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Notes to Accounts of Kirloskar Industries Ltd.

Mar 31, 2015

CORPORATE INFORMATION

Kirloskar Industries Limited (''the Company'') is a public company incorporated under the provisions of the Companies Act, 1956. Its shares are listed on two Stock Exchanges in India, namely the BSE Limited and the National Stock Exchange of India Limited. The Company is engaged in wind-power generation. The Company has seven windmills in Maharashtra with total installed capacity of 5.6 Mega Watt (MW). The windmills are located at Tirade Village, Tal- Akole, Dist. - Ahmednagar. The Company sells wind power units generated, to third party as per the approval from the Maharashtra State Electricity Distribution Company Limited (MSEDCL) and in the absence of such approval to MSEDCL.

The Company has investments in properties and securities.

NOTE 2:

BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The Financial Statements have been prepared in conformity with Generally Accepted Accounting Principles in India (Indian GAAP) to comply in all material respects with the notified Accounting Standards as prescribed under section 133 of the Companies Act, 2013, (the Act), read with Rule 7 of Companies (Accounts) Rules, 2014, the relevant provisions of the Act and the guidelines issued by Securities and Exchange Board of India (SEBI). The Financial Statements have been prepared under the historical cost convention on an accrual basis. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

Each holder of equity share is entitled to one vote per share and to receive interim / final dividend as and when declared by the Board of Directors / at the Annual General Meeting. In the event of liquidation of the Company, the holder of equity shares will be entitled to receive any of the 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.

NOTE 3:

DE-CLASSIFICATION AS NON - BANKING FINANCIAL COMPANY

The Company was entitled to be declassified as Non - Banking Financial Company (NBFC) during the year 2013-14. However, pending confirmation by the Reserve Bank of India (RBI), the Company had created Reserve Fund under Section 45-IC of the Reserve Bank of India Act, 1934 (RBI Act) and continued to disclose the income from bank deposits as ''Revenue from Operations''.

During the year, the Reserve Bank of India, clarified that since the Company is an exempted CIC, none of the RBI Regulations, including creation of Reserve Fund under section 45-IC of the RBI Act, would be applicable to the Company. Consequently, the said Reserve Fund of Rs. 3,004.73 Lakhs has been transferred from Reserve Fund to ''Surplus in the Statement of Profit and Loss'' and no Reserve Fund under Section 45-IC of the RBI Act is created during the year 2014-15.

Further, in view of its de-classification as NBFC, income from bank deposits has been disclosed as ''Other Income'' during the year 2014-15 and regrouping for the year 2013-14 has been carried out.

NOTE 4:

CONTINGENT LIABILITIES

(Rs. in Lakhs)

Sr. Particulars As at 31 As at 31 March 2014 No. March 2015

(a) Disputed service tax demands 157.86 2.90

(b) Disputed Income tax demand 241.04 206.34

Out of this, Rs. 238.68 Lakhs (Rs. 206.34 Lakhs) paid under protest

(c) Claims against the Company not acknowledged as debt

- Development charges demanded by PMC 141.21 141.21

- Enercon Counterclaim in respect of Windmill 293.21 293.21

(d) Conveyance Deed Charges in respect of property 21.51 21.51

During the year 2013-14, in view of uncertainties involved in purchase of unutilised units under the Open Access by MSEDCL, revenue in respect of such estimated unutilised units was not recognised.

During the current year, commercial circular issued by MSEDCL, permits purchase by MSEDCL, unutilised wind energy units for the FY 2013-14. Consequently, revenue in respect of these unadjusted units has been recognised in the current year at the rate specified in the circular..

MSEDCL, in response to the application made for NOC for open access, informed the Company, that the approval for sale of wind power under Open Access shall be granted with effect from the date of certain compliances by the Open Access Consumer. Pending such compliances, the revenue from sale of wind power for the year 2014-15, has been accounted for at an estimated rate at which MSEDCL shall purchase the wind power from the open access generators. Accordingly, the Transmission and Wheeling charges are not payable in case of sale of wind power units to MSEDCL. As such no expenditure has been recognised

Note 5:

EMPLOYEE BENEFITS:

(a) Defined Contribution Plans:

The Company has contributed Rs. 10.34 Lakhs (Rs. 9.98 Lakhs for 31 March 2014) towards Defined Contribution plans i.e. Provident Fund Contribution and Super Annuation Scheme.

(b) Gratuity

The Company has an unfunded defined benefit gratuity plan. Every employee who has completed five years or more of service is eligible for a gratuity on separation at 15 days basic salary (last drawn salary) for each completed year of service. Where service is in excess of 15 years full months basic salary is considered for the calculation of gratuity.

Disclosure pursuant to Accounting Standard (AS 15) - Revised 2005 ''Employee Benefits'':

NOTE 6:

RELATED PARTY DISCLOSURE

Related parties, as defined under Clause 3 of Accounting Standard (AS 18) "Related Party Disclosures” prescribed under Section 133 of Companies Act, 2013, have been identified on the basis of representation made by the Key Management Persons and taken on record by the Board of Directors. Disclosures of transactions with Related Parties are as under:

Out of the total advances of Rs. 1,072.76 Lakhs (fully provided for as at March 31,2014), recovery of Rs. 200.00 Lakhs has been made and an amount of Rs. 486.89 Lakhs has been written off during the year. Consequently provision of Rs. 686.89 Lakhs for doubtful advances has been written back during the year and advance of Rs. 385.87 Lakhs as on March 31,2015 continues to be provided for fully.

NOTE 7:

The Company is satisfying all the conditions of Section 115-O (1A) of the Income Tax Act, 1961; for claiming reduction of the dividend, if any, declared by the subsidiary viz. Kirloskar Ferrous Industries Limited from the dividend, if any, declared by the Company.

For the current year, provision for Dividend Distribution Tax (DDT) made is arrived at after considering the Company''s share in Dividend Distribution Tax on divided declared by the Subsidiary.

NOTE 8:

On the basis of information available with the Company regarding the status of suppliers as defined under the "Micro Small and Medium Enterprises Development Act, 2006”, there are no suppliers covered under the above mentioned Act and hence the question of provision or payment of interest and related disclosures under the said Act does not arise.

Note 9:

In accordance with the requirements of Schedule II to the Companies Act, 2013, the Company has reassessed the useful lives of the fixed assets during the year. In case of fixed assets other than Wind power generators, the useful lives as prescribed under Part C of Schedule II to the Companies Act, 2013, have been considered and in case of Wind power generators, the useful life is considered as 20 years as against 22 years as prescribed in Schedule II, based on independent technical evaluation. Accordingly Rs. 35.22 Lakhs, being written down value of assets having no useful life as at 1st April 2014, have been adjusted against the retained earnings. As a consequence of such a revision, the depreciation for the year is lower by Rs. 211.56 Lakhs as compared to the depreciation which was hitherto being accounted for under the Companies Act, 1956.

NOTE 10:

DEFERRED TAX LIABILITIES / (ASSETS) (NET)

As required by Accounting Standard (AS 22) “Accounting for Taxes on Income” prescribed under Section 133 of Companies Act, 2013, the Company has recognised deferred taxes on timing differences excluding the timing difference which reverse fully during the tax holiday period in view of Accounting Standards Interpretation (ASI) - 3 (Revised) Accounting for Taxes on Income in the situations of Tax Holiday under Sections 80-IA and 80-IB of the Income Tax Act, 1961.

NOTE 11:

Previous year''s figures have been regrouped wherever considered necessary to make them comparable with those of the current year.


Mar 31, 2014

NOTE 1:

NON- BANKING FINANCIAL COMPANY

As per the audited Financial Statements for the Financial Year 2012-13, the financial assets of the Company are more than 50% of its total assets but its income from the financial assets is less than 50% of its total income. Consequently, the Company is declassified as Non-Banking Financial Company (NBFC) – Core Investment Company (CIC) with effect from 1 April 2013. The Company has communicated the same to the Reserve Bank of India (RBI) vide its letter dated 8 October 2013. Since no communication in this regard has been received by the Company from the RBI, the Company has created Reserve Fund under Section 45 IC of the Reserve Bank of India Act, 1934, and continues to show income from bank deposits as Operating Income.

NOTE 2:

The order dated 3 January 2013 of Maharashtra Electricity Regulatory Commission (MERC) does not permit carry forward and sale of unutilised units beyond the financial year but requires Maharashtra State Electricity Distribution Company Limited (MSEDCL) to pay to the generator at a fixed rate. However, MSEDCL has filed an appeal against this order which still remains undecided. Consequently, no revenue on approximately 11.72 lakh units has been recognised during the year ended 31 March 2014. The admissibility of the Company''s claim against MSEDCL for such units is contingent on the outcome of the appeal.

NOTE 3:

EMPLOYEE BENEFITS

(a) Defined Contribution Plans:

The Company has contributed Rs. 9.98 Lakhs (Rs. 10.28 Lakhs for 31 March 2013) towards Defined Contribution plans i.e. Provident Fund Contribution and Super Annuation Scheme.

(b) Gratuity

The Company has an unfunded defined benefit gratuity plan. Every employee who has completed five years or more of service is eligible for a gratuity on separation at 15 days basic salary (last drawn salary) for each completed year of service. Where service is in excess of 15 years full months basic salary is considered for the calculation of gratuity.

Disclosure pursuant to Accounting Standard (AS 15) – Revised 2005 ''Employee Benefits'' prescribed by Companies Accounting Standard Rules, 2006:

i. Statement of Profit and Loss:

Included in employee cost

NOTE 4:

RELATED PARTY DISCLOSURE

Related parties, as defined under Clause 3 of Accounting Standard (AS 18) "Related Party Disclosures" prescribed by Companies (Accounting Standards) Amendment Rules, 2006, have been identified on the basis of representation made by the Key Management Persons and taken on record by the Board of Directors. Disclosures of transactions with Related Parties are as under:

(a) Name of the related party and nature of relationship (as per AS - 18):

1. Subsidiary

- Kirloskar Ferrous Industries Limited (with effect from 31 May 2013)

2. Associate Companies

- Kothrud Power Equipment Limited

- Kirloskar Ferrous Industries Limited (upto 30 May 2013)

3. Key Management Personnel and their relatives

NOTE 5:

DEFERRED TAX LIABILITIES / (ASSETS) (NET)

Deferred Tax has not been recognised in view of Accounting Standards Interpretation (ASI) - 3 (Revised) "Accounting for Taxes on Income in the situations of Tax Holiday under Sections 80-IA and 80-IB of the Income Tax Act, 1961", since the timing differences reverse fully during the tax holiday period.

NOTE 6:

The disposal of the investment in F. H. Schule GMBH, Germany, having a carrying value of Rs. 1/- has been approved by Reserve Bank of India vide letter dated 25 April 2014.Consequently, investment of Rs. 120.19 Lakhs has been written off and provision for diminution in value of the said investment of Rs. 120.19 Lakhs has been written back.

NOTE 7:

Provision for Dividend Distribution Tax of Rs. 63 Lakhs made in Financial Year 2012-13 has been reversed during the year as the Company is satisfying all the conditions of Section 115-O (1A) of the Income Tax Act, 1961, for claiming reduction of the dividend amount declared by the subsidiary namely, Kirloskar Ferrous Industries Limited from the dividend amount declared by the holding company.

For the current year, amount of the proposed dividend from subsidiary is more than that proposed by the Company and hence provision of Dividend Distribution Tax is not required.

NOTE 8:

On the basis of information available with the Company regarding the status of suppliers as defined under the ''Micro Small and Medium Enterprises Development Act, 2006'', there are no suppliers covered under the above mentioned Act and hence the question of provision or payment of interest and related disclosures under the said Act does not arise.

There are no loans and advances in the nature of loans to firms / companies in which Directors are interested.

NOTE 9 :

Previous year''s figures have been regrouped wherever considered necessary to make them comparable with those of the current year.


Mar 31, 2013

NOTE 1:

CORPORATE INFORMATION

Kirloskar Industries Limited ("the Company”) is a public company incorporated under the provisions of the Companies Act, 1956. Its shares are listed on two Stock Exchanges in India, namely the BSE Limited and the National Stock Exchange of India Limited. The Company is engaged in wind-power generation. The Company has seven windmills in Maharashtra with total installed capacity of 5.6 Mega Watt (MW). The windmills are located at Tirade Village, Tal- Akole, Dist. - Ahmednagar. The Company sells Windpower units generated, to third party as per the approval from the Maharashtra State Electricity Distribution Company Limited (MSEDCL).

The Company is a Non Banking Financing Company (NBFC) and has investments in properties and securities.

NOTE 2:

BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The Financial Statements have been prepared in conformity with Generally Accepted Accounting Principles to comply in all material respects with the notified Accounting Standards (''AS'') under Companies Accounting Standard Rules, 2006, (as amended), the relevant provisions of the Companies Act, 1956, (''the Act'')and the guidelines issued by The Securities and Exchange Board of India (SEBI). The Financial Statements have been prepared under the historical cost convention on an accrual basis. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

NOTE 3:

NON- BANKING FINANCIAL COMPANY

As on 31 March 2012, the Company''s financial assets continue to be more than 50% of the total assets and its income from financial assets continues to exceed 50% of its gross income. As a result the Company satisfies the determinant tests given in the Press Release 1998-99/1269, dated 08 April 1999 issued by the Reserve Bank of India (RBI) for determination of "Principal business” of the Company as a Non-Banking Finance Company (NBFC). The Company therefore is a NBFC in terms of the Reserve Bank of India Act, 1934.

The Company''s investment pattern continues to comply with the parameters specified in the Reserve Bank of India Notification RBI/2010-11/354 DNBS (PD) CC. No. 206/03.10.001/2010-2011, dated 05 January 2011 for Core Investment Companies (CIC - NBFC). Accordingly, on the basis of the submissions made to the Reserve Bank of India, the Company is classified as a Core Investment Company (CIC - NBFC) vide letter dated 15th October 2012 received from the RBI. As a result, the Company is exempt from obtaining Certificate of Registration as NBFC, under Section 45 - IA of the Reserve Bank of India Act, 1934.

NOTE 4:

CONTINGENT LIABILITIES NOT PROVIDED FOR

(Rs.in Lakhs)

Sr. Particulars As at As at No. 31 March 2013 31 March 2012

(a) Disputed service tax demands 2.90 2.90

(b) Claims against the Company not acknowledged as debt

Development charges demanded by PMC 141.21 141.21

Enercon Counterclaim in respect of Wind mill 293.21 293.21

(c) Disputed Income Tax demand 206.34*

(d) Conveyance Deed Charges in respect of property 21.51

Total 665.17 437.32

* Paid under protest

NOTE 5:

EMPLOYEE BENEFITS

(a) Defined Contribution Plans:

The Company has contributed Rs. 10.28 Lakhs (Rs. 14.42 Lakhs for 31 March 2012) towards Defined Contribution plans i.e. Provident Fund Contribution and Super Annuation Scheme.

(b) Gratuity

The Company has an unfunded defined benefit gratuity plan. Every employee who has completed five years or more of service is eligible for a gratuity on separation at 15 days basic salary (last drawn salary) for each completed year of service.

Disclosure pursuant to Accounting Standard (AS 15) - Revised 2005 "Employee Benefits” prescribed by Companies Accounting Standard Rules, 2006:

NOTE 6:

RELATED PARTY DISCLOSURE

Related parties, as defined under Clause 3 of Accounting Standard (AS 18) "Related Party Disclosures” prescribed by Companies (Accounting Standards) Amendment Rules, 2006, have been identified on the basis of representation made by the Key Management Persons and taken on record by the Board of Directors. Disclosures of transactions with Related Parties are as under:

NOTE 7:

DEFERRED TAX LIABILITIES/ (ASSETS)(NET)

Deferred Tax has not been recognised in view of Accounting Standards Interpretation (ASI) - 3 (Revised) "Accounting for taxes on Income in the situations of Tax Holiday under Sections 80-IA and 80-IB of the Income Tax Act, 1961”, since the timing differences reverse fully during the tax holiday period.

NOTE 8:

On the basis of information available with the Company regarding the status of suppliers as defined under the "Micro Small and Medium Enterprises Development Act, 2006”, there are no suppliers covered under the above mentioned Act and hence the question of provision or payment of interest and related disclosures under the said Act does not arise.

NOTE 9:

Previous year''s figures have been regrouped wherever considered necessary to make them comparable with those of the current year.


Mar 31, 2012

NOTE 1:

CORPORATE INFORMATION

Kirloskar Industries Limited (the Company) is a public company incorporated under the provisions of the Companies Act, 1956. Its shares are listed on two stock exchanges in India, namely the Bombay Stock Exchange and the National Stock Exchange of India Ltd. The Company is engaged in wind-power generation. The Company has seven windmills in Maharashtra with total installed capacity of 5.6 Mega Watt (MW). The windmills are located at Tirade Village, Tal- Akole, Dist. -Ahmednagar. The Company sells wind power units generated, to third party as per the approval from the Maharashtra State Electricity Distribution Company Limited.

The Company is a Non Banking Financing Company (NBFC) and has investments in properties and securities.

NOTE 2:

BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The Financial Statements have been prepared in conformity with Generally Accepted Accounting Principles to comply in all material respects with the notified Accounting Standards ('AS1) under Companies Accounting Standard Rules, 2006, (as amended), the relevant provisions of the Companies Act, 1956 ('the Act'). The Financial Statements have been prepared under the historical cost convention on an accrual basis. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

(a) After the demerger of Kirloskar Oil Engines Limited (now known as Kirloskar Industries Limited), the said bonus shares along with the pre-bonus shares have been reorganized by reduction and consolidation. The face value of the shares has been changed from Rs.2/-to Rs10/-.

(b) Each holder of equity share is entitled to one vote per share and to receive interim/ final dividend as and when declared by the Board of Directors/ at the Annual General Meeting. In the event of liquidation of the Company, the holder of equity shares will be entitled to receive any of the 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.

Notes:

* Buildings include a property having written down value (WDV) of Rs 321.72 Lakhs as at 31 March 2012 (Rs 328 Lakhs as at 31 March 2011) which is jointly owned by the Company with Kirloskar Brothers Limited. The Company's share in such joint holding is 45% as at 31 March 2012 (45% as at 31 March 2011).

# At carrying cost of Rs.36.96

## As at 31 March 2011 at carrying cost ofRs 100/- ** Offered on exercise of Rights Option, Convertible into Equity shares at the option of shareholders of the Company or upon call by Kirloskar Ferrous Industries Limited, at a price of Rs 35/- per warrant during the warrant exercise period from 13 March 2007 to 13 March 2010, which has been further extended up to 13 March 2013.

NOTE 3:

NON- BANKING FINANCIAL COMPANY

As on 31 March 2012, the Company's financial assets continue to be more than 50% of the total assets and its income from financial assets continues to exceed 50% of its gross income. As a result the Company satisfies the determinant tests given in the Press Release 1998-99/1269, dated 08 April 1999 issued by the Reserve Bank of India for determination of "Principal business" of the Company as a Non-Banking Finance Company (NBFC). The Company therefore is a NBFC in terms of the Reserve Bank of India Act, 1934.

The Company's investment pattern continues to comply with the parameters specified in the Reserve Bank of India notification RBI/2010-11/354 DNBS (PD) CC. No. 206/03.10.001/2010-2011, dated 05 January 2011 for Core Investment Companies (CIC - NBFC). As a result, the Company is exempt from obtaining Certificate of Registration as NBFC, under Section 45- IA of the Reserve Bank of India Act, 1934 and submissions to this effect are made to the RBI and the same is under process.

NOTE 4:

EMPLOYEE BENEFITS

(a) Defined Contribution Plans:

The Company has contributed Rs.14.42 Lakhs towards Defined Contribution plans i.e. Provident Fund Contribution and Super Annotation Scheme.

(b) Gratuity

The Company has an unfunded defined benefit gratuity plan. Every employee who has completed five years or more of service is eligible for a gratuity on separation at 15 days basic salary (last drawn salary) for each completed year of service.

Disclosure pursuant to Accounting Standard (AS 15) - Revised 2005 "Employee Benefits" prescribed by Companies Accounting Standard Rules, 2006:

RELATED PARTY DISCLOSURE

Related parties, as defined under Clause 3 of Accounting Standard (AS 18) "Related Party Disclosures" prescribed by Companies (Accounting Standards) Amendment Rules, 2006, have been identified on the basis of representation made by the Key Management Persons and taken on record by the Board of Directors. Disclosures of transactions with Related Parties are as under:

NOTE 5:

On the basis of information available with the Company regarding the status of suppliers as defined under the "Micro Small and Medium Enterprises Development Act 2006", there are no suppliers covered under the above mentioned Act and hence the question of provision or payment of interest and related disclosures under the said Act does not arise.

NOTE 6:

Till the year ended 31st March 2011, the Company was using pre-revised Schedule VI to the Companies Act 1956,for preparation and presentation of its financial statements. During the year ended 31st March 2012, the Revised Schedule VI notified under the Companies Act 1956,has become applicable to the Company. The Company has reclassified previous year figures to confirm to this year's classification. However, it significantly impacts presentation and disclosures made in the Financial Statements, particularly presentation of Balance Sheet. The following is a summary of significant effects of that Revised Schedule VI had on presentation of Balance Sheet of the Company for the year ended 31 st March 2011:

NOTE 7:

Previous year's figures have been regrouped wherever considered necessary to make them comparable with those of the current year.


Mar 31, 2010

The Company was, until 31 March 2009, engaged in the business of manufacture, trading and / or dealing in engines, engine spares, pumps, generating sets and oils used therein, bimetal bearings, bushes and bimetal strips (referred to as "the Engines and Auto Components Business" or "the Demerged Undertaking") and the Wind Mill and Investment operations ("the Remaining Undertaking").

Under a Scheme of Arrangement, sanctioned by the Honble High Court of Judicature at Bombay, between the Company and Kirloskar Engines India Limited (referred to as the "Resulting Company") and their respective shareholders and creditors under Section 391 to 394 of the Companies Act, 1956, the Engines and Auto Components Business of the Company was demerged to the later Company. The said Scheme became effective from 31 March 2010, but operative with retrospective effect from 1 April 2009, being the Appointed Date. Upon the Scheme becoming effective,

a. The name of the Company changed to Kirloskar Industries Limited.

b. The business and operations of the demerged undertaking were deemed to be vested with the Resulting Company with effect from 1 April 2009. Consequently,

i. The related assets and liabilities of the Demerged Undertaking, including those specifically identified in the scheme, at the close of business on 31 March 2009 were deemed to have been transferred to the Resulting Company on 1 April 2009.

ii. The Company carried on the business of the Demerged Undertaking, in trust for the Resulting Company, from 1 April 2009 to 31 March 2010, pending the Scheme becoming effective.

c. The said transfer and vesting of the assets of the undertaking was deemed to be on a going concern basis.

d. The accounting treatment of assets and liabilities is to be effected, as specified in Part V of the Scheme.

e. The investment of the Company, in shares of Kirloskar Engines India Limited stands cancelled.

As the Scheme became effective only on 31 March 2010 the titles to the Assets vested and those resulting from the conduct of business thereafter, could not, where necessary, be transferred, as at 31 March 2010. Hence the company held the same, in trust, for the resulting company.

* Includes share of Kirloskar Proprietary Limited, cost Rs 100/-.

(B) Reorganisation of Share Capital

i. Authorised Share Capital

250,000,000 Equity Shares of Rs 21- each altered to 50,000,000 Equity Shares of Rs 10/- each.

ii. Issued Share Capital

195,353,480 Equity Shares of Rs 21- each altered to 9,708,650 Equity Shares of Rs 10/- each.

iii. Subscribed Share Capital

194,173,000 Equity Shares of Rs 21- each altered to 9,708,650 Equity Shares of Rs 10/- each.

iv. Called up and Paid up Capital

194,172,380 Equity Shares of Rs 21- each are reduced to 48,543,095 Equity Shares of Rs 21- each (by cancellation of 145,629,285 equity shares of Rs 21- each) and the same is further consolidated into 9,708,619 Equity Shares of Rs 10/-each.

v. Share Capital Suspense Account

620 Equity Shares of Rs 21- each, being shares in abeyance, are reduced to 155 Equity Shares of Rs 21- each (by cancellation of 465 equity shares of Rs 2/-each) and the same is further consolidated into 31 Equity Shares of Rs 10/-each.

1. Contingent Liabilities not provided for As at 31 March 2010

Rs in 000s

(a) Disputed Central Excise demands 128

(b) Claims against the Company not acknowledged as debts 43,321

(c) Guarantees given on behalf of third parties 50,000

93,449

4. Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of advances) 9,553

2. On the basis of information available with the Company regarding the status of suppliers as defined under the "Micro, Small and Medium Enterprises Development Act, 2006", there are no suppliers covered underthe above mentioned Act and hence the question of provision or payment of interest and related disclosures under the said Act does not arise.

3. In case of long term Investments made by the Company, diminution in the value of quoted investments, if any, are not considered to be of a permanent nature. However provision of estimated diminution in the value wherever considered necessary by the Management has been made in the Financial Statements.

4. Disclosure pursuant to Accounting Standard (AS 15) - Revised 2005 "Employee Benefits" prescribed by Companies (Accounting Standards)Amendment Rules, 2006

a. Defined Contribution Plans:

Amount of Rs 1,713,855/- is recognised as expense and included in Schedule No. 16 "Employee Cost".

5. Segment information as required by Accounting Standard (AS 17) "Segment Reporting" prescribed by Companies (Accounting Standards) Amendment Rules, 2006 is set out in a separate statement annexed to the schedule.

6. Related parties, as defined under Clause 3 of Accounting Standard (AS 18) "Related Party Disclosures" prescribed by Companies (Accounting Standards) Amendment Rules, 2006, have been identified on the basis of representation made by the Key Management Persons and taken on record by the Board. Disclosure of transactions with Related Parties are asunder.

(A) Name of the related party and nature of relationship where control exists:

1. Subsidiary Company Kirloskar Engines India Limited *

2. Associate Companies

Kirloskar Integrated Technologies Limited (Formerly Known as Kirloskar Kisan Equipment Ltd.) $ Kothrud Power Equipments Limited Kirloskar Ferrous Industries Limited

3. Joint Venture Companies

KirloskarToyoda Textile Machinery Private Limited # Denso Kirloskar Industries Private Limited # T. G. Kirloskar Automotive Private Limited # Toyota Tsusho India Private Limited # Toyota Kirloskar Auto Parts Private Limited # Toyota Kirloskar Motor Private Limited # Kirloskar Kenya Limited

4. Companies controlled by Key Management Personnel Cees Investments & Consultants Private Limited Navsai Investments Private Limited

Kirloskar Consultants Limited ,

Achyut & Neeta Holding & Finance Private Limited ** Alpak Investments Private Limited **

5. Key Management Personnel & their relatives

Key Management Personnel Relatives

Name Designation

Atul C. Kirloskar Chairman & Managing Director Arti A. Kirloskar, Gauri A. Kirloskar, Aditi A. Kirloskar, Sanjay C. Kirloskar, Rahul C. Kirloskar, Suman C. Kirloskar

Gautam A. Kulkarni** Joint Managing Director Jyotsna G. Kulkarni, Nihal G. Kulkami, Ambar G. Kulkarni, Ashwini H. Parulkar, NeetaA. Kulkarni

Rahul C. Kirloskar** Whole time Director Alpana R. Kirloskar, Aman R. Kirloskar, Alika R. Kirloskar, Atul C. Kirloskar, Sanjay C. Kirloskar, Suman C. Kirloskar

R. R. Desh pande** Whole time Director Veena R. Deshpande, Kaustubh R. Deshpande, Saurabh R. Deshpande, D. R. Deshpande, P. R. Deshpande, R. G. Deshpande, Leela R. Deshpande

*Upto 31 March 2010 $Upto 29 March 2010 # Upto 27 November 2009 **Upto 30 March 2010

7. Kirloskar Engines India Limited, a wholly owned subsidiary was promoted and incorporated by the Demerged Company on 12 January 2009 for the purpose of taking over the Engines and Auto Components business of Demerged Company on going concern basis.

As a result of the scheme becoming effective as detailed in Note No. 2, investment in equity shares of Kirloskar Engines India Limited stand cancelled and therefore it ceased to be a subsidiary of the Company. Hence as per the provisions of the Accounting Standard (AS 21) "Consolidated Financial Statements" prescribed by Companies (Accounting Standards) Amendment Rules, 2006, the consolidated financial statements have not been prepared.

8. The Company has during the year, sold its investments in unlisted Joint Venture Companies (referenced in the Schedule 6 to the Accounts), to Kirloskar Systems Ltd, a Group Company. The sale was effected at a price higher than that determined by applying the erstwhile CCI Guidelines, and in terms of the Joint Venture Agreements, which is not lower than the carrying value in the books of accounts of the company and as resolved by the Board of Directors. Consequently, the resultant gain amounting to Rs. 52,256,230 has been recognized in the Financial Statements during the year.

9. Consequent to the Demerger disclosed in Note No 2 above, previous years comparatives in the profit and loss account and the profit and loss account schedules serve no meaningful purpose and hence have not been disclosed. However, previous years figures have been regrouped in the balance sheet to make them comparable with those of the current year.

10. Information given above is restricted to the extent the relevant income and expenditure has been recognized in Profit and Loss account of the Company. Income and expenses incurred by the Company, in the conduct of the business of Demerged Undertaking referred to in Note No 2(A) above, from 1 April 2009 in trust pending the scheme becoming effective, has been disclosed in the financial statements of the Resulting Company. Consequently there are no disclosures necessary for this financial year.

11. Information required in terms of Part IV of Schedule VI of the Companies Act, 1956 is attached.

 
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