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Notes to Accounts of Kirloskar Pneumatic Company Ltd.

Mar 31, 2016

1. Disclosure pursuant to Accounting Standard - 15 ( Revised ) " Employee Benefits" :

a. Defined Contribution Plans:

Amount of Rs. 39,554,538/- (Previous Year Rs. 46,555,211/-) is recognised as expense and included in "Employee Benefits Expenses" in Note 24 in the Profit and Loss Account.

vii General Descriptions of significant Defined Benefit plans:

Gratuity Plan:

The Company operates gratuity plan wherein every employee is entitled to the benefit as per the scheme of the Company, for each completed year of service. The same is payable on termination of service or retirement, whichever is earlier. The benefit vests only after five years of continuous service.

viii The company has valued the compensated absences, as specified in AS 15 ( Revised) on actuarial basis. Further Para 132 of AS 15 ( Revised 2005) does not require any specific disclosure except where the expense resulting from compensated absences is of such size, nature or incidence that its disclosure is relevant under other accounting standards. In the opinion of the management, the expense resulting from compensated absences is not significant and hence no disclosures are prepared under various paragraphs of AS 15 ( Revised 2005).

2. Managerial Remuneration :

During the year Company had made an application to Central Government (The Ministry of Corporate Affairs) seeking approval for the remuneration payable to the Executive Chairman due to inadequacy of profits for the year 2014-15. The Ministry of Corporate Affairs vide its letter dated 15th January, 2016 rejected the application on the ground that Company had paid remuneration exceeding 5% of net profits to the Executive Chairman during the financial years 2012-13 & 2013-14 without obtaining prior approval of the Central Government and further directed recovery of excess remuneration paid amounting to Rs.200.39 lacs (Rs.131.04 lacs net of tax). Company was advised to make an application to the Central Government for seeking waiver of recovery of this amount and accordingly, Company has made the requisite application to the Central Government. The said application is pending for approval and therefore Company has not recovered any amount nor accounted it as recoverable in the books of accounts as on 31st March 2016.

3. Leases:

The Company has entered into agreements in the nature of Lease/Leave and License agreement with different Lessors / Licensors for the purpose of establishment of office premises / residential accommodations and assets. These are generally in nature of operating Lease / Leave and License and disclosure required as per accounting standard 19 with regard to the above is as under:

a. Payment under Lease / Leave and License for period :

1) Not later than 1 year Rs.7,495,301/- (Rs. 9,010,167/-)

2) Later than 1 year but not later than 5 years Rs. 3,504,060/- (Rs. 9,365,596/-)

b. There are no transaction in the nature of Sub Lease.

c. Payments recognised in the Profit and Loss Account for the year ended 31st March, 2016 amounts to Rs. 9,636,670/- (Rs. 10,533,341/-)

d. Period of Agreement is generally for eleven months, in some cases extending upto five years and renewable at the option of Lessee.

4. Intangible assets:

In accordance with the Accounting Standard 26, "Intangible Assets" expenditure on Technical Know-how on Project under implementation is amortized on commencement of commercial production. Software is being amortized on pro rata basis from the month of installation, over a period of one year.

5. Miscellaneous expenses includes prior period items of Rs.1,173,426/- (PY Rs.3,656,754/-)

6. The information as required to be disclosed under the "Micro, Small and Medium Enterprises Development Act, 2006" has been determined to the extent such parties have been identified on the basis of information available with the company. Based on this information there are no Micro, Small and Medium Enterprises to whom the company owes dues, which are outstanding for more than 45 days as at 31st March, 2016.

7. Previous years figures have been regrouped wherever necessary to make them comparable with those of the current year.


Mar 31, 2015

1 Leases

The Company has entered into agreements in the nature of Lease / Leave and License agreement with different Lessors / Licensors for the purpose of establishment of office premises / residential accommodations and assets. These are generally in nature of operating Lease / Leave and License and disclosure required as per accounting standard 19 with regard to the above is as under.

a. Payment under Lease / Leave and License for period :

1) Not later than 1 year Rs. 9,010,167/- ( Rs. 8,361,680/- )

2) Later than 1 year but not later than 5 years Rs. 9,365,596/- ( Rs. 15,589,445/-)

b. There are no transactions in the nature of Sub Lease.

c. Payments recognised in the Profit and Loss Account for the year ended 31st March, 2015 amounts to Rs. 10,533,341/- ( Rs. 10,649,404/-)

d. Period of Agreement is generally for Eleven Months, in some cases extending upto five years and renewable at the option of Lessee.

2 Intangible assets

In accordance with the Accounting Standard 26, "Intangible Assets" expenditure on Technical Know-how on Project under implementation is amortized on commencement of commercial production. Software is being amortized on pro rata basis from the month of installation, over a period of one year.

3 A. Contingent Liabilities not provided for in respect of :

2014-15 2013-14 Rs. Rs.

Claims against the Company not acknowledged as Debts, estimated at 402,618,329 330,385,104

Income Tax Matters 712,247 712,247

Disputed Central Excise Matters 1,844,298 2,400,872

Disputed Customs Matters 1,454,000 1,454,000

Disputed Sales Tax Demands 69,615,414 1,157,000

Guarantees given by Company to Customers for the

contracts undertaken in usual course of business 6,407,829 11,947,143

B.Claim for US $ 10 million has been filed against the Company in the International Court of Arbitration. The Arbitration proceedings have been stayed by the Honorable High Court of Delhi. The Special Leave Petition filed by the plaintiff against the Order of High Court has been dismissed by the Honorable Supreme Court. Further the Honorable High Court of Delhi has transferred the matter to District Courts, Tis Hazari, Delhi on the grounds of pecuniary jurisdiction. Company has obtained an opinion from Senior Counsel stating that claim made by the plaintiff is not tenable and therefore management does not anticipate any financial impact on this account.

(C) Exchange differences on account of settlement / revalorization of foreign currency transactions in current account are included in Miscellaneous Expenses ( Rs.2,072,300/- Previous Year Rs.848,235/-) if such differences are in the nature of expenses & in Miscellaneous Receipts ( Rs. Nil, Previous Year Rs. Nil ) if such differences are in the nature of gain.

4.Miscellaneous expenses includes prior period items of Rs. 3,656,754/- ( PY Rs. 2,911,175/-)

5.The information as required to be disclosed under the "Micro, Small and Medium Enterprises Development Act,2006" has been determined to the extent such parties have been identified on the basis of information available with the company. Based on this information there are no Micro, Small and Medium Enterprises to whom the company owes dues, which are outstanding for more than 45 days as at 31 st March,2015.

6 Company has incurred an expenditure of Rs. 16,988,775 /- on Corporate Social Responsibility activities in terms of Section 135 of the Companies Act, 2013, comprising of an amount of Rs.15,000,000/- as contribution by way of donation and balance Rs. 1,988,775/- as direct CSR expenditure, included in other expenses covered in Note no. 27.

7 During the year the company has given donation to two political parties viz. Bharatiya Janata Party Rs. 750,000/- and Aam Aadmi Party Rs.750,000/-.

8 Previous years figures have been regrouped wherever necessary to make them comparable with those of the current year.


Mar 31, 2014

1 Effects of changes in foreign exchange rates :

The company, in terms of Notification issued by Ministry of Corporate Affairs on 31st March, 2009, had exercised the option of implementing the provisions of newly inserted Paragraph 46 of Accounting Standard 11, ''Accounting for the Effects of Changes in Foreign Exchange Rates'', prescribed by Companies (Accounting Standards) Amendment Rules, 2009. The exchange fluctuation on account of Fixed Assets has accordingly been added to / deleted from the respective Fixed Assets.

2 Disclosure pursuant to Accounting Standard - 15 (Revised) " Employee Benefits" :

a. Defined Contribution Plans:

Amount of Rs. 48,159,022/- (Previous Year Rs. 46,980,069/-) is recognised as expense and included in "Employee Benefits Expenses" in Note 24 in the Profit and Loss Account.

b. Defined Benefit Plans:

i. Reconciliation of opening and closing balances of the Present Value of the Defined Benefit Obligation :

iii. Amount Recognised in the Balance Sheet including a reconciliation of the present value of the defined obligation in (i) and the fair value of the plan assets in (ii) to the assets and liabilities recognised in the Balance Sheet:

vii General Descriptions of significant Defined plans:

Gratuity Plan:

The Company operates gratuity plan wherein every employee is entitled to the benefit as per the scheme of the Company, for each completed year of service. The same is payable on termination of service or retirement, whichever is earlier. The benefit vests only after five years of continuous service.

viii The company has valued the compensated absences, as specified in AS 15 (Revised) on actuarial basis. Further Para 132 of AS 15 (Revised 2005) does not require any specific disclosure except where the expense resulting from compensated absences is of such size, nature or incidence that its disclosure is relevant under other accounting standards. In the opinion of the management, the expense resulting from compensated absences is not significant and hence no disclosures are prepared under various paragraphs of AS 15 (Revised 2005).

C Other Disclosures

1. Segments have been identified in line with the Accounting standard, AS-17 "Segment Reporting" (AS - 17),taking in to account the organisation structure as well as the differing risks and returns.

2. Company has disclosed Business Segment as the primary segment.

3. Composition of Business Segment

Name of the Segment : Comprises of :

a) Compression Systems Air and Gas Compressors, Air-conditioning and Refrigeration Compressors and Systems etc.

b) Transmission Equipments Power Transmission Equipments (Torque Convector), Reverse Reduction Gears for Marine Gear Engines, Industrial and Mobile application etc.

4. The Segment Revenue, Results , Assets and Liabilities include the respective amounts identifiable to each of the segment and amounts allocated on reasonable basis.

5. The Accounting Policies of the Segments are the same as those described in the Significant Accounting Policy as referred in Note 47 to the Financial Statement.

3 Leases:

The Company has entered into agreements in the nature of Lease / Leave and License agreement with different Lessors / Licensors for the purpose of establishment of office premises / residential accommodations and assets. These are generally in nature of operating Lease / Leave and License and disclosure required as per accounting standard 19 with regard to the above is as under.

a. Payment under Lease / Leave and License for period :

1) Not later than 1 year Rs. 8,361,680/- (Rs. 4,400,731/-)

2) Later than 1 year but not later than 5 years Rs. 15,589,445/- (Rs. 6,438,810/-)

b. There are no transaction in the nature of Sub Lease.

c. Payments recognised in the Profit and Loss Account for the year ended 31st March, 2014 amounts to Rs.10,649,404/- (Rs. 7,154,960/-)

d. Period of Agreement is generally for Eleven Months, in some cases extending upto five years and renewable at the option of Lessee.

4 Intangible assets:

In accordance with the Accounting Standard 26, "Intangible Assets" expenditure on Technical Know-how on Project under implementation is amortized on commencement of commercial production. Software is being amortized on pro rata basis from the month of installation, over a period of one year.

5 A. Contingent Liabilities not provided for in respect of :

Claims against the Company not acknowledged as Debts, estimated at 330,385,104 310,188,849

Income Tax Matters 712,247 30,968,912

Disputed Central Excise Matters 2,400,872 2,400,872

Disputed Sales Tax Demands 1,157,000 1,157,000

Guarantees given by Company to Customers for the contracts undertaken in usual course of business 11,947,143 14,941,901

B. Claim for US $ 10 million has been filed against the Company in the International Court of Arbitration. The Arbitration proceedings have been stayed by the Honorable High Court of Delhi. The Special Leave Petition filed by the plaintiff against the Order of High Court has been dismissed by the Honorable Supreme Court. Further the Honorable High Court of Delhi has transferred the matter to District Courts, Tis Hazari, Delhi on the grounds of pecuniary jurisdiction. Company has obtained an opinion from Senior Counsel stating that claim made by the plaintiff is not tenable.

(c) Exchange differences on account of settlement / revalorization of foreign currency transactions in current account are included in Miscellaneous Expenses (Rs. 848,235/- Previous Year Rs.2,279,378/-) if such differences are in the nature of expenses & in Miscellaneous Receipts (Rs. Nil, Previous Year Rs. Nil) if such differences are in the nature of gain.

6 The information as required to be disclosed under the "Micro, Small and Medium Enterprises Development Act,2006" has been determined to the extent such parties have been identified on the basis of information available with the company. Based on this information there are no Micro, Small and Medium Enterprises to whom the company owes dues, which are outstanding for more than 45 days as at 31st March,2014.

7 Previous years figures have been regrouped wherever necessary to make them comparable with those of the current year.


Mar 31, 2013

1 Effects of changes in foreign exchange rates:

The company, in terms of Notification issued by Ministry of Corporate Affairs on 31 st March, 2009, had exercised the option of implementing the provisions of newly inserted Paragraph 46 of Accounting Standard 11, ''Accounting for the Effects of Changes in Foreign Exchange Rates'', prescribed by Companies (Accounting Standards) Amendment Rules, 2009. The Company had outstanding long term foreign currency loan which was categorized as Long Term Foreign Currency Monitory Item as referred in the said notification. Outstanding foreign currency loan is stated at the rate at which it is fully swaped and therefore no effects of change in foreign exchange rates are required to be considered.

2 Disclosure pursuant to Accounting Standard -15 (Revised)" Employee Benefits" :

a. Defined Contribution Plans:

Amount of Rs.46,980,069/- (Previous Year Rs. 41,727,896/-) is recognised as expense and included in "Employee Benefits Expenses" in Note 25 in the Profit and Loss Account.

b. Defined Benefit Plans:

i. Reconciliation of opening and closing balances of the Present Value of the Defined Benefit Obligation:

3 Leases

The Company has entered into agreements in the nature of Lease / Leave and License agreement with different Lessors / Licensors for the purpose of establishment of office premises / residential accommodations and assets. These are generally in nature of operating Lease / Leave and License and disclosure required as per accounting standard 19 with regard to the above is as under.

a. Payment under Lease / Leave and License for period:

1) Notlaterthan 1 year Rs. 4,400,731/-

2) Later than 1 year but not later than 5 years Rs. 6,438,810/-

b. There are no transaction in the nature of Sub Lease.

c. Payments recognised in the Profit and Loss Account for the year ended 31st March, 2013 amounts to Rs.7,154,960/-

d. Period of Agreement is generally for Eleven Months, in some cases extending upto five years and renewable at the option of Lessee.

4 Intangible assets

In accordance with the Accounting Standard 26, "Intangible Assets" expenditure on Technical Know-how on Project under implementation is amortized on commencement of commercial production. Expenditure on Technical Know-how, in respect of which commercial production has been started, is amortised over a period of three years based on its usage. Current Year Nil (Previous year Rs.4,166,668/-). Software is being amortized on pro rata basis from the month of installation, over a period of one year.

5 A. Contingent Liabilities not provided for in respect of:

Claims against the Company not acknowledged as Debts, estimated at 310,188,849 305,226,955

Income Tax Matters under Dispute 30,968,912 712,247

Disputed Central Excise Matters 2,400,872 2,394,872

Disputed Sales Tax Demands 1,157,000 1,157,000

Guarantees given by Company to Customers for the contracts undertaken in usual course of business 14,941,901 3,418,814

B. Claim for US $ 10 million has been filed against the Company in the International Court of Arbitration. The Arbitration proceedings have been stayed by the Honorable High Court of Delhi. The Special Leave Petition filed by the plaintiff against the Order of High Court has been dismissed by the Honorable Supreme Court. Further the Honorable High Court of Delhi has transferred the matter to District Courts, Tis Hazari, Delhi on the grounds of pecuniary jurisdiction. Company has obtained an opinion from Senior Counsel stating that claim made by the plaintiff is not tenable.

6 The information as required to be disclosed under the "Micro, Small and Medium Enterprises Development Act,2006" has been determined to the extent such parties have been identified on the basis of information available with the company. Based on this information there are no Micro, Small and Medium Enterprises to whom the company owes dues, which are outstanding for more than 45 days as at 31 st March,2013.

7 A. Deferred tax asset/liability:

As required by Accounting Standard 22, "Accounting for taxes on Income", prescribed by Companies (Accounting Standards) Amendment Rules, 2009, the Company has recognised Deferred Taxes which result from the timing difference between the Book Profits and Tax Profits aggregating Rs. 3,217,696/- in the Profit and Loss Account, The details of which are as under.

B. Current Tax includes Rs.24,203,021/-(PYRs. Nil) in respect of earheryears.

8 Previous years figures have been regrouped wherever necessary to make them comparable with those of the current year.


Mar 31, 2012

(a) External Commercial Borrowing of US$ 5,500,000 from Bank of India, UK, is secured by hypothecation of Plant and Machinery amounting to Rs.402,854,000/- purchased out of the said loan.

(b) Terms of repayment-Eight equal half yearly installments w.e.f June 2010

$ Included in market value at face value/paid up value, whichever is lower, as the quotations are not available.

Note : Investments made by the Company being of long term nature, diminution in the value of Quoted investments are generally not considered to be a permanent nature. However, provision for such diminution as considered necessary by the Management has been made in the Financial statements.

1 Effects of changes in foreign exchange rates:

The company, in terms of Notification issued by Ministry of Corporate Affairs on 31st March, 2009, had exercised the option of implementing the provisions of newly inserted Paragraph 46 of Accounting Standard 11, 'Accounting for the Effects of Changes in Foreign Exchange Rates', prescribed by Companies (Accounting Standards) Amendment Rules, 2009. The Company has outstanding long term foreign currency loans which are categorized as Long Term Foreign Currency Monitory Item as referred in the said notification. Accordingly Rs.2,763,750/- being loss for the year (Previous year gain Rs 1,897,500/-) has been adjusted against the cost of Fixed Assets.

2 Disclosure pursuant to Accounting Standard -15 (Revised) "Employee Benefits" :

a. Defined Contribution Plans:

Amount of Rs.41,727,896/- (Previous Year Rs.36,602,648/-) is recognised as expense and included in "Employee Benefits Expenses" in Note 25 in the Profit and Loss Account.

iii. Amount Recognised in the Balance Sheet including a reconciliation of the present value of the defined obligation in (i) and the fair value of the plan assets in (ii) to the assets and liabilities recognised in the Balance Sheet:

v. Broad Categories of plan assets as a percentage of total assets as at 31.03.12

The plan assets are with Life Insurance Corporation of India and the Trust's Investments are in State Government Securities.

vii General Descriptions of significant Defined plans:

Gratuity Plan:

The Company operates gratuity plan wherein every employee is entitled to the benefit as per the scheme of the Company, for each completed year of service. The same is payable on termination of service, or retirement, whichever is earlier. The benefit vests only after five years of continuous service.

viii The company has valued the compensated absences, as specified in AS 15 (Revised) on actuarial basis. Further Para 132 of AS 15 (Revised 2005) does not require any specific disclosure except where the expense resulting from compensated absences is of such size, nature or incidence that its disclosure is relevant under other accounting standards. In the opinion of the management, the expense resulting from compensated absences is not significant and hence no disclosures are prepared under various paragraphs of AS 15 (Revised 2005).

Details of Remuneration paid / payable to Key Managerial personnel are as per note no.33 Transactions with fellow subsidiary are only with Kirloskar Oil Engines Ltd.

Transactions with relatives of key management personnel is only with Mrs. Suman C. Kirloskar.

Note:

1. As the employee wise breakup of contribution to gratuity fund is not ascertainable, the same has been included on the basis of entitlement in the above figures for the purpose of computation of net profit in terms of Section 349 of Companies Act, 1956, as per rules of the company.

2. As the employee wise breakup of liability of leave entitlement, based on actuarial valuation, is not ascertainable, the same has not been included in the above figures, for the purpose of computation of Net Profit in terms of Section 349 of the Companies Act, 1956.

3 Leases

The Company has entered into agreements in the nature of Lease / Leave and License agreement with different Lessors / Licensors for the purpose of establishment of office premises / residential accommodations and assets. These are generally in nature of operating Lease / Leave and License and disclosure required as per Accounting Standard 19 with regard to the above is as under.

a. Payment under Lease I Leave and License for period:

1) Not later than 1 year Rs.5,865,048/-

2) Later than 1 year but not later than 5 years Rs.6,366,335/-

b. There are no transaction in the nature of Sub Lease.

c. Payments recognised in the Profit and Loss Account for the year ended 31st March, 2012 amounts to Rs.4,850,225/-

d. Period of Agreement is generally for Eleven Months, in some cases extending upto five years and renewable at the option of Lessee.

4 Intangible assets

In accordance with the Accounting Standard 26, "Intangible Assets" expenditure on Technical Know-how on Project under implementation will be amortized on commencement of commercial production. Expenditure of Rs. 12,500,000/- on Technical Know-how, in respect of which commercial production has been started, has been amortised over a period of three years Software is being amortized on pro rata basis from the month of installation, over a period of one year.

5 A. Contingent Liabilities not provided for in respect of:

Claims against the Company not

acknowledged as Debts, estimated at 305,226,955 278,648,095

Income Tax Matters under Dispute 712,247 712,247

Disputed Central Excise Matters 2,394,872 3,970,702

Disputed Sales Tax Demands 1,157,000 1,157,000

Guarantees given by Company to Customers for the contracts undertaken in usual course of business 3,418,814 2,458,566

B. Claim for US $ 10 million has been filed against the Company in the International Court of Arbitration. The Arbitration proceedings have been stayed by the Honorable High Court of Delhi. The Special Leave Petition filed by the plaintiff against the Order of High Court has been dismissed by the Honorable Supreme Court. Further the Honorable High Court of Delhi has transferred the matter to District Courts, Tis Hazari, Delhi on the grounds of pecuniary jurisdiction. Company has obtained an opinion from Senior Counsel stating that claim made by the plaintiff is not tenable.

(C) Exchange differences on account of settlement / revalorization of foreign currency transactions in current account are included in Miscellaneous Expenses (Rs. 10,239,299/- Previous Year Rs.6,368,018/-) if such differences are in the nature of expenses and in Miscellaneous Receipts (Rs.Nil, Previous Year Rs.Nil) if such differences are in the nature of gain.

6 The information as required to be disclosed under the "Micro, Small and Medium Enterprises Development Act, 2006" has been determined to the extent such parties have been identified on the basis of information available with the company. Based on this information there are no Micro, Small and Medium Enterprises to whom the company owes dues, which are outstanding for more than 45 days as at 31 st March, 2012.

7 Previous years figures have been regrouped wherever necessary to make them comparable with those of the current year.


Mar 31, 2011

As at As at 31st March, 2011 31st March, 2010 Rs. Rs.

1 Significant Accounting Policies followed by the Company are as stated in the statement annexed to the Schedule. (Annexure A)

2. A Contingent Liabilities not provided for in respect of:

(a) Claims against the Company not 278,648,095 71,486,111 acknowledged as Debts, estimated at

(b) Income Tax Matters under Dispute 712,247 712,247

(c) Disputed Central Excise Matters 3,970,702 10,270,425

(d) Disputed Sales Tax Demands 1,157,000 1,310,000 (e) Guarantees given by Company to Customers for the contracts undertaken 2,458,566 2,575,082 in usual course of business

B. Claim for US $ 10 million has been filed against the Company in the International Court of Arbitration. The Arbitration proceedings have been stayed by the Honorable High Court of Delhi. The Special Leave Petition filed by the plaintiff against the Order of High Court has been dismissed by the Honorable Supreme Court. Further the Honorable High Court of Delhi has transferred the matter to District Courts, Tis Hazari, Delhi on the grounds of pecuniary jurisdiction. Company has obtained an opinion from Senior Counsel stating that claim made by the plaintiff is not tenable.

8. Details of Licensed and Installed Capacity, Production, Stocks and Turnover:

* Note: Installed Capacity Most of the Plant & Machinery being common for different products manufactured by the Company and installed capacity being dependent on Product Mix, which in turn is decided by the actual demand for various products from time to time and also on availing of subcontracting facilities , it is not ascertainable for the Company to indicate the exact installed capacity. The Company has, however, indicated the installed capacity on the basis of years Products Mix as certified by the Executive Director of company and being a technical matter, accepted by the Aud itors as correct.

9 Managerial Remuneration:

Note:

1. As the employee wise breakup of contribution to gratuity fund is not ascertainable, the same has been included on the basis of entitlement in the above figures for the purpose of computation of net profi/in terms of Section 349 of Companies Act, 1956, as per rules of the company.

2. As the employee wise breakup of liability of leave entitlement, based on Actuarial valuation, is not ascertainable, the same has not been included in the above figures, for the purpose of computation of Net Profit in terms of Sec 349 of the Companies Act

10. The information as required to be disclosed under the "Micro, Small and Medium Enterprises Development Act,2006" has been determined to the extent such parties have been identified on the basis of information available with the company. Accordingly there are no Micro, Small and Medium Enterprises Medium Enterprises identified to whom the company owes dues., which are outstanding for more than 45 days as at 31st March, 2011.

11. Foreign Exchange Derivatives & Exposures not hedged at close of the year

(C) Exchange Differences on account of settlement/ revalorisation of foreign currency transactions in currant account are included in Miscellaneous Expenses (Rs. 6,368,018/- Previous year Rs. Nil) if such differences are in the nature of expenses & in Miscellaneous Receipts (Rs. Nil, Previous year Rs.16,827,643/-) if such differences are in the nature of gain.

12 Disclosure pursuant to Accounting Standard -15 (Revised)" Employee Benefits":

a. Defined Contribution Plans: Amount of Rs. 36,602,648 /- (Previous Year Rs. 33,956.061/-) is recognised as expense and included in "Employee Emoluments" in Schedule 17 in the Profit and Loss Account,

b. Defined Benefit Plans:

v. Broad Categories of plan assets as a percentage of total assets as at 31.03.2011

The plan assets are with Life Insurance Corporation of india and the Trusts Investments are in State Government Securities.

vi. Actuarial Assumptions at the Balance Sheet date:

The estimates of future salary increases considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors.

vii. General Descriptions of significant Defined plans:

Gratuity Plan:

The Company operates gratuity plan wherein every employee is entitled to the benefit as per the scheme of the Company, for each completed year of service. The same is payable on termination of service, or retirement, whichever is earlier. The benefit vests only after five years of continuous service.

viii. The company has valued the compensated absences, as specified in AS 15 (Revised) on acturial basis. Further para 132 of AS 15 (Revised 2005) does not require any specific disclosure except where the expense resulting from compensated absences is of such size, nature or incidence that its disclosure is relevant under other accounting standards. In the opinion of the management, the expense resulting from compensated absences is not significant and hence no disclosures are prepared under various paragraphs of AS 15 (Revised 2005).

C Other Disclosures

1 Segments have been identified in line with the Accounting standard, AS-17 "Segment Reporting" (AS - 17), taking in to account the organisation structure as well as the differing risks and returns.

2 Company has disclosed Business Segment as the primary segment.

3 Composition of Business Segment

Name of the Segment: Comprises of:

a) Compression Systems Air & Gas Compressors, Air conditioning & Refrigeration Compressors and Systems etc.

b)Transmission Equipments Power Transmission Equipments (Torque Converter), Reverse Reduction Gears for Marine Gear Engines, Industrial & Mobile application etc.

4 The Segment Revenue, Results, Assets and Liabilities include the respective amounts identifiable to each of the segment and amounts allocated on reasonable basis.

5 The Accounting Policies of the Segments are the same as those described in the Significant Accounting Policy as referred in Note 1 of Schedule 20 to the Accounts.

14 Disclosure of Transactions with Related Parties as required bytheAS-18 (A) Name of the related party and nature of relationship where control exists

Names of Related parties

1) Subsidiary Company NIL 2) Associate Company Kirloskar Chillers Pvt. Ltd.

3) Key Management Personnel Mr.Aditya Kowshik

4) Relatives of

Key Management Personnel Mrs. Kavita Kowshik Wife

Mr. Karn Kowshik Son

Ms. Meera Kowshik Daughter

Ms. Laxmi Chalapathi Mother

Ms. Sarayu Sister of Mr. Aditya Kowshik

Note : Related Party relationship is as identified by the Company based on the available information and relied upon by the Auditors.

15. The Company has entered into agreements in the nature of Lease / Leave and Licence agreement with different Lessors / Licensors for the purpose of establishment of office premises / residential accommodations and assets. These are generally in nature of operating Lease / Leave and Licence and disclosure required as per accounting standard 19 with regard to the above is as under.

a. Payment under Lease / Leave and License for period :

1) Not later than 1 year Rs. 2,105,6607/-

2) Laterthan 1 year but not laterthan 5 years Rs. 1,666,366/-

b. There are no transaction in the nature of Sub Lease.

c. Payments recognised in the Profit and Loss Account for the year ended 31st March, 2011 Rs.4,090,196/-

d. Period of Agreement is generally for Eleven Months and renewable at the option of Lessee.

17 In accordance with the Accounting Standard 26, "Intangible Assets" expenditure on Technical Know-how on Project under implementation will be amortized on commencement of commercial production. Expenditure of Rs. 12,500,0007- on Technical Know-how, in respect of which commercial production has been started, is being amortised over a period of three years.

18 The company, in terms of Notification issued by Ministry of Corporate Affairs on 31st March, 2009, had exercised the option of implementing the provisions of newly inserted Paragraph 46 of Accounting Standard 11, Accounting for the Effects of Changes in Foreign Exchange Rates, prescribed by Companies (Accounting Standards) Amendment Rules, 2009 . The Company has outstanding long term foreign currency loan which is categorized as Long Term Foreign Currency Monitory Item as referred in the said notification. Accordingly Rs.1,897,500/- being gain for the year (Previous year gain Rs 14,584,5217-) has been adjusted against the cost of Fixed Assets.

19 Previous years figures have been regrouped wherever necessary to make them comparable with those of the current year.




Mar 31, 2010

As at As at 31stMarch, 2010 31st March, 2009 Rs. Rs.

1 Significant Accounting Policies followed by the Company are as stated in the statement annexed to the Schedule (Annexure A)

2. A Contingent Liabilities not provided for in respect of:

(a) Claims against the Company not acknowledged as Debts, estimated at 71,486,111 54,009,661

(b) Income Tax Matters under Dispute 712,247 19,282,704

(c) Disputed Central Excise Matters 10,270,425 9,380,960

(d) Disputed Sales Tax Demands 1,310,000 1,227,000

(e) Guarantees to Housing Development Finance

Corporation Limited for housing loans to employees - 1,187

(f) Guarantees given by Company to Customers for the contracts undertaken in usual course of business 2,575,082 2,447,723

B. Claim for US $ 10 million has been filed against the Company in the International Court of Arbitration. The Arbitration proceedings have been stayed by the Honorable High Court of Delhi. The Special Leave Petition filed by the plaintiff against the Order of High Court has been dismissed by the Honorable Supreme Court. Furtherthe Honorable High Court of Delhi has transferred the matter to District Courts, Tis Hazari, Delhi on the grounds of pecuniary jurisdiction. Company has obtained an opinion from Senior Counsel stating that claim made by the plaintiff is not tenable.

3 The Company has imported Capital Goods under the Export Promotion Capital Goods Scheme, of the

Government of India, at concessional rates of Duty with an obligation to fulfill quantified exports. The export obligation is fulfilled completely and there is no pending export obligation against Export Promotion Capital Goods Scheme.

4. As the employee wise breakup of liability of leave entitlement, based on actuarial valuation, is not ascertainable, the same has not been included in the above figures, for the purpose of computation of Net Profit in terms of Sec 349 of the Companies Act.

b) Computation of net profit under section 349 of the Companies Act, 1956.

5. The information as required to be disclosed under the "Micro, Small and Medium Enterprises Development Act,2006" has been determined to the extent such parties have been identified on the basis of information available with the company. Based on this information there are no Micro, Small and Medium Enterprises to whom the company owes dues, which are outstanding for more than 45 days as at 31 st March, 2010.

6. Foreign Exchange Derivatives & Exposures not hedged at close of the year

7 Disclosure pursuant to Accounting Standard -15 (Revised )" Employee Benefits":

a. Defined Contribution Plans:

Amount of Rs. 33,956,061 /- ( Previous Year Rs. 33,366,525/-) is recognised as expense and included in "Employee Emoluments" in Schedule 17 in the Profit and Loss Account,

b. Defined Benefit Plans:

i Reconciliation of opening and closing balances of the Present Value of the Defined Benefit Obligation:

iii Amount Recognised in the Balance Sheet including a reconciliation of the present value of the defined obligation in (i) and the fair value of the plan assets in (ii) to the assets and liabilities recognised in the Balance Sheet:

v. Broad Categories of plan assets as a percentage of total assets as at 31.03.2010

The plan assets are with Life Insurance Corporation of India and the Trusts Investments are in State Government Securities.

vii General Descriptions of significant Defined plans:

Gratuity Plan:

The Company operates gratuity plan wherein every employee is entitled to the benefit as per the scheme of the Company, for each completed year of service. The same is payable on termination of service, or retirement, whichever is earlier. The benefit vests only after five years of continuous service.

viii The company has valued the compensated absences, as specified in AS 15 (Revised) on acturial basis. Further para 132 of AS 15 (Revised 2005) does not require any specific disclosure except where the expense resulting from compensated absences is of such size, nature or incidence that its disclosure is relevant under other accounting standards. In the opinion of the management, the expense resulting from compensated absences is not significant and hence no disclosures are prepared under various paragraphs of AS 15 (Revised 2005).

C Other Disclosures

1 Segments have been identified in line with the Accounting standard, AS-17 "Segment Reporting" (AS -17), taking in to account the organisation structure as well as the differing risks and returns.

2 Company has disclosed Business Segment as the primary segment.

3 Composition of Business Segment

Name of the Segment: Comprises of:

a) Compression Systems Air & Gas Compressors, Air conditioning &

Refrigeration Compressors and Systems etc.

b) Transmission Equipments Power Transmission Equipments (Torque Convertor),

Reverse Reduction Gears for Marine Gear Engines, Industrial & Mobile application etc.

4 The Segment Revenue, Results, Assets and Liabilities include the respective amounts identifiable to each of the segment and amounts allocated on reasonable basis

5 The Accounting Policies of the Segments are the same as those described in the Significant Accounting Policy as referred in Note 1 of Schedule 19 to the Accounts.

8 Disclosure of Transactions with Related Parties as required bytheAS-18

(A) Name of the related party and nature of relationship where control exists Names of Related parties

1) Subsidiary Company Khosla Indair Ltd. Ceased to be Subsidiary during theYear and now an Associate company.

2) Associate Company Kirloskar Chillers Pvt. Ltd.

3) Key Management Personnel Mr.H.R.Mustikar Upto 5th July 2009

Mr.Aditya Kowshik

4) Relatives of

Key Management Personnel Mrs. Snehlata H. Mustikar Wife

Mr. Milind H. Mustikar Son

Mr. Mukul H. Mustikar Son

Mrs. Kanchan M Mustikar Sons Wife

Mrs. Gauri M Mustikar Sons Wife

Master Pranav M Mustikar Sons Son

Master Aditya M Mustikar Sons Son

Miss Madhura M Mustikar Sons Daughter

Miss Mrunal M Mustikar Sons Daughter

Mr. Yeshwant P Kulkarni Brother

Mrs. Premlata Y Kulkarni Brothers Wife

Mr. Mohan R Mustikar Brother

Mrs. Anjaii M Mustikar Brothers Wife

Mrs. Usha S. Kale Sister of Mr. H. R. Mustikar

Mr. Shyamkant P Kale Sisters husband

Mrs. Kavita Kowshik Wife

Mr. Karn Kowshik Son

Ms. Meera Kowshik Daughter

Ms. Laxmi Chalapathi Mother

Ms. Sarayu Sister of Mr. Aditya Kowshik

Mr. H. L. Narasimha Sisters husband

Note: Related Party relationship is as identified by the Company based on the available information and relied upon by the Auditors.

9 The Company has entered into agreements in the nature of Lease / Leave and Licence agreement with different Lessors / Licensors for the purpose of establishment of office premises / residential accommodations and assets. These are generally in nature of operating Lease / Leave and Licence and disclosure required as per accounting standard 19 with regard to the above is as under.

a. Payment under Lease / Leave and License for period:

1) Not laterthan 1 year Rs. 1,955,522/-

2) Laterthan 1 year but not laterthan 5 years Rs. 507,630/-

b. There are no transaction in the nature of Sub Lease.

c. Payments recognised in the Profit and Loss Account for the year ended 31st March, 201 ORs. 4,147,910/-

d. Period of Agreement is generally for Eleven Months and renewable at the option of Lessee.

10 As required by Accounting Standard 22, "Accounting for taxes on Income ", prescribed by Companies (Accounting Standards) Amendment Rules, 2009, the Company has recognised Deferred Taxes which result from the timing difference between the Book Profits and Tax Profits aggregating Rs. 5,972,078/- in the Profit and Loss Account, The details of which are as under.

11 In accordance with the Accounting Standard 26, "Intangible Assets" expenditure on Technical Know-how on Project under implementation will be amortized on commencement of commercial production. Expenditure of Rs. 12,500,000/- on Technical Know-how, in respect of which commercial production has been started, is being amortised over a period of three years.

12 The company, in terms of Notification issued by Ministry of Corporate Affairs on 31st March, 2009, had exercised the option of implementing the provisions of newly inserted Paragraph 46 of Accounting Standard 11, Accounting for the Effects of Changes in Foreign Exchange Rates, prescribed by Companies (Accounting Standards)Amendment Rules, 2009. The Company has outstanding long term foreign currency loans which are categorized as Long Term Foreign Currency Monitory Item as referred in the said notification. Accordingly Rs. 27,750,189/- being gain for the year ended 31 st March 2010 (Rs 13,721,930/- being loss for the year ended 31st March 2009) has been adjusted against the cost of Fixed Assets.

13 Information required in terms of Part IV of Schedule VI to the Companies Act, 1956, as compiled by the Company, is attached.

14 Previous years figures have been regrouped wherever necessary to make them comparable with those of the current year.



 
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