the period of five years immediately preceding March 31, 2014, no shares are allotted as fully paid-up by way of bonus shares or pursuant to contract(s) without payment being received in cash.

Provision for litigations/disputes:

Provision for litigations/disputes mainly includes employees claiming damages towards termination of employment and are provided for based on estimates made by the Company. It is expected that this expenditure will be incurred beyond twelve months.

Provision for Warranties:

Warranties against manufacturing and other defects, as per terms of contract(s) with the customer, are provided for based on estimates made by the Company, except where the Company has back to back arrangement with the suppliers. It is expected that this expenditure will be incurred in the remaining unexpired warranty period ranging from twelve to eighteen months.

* The loans advanced to fellow subsidiaries on interest are repayable on demand and are backed by corporate guarantees'' issued to the Company by the ultimate holding company that are valid upto July 20, 2014. These guarantees have been renewed prior to the date of expiry as per past practice. As Management does not have an intention to recover the loans in the next twelve months, these have been classified under Long-term Loans and Advances.

2. Contingent Liabilities

(a) Claims against the Company not acknowledged as debts 39.70 54.77 (Claims filed against the Company by customers/ vendors/ employees claiming damages for non-performance of contractual obligation/defective supply of products/termination of employment), which is disputed by the Company and the matters are lying under appeal with various forums.

(b) Value added tax/Central excise matters in dispute (Relates to adjustment on account of levy of additional duty and other matters made by the VAT/Excise 149.91 134.46 department, which is disputed by the Company and are lying under appeal with various forums. In connection with the disputes, the Company has: 1) Paid Rs.1.40 (March 31, 2013: Rs.3.40) "under protest"; and 2) Furnished a Bank guarantee of Rs.4.87 (March 31, 2013: Rs.4.87).

(c) Income Tax matters 119.81 150.55 [Relates to transfer pricing and other adjustments made by the Income Tax Department for the assessment years 2003-04 to 2010-11, which is disputed by the Company and the matters are lying under appeal with various forums. The Company has paid ''under protest'' Rs.98.18 (March 31, 2013: Rs.129.54) to the Income Tax Department in this regard]

Note: Considering the very nature of the disputes and the dependency on decisions pending with various forums, it is not practicable for the Company to estimate the timing of the cash outflows at this stage with respect to the above contingent liabilities.

Contingent liabilities does not include guarantees issued by Banks on behalf of the Company against advances received for supply of products and guaranteeing performance of products sold or timely completion of contractual obligations by the Company of Rs.280.50 (March 31, 2013: Rs.424.31).

(a) Includes provision for leave encashment (Net) Rs.1.05 (March 31, 2013 Provision for leave encashment written back: Rs.9.39)

(b) Defined Benefit Plan:

Gratuity: The Company operates a gratuity plan through the "Ingersoll Rand Employees Gratuity Trust". Every employee is entitled to a benefit equivalent to fifteen days salary last drawn for each completed year of service in line with the Payment of Gratuity Act, 1972. It is payable at the time of separation from the Company or retirement, whichever is earlier. The benefits vest after five years of continuous service. In case of employees who joined the Company prior to April 1, 2006, the benefits given by the Company are more favourable than the Payment of Gratuity Act, 1972 depending upon the length of service.

Provident Fund: Provident fund for certain eligible employees is managed by the Company through the "Ingersoll Rand Employees Provident Fund Trust". In line with the Provident Fund and Miscellaneous Provisions Act, 1952, the plan guarantees interest at the rate notified by the Provident Fund Authorities. The contribution by the employer and employee together with the interest accumulated thereon are payable to employees at the time of their separation from the Company or retirement, whichever is earlier. Interest shortfall, if any, is met by the Company. The benefits vest immediately on rendering of the services by the employee.

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

The expected rate of return on assets is determined based on the assessment made at the beginning of the year on the return expected on its existing portfolio, along with the estimated increment to the plan assets and expected yield on the respective assets in the portfolio during the year.

* The Guidance Note on implementation of AS15 "Employee Benefits" issued by the Institute of Chartered Accountants of India states that Provident Fund set up by employers that guarantee a specified rate of return and which require interest shortfall to be met by employer would be a Defined Benefit plan in accordance with the requirements of para (26b) of AS15. Pursuant to the Guidance Note, the liability in respect of the shortfall of interest determined on the basis of an independent actuarial valuation [carried out as per the Guidance Note (GN29) issued by Institute of Actuaries of India effective from April 1, 2011], as at March 31, 2014 is Nil.

(d) Employee Share-based Payments

Certain executives of the Company are eligible to participate in the employee share based payment plans, as detailed below, of Ingersoll-Rand Company, New Jersey, USA the holding company. Based on a confirmation received from the ultimate holding company, that the cost related to such share based payments will not be recharged to the Company, no liability has been recorded in the financial statement.

(i) Incentive Stock Option Plan of 1998 (1998 plan)

The stock options vest ratably over a period of three years and expire at the end of ten years, subject to conditions related to termination of employment.

(ii) Stock Appreciation Rights Plan of 1998 (SAR 1998)

SARs generally vest ratably over a three-year period from the date of grant and expire at the end of ten years. All exercised SARs are settled with the holding company''s Class A common shares.

(iii) Incentive Stock Option Plan of 2007 (2007 plan)

On June 6, 2007, the shareholders of the holding company approved the Incentive Stock Plan of 2007, which authorises the holding company to issue stock options and other share-based incentives. The plan replaces the 1998 plan which terminated in May 2007. The stock options vest ratably over a period of three years and expire at the end of ten years, subject to conditions related to termination of employment.

(iv) Restricted Stock Unit (RSU)

Restricted Stock Unit (RSU) are share equivalents that are awarded to an employee with a promise to issue actual shares to holders of the RSU award at vesting. The RSU will vest in one-third installments over three years. Once they vest, each unit is converted into a share of stock at current value.

These Plans are assessed, managed and administered by the holding company.

The number and weighted average exercise prices of stock options for each of the above plans are given in US $ currency as Rupee values are not available.

Expected volatility is based on the historical volatility from traded options on the Company''s stock. The risk-free rate of return is based on the yield curve of a zero-coupon U.S. Treasury bond on the date the award is granted with a maturity equal to the expected term of the award. Historical data is used to estimate forfeitures within the Company''s valuation model. The Company''s expected life of the stock option awards is derived from historical experience and represents the period of time that awards are expected to be outstanding.

Note: Based on a confirmation received from the ultimate holding company in the prior year, that the cost related to such share based payments will not be recharged to the Company, the liability of Rs.Nil (March 31, 2013: Rs.12.91) has been written back and disclosed as ''Provision written back''.

The above information has been compiled from the data provided by the holding company, which has been relied upon by the auditors.

3. Segment Reporting:

The Company has considered business segments as the primary reporting segment on the basis that risk and returns of the Company is primarily determined by the nature of products and services. Consequently, the geographical segment has been considered as a secondary segment.

The business segments have been identified on the basis of the nature of products and services, the risks and returns, internal organisation and management structure and the internal performance reporting systems.

The business segments comprise of the following:

(a) Air Solutions - comprising of reciprocating compressors, centrifugal compressors and system components

(b) Environment Solutions - relating to contract manufacturing of air conditioner packages for a fellow subsidiary.

4. Leases

As a lessee:

Operating Lease

The Company has significant operating leases for premises. These lease arrangements range for a period between 11 months and 10 years, which include both cancellable and non-cancellable leases. Most of the leases are renewable for further period on mutually agreeable terms and also include escalation clauses. The Company has entered into certain sub-leases and all such sub-leases are cancellable and are for a period of 11 months, with an option of renewal on mutually agreeable terms.

Operating Lease

The Company has given plant and machinery and also sub-let premises on operating leases. These lease arrangements range for a period between 11 to 60 months and are cancellable by notice of 30 days by either side. Most of the leases are renewable for further period on mutually agreeable terms and also include escalation clauses.

Note: Vide letter dated September 29, 2012, the Department of Scientific & Industrial Research (DSIR), Ministry of Science and Technology, Government of India has accorded recognition to the Company''s In-House R&D unit, Naroda, Ahmedabad. The above disclosure is based on requirement stipulated by DSIR, Ministry of Science and Technology, Government of India.

Note: The above information has been determined based on vendors identified by the Company and to the extent these have been confirmed by such vendors, which have been relied upon by the auditors.

5. The Company had a long standing dispute with the Department of Commercial Taxes, Government of Karnataka (the "Department"), in connection with the classification of certain road construction equipment manufactured and sold by the Company (that business has since been transferred/ sold to an independent third party as a part of global divestiture). The Department disputed the classification of the products under the Karnataka Sales Tax Act, 1957, and demanded sales tax at a higher rate than what was charged by the Company to its customers. The Company had remitted the differential tax "under protest", and charged the amounts to the Statement of Profit and Loss in the financial year 2002-03. The dispute, which was lying under appeal with various appellate authorities, was ruled in favour of the Company by the High Court of Karnataka in the prior year. During the current year, the Company has filed an application to the Department seeking a refund of Rs.80.21 million. The Company has been advised by reputed indirect tax consultants that the refund process is time consuming, entails onerous procedural aspects, and requires submission of various documents and arguments at different stages. Considering the uncertainty around ultimate collection at this stage, and the risk that the Department may prefer a belated appeal with the Supreme Court of India, on prudence basis, no income has been recognised in these financial statements.

6. Previous Year Figures

Previous year''s figures have been regrouped / reclassified whereever necessary to conform to current year''s classification.


Mar 31, 2013

1 General Information

INGERSOLL-RAND (INDIA) LIMITED (the ''Company'') is a public limited company incorporated in 1921 under provisions of Companies Act, 1913 and existing under the provisions of Companies Act, 1956. The Company has a manufacturing plant in Naroda, Gujarat and is primarily engaged in the business of manufacturing and sales of Industrial air compressors of various capacities. The Company also manufactures Air Conditioner package for buses under contract manufacturing arrangement for its fellow subsidiary in India. The Company sells air compressors primarily in India and also exports to other SAARC countries and United States. The Company is in the process of constructing a new manufacturing plant at Chennai, Tamil Nadu for manufacture of Heating, Ventilation & Air Conditioning (HVAC) equipments and Transport Refrigeration products in Phase 1. The equity shares of the Company are listed on the Bombay Stock Exchange Limited, National Stock Exchange of India Limited and Ahmedabad Stock Exchange Limited.

2 Segment Reporting:

The Company has considered the business segment as the primary reporting segment on the basis that the risk and returns of the Company is primarily determined by the nature of products and services. Consequently, the geographical segment has been considered as a secondary segment.

The business segment have been identified on the basis of the nature of products and services, the risks and returns, internal organisation and management structure and the internal performance reporting systems and amounts allocated on a reasonable basis.

The business segments comprise of the following:

(a) Air Solutions (AS) - comprising of reciprocating compressors, centrifugal compressors and system components

(b) Others - arising on account of contract manufacturing for fellow subsidiary.

The expenses, assets and liabilities relating to Chennai Plant has been grouped under Other unallocable head, since it is in the pre-production stage.

3 Leases

As a lessee:

Operating Lease

The Company has significant operating leases for premises. These lease arrangements range for a period between 11 months and 10 years, which include both cancellable and non-cancellable leases. Most of the leases are renewable for further period on mutually agreeable terms and also include escalation clauses. The Company has entered into some sub-leases and all such subleases are cancellable and are for a period of 11 months, with an option of renewal on mutually agreeable terms.

4 Previous Year Figures

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


Mar 31, 2011

1. (a) Provision for taxation for the current year ended 31st March 2011 has been calculated and for prior years retained in the books as at that date, keeping in view the current decisions of courts/ appellate tax authorities.

(b) Transfer Pricing

The Finance Act, 2001 has introduced, with effect from Assessment Year 2002-03 (effective April 1, 2001), detailed Transfer Pricing regulations for computing the taxable income and expenditure from international transactions between associated enterprises on an arms length basis. These regulations, inter alia, also require the maintenance of prescribed documents and information including furnishing a report from an Accountant on or before the due date for filing the return of income. For the year ended March 31, 2010, the Company had undertaken a transfer pricing study and obtained the prescribed certificate of the Accountant to comply with the said transfer pricing regulations which did not envisage any tax liability. For the tax year ended March 31, 2011, the Company will carry out a similar study to comply with the said regulations.

9. (i) Refer Schedule 14 for quantitative information regarding capacities and production in respect of each class of goods manufactured and quantitative details pursuant to paragraphs 3(i)(a), 3(ii)(a)(1) and (2) and 3(ii)(b) of Part II of Schedule VI to the Companies Act, 1956

(ii) Sales and purchases reported do not include materials sent to the sub-contractors and returned back.

2. Disclosure as required by Accounting Standard (AS) 19, "Leases" are given below:

II. Rent income represents lease rental received towards portion of the office premises sub-let. Such leases are generally for period of 60 months with options for renewal against increased rent.

(b) Where the Company is a lessee:

(i) The Companys significant leasing arrangements are in respect of godowns/ residential/ office premises (including furniture and fittings therein, as applicable). These Leases are generally for a period of 11 to 120 months and renewable by mutual consent on mutually agreeable terms. The operating leases are cancellable by the lessor / lessee with 1 to 3 months notice. However, some of the operating leases have lock in period ranging from 10 to 60 months

3. Segment Information:

The business segment has been considered as the primary segment.

Air Solutions (AS) - comprising of reciprocating compressors, centrifugal compressors and system components

Others - arising on account of contract manufacturing for associate companies Segment revenue, results, assets and liabilities have been accounted for on the basis of their relationship to the operating activities of the segment and amounts allocated on a reasonable basis.

4. Related Party Disclosures:

4.1 Parties where control exists

Related Party Relationship

Ingersoll - Rand plc, Ireland Ultimate Holding Company

Ingersoll - Rand Company, New Jersey, U.S.A. Substantial Interest in Voting Power of the Company (holds 74% of equity share capital as at 31st March, 2011)

4.2 Other Related Parties:

Fellow Subsidiaries:

Club Car Inc., U.S.A. Ingersoll - Rand Machinery (Shanghai) Co. Ltd, China

GHH - Rand Schraubenkompressoren GmbH, Germany Ingersoll - Rand Malaysia Co. Sdn. Bhd., Malaysia

Hibon Inc.,Canada Ingersoll - Rand South-East Asia (Pte) Limited, Singapore

Ingersoll - Rand (Australia) Limited, Australia IRCR Manufacturing S.R.O., Czech Republic

Ingersoll - Rand (Chang Zhou) Tools Co. Ltd., China Nanjing Ingersoll - Rand Compressor Co. Ltd. China

Ingersoll - Rand (China) Industrial Equipment Manufacturing Officina Meccaniche Industriali SRL, Italy Co. Limited, China

Ingersoll - Rand Air Solutions Hibon Sarl, France Plurifilter D.o.o, Slovenia

Ingersoll - Rand Brasil Ltda, Brazil Schlage Lock Company LLC, USA

Ingersoll - Rand Company Limited, United Kingdom Service First Aircon Pvt. Limited, India

Ingersoll - Rand Company South Africa (Pty) Limited, South Africa Shanghai Ingersoll - Rand Compressor Limited, China

Ingersoll - Rand CZ s.r.o, Czech Republic Thermo King India Private Limited, India

Ingersoll - Rand European Sales Limited, United Kingdom Thermoking Corporation, U.S.A.

Ingersoll - Rand Industrial Products Private Limited , India Thermoking European Manufacturing Limited, Ireland

Ingersoll - Rand International (India) Limited, India Thermoking Ireland Limited, Ireland

Ingersoll - Rand International Limited, Ireland Trane BVBA, Belgium

Ingersoll - Rand Italiana, S.P.A., Italy Trane India Pvt. Limited,India

4.3 Key Management Personnel:

Venkatesh Valluri B. Jayaraman

Jaideep Wadhwa (Part of the year) Sameer Agarwal (Part of the Year)

Prasad Y. Naik

Key Management Personnel do not exercise significant influence in the employee trust funds where they are the Trustees.

5. Employee Benefits

The details of the Employee Benefit Schemes are as under: (i) Defined Benefit Plans

The Company provides for gratuity, a defined benefit plan (the Gratuity Plan), to its employees. The Gratuity Plan provides for a lump sum payment to vested employees at retirement or termination of employment, whichever is earlier, based on the respective employees last drawn salary and years of employment with the Company. The employees gratuity funds are managed by an Insurance Company.

Notes:

The estimates of future increase in salary, considered in the actuarial valuation, have been taken on account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

(ii) Defined Contribution Plans

Contribution to Provident and other funds under "Payments to and Provision for Employees" (Schedule 11) includes Rs. 26.33 million (2010: Rs. 24.94 million), being expenses debited under the defined contribution plans.

(iii) Accounting Standards Board Guidance on implementing Accounting Standard (AS) 15 on Employee Benefits, states that benefits involving employer established provident funds, which require interest shortfall to be recompensed, are to be considered as defined benefit plans. Pending the issuance of the Guidance Note from the Actuarial Society of India, the Companys actuary has expressed an inability to reliably measure provident fund liabilities. Accordingly the company is unable to exhibit the related information.

6. Employee Share-based Payments

(a) Certain executives of the Company are eligible to participate in the employee share based payment plans of Ingersoll Rand Company Limited (the holding company), which are explained below:

(i) Incentive Stock Option Plan of 1998 (1998 plan) The stock options vest ratably over a period of three years and expire at the end of ten years, subject to conditions related to termination of employment.

(ii) Stock Appreciation Rights Plan of 1998 (SAR 1998) SARs generally vest ratably over a three-year period from the date of grant and expire at the end of ten years. All exercised SARs are settled with the Companys Class A common shares.

(iii) Incentive Stock Option Plan of 2007 (2007 plan) On June 6, 2007, the shareholders of the Company approved the Incentive stock Plan of 2007, which authorizes the Company to issue stock options and other share-based incentives. The plan replaces the 1998 plan which terminated in May 2007.

The stock options vest ratably over a period of three years and expire at the end of ten years, subject to conditions related to termination of employment.

(iv) Restricted Stock Unit (RSU)

Restricted Stock Unit (RSU) are share equivalents that are awarded to an employee with a promise to issue actual shares to holders of the

RSU award at vesting. The RSU will vest in one-third instalments over three years. Once they vest, each unit is converted into a share of stock at current value.

These Plans are assessed, managed and administered by the holding Company.

The costs related to such share based payments pertaining to the Companys employees are being recharged to the Company by the holding company at the time of exercise of the options/ rights. However, as at the year end, the Company has accrued for the expected proportionate costs of share based payments pertaining to the Companys employees.

(b) The number and weighted average exercise prices of stock options for each of the above plans are given in US $ curency as Rupee values are not available Expected volatility is based on the historical volatility from traded options on the Companys stock. The risk-free rate of return is based on the yield curve of a zero-coupon U.S. Treasury bond on the date the award is granted with a maturity equal to the expected term of the award. Historical data is used to estimate forfeitures within the Companys valuation model. The Companys expected life of the stock option awards is derived from historical experience and represents the period of time that awards are expected to be outstanding.

7. During the year, there have been no significant purchases of machinery spares, which are of irregular usage.

8. Previous years figures have been regrouped whereever necessary.


Mar 31, 2010

1 Employee Share-based Payments

(a) Certain executives of the Company are eligible to participate in the employee share based payment plans ot Ingersoll Rand Company Limited (the holding company), which are explained below:

(i) Incentive Stock Option Plan of 1998 (1998 plan)

The stock options vest rateably over a period of three years and expire at the end of ten years, subject to conditions related to termination of employment.

(ii) Stock Appreciation Rights Plan of 1998 (SAR 1998)

SARs generally vest rateably over a three-year period from the date of grant and expire at the end of ten years. All exercised SARs are settled with the Companys Class A common snares.

(iii) Incentive Stock Option Plan of 2007 (2007 plan)

On June 6, 2007, the shareholders of the Company approved the Incentive Stock Plan of 2007, which authorizes the Company to issue stock options and other share-based incentives. The plan replaces the 1998 plan which terminated in May 2007.

The stock options vest rateably over a period of three years and expire at the end of ten years, subject to conditions related to termination of employment.

(iv) Restricted Stock Unit (RSU)

Restricted Stock Unit (RSU) are share equivalents that are awarded to an employee with a promise to issue actual shares to holders of the RSU award- at vesting. The RSU will vest in one-third instalments over three years. Once they vest, each unit is converted into a share of stock at current value.

These Plans are assessed, managed and administered by the holding Company.

The costs related to such share based payments pertaining to the Companys employees are being recharged to the Company by the holding company at the time of exercise of the options/ rights. However, as at the year end, the Company has accrued for the expected proportionate costs of share based payments pertaining to the Companys employees.

2. During the year, there have been no significant purchases of machinery spares, which are of irregular usage.

3. Previous years figures have been regrouped whereever necessary.

 
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