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Notes to Accounts of LG Balakrishnan & Bros Ltd.

Mar 31, 2015

1 Corporate Information

L.G.Balakrishnan & Bros Limited was founded in 1937 as a transport Company and has evolved today as a major manufacturer of chains, sprockets and metal formed parts for automotive applications. Its business segments include transmission, metal forming and others. Its transmission products include chains, sprockets, tensioners, belts and brake shoe. It also offers metal forming products consisting of fine blanking for precision sheet metal parts, machined components and wire drawing products for internal use as well as for other chain manufacturing plants, spring steel suppliers and umbrella manufacturers. The Company's products are marketed under the "Rolon" brand. LGB has manufacturing units spread across Tamil Nadu, Maharashtra, Uttrakhand, Karnataka and Haryana.

(i) Details of Security for Long Term Borrowings:

a) Term Loans from banks are secured by hypothecation of Plant and Machineries and are collaterally secured by equitable mortgage by deposit of title deeds of immovable properties of Chakkan Plant and Jalna Plant.

b) Inerest rate relating to Term Loan from banks is in the range of 9.70% to 11.75%

As at As at Particulars 31.03.2015 31.03.2014 (Rs. in lakhs) (Rs. in lakhs)

2. Contingent liabilities and commitments (to the extent not provided for)

(i) Contingent liabilities:

(a) Claims against the Company, not acknowledged as debt - disputed tax liability.

i. Central Excise 624.28 538.80

ii. Entry Tax 408.36 408.36

iii. Service tax 10.02 21.41

iv. VAT / CST 454.33 289.81

1,496.99 1,258.38

(b) Guarantee given by Bankers 38.36 85.88 and outstanding

(c) Corporate guarantee given 4,450.00 5,750.00 for others (d) Estimated customs duty obligation on imports, if corresponding export 1,784.97 1,522.94 obligation is not satisfied.

Note : Future Cash outflows in respect of the above matters are determinable only on receipt of Judgements/decisions pending at various forums / authorities.

(ii) Commitments:

As at As at Particulars 31.03.2015 31.03.2014 (Rs. in lakhs) (Rs. in lakhs)

Estimated amount of contracts remaining to be executed on capital account and not 7,886.59 6,701.99 provided for - Tangible assets

3.Details on derivative instruments and unhedged foreign currency exposures:

I. The following derivative positions are open as at 31st March, 2015. These transactions have been undertaken to act as economic hedges for the Company's exposures to various risks in foreign exchange markets and may/may not qualify or be designated as hedging instruments. The accounting for these transactions is stated in Notes 2.11.

(a) Forward exchange contracts and options (being derivative instruments), which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

4. Excise duty amounting to Rs. 102.88 Lakhs (Previous Year: Rs. 69.20 Lakhs) is included in the finished goods stock value, pending clearance from factories

5.Employee benefit plans

Defined Contribution plans:

The Company makes Providend Fund and Superannuation Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized Rs. 519.01 Lakhs (Year ended 31 March, 2014 Rs.387.08Lakhs) for Providend Fund contributions and Rs. 8.49 Lakhs (Year ended 31 March, 2014 Rs. 7.60 Lakhs) for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the Schemes.

State plans:

The Company makes ESI contributions to Employees State Insurance Scheme. Under the Scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs. 157.36 Lakhs (Year ended 31 March, 2014 Rs.154.72 Lakhs) in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the Scheme.

Defined Benefit Plan - Gratuity:

The Company provides gratuity benefit (included as part of employees contribution to funds in Note 22 Employee benefits expense) to all eligible employees, which is funded with Life Insurance Corporation of India.

6.Segment information

The Company has identified business segments as its primary segment and geographic segments as its secondary segment. Business segments are primarily transmission, metal forming and others. Revenues and expenses directly attributable to segments are reported under each reportable segments. Expenses which are not directly identifiable to each reportable segment have been allocated on the basis of associated revenues of the segment and manpower efforts. All other expenses which are not attributable or allocable to segments have been disclosed as unallocable expenses. Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as unallocable. Fixed assets that are used interchangeably amongst segments are not allocated to primary and secondary segments. Geographical revenues are allocated based on the location of the customer. Geographic segments of the Company and within India and outside India.

7.Previous year figures have been regrouped and reclassified, wherever necessary, to correspond with the current year's classification/disclosure.


Mar 31, 2014

1. Employee benefit plans

Defined Contribution plans:

The Company makes Provident Fund and Superannuation Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs. 387.08 Lakhs (Year ended 31 March, 2013 Rs. 332.72 Lakhs) for Provident Fund contributions and Rs. 7.60 Lakhs (Year ended 31 March, 2013 Rs. 5.25 Lakhs) for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the Schemes.

State plans:

The Company makes ESI contributions to Employees State Insurance Scheme. Under the Scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs. 154.72 Lakhs (Year ended 31 March, 2013 Rs. 106.93 Lakhs) in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the Scheme.

Defined Benefit Plan – Gratuity:

The Company provides gratuity benefit to all eligible employees, which is funded with Life Insurance

Corporation of India.

2. Segment information

The Company has identified business segments as its primary segment and geographic segments as its secondary segment. Business segments are primarily transmission, metal forming and others. Revenues and expenses directly attributable to segments are reported under each reportable segments. Expenses which are not directly identifiable to each reportable segment have been allocated on the basis of associated revenues of the segment and manpower efforts. All other expenses which are not attributable or allocable to segments have been disclosed as unallocable expenses. Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as unallocable. Fixed assets that are used interchangeably amongst segments are not allocated to primary and secondary segments. Geographical revenues are allocated based on the location of the customer. Geographic segments of the Company and within India and outside India.

Note:

While the accounts of R & D department are maintained separately, for the purpose of presentation, the administrative and other expenses are clubbed along with other functional head of expenses and presented in the Statement of Profit and Loss.

3. Previous year figures have been regrouped and reclassified, wherever necessary, to correspond with the current year''s classification/ disclosure.


Mar 31, 2013

1 Corporate Information

L.G. Balakrishnan & Bros Ltd. was founded in 1937 as a transport Company and has evolved today as a major manufacturer of chains, sprockets and metal formed parts for automotive applications. Its business segments include transmission, metal forming and others. Its transmission products include chains, sprockets, tensioners, belts and brake shoe. It also offers metal forming products consisting of fine blanking for precision sheet metal parts, machined components and wire drawing products for internal use as well as for other chain manufacturing plants, spring steel suppliers, and umbrella manufacturers. The Company''s products are marketed under the "Rolon" brand. LGB has manufacturing units spread across Tamil Nadu, Maharashtra, Uttrakhand, Karnataka and Hariyana.

As at As at Particulars 31.03.2013 31.03.2012 (Rs. in lakhs) (Rs. in lakhs)

2.1 Contingent liabilities and commitments (to the extent not provided for)

(i) Contingent liabilities:

(a) Claims against the Company, not acknowledged as debt - Disputed tax liability. 982.87 772.32

(b) Guarantee given by Bankers and outstanding 21.05 2.87

(c) Corporate guarantee given for others 7,150.00 8,400.00

(d) Estimated customs duty obligation on imports, if corresponding export obligation is not satisfied. 1,386.06 1,625.20

(ii) Commitments:

Estimated amount of contracts remaining to be executed on capital account and not provided for - Tangible assets 1,791.58 778.22

2.2 Details on derivative instruments and unhedged foreign currency exposures:

I. The following derivative positions are open as at 31st March, 2013. These transactions have been undertaken to act as economic hedges for the Company''s exposures to various risks in foreign exchange markets and may/may not qualify or be designated as hedging instruments. The accounting for these transactions is stated in Note 2.11.

(a) Forward exchange contracts and options (being derivative instruments), which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

2.3. Excise duty amounting to '' 80.72 Lakhs (Previous Year: '' 103.77 Lakhs) is included in the finished goods stock value, pending clearance from factories.

2.4. Mat Credit:

Provision for income tax has been computed on the basis of Minimum Alternate Tax (MAT) in accordance with Section 115JB of the Income Tax Act, 1961. Considering the future profitability and taxable positions in the subsequent years, the Company has recognised "MAT Credit Entitlement of '' 47.19 Lakhs as an asset by crediting to the Statement of Profit and Loss an equivalent amount and included under Loans and Advances in accordance with the guidance note on "Accounting for credit available in respect of Minimum Alternate Tax under Income Tax Act, 1961, issued by the Institute of Chartered Accountants of India. Balance as on 31.03.2013 is '' 399.27 Lakhs (Previous year - '' 352.08 Lakhs).

2.5 Employee benefit plans

Defined Contribution plans:

The Company makes Providend Fund and Superannuation Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised '' 332.72 Lakhs (Year ended 31 March, 2012 '' 264.04 Lakhs) for Providend Fund contributions and '' 5.25 Lakhs (Year ended 31 March, 2012 '' 5.02 Lakhs) for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the Schemes. State plans:

The Company makes ESI contributions to Employees State Insurance Scheme. Under the Scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised '' 106.93 Lakhs (Year ended 31 March, 2012 '' 82.04 Lakhs) in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the Scheme.

Defined Benefit Plan - Gratuity:

The Company provides gratuity benefit to all eligible employees, which is funded with Life Insurance Corporation of India.

2.6 Segment information

The Company has identified business segments as its primary segment and geographic segments as its secondary segment. Business segments are primarily transmission, metal forming and others. Revenues and expenses directly attributable to segments are reported under each reportable segments. Expenses which are not directly identifiable to each reportable segment have been allocated on the basis of associated revenues of the segment and manpower efforts. All other expenses which are not attributable or allocable to segments have been disclosed as unallocable expenses. Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as unallocable. Fixed assets that are used interchangeably amongst segments are not allocated to primary and secondary segments. Geographical revenues are allocated based on the location of the customer. Geographic segments of the Company and within India and outside India.

3 Previous year figures have been regrouped and reclassified, wherever necessary, to correspond with the current year''s classification/disclosure.


Mar 31, 2010

1. Pending the outcome of the Companys reference to the Tamilnadu High Court regarding adequacy of the compensation relating to 163.73 acres of land acquired by the State government in 1972, no adjustment has been made in the value of land.

2. The Company had purchased a Flat in Ahmedabad in 1979 for Rs. 1.40 Lakhs. The Flat has not yet been registered in the name of the Company. A suit was filed against the company by the builder claming the possession of the Flat together with an amount of Rs. 17.77 Lakhs towards lease rent, compensation, and mense profit. The Company has been advised by the counsel that the claim against the company is not tenable.

3. SECURITY FOR LOAN

a. Term Loan:

The term loans are secured by the hypothecation of Plant and Machineries and are collaterally secured by the equitable mortgage by deposits of title deeds of certain immoveable properties.

b. Working Capital Loan:

The Working Capital loans are primarily secured by hypothecation of inventories and book debts of the company.

4. CONTINGENT LIABILITIES (Rs. in Lakhs) 31.03.2010 31.03.2009 a. Guarantee given by Bankers and outstanding 1023.61 701.47 b. Corporate guarantee given for others 8376.67 8898.82 c. Estimated amount of contracts remaining to be executed on Capital Accounts and not provided for (Net after advance payments) 2355.16 617.31 d. Disputed tax liability 465.87 546.86 e. Duty implication involved on Export obligation 811.54 909.73

5. MAT CREDIT:

Provision for Income tax has been computed on the basis of Minimum Alternate Tax (MAT) in accordance with Section 115JB of the Income Tax Act, 1961. Considering the future profitability and taxable positions in the subsequent years, the company has recognized "MAT Credit Entitlement" of Rs.530.45 Lakhs (Previous Year - Nil) as an asset by crediting to the Profit and Loss Account an equivalent amount and included under Loans and Advances in accordance with the guidance note on " Accounting for credit available in respect of Minimum Alternate Tax under Income Tax Act, 1961, issued by the Institute of Chartered Accountants of India.

6. Excise Duty amounting to Rs.59.75 Lakhs (Previous year Rs.39.52 lakhs) is included in the finished goods stock.

7. Remittances in foreign currencies for Dividends :

The Company has not remitted any foreign currencies on account of Dividend during the year, 2009 - 10.

8. Pursuant to the notification G.S.R. 225(E) issued by Ministry of Corporate Affairs, the Company exercised its option, during the year irrevocably, to account for exchange difference on long term monetary items in foreign currency (i.e. those items whose term of settlement exceeds twelve months from the date of its origination) as directed in this said notification. Accordingly, all long term outstanding in foreign currency are translated at the closing rate as on March, 2010.

Exchange differences on translation or settlement of long term foreign currency monetary items at rates different from those at which they were initially recorded or April 1, 2007 which ever is later, in so far as it relates to acquition of depreciable assets are adjusted to the cost of the assets. In other cases, such exchange differences are accumulated inToreign Currency Monetary Item translation difference account" and amortised by recognition as income or expense in each period over the balance term till settlement occurs but not beyond March 31, 2011. The impact of the above adjustments returning to the current year is a higher net profit of Rs.242.25 lakhs.

Note:

In the absence of detailed information regarding plan assets which is funded with Life Insurance Corporate of India, the composition of each major category of plan assets, the percentage or amount for each category to the fair value of plan assets has not been disclosed. The details of experience adjustments arising on account of plan assets and liabilities as required by Paragraph 120(n) (ii) of AS 15 (Revised) on "Employee Benefits" are not readily available in the valuation report and hence, are not furnished.

The estimate of rate of escalation in salary considered in actuarial valuation, takes into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market.

9. The previous year figures in the Balance Sheet and in the Profit & Loss Account have been regrouped and reclassified, wherever necessary, to conform to the current years classification and expressed in terms of Lakhs.

 
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