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Notes to Accounts of LML Ltd.

Mar 31, 2016

1. (Note [7.2] of Standalone Financial Statement)

The Company is in default in respect to the repayments long term debts of Principal and Interest as under:

2. (Note [7.3] of Standalone Financial Statement)

The Company is in default in the payment of interest to Foreign Currency Convertible Bonds holders:

3. (Note [25] of Standalone Financial Statement)

Contingent Liabilities & Commitments (to the extent not provided for)

a. Income-tax, Sales-tax, Customs and Excise Duty matters pending in appeals etc. Rs.17013.71 lakhs (Previous year Rs. 16991.80 lakhs) (net of Bank Guarantee of Rs 3.00 lakhs included in (b) below (Previous year Rs. 3.00 lakhs)

b. Outstanding guarantees furnished by Bankers Rs.6.15 lakhs (Previous year Rs.6.15 lakhs).

c. Claims against the Company not acknowledged as debts Rs.20880.52 lakhs

(Previous year Rs. 18601.44 lakhs).

d. Unexecuted capital commitments (net of advances) Rs.18.76 lakhs (Previous year Rs. 150.77 lakhs)

(i) The Company''s pending litigations comprise of claims against the Company and proceedings pending with Tax Authorities. The Company has reviewed all its pending litigations and proceedings and has made adequate provisions, wherever required and disclosed the contingent liabilities, wherever applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a material impact on its financial position.

(ii) The Company periodically reviews all its long term contracts to assess for any material foreseeable losses. Based on such review wherever applicable, the Company has made adequate provisions for these long term contracts in the books of account as required under any applicable law/accounting standard.

(iii) The Company neither entered into any derivative contracts during the year nor have any outstanding derivative contract at year end.

4. (Note [26] of Standalone Financial Statement)

Balances of some of the Trade Receivables, Trade Payable, Lenders, loans and advances are subject to confirmation from the respective parties and consequential adjustments arising from reconciliation, if any. The management however is of the view that there will be no material adjustment in this regard.

5. (Note [27] of Standalone Financial Statement)

The Company is in the process of restructuring/revival of its business under the aegis of BIFR which inter alia includes finalization of the product plan. The process of possible utilization of slow / non-moving items of inventory will be undertaken upon - finalization of the product plan, approval and implementation of the restructuring/revival scheme. Pending such ascertainment/ determination the management has considered the inventories except finished goods at cost. Requisite accounting effect, if any, will be given upon such ascertainment/ determination, approval and implementation of the revival scheme.

6. (Note [30] of Standalone Financial Statement)

The Company became a Sick Industrial Company within the meaning of Section 3(1)(O) of Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) due to erosion of its net worth and the Company -was declared a Sick Industrial Company by BIFR on 8th May, 2007. The Company resumed operations in a small way from April, 2007 and is working inter-alia on the development of various new products and technologies and production of new generation vehicles. The Company had earlier submitted its draft revival scheme to BIFR. As directed by BIFR, the Company had since submitted the updated revival scheme. In view of this, the accounts have been prepared on the basis of going concern.

7. (Note [31] of Standalone Financial Statement) Settlement of dues

a) The Company had executed a Multipartite Agreement on 28th March, 2005 (MPA) with all its Secured Lenders (SL). The Company is in default in re-payment of principal and payment of interest to its SL. The draft Revival Scheme submitted to BIFR inter-alia takes into consideration the matter relating to the dues of SL.

b) The Company has obtained approval(s) from SL (representing 96.69% by value) regarding the settlement of their dues, which will come into effect from the date of sanction of its Revival Scheme by BIFR. Upon approval of the Revival Scheme by BIFR, the approvals of the SL will form an integral part of the MPA and accordingly the MPA shall stand modified / amended to that extent. Pending approval of the Revival Scheme by BIFR, applicable interest has been provided on the defaulted amount for the year.

8. (Note [32] of Standalone Financial Statement) Deferred Taxation:

In terms of Para 26 of AS-22 "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, the Company has reviewed the Deferred Tax Assets (DTA), recognized as on 31st March, 2016 at the Balance Sheet date. In the context of - uncertainty of generation of profits in near future, Deferred Tax Assets has not been recognized.

11. (Note [34] of Standalone Financial Statement)

Earnings Per Share (EPS) computed in accordance with Accounting Standard 20 issued by The Institute of Chartered Accountants of India.

Shri R K Srivastava - Whole-time Director, Shri Khushahal Chand Agarwal - Sr. President (Commercial) & Company Secretary and

Shri Mahesh Kumar Kanodia - Chief Financial Officer.

(i-c) Enterprises over which Directors and their relatives are able to exercise significant influence:

Smart Chips Limited, Suryodaya Investment

& Trading. Co. Limited, Mahalaxmi Holdings Limited, Payal Investments & Trading LTD, Mimosa Finance & Trading Limited, Bina Fininvest P. Limited, Ginideep Finance & Investments P. Limited, Gold Rock Investments Limited, Gold Rock Metals Limited, Gold Rock World Trade Limited, Blue Point Leasing Limited, Gold Rock Agro-Trading Limited, Tridhar Finance & Trading Limited, Picanova Investments P. Limited, Inlac Granston Limited, Shree Dhan Sharda Mercantile P Limited, B.S. Infotech P. Ltd, Ind Hi-Tech Enterprises Pvt. Limited, Saryu Investment & Trading P. Limited, Panki Roadlines Pvt. Limited, Sugata Investment Limited, Gold Rock Agrotech Limited, Syscom Corporation Limited, Seattle Ontime P. Limited

[ii] There is no provision for doubtful debts or amounts written off or written back during the year in respect of dues from or to related parties.

[iii] Summary of Transactions with related parties:

9. (Note [36] of Standalone Financial Statement)

In the absence of information from Trade Payable regarding status under The Micro, Small and Medium Enterprises Development Act, 2006, liability of interest if any cannot be reliably estimated, nor required disclosures can be made.

10. (Note [37] of Standalone Financial Statement)

Related Party Disclosures:

(i-a) Associate : VCCL Limited (i-b) Key Management Personnel

Shri Deepak Kumar Singhania - Chairman & Managing Director,

Shri. Lalit Kumar Singhania - Whole-time Director,

Shri Anurag Kumar Singhania - Whole-time Director,

Details of related parties transactions:

Associate: All transactions and outstanding balance are with VCCL Limited.

Key Management Personnel: Remuneration to Shri Deepak Kumar Singhania Rs.17.96 lakhs (Previous year Rs. 17.76 lakhs), Shri. Lalit Kumar Singhania Rs.17.75 lakhs(*) (Previous year Rs. 9.51 lakhs), Shri Sanjeev Shriya Rs.Nil (Previous year Rs. 1.89 lakh*), Shri Anurag Kumar Singhania Rs.17.89 lakhs (Previous year Rs. 9.84 lakhs) and Shri R K Srivastava Rs. 18.00 lakhs (Previous year Rs. 18.00 lakhs), Shri Khushahal Chand Agarwal Rs. 41.75 lakhs (Previous year Rs.41.86 lakhs), Shri Mahesh Kumar Kanodia Rs. 21.95 lakhs (Previous year Rs.21.93 lakhs).

* During the previous year up to 17/07/2014

(*) Company''s application for re-appointment and payment of remuneration is pending with Ministry of Corporate affairs w.e.f.28.03.2016.

Enterprises over which Directors & their Relatives are able to exercise significant influence: Mimosa Finance & Trading Limited Rs. Nil (Previous year Rs.2.40 lakhs), B.S. Infotech P. Limited Rs. nil (Previous year Rs.0.33 lakh). Others less than 10% Rs. Nil (Previous year Rs.0.13 lakh).

11 (Note [38] of Standalone Financial Statement)

Business Segment :

(a) Primary (Business) Segment

The operations of the Company relate to only one segment viz. Motorized Two-Wheelers.

(b) Secondary (Geographical) Segment

12. Secondary segment reporting is on the basis of geographical location of the customers. The Company''s revenue during the year by geographical markets are : Domestic Sales Rs.1781.80 lakhs (Previous year Rs. 4782.86 lakhs) and Export sales Rs.13534.87 lakhs (Previous year Rs.15151.37 lakhs)

13. Geographical segment wise loss and capital employed are not given since the production unit and administrative expenses are common.

14 (Note [39] of Standalone Financial Statement)

The Company has carried out impairment test on its Fixed Assets as on 31.03.2016 and the Management is of the opinion that there is no asset for which impairment is required to be made as per Accounting Standard-28 on Impairment of Assets issued by ICAI.

15. (Note [47] of Standalone Financial Statement)

Figures of the previous year have been regrouped and recanted wherever necessary to make them comparable.


Mar 31, 2015

1 Notes: (i) 460000 Equity Shares were allotted as fully paid-up Bonus Shares on 3rd October, 1979 by capitalisation of General Reserve.

(ii) 5314116 Equity Shares were allotted as fully paid-up on conversion of Debentures (Series I, II & III).

(iii) 3162000 Equity Shares were allotted as fully paid-up to Financial Institutions pursuant to the convertibility clause in the relevant Rupee Loan Agreement.

(iv) 785423 Equity Shares were allotted to Banks & Financial Institutions on 29th March, 2005 as per terms & conditions of the Negotiated Settlement.

(v) 11842519 Non cumulative Redeemable Preference Shares were allotted to Banks & Financial Institutions on 29th March, 2005 as per terms & conditions of the Negotiated Settlement and redeemable in three annual instalments due on 29th March, 2015, 29th March, 2016 and 29th March, 2017.

In respect of the outstanding Redeemable Preference Shares (RPS) as at 31 .03.2015, redemption of Rs.3947.51 lacs was due on the first tranche date of 29.03.2015. In view of the adverse financial position of the Company, the same has not been effected. The RPS holders represting 96.90% of issued and paid up Preference Capital have given written approvals, extending the redemption dates to December, 2024 & December, 2025 payable in two equal instalments, which is forming part of the DRS and is under consideration of BIFR, in terms of section 18 of SICA. BIFR is empowered under the provisions of SICA to take decisions on all matters affecting the revival of the Company, the redemption dates of RPS will be as per the DRS to be approved by BIFR.

(vi) 819723 Equity Shares were allotted to specified lenders on 16th November, 2005 as per terms & conditions of the Negotiated Settlement.

(vii) 32223538 Equity Shares were allotted on conversion of FCCB series A & B during the period from 24.08.2005 to 31.07.2009

(viii) Shareholders holding more than 5 percent shares:

2 Long Term Debts Secured by:

(a) Term Loans from Banks and Financial Institutions included above, except Industrial Investment Bank of India and Bank of Baroda, represent the settled amounts outstanding as on 31.03.2015.In terms of Multi Partite Agreement executed between all the Lenders and the Company on 28th March, 2005 (MPA) reached with these Lenders. These are secured by (i) a First mortgage and charge on the immovable properties consisting of Land, Buildings, Fixed Plant and Machinery, Furniture and Fixtures of the Company existing as on 31.03.2005 (save and except Land and property situated at Plot No. C-3 & 4, Site - I, Panki Industrial Estate, Kanpur) and (ii) first charge by way of hypothecation of all movable assets of the Company (save and except Stocks of Raw Materials, Components, Stores & Spares, Work-in-process, Finished Goods, Book Debts etc), including movable machinery, tools, accessories, etc., existing as on 31.03.2005, subject however, to the prior charges created in favour of (a) banks/others over certain specified equipment purchased by the Company on Hire Purchase basis,(b) SASF over the specified equipment acquired out of its erstwhile EFS Loan, (c) Exim Bank over the specified equipment acquired by the Company out of its erstwhile Rupee Loan under PEFP, (d) IIBI over the specified equipment acquired out of its erstwhile Rupee Loan under ACS. The aforesaid first mortgage and charges rank pari-passu, inter-se,in all respects amongst the aforesaid Financial Institution/Banks. These Loans are further secured by Personal Guarantee (s) of three Directors of the Company. Equitable Mortgage on some of the properties is yet to be created.

(b) Term Loans against erstwhile Rupee Loan from IDBI under EFS, erstwhile Rupee Loan from Exim Bank under PEFP and erstwhile Rupee Loan from IIBI under ACS, included in Serial Number (i) represent the settled amounts outstanding as on 31.03.2015 under the MPA. These Loans are secured by (i) an exclusive first charge by way of hypothecation of specified equipments acquired out of the said erstwhile loans and (ii) Personal Guarantee(s) of three Directors of the Company.

(c) Export Import Bank of India (Exim Bank) have informed the Company that they have assigned their dues to Edelweiss Asset Reconstruction Company Limited (ARC). The Company has disputed the assignment inter-alia due to major discrepancies in the Assignment Agreement executed between Exim Bank and ARC. The name of the ARC can be substituted only after resolution of dispute and approval of BIFR. In the view of the Company, this has no effect on the Balance Sheet or Profit & Loss Account of the Company.

(d) Phoenix ARC Private Limited (Phoenix) has informed the Company about the assignment of the dues by IIBI Ltd., to them. The Company has disputed the assignment inter-alia due to major discrepancies in the assignment between Phoenix and IIBI. The name of the Phoenix can be substituted only after resolution of dispute and approval of BIFR. In the view of the Company, this has no effect on the Balance Sheet or Profit & Loss account of the Company.

(e) Amounts outstanding against erstwhile working capital facilities from SBI, BOI and BOB included in Serial Number (i) above represent the settled amounts outstanding as on 31.03.2015 under the MPA with these Banks. These Loans are secured by (i) a first charge on the land and property situated at Plot No. C-3 & 4, Site - I, Panki Industrial Estate, Kanpur by way of Equitable Mortgage, ranking pari passu, inter-se, in all respects amongst these Banks and (ii) Personal Guarantee(s) of three Directors of the Company. These are further secured by a Second Charge on the immovable properties consisting of Land, Buildings, Fixed Plant and Machinery, Furniture and Fixtures of the Company existing as on 31.03.2005 (save and except Land and property situated at Plot No. C-3 & 4, Site - I, Panki Industrial Estate, Kanpur ). Certain charges in respect of 1(a) and 1(c) are yet to be modified / created.

(f) Fixed Assets purchased under Hire Purchase arrangement are secured by hypothecation of respective assets.

(g) Rate of interest - for the period from April 2009 to March 2013, on ballooning basis, so as to gives yield of 6.5% per annum (YTM), w.e.f. April, 2013 since the entire Principal is in default, interest @ 12.5% has been provided

3. Contingent Liabilities & Commitments (to the extent not provided for)

(a) Income-tax, Sales-tax, Customs and Excise Duty matters pending in appeals etc. Rs.16991.80 lakhs (Previous year Rs. 18267.29 lakhs) (net of Bank Guarantee of Rs 3.00 lakhs included in (b) below (Previous year Rs. 3.00 lakhs)

(b) Outstanding guarantees furnished by Bankers Rs. 6.15 lakhs (Previous year Rs.11.65 lakhs).

(c) Claims against the Company not acknowledged as debts Rs.18601.44 lakhs (Previous year Rs. 16720.85 lakhs).

(d) Unexecuted capital commitments (net of advances) Rs. 150.77 lakhs (Previous year Rs. 22.53 lakhs)

(i) The Company's pending litigations comprise of claims against the Company and proceedings pending with Tax Authorities. The Company has reviewed all its pending litigations and proceedings and has made adequate provisions, wherever required and disclosed the contingent liabilities, wherever applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a material impact on its financial position.

(ii) The Company periodically reviews all its long term contracts to assess for any material foreseeable losses. Based on such review wherever applicable, the Company has made adequate provisions for these long term contracts in the books of account as required under any applicable law/ accounting standard.

(iii) The Company neither entered into any derivative contracts during the year nor have any outstanding derivative contract at year end..

4. Balances of some of the Trade Receivables, Trade Payable, Lenders, loans and advances are subject to confirmation from the respective parties and consequential adjustments arising from reconciliation, if any. The management however is of the view that there will be no material adjustment in this regard.

5. The Company is in the process of restructuring/revival of its business under the aegis of BIFR which inter alia includes finalization of the product plan. The process of possible utilization of slow / non-moving items of inventory will be undertaken upon - finalization of the product plan, approval and implementation of the restructuring/revival scheme. Pending such ascertainment/ determination the management has considered the inventories except finished goods at cost. Requisite accounting effect, if any, will be given upon such ascertainment/ determination, approval and implementation of the revival scheme.

6. Interest in respect of Long Term Loans/Debentures/ Deferred Credits (for acquisition of Fixed Assets) availed / issued during the financial years 1982-83 to 1984-85 had been capitalised for the full period of Long Term Loans/ Debentures/Deferred Credits in the year of availment/issue as per practice prevailing then. No such capitalisation has since been made. In view of such capitalisation, the charge to Profit and Loss Account on account of depreciation is higher by Rs. Nil (previous year Rs. 6.49 lakhs).

7. Expenditure on Research & Development Activities during the year amounted to Rs.510.65 lakhs (previous year Rs. 485.89 lakhs) has been charged to P&L Account.

8. The Company became a Sick Industrial Company within the meaning of Section 3(1)(O) of Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) due to erosion of its net worth and the Company -was declared a Sick Industrial Company by BIFR on 8th May, 2007. The Company resumed operations in a small way from April, 2007 and is working inter-alia on the development of various new products and technologies and production of new generation vehicles. The Company had earlier submitted its draft revival scheme to BIFR. As directed by BIFR, the Company has since submitted the updated revival scheme. In view of this, the accounts have been prepared on the basis of going concern.

9. To aid and support the revival of the Company, including continuity of operations and other related activities such as product development, the Company had to meet capital expenditure (including capital work in progress and capital advances) by way of increase in current liabilities to the extent of Rs.207.06 lakhs. (previous year Rs.135.85 lakhs).

10. Restructuring of Loans

a) The Company had executed a Multipartite Agreement on 28th March, 2005 (MPA) with all its Secured Lenders (SL). The Company is in default in re-payment of principal and payment of interest to its SL. The draft Revival Scheme submitted to BIFR inter-alia takes into consideration the matter relating to the dues of SL.

b) The Company has obtained approval(s) from SL (representing 96.69% by value) regarding their dues, which will come into effect from the date of sanction of its Revival Scheme by BIFR. Upon approval of the Revival Scheme by BIFR, the approvals of the SL will form an integral part of the MPA and accordingly the MPA shall stand modified / amended to that extent. Pending approval of the Revival Scheme by BIFR, applicable interest has been provided on the defaulted amount for the year.

11. Deferred Taxation:

In terms of Para 26 of AS-22 "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, the Company has reviewed the Deferred Tax Assets (DTA), recognized as on 31st March, 2015 at the Balance Sheet date. In the context of - uncertainty of generation of profits in near future, Deferred Tax Assets has not been recognized.

12. Disclosure in pursuance of Accounting Standard 15 (Revised) "Employees Benefit" issued by the ICAI

During the year, Company has recognized the following amounts in the financial statements:

Defined Benefit Plan

The employees gratuity fund is partly managed by Life Insurance Corporation is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in the same manner as gratuity:

13. In the absence of information from Trade Payable regarding status under The Micro, Small and Medium Enterprises Development Act, 2006, liability of interest if any can not be reliably estimated, nor required disclosures can be made.

14. Related Party Disclosures:

(i-a) Associate

VCCL Limited

(i-b) Key Management Personnel

Shri Deepak Kumar Singhania - Chairman & Managing Director, Shri. Lalit Kumar Singhania - Whole-time Director, Shri Sanjeev Shriya - Whole-time Director (up to 17/07/2014), Shri Anurag Kumar Singhania - Whole-time Director, Shri R K Srivastava - Whole-time Director, Shri Khushal Chand Agarwal - Sr. President (Commercial) & Company Secretary (w.e.f.24/05/2014) and *Shri Mahesh Kumar Kanodia - Chief Financial Officer (w.e.f. 24/05/2014).

(i-c) Enterprises over which Directors and their relatives are able to exercise significant influence:

Smart Chips Limited, Suryodaya Investment & Trading. Co. Limited, Mahalaxmi Holdings Limited, Payal Investments & Trading Limited, Mimosa Finance & Trading Limited, Bina Fininvest P. Limited, Ginideep Finance & Investments P. Limited, Gold Rock Investments Limited, Gold Rock Metals Limited, Gold Rock World Trade Limited, Blue Point Leasing Limited, Gold Rock Agro-Trading Limited, Tridhar Finance & Trading Limited, Picanova Investments P. Limited, Inlac Granston Limited, Shree Dhan Sharda Mercantile P Limited, B.S. Infotech P. Limited, Ind Hi-Tech Enterprises Pvt. Limited, Saryu Investment & Trading P. Limited, Panki Roadlines Pvt. Limited, Sugata Investment Limited, Gold Rock Agrotech Limited, Syscom Corporation Limited, Seattle Ontime P. Limited

[ii] There is no provision for doubtful debts or amounts written off or written back during the year in respect of dues from or to related parties.

15. Business Segment :

(a) Primary (Business) Segment

The operations of the Company relate to only one segment viz. Motorized Two-Wheelers.

(b) Secondary (Geographical) Segment

1 . Secondary segment reporting is on the basis of geographical location of the customers. The Company's revenue during the year by geographical markets are :

Domestic Sales Rs.4782.86 lakhs (Previous year Rs. 7432.98 lakhs) and Export sales Rs.15151.37 lakhs (Previous year Rs.18211.65 lakhs)

2. Geographical segment wise loss and capital employed are not given since the production unit and administrative expenses are common.

16. The Company has carried out impairment test on its Fixed Assets as on 31 .03.2015 and the Management is of the opinion that there is no asset for which impairment is required to be made as per Accounting Standard-28 on Impairment of Assets issued by ICAI.

17. Pursuant to requirements of Schedule II of the Companies Act, 2013 (the 'Act') Company has revised the depreciation rates as prescribed under the Schedule II of the Act w.e.f.1st April, 2014. In case of fixed assets where the useful life was nil as at 01.04. 2014, the Company has adjusted the net residual value aggregating to Rs.507.97 lacs from Reserve & Surplus. Further due to change in life of the assets according to Schedule II of the Act, the depreciation for the year is higher and profit for the year is lower by Rs.127.06 lacs.

18. Remuneration to Auditors

(a) Statutory Audit Fee Rs.9.00 lakhs (Previous year Rs. 9.00 lakhs)

(b) Tax Audit Fee Rs.0.80 lakh (Previous year Rs. 0.80 lakh).

(c) Other Services - Certification and other Jobs Rs.6.00 lakhs (Previous year Rs. 6.00 lakhs).

20. Remuneration to Cost Auditors

Audit Fee Nil (previous year Rs. 0.35 lakh).

21. Remittance in Foreign Currency on Account of Dividend

Amount remitted

22. Figures of the previous year have been regrouped and recasted wherever necessary to make them comparable. Notes 1 to 51 form an integral part of the Balance Sheet and Profit and Loss Account


Mar 31, 2014

1.SHARE CAPITAL

Nots:

(i) 460000 Equity Shares were allotted as fully paid-up Bonus Shares on 3rd October, 1979 by capitalisation of General Reserve.

(ii) 5314116 Equity Shares were allotted as fully paid-up on conversion of Debentures (Series I, II & III).

(iii) 3162000 Equity Shares were allotted as fully paid-up to Financial Institutions pursuant to the convert- ibility clause in the relevant Rupee Loan Agreement.

(iv) 785423 Equity Shares were allotted to Banks & Financial Institutions on 29th March, 2005 as perterms & condi- tions of the Negotiated Settlement.

(v) 11842519 Non cumulative Redeemable Preference Shares were allo- tted to Banks & Financial Institutions on 29th March, 2005 as per terms & conditions of the Negotiated Sett- lement and redeemable in three annual instalments due on 29th March, 2015, 29th March, 2016 and 29th March, 2017.

(vi) 819723 Equity Shares were allotted to specified lendors on 16th November, 2005 as per terms & conditions of the Negotiated Settlement.

(vii) 32223538 Equity Shares were allotted on conversion of FCCB series A & B during the period from 24.08.2005 to 31.07.2009

(viii) Shareholders holding more than 5 percent shares:

2. OTHER CURRENT LIABILITIES

1 Long Term Debts Secured by:

(a) Term Loans from Banks and Financial Institutions included above, except Industrial Investment Bank of India and Bank of Baroda, represent the settled amounts outstanding as on 31.03.2014.In terms of Multi Partite Agreement executed between all the Lenders and the Company on 28th March, 2005 (MPA) reached with these Lenders. These are secured by (i) a First mortgage and charge on the immovable properties consisting of Land, Buildings, Fixed Plant and Machinery, Furniture and Fixtures of the Company existing as on 31.03.2005 (save and except Land and property situated at Plot No. C-3 & 4, Site - I, Panki Industrial Estate, Kanpur) and (ii) first charge by way of hypothecation of all movable assets of the Company (save and except Stocks of Raw Materials, Components, Stores & Spares, Work-in-process, Finished Goods, Book Debts etc), including movable machinery, tools, accessories, etc., existing as on 31.03.2005, subject however, to the prior charges created in favour of (a) banks/others over certain specified equipment purchased by the Company on Hire Purchase basis,(b) SASF over the specified equipment acquired out of its erstwhile EFS Loan, (c) Exim Bank over the specified equipment acquired by the Company out of its erstwhile Rupee Loan under PEFP, (d) IIBI over the specified equipment acquired out of its erstwhile Rupee Loan under ACS. The aforesaid first mortgage and charges rank pari-passu, inter-se,in all respects amongst the aforesaid Financial Institution/Banks. These Loans are further secured by Personal Guarantee (s) of three Directors of the Company. Equitable Mortgage on some of the properties is yet to be created.

(b) Term Loans against erstwhile Rupee Loan from IDBI under EFS, erstwhile Rupee Loan from Exim Bank under PEFP and erstwhile Rupee Loan from IIBI under ACS, included in Serial Number (i) represent the settled amounts outstanding as on 31.03.2014 under the MPA. These Loans are secured by (i) an exclusive first charge by way of hypothecation of specified equipments acquired out of the said erstwhile loans and (ii) Personal Guarantee(s) of three Directors of the Company.

(c) Export Import Bank of India (Exim Bank) have informed the Company that they have assigned their dues recoverable from the Company to an Asset Reconstruction Company (ARC). The effect of the same shall be given after receipt of necessary documents including the Deed of Assignment executed by Exim Bank. In view of the Company, the same will not have any effect on the Balance Sheet or Profit & Loss account of the Company.

(d) Phoenix ARC has informed the Company about the assignment of the dues recoverable from the Company by IIBI Ltd., to them. The Company has disputed the assignment due to discrepancy in security assigned to Phoenix ARC by IIBI. Effect of the same shall be given after resolution of dispute with them. In view of the Company, the same will not have any effect on the Balance Sheet or Profit & Loss account of the Company.

(e) Amounts outstanding against erstwhile working capital facilities from SBI, BOI and BOB included in Serial Number (i) above represent the settled amounts outstanding as on 31.03.2014 under the MPA with these Banks. These Loans are secured by (i) a first charge on the land and property situated at Plot No. C-3 & 4, Site I, Panki Industrial Estate, Kanpur by way of Equitable Mortgage, ranking pari passu, inter-se, in all respects amongst these Banks and (ii) Personal Guarantee(s) of three Directors of the Company. These are further secured by a Second Charge on the immovable properties consisting of Land, Buildings, Fixed Plant and Machinery, Furniture and Fixtures of the Company existing as on 31.03.2005 (save and except Land and property situated at Plot No. C-3 & 4, Site - I, Panki Industrial Estate, Kanpur). Certain charges in respect of 1(a) and 1(c) are yet to be modified / created.

(f) Fixed Assets purchased under Hire Purchase arrangement are secured by hypothecation of respective assets.

(g) Rate of interest - for the period from April 2009 to March 2013, on ballooning basis, so as to gives yield of 6.5% per annum (YTM), w.e.f. April, 2013 since the entire Principal is in default, interest @ 12.5% has been provided.

3.Contingent Liabilities & Commitments (to the extent not provided for)

(A) Income-tax, Sales-tax, Customs and Excise Duty matters pending in appeals etc. Rs.18267.29 lakhs (Previous year Rs. 17925.16 lakhs) (net of Bank Guarantee of Rs 3.00 lakhs included in (b) below (Previous year Rs. 3.00 lakhs)

(B) Outstanding guarantees furnished by Bankers Rs. 11.65 lakhs (Previous year Rs.11.65 lakhs).

(C) Claims against the Company not acknowledged as debts Rs.16720.85 lakhs (Previous year Rs. 13921.55 lakhs).

(D) Unexecuted capital commitments (net of advances) Rs. 22.53 lakhs (Previous year Rs. 6.71 lakhs)

4. Balances of some of the Trade Receivables, Trade Payable, lenders, loans and advances are subject to confirmation from the respective parties and consequential adjustments arising from reconciliation, if any. The management however is of the view that there will be no material adjustment in this regard.

5. The Company is in the process of restructuring/revival of its business under the aegis of BIFR which inter alia includes finalization of the product plan. The process of possible utilization of slow / non-moving items of inventory will be undertaken upon - finalization of the product plan and the restructuring/revival plan. Pending such ascertainment/ determination the management has considered the inventories except finished goods at cost. Requisite accounting effect, if any, will be given upon such ascertainment/ determination and approval of revival plan

6. Interest in respect of Long Term Loans/Debentures/Deferred Credits (for acquisition of Fixed Assets) availed / issued during the financial years 1982-83 to 1984-85 had been capitalised for the full period of Long Term Loans/Debentures/Deferred Credits in the year of availment/issue as per practice prevailing then. No such capitalisation has since been made. In view of such capitalisation, the charge to Profit and Loss Account on account of depreciation is higher by Rs. 6.49 lakhs (previous year Rs. 6.49 lakhs).

7. Remuneration to Chairman & Managing Director and Whole-time Directors:

(Rs. in lakhs)

2013-14 2012-13

Salary 12.75 12.75

Contribution to Provident Fund 0.88 0.88

Perquisites 60.59 59.79

Total 74.22 73.42

8. Expenditure on Research & Development Activities during the year amounted to Rs.485.89 lakhs (previous year Rs. 416.34 lakhs) has been charged to P&L Account.

9. The Company became a Sick Industrial Company within the meaning of Section 3(1)(O) of Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) due to erosion of its net worth and the Company -was declared a Sick Industrial Company by BIFR on 8th May, 2007. The Company resumed operations in a small way from April, 2007 and is working on the development of various new products and technologies and production of new generation 4-stroke Automatic Gearless Scooter (CVT) has since commenced. The Company had earlier submitted its draft revival scheme to BIFR. As directed by BIFR, the Company has since submitted the updated revival scheme. In view of this, the accounts have been prepared on the basis of going concern.

10. To aid and support the revival of the Company, including continuity of operations and other related activities such as product development, the Company had to meet capital expenditure (including capital work in progress and capital advances) by way of increase in current liabilities to the extent of Rs. 135.85 lakhs. (previous year Rs.259.09 lakhs).

11. Restructuring of Loans

a) The Company had executed a Multipartite Agreement on 28th March, 2005 with all its Secured Lenders (MPA). The Company is in default in re-payment of principal and interest payment. The draft Revival Scheme submitted to BIFR inter-alia takes into consideration the dues of Secured Lenders (SL).

b) The Company has obtained approval(s) from SL (representing 96.69% by value) regarding their dues, which will come into effect from the date of sanction of its Revival Scheme by BIFR. Upon approval of the Revival Scheme by BIFR, the approvals of the SL will form an integral part of the MPA and accordingly the MPA shall stand modified / amended to that extent. Pending approval of the Revival Scheme by BIFR, applicable interest has been provided on the defaulted amount for the year.

12. Deferred Taxation:

In terms of Para 26 of AS-22 "Accounting for Taxes on Income " issued by the Institute of Chartered Accountants of India, the Company has reviewed the Deferred Tax Assets (DTA), recognized as on 31st March, 2014 at the Balance Sheet date. In the context of - uncertainty of generation of profits in near future, Deferred Tax Assets has not been recognized.

13.Disclosure in pursuance of Accounting Standard 15 (Revised) "Employees Benefit " issued by the ICAI

During the year, Company has recognized the following amounts in the financial statements:

Defined Contribution Plan

Contribution to Defined Contribution Plan, maintained under the Employees Provident Fund Scheme by the Central Government, is charged to Profit and Loss Account.

Defined Benefit Plan

The employees gratuity fund is partly managed by Life Insurance Corporation is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in the same manner as gratuity.

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.

14. The Company has carried out impairment test on its Fixed Assets as on 31.03.2014 and the Impairment loss of Rs.260.42 lacs has been debited to Profit & Loss Account.

15. Leases:

Operating Leases: The Company has taken various residential/ commercial premises and Plant and Machinery under operating leases. These lease arrangements are normally renewed on expiry.

The rental expenses in respect of operating leases Rs.140.59 Lakhs

16. In the absence of information from Trade Payable regarding status under The Micro, Small and Medium Enterprises Development Act, 2006, liability of interest if any can not be reliably estimated, nor required disclosures can be made.

17. Related Party Disclosures:

(i-a) Associates

VCCL Limited

(i-b) Key Management Personnel

Shri Deepak Kumar Singhania - Chairman & Managing Director, Shri. Lalit Kumar Singhania - Whole-time Director, Shri Sanjeev Shriya - Whole-time Director,Shri Anurag Kumar Singhania - Whole-time Director, Shri R K Srivastava - Whole-time Director (i-c) Companies controlled by Directors/Relatives Smart Chips Limited, Suryodaya Investment & Trading. Co. Limited, Mahalaxmi Holdings Limited, Payal Investments & Trading Limited, Mimosa Finance & Trading Limited, Bina Fininvest P. Limited, Ginideep Finance & Investments P. Limited, Gold Rock Investments Limited, Gold Rock Metals Limited, Gold Rock World Trade Limited, Blue Point Leasing Limited, Gold Rock Agro-Trading Limited, Tridhar Finance & Trading Limited, Picanova Investments P. Limited, Inlac Granston Limited, Shree Dhan Sharda Mercantile P Limited, B.S. Infotech P. Limited, Ind Hi-Tech Enterprises Pvt. Limited, Saryu Investment & Trading P. Limited, Panki Roadlines Pvt. Limited, Sugata Investment Limited, Gold Rock Agrotech Limited, Syscom Corporation Limited, Seattle Ontime P. Limited

[ii] There is no provision for doubtful debts or amounts written off or written back during the year in respect of dues from or to related parties.

Details of related parties transactions:

Associates: All the transactions and outstanding balance are with VCCL Limited.

Key Management Personnel: Remuneration to Shri Deepak Kumar Singhania Rs.19.44 lakhs (Previous year Rs. 21.38 lakhs), Shri. Lalit Kumar Singhania Rs. 11.99 lakhs (Previous year Rs. 9.15 lakhs), Shri Sanjeev Shriya Rs.15.35 lakhs (Previous year Rs. 15.41 lakhs), Shri Anurag Kumar Singhania Rs.9.44 lakhs (Previous year Rs. 9.48 lacs) and Shri R K Srivastava Rs. 18.00 lakhs (Previous year Rs. 18.00 lakhs).

18. Business Segment :

(a) Primary (Business) Segment

The operations of the Company relate to only one seg ment viz. Motorized Two-Wheelers.

(b) Secondary (Geographical) Segment

1. Secondary segment reporting is on the basis of geographical location of the customers. The Company''s revenue during the year by geographical markets are :

Domestic Sales Rs.7432.98 lakhs (Previous year Rs. 8588.17 lakhs) and Export sales Rs.18211.65 lakhs (Previous year Rs. 15066.65 lakhs)

2. Geographical segment wise loss and capital employed are not given since the production unit and administrative expenses are common.

19. CASH PROFIT FROM OPERATING ACTIVITIES

Profit (Loss)before Tax

1. The Cash Flow statement has been prepared under the indirect method as set out in the Accounting Standard - 3 on Cash Flow statement issued by The Institute of Chartered Accountants of India.

2. Figures in bracket indicate cash outflow.

3. Previous year figures have been re-grouped and recasted wherever necessary to conform to current year classification.


Mar 31, 2013

1. Contingent Liabilities & Commitments (to the extent not provided for)

(a) Income-tax, Sales-tax, Customs and Excise Duty matters pending in appeals etc. Rs.17925.16 lakhs (Previous year Rs. 17174.46 lakhs) (net of Bank Guarantee of Rs 3.00 lakhs included in (b) below (Previous year Rs. 3.00 lakhs)

(b) Outstanding guarantees furnished by Bankers Rs. 11.65 lakhs (Previous year Rs.11.65 lakhs).

(c) Claims against the Company not acknowledged as debts Rs.13921.55 lakhs (Previous year Rs. 13671.08 lakhs).

(d) Unexecuted capital commitments (net of advances) Rs. 6.71 lakhs (Previous year Rs. 9.12 lakhs)

2. Balances of some of the Trade Receivables, Trade Payable, lenders, loans and advances are subject to confirmation from the respective parties and consequential adjustments arising from reconciliation, if any. The management however is of the view that there will be no material adjustment in this regard.

3. The Company is in the process of restructuring/revival of its business under the aegis of BIFR which inter alia includes finalization of the product plan. The process of possible utilization of slow / non-moving items of inventory will be undertaken upon - finalization of the product plan and the restructuring/revival plan. Pending such ascertainment/ determination the management has considered the inventories except finished goods at cost. Requisite accounting effect, if any, will be given upon such ascertainment/ determination and approval of revival plan.

4. Interest in respect of Long Term Loans/Debentures/ Deferred Credits (for acquisition of Fixed Assets) availed / issued during the financial years 1982-83 to 1984-85 had been capitalised for the full period of Long Term Loans/Debentures/Deferred Credits in the year of availment/issue as per practice prevailing then. No such capitalisation has since been made. In view of such capitalisation, the charge to Profit and Loss Account on account of depreciation is higher by Rs. 6.49 lakhs (Previous year Rs. 6.49 lakhs).

5. Remuneration to Chairman & Managing Director and - Whole-time Directors:

(Rs. in lakhs)

2012-13 2011-12

Salary 12.75 8.44

Contribution to:

Provident Fund 0.88 0.48

Perquisites 59.79 58.40

Total 73.42 67.32

6. Expenditure on Research & Development Activities during the year amounted to Rs. 416.34 lakhs (previous year Rs. 328.40 lakhs) has been charged to P&LAccount.

7. The Company became a Sick Industrial Company within the meaning of Section 3(1 )(0) of Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) due to erosion of its net worth and the Company -was declared a Sick Industrial Company by BIFR on 8th May, 2007. The Company which restarted its operations from April, 2007 is working on the development of various new products and technologies and production of new generation 4-stroke Automatic Gearless Scooter (CVT) has since commenced. The Company has already submitted its draft revival scheme to BIFR and as directed by BIFR, Company is in process of submitting updated revival scheme. In view of this, the accounts have been prepared on the basis of going concern.

8. To aid and support the revival of the Company, including continuity of operations and other related activities such as product development, the Company had to meet urgent capital expenditure (including capital work in progress and capital advances) by way of increase in current liabilities to the extent of Rs. 259.09 lakhs. (Previous year Rs.297.19 lakhs).

9. Restructuring of Loans

(a) The Company has executed with the Secured Lenders (SL) on 28th March, 2005 a Multipartite Agreement (MPA). The Company is in default towards payment of interest since December 2006. Applicable penal interest has been provided on the above over dues. The Draft Revival Scheme submitted to BIFR inter-alia takes into consideration the dues of the_SL.

(b) In terms of the MPA the outstanding amounts are repayable to the SL as per the repayment schedule over eight years along with interest at increasing rate (on yield to maturity basis). Accordingly. the Company has provided interest at the rate specified for the financial period in the MPA and not at the Yield to Maturity (YTM) rate. The amount of interest so provided for the financial year ended 31st March, 2013 amounts to Rs.2383.18 lakhs as compared to YTM rate. There is excess provision of Rs.35.30 lakhs for the year, which is equivalent to cumulative short provisions in earlier years.

10. Deferred Taxation:

In terms of Para 26 of AS-22 "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, the Company has reviewed the Deferred Tax Assets (DTA), recognized as on 31st March, 2013 at the Balance Sheet date. In the context of - uncertainty of generation of profits in near future, Deferred Tax Assets has not been recognized.

11. Disclosure in pursuance of Accounting Standard 15 (Revised) "Employees Benefit" issued by the ICAI During the year, Company has recognized the following amounts in the financial statements:

Defined Contribution Plan

Contribution to Defined Contribution Plan, maintained under the Employees Provident Fund Scheme by the Central Government, is charged to Profit and Loss Account as under:

Amount (Rs. in Lakhs)

2012-13 2011-12

Employer''s Contribution to

Provident Fund 55.13 50.27

Employer''s Contribution to

Pension Scheme 46.67 46.04

Defined Benefit Plan

The employees gratuity fund is partly managed by Life Insurance Corporation is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in the same manner as gratuity.

Note: The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.

12. The Company has carried out impairment test on its Fixed Assets as on 31.03.2013 and the Management is of the opinion that there is no asset for which impairment required to be made as per Accounting Standard-28 on Impairment of Assets issued by ICAI.

13. Earning Per Share (EPS) computed in accordance with Accounting Standard 20 issued by The Institute of Chartered Accountants of India.

14. Leases:

(a) Operating Leases:

The Company has taken various residential/ commercial premises and Plant and Machinery under operating leases. These lease arrangements are normally renewed on expiry. The future minimum lease payments in respect of the aforesaid leases are as follows:

The rental expenses in respect of operating leases Rs. 164.22 lakhs

(b) Finance Leases:

The minimum lease payment in respect of assets taken on lease on or after 01.04.2001 and the present value thereof in respect of assets acquired under finance leases are as follows:

15. In the absence of information from Trade Payable regarding status under The Micro, Small and Medium Enterprises Development Act, 2006, liability of interest if any can not be reliably estimated, nor required disclosures can be made.

16. Related Party Disclosures: (i-a) Associates/ Joint Venture

VCCL Limited, Trident Auto Components (P) Ltd. (i-b) Key Management Personnel

Shri Deepak Kumar Singhania - Chairman & Managing Director, Shri Lalit Kumar Singhania

- Whole-time Director, Shri Sanjeev Shriya

- Whole-time Director, Shri Anurag Kumar Singhania - Whole-time Director, Shri Ram Kumar Srivastava - Whole-time Director

(i-c) Companies controlled by Directors/Relatives Smart Chips'' Limited, Suryodaya Investment & Trading. Co. Limited, Mahalaxmi Holdings Limited, Payal Investments & Trading Limited, Mimosa Finance & Trading Limited, Bina Fininvest P. Limited, Ginideep Finance & Investments P. Limited, Gold Rock Investments Limited, Gold Rock Metals Limited, Gold Rock World Trade Limited, Blue Point Leasing Limited, Gold Rock Agro-Trading Limited, Tridhar Finance & Trading Limited, Picanova Investments P. Limited, Inlac Granston Limited, Shree Dhan Sharda Mercantile P Limited, B.S. Infotech P. Limited, Ind Hi-Tech Enterprises Pvt. Limited, Saryu Investment & Trading P. Limited, Panki Roadlines Pvt. Limited, Sugata Investment Limited, Gold Rock Agrotech Limited, Syscom Corporation Limited, Seattle Ontime P. Limited

[ii] There is no provision for doubtful debts or amounts written off or written back during the year in respect of dues from or to related parties.

[iii] Summary of Transactions with related parties:

Details of related parties transactions:

Associates/Joint Ventures: All the transactions and outstanding balance are with VCCL Limited except Rs.8.04 lacs payable to Trident Auto Components Pvt. Ltd.

Key Management Personnel: Remuneration to Shri Deepak Kumar Singhania Rs. 21.38 lakhs (Previous year Rs. 22.23 lakhs), Shri Lalit Kumar Singhania Rs. 9.15 lakhs (Previous year Rs. 4.16 lakhs), Shri Sanjeev Shriya Rs. 15.41 lakhs (Previous year Rs. 16.65 lakhs), Shri Anurag Kumar Singhania Rs. 9.48 lakhs (Previous year Rs. 11.83 lacs) and Shri Ram Kumar Srivastava Rs. 18.00 lakhs (Previous year Rs. 12.45 lakhs). 40. Business Segment:

(a) Primary (Business) Segment

The operations of the Company relate to only one segment viz. Motorized Two-Wheelers.

(b) Secondary (Geographical) Segment

1. Secondary segment reporting is on the basis of geographical location of the customers. The Company''s revenue during the year by geographical markets are:

Domestic Sales Rs. 8588.17 lakhs (Previous year Rs. 12381.30 lakhs) and Export sales Rs. 15066.65 lakhs (Previous year Rs. 17326.31 lakhs)

2. Geographical segment wise loss and capital employed are not given since the production unit and administrative expenses are common.

17. As required by Accounting Standard - 29 " Provisions, Contingent Liabilities and Contingent Assets" issued by the Institute of Chartered Accountants of India, the disclosure with respect to provisions of warranty expenses are as follows:

18. Remuneration to Auditors

(a) Statutory Audit Fee Rs. 9.00 lakhs (Previous year Rs. 9.00 lakhs)

(b) Tax Audit Fee Rs. 0.80 lakh (Previous year Rs. 0.80 lakh).

(c) Other Services - Certification and other Jobs Rs.7.00 lakhs (Previous year Rs. 7.00 lakhs).

19. Remuneration to Cost Auditors

Audit Fee Rs. 0.35 lakh (Previous year Rs. 0.35 lakh).

20. C.I.F.Value of Imports

21. Figures of the previous year have been regrouped and recasted wherever necessary to make them comparable. Notes 1 to 49 form an integral part of the Balance Sheet and Profit and Loss Account


Mar 31, 2012

Notes:

(i) 460000 Equity Shares were allotted as fully paid-up Bonus Shares on 3rd October, 1979 by capitalisation of General reserve.

(ii) 5314116 Equity Shares were allotted as fully paid-up on conversion of Debentures (Series I, II & III).

(iii) 3162000 Equity Shares were allotted as fully paid-up to Financial Institutions pursuant to the convertibility clause in the relevant Rupee Loan Agreement.

(iv) 785423 Equity Shares were allotted to Banks & Financial Institutions on 29th March, 2005 as per terms & conditions of the Negotiated Settlement.

(v) 11842519 Non cumulative Redeemable Preference Shares were allotted to Banks & Financial Institutions on 29th March, 2005 as per terms & conditions of the Negotiated Settlement and redeemable in three annual instalments due on 29th March, 2015, 29th March, 2016 and 29th March, 2017

(vi) 819723 Equity Shares were allotted to specified lendors on 16th November. 2005 as psr terms & conditions of the Negotiated Settlement.

(vii) 32223538 Equity Shares were allotted on conversion of FCCB series A & B during the period from 24.08.2005 to 31.07.2009.

1. Long Term Debts Secured by:

(a) Term Loans from Banks and Financial Institutions included above, except Industrial Investment Bank of India and Bank of Baroda, represent the settled amounts outstanding as on 31.03.2012 under the Negotiated Settlement reached with these Lenders. These are secured by (i) a First mortgage and charge on the immovable properties consisting of Land, Buildings, Fixed Plant and Machinery, Furniture and Fixtures of the Company existing as on 31.03.2005 (save and except Land and property situated at Plot No. C-3 & 4, Site I, Panki Industrial Estate, Kanpur) and (ii) first charge by way of hypothecation of all movable assets of the Company (save and except Stocks of Raw Materials, Components, Stores & Spares, Work-in-process, Finished Goods, Book Debts etc), including movable machinery, tools, accessories, etc., existing as on 31.03.2005, subject however, to the prior charges created in favour of (a) banks/others over certain specified equipment purchased by the Company on Hire Purchase basis,(b) SASF over the specified equipment acquired out of its erstwhile EFS Loan, (c) Exim Bank over the specified equipment acquired by the Company out of its erstwhile Rupee Loan under PEFP, (d) IIBI over the specified equipment acquired out of its erstwhile Rupee Loan under ACS. The aforesaid first mortgage and charges rank pari-passu. inter-se.in all respects amongst the aforesaid Financial Institution/Banks. These Loans are further secured by Personal Guarantee (s) of three Directors of the Company. Equitable Mortgage on some of the properties is yet to be created.

(b) Term Loans against erstwhile Rupee Loan from IDBI under EFS, erstwhile Rupee Loan from Exim Bank under PEFP and erstwhile Rupee Loan from IIBI under ACS, included in Serial Number (i) represent the settled amounts outstanding as on 31.03.2012 under the Negotiated Settlement reached with these Lenders. These Loans are secured by (i) an exclusive first charge by way of hypothecation of specified equipments acquired out of the said erstwhile loans and (ii) Personal Guarantee(s) of three Directors of the Company.

(c) Amounts outstanding against erstwhile working capital facilities from SBI, BOI and BOB included in Serial Number

(i) above represent the settled amounts outstanding as on 31.03.2012 under the Negotiated Settlement reached with these Banks. These Loans are secured by (i) a first charge on the land and property situated at Plot No. C-3 & 4, Site I, Panki Industrial Estate, Kanpur by way of Equitable Mortgage, ranking pari passu, inter-se, in all respects amongst these Banks and (ii) Personal Guarantee(s) of three Directors of the Company. These are further secured by a Second Charge on the immovable properties consisting of Land, Buildings, Fixed Plant and Machinery, Furniture and Fixtures of the Company existing as on 31.03.2005 (save and except Land and property situated at Plot No. C-3 & 4, Site I. Panki Industrial Estate, Kanpur). Certain charges in respect of 1(a) and 1(c) are yet to be modified / created.

(d) Fixed Assets purchased under Hire Purchase arrangement are secured by hypothecation of respective assets.

Other Notes on Accounts

2. Contingent Liabilities & Commitments (to the extent not provided for)

(a) Income-tax, Sales-tax, Customs and Excise Duty matters pending in appeals etc. Rs. 17174.46 lakhs (Previous period Rs. 16840.23 lakhs) (net of Bank Guarantee of Rs 3.00 lakhs included in (b) below (Previous period Rs. 3.00 lakhs)

(b) Outstanding guarantees furnished by Bankers Rs. 11.65 lakhs (Previous period Rs.10.64 lakhs).

(c) Claims against the Company not acknowledged as debts Rs. 13671.08 lakhs (Previous period Rs. 12919.22 lakhs).

(d) Unexecuted capita! commitments (net of advances) Rs.9.12 Lakhs (Previous period Rs. 51.35 lakhs)

3. Balances of some of the sundry debtors, creditors, lenders. loans and advances are subject to confirmation from the respective parties and consequential adjustments arising from reconciliation, if any. The management however is of the view that there will be no material adjustment in this regard.

4. The Company is in the process of restructuring/revival of its business under the aegis of BIFR which inter alia includes finalization of the product plan. The process of possible utilization of slow / non-moving items of inventory will be undertaken upon finalization of the product plan and the restructuring/revival plan. Pending such ascertainment/ determination the management has considered the inventories except finished goods at cost of Rs. 8446.54 lakhs. Requisite accounting effect, if any. will be given upon such ascertainment/ determination and approval of revival plan

5. Interest in respect of Long Term Loans/Debentures/Deferred Credits (for acquisition of Fixed Assets) availed / issued during the financial years 1982-83 to 1984-85 had been capitalised for the full period of Long Term Loans/ Debentures/Deferred Credits in the year of availment/issue as per practice prevailing then. No such capitalisation has since been made, in view of such capitalisation, the charge to Profit and Loss Account on account of depreciation is higher by Rs. 6.49 lakhs (Previous period Rs. 9.74 lakhs).

6. Expenditure on Research & Development Activities during the period amounted to Rs.328.40 lakhs (previous period Rs. 410.07 lakhs) has been charged to P&L Account.

7. The Company became a Sick Industrial Company within the meaning of Section 3(1 )(0) of Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) due to erosion of its net worth and the Company -was declared a Sick Industrial Company by BIFR on 8th May. 2007. The Company which restarted its operations from April. 2007 is working on the development of various new products and technologies and production of new generation 4-stroke scooter has since commenced. The Company has already submitted its Draft Revival Scheme to BIFR. In view of this, the accounts have been prepared on the basis of going concern.

8. To aid and support the revival of the Company, including continuity of operations and other related activities such as product development, the Company had to meet urgent capita! expenditure (including capital work in progress and capital advances) by way of increase in current liabilities to the extent of Rs. 297.19 lakhs.

9 Restructuring of Loans

(a) The Company has executed with the Secured Lenders (SL) on 28th March, 2005 a Multipartite Agreement (MPA). The Company is in default towards payment of interest since December 2006 and principal amount since March 2007 to the SL. Applicable penal interest has been provided on the above over dues. The Draft Revival Scheme submitted to BIFR inter-alia takes into consideration the dues of the SL.

(b) In terms of the MPA the outstanding amounts are repayable to the SL as per the repayment schedule over eight years along with interest at increasing rate (on yield to maturity basis). Accordingly, the Company has provided interest at the rate specified for the financial year in the MPA and not at the Yield to Maturity (YTM) rate. The amount of interest so provided for the financial year ended 31st March, 2012 amounts to Rs 2077.25 lakhs. As compared to the YTM rate, there is a excess provision of Rs. 90.04 lakhs for the year (cumulative short provision Rs. 35.30 lakhs)

10. Deferred Taxation:

In terms of Para 26 of AS-22 "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, the Company has reviewed the Deferred Tax Assets (DTA), recognized as on 31st March, 2012 at the Balance Sheet date. In the context of uncertainty of generation of profits in near future, Deferred Tax Assets has not been recognized.

11 Disclosure in pursuance of Accounting Standard 15 (Revised) "Employees Benefit" issued by the ICAI During the year, Company has recognized the following amounts in the financial statements:

Defined Contribution Plan

Contribution to Defined Contribution Plan, maintained under the Employees Provident Fund Scheme by the Central Government, is charged to Profit and Loss Account as under:

Defined Benefit Plan

The employees gratuity fund is partly managed by Life Insurance Corporation is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in the same manner as gratuity.

Note: The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary,

12. The Company has carried out impairment test on its Fixed Assets as on 31.03.2012 and the Management is of the opinion that there is no asset for which impairment required to be made as per Accounting Standard-28 on Impairment of Assets issued by ICAI.

The rental expenses in respect of operating leases Rs. 150.69 lakhs

(b) Finance Leases:

The minimum lease payment in respect of assets taken on lease on or after 01.04.2001 and the present value thereof in respect of assets acquired under finance leases are as follows:

13. In the absence of information from Sundry Creditors regarding status under The Micro, Small and Medium Enterprises Development Act, 2006, the liability of interest cannot be reliably estimated, nor required disclosures can be made.

14 Related Party Disclosures (i-a) Associates/ Joint Venture

VCCL Limited, Trident Auto Components (P) Ltd. (i-b) Key Management Personnel

Shn Deepak Kumar Singhania Chairman & Managing Director, Shri Lalit Kumar Singhania

Whole-time Director. Shri Sanjeev Shriya Whole-time Director, Shri Anurag kumar Singhania

Whole-time Director, Shri R K Srivastava Whole-time Director

(i-c) Companies controlled by Directors/Relatives Smart Chips Limited, Suryodaya Investment & Trading. Co. Limited, Mahalaxmi Holdings Limited, Payal Investments & Trading Limited. Mimosa Finance & Trading Limited, Bina Fininvest P. Limited, Gimdeep Finance & Investments P. Limited, Gold Rock Investments Limited, Gold Rock Metals Limited, Gold Rock World Trade Limited, Blue Point Leasing Limited, Gold Rock Agro-Trading Limited, Tridhar Finance & Trading Limited, Picanova Investments P. Limited, Inlac Granston Limited, Shree Dhan Sharda Mercantile P Limited, B.S, Infotech P. Limited, Ind Hi-Tech Enterprises Pvt. Limited, Saryu Investment & Trading P. Limited, Panki Roadlines Pvt. Limited, Sugata Investment Limited, Gold Rock Agrotech Limited, Syscom Corporation Limited, Seattle Ontime P. Limited

(ii) There is no provision for doubtful debts or amounts written off or written back during the year in respect of dues from or to related parties.

(iii) Summary of Transactions with related parties:

Details of related parties transactions:

Associates/Joint Ventures: All the transactions and outstanding balance are with VCCL Limited except Rs.8.04 lacs payable to Trident Auto Components Pvt.Ltd.

Key Management Personnel: Remuneration paid to Shri Deepak Kumar Singhania Rs. 22.23 lakhs (Previous period Rs. 34.61 lakhs), Shri Lalit Kumar Singhania Rs. 4.16 lakhs (Previous period Rs. 4.88 lakhs), Shri Sanjeev Shriya Rs. 16.65 lakhs (Previous period Rs. 29.19 lakhs), Shri Anurag kumar Singhania Rs. 11.83 lakhs (Previous period Rs. 16.00 lacs) and Shri R K Srivastava Rs. 12.45 lakhs (Previous period Rs. 15.90 lakhs).

15 Business Segment:

(a) Primary (Business) Segment

The operations of the Company relate to only one segment viz. Motorized Two-Wheelers.

(b) Secondary (Geographical) Segment

1. Secondary segment reporting is on the basis of geographical location of the customers. The Company's revenue during the year by geographical markets are :

Domestic Sales Rs.12381.30 lakhs (Previous period Rs. 13853.54 lakhs) and Export sales Rs.17326.31 lakhs (Previous period Rs. 20652.30 lakhs)

2. Geographical segment wise loss and capital employed are not given since the production unit and administrative expenses are common.

16. Remuneration to Auditors

(a) Statutory Audit Fee Rs. 9.00 lakhs (Previous period Rs. 13.50 lakhs)

(b) Tax Audit Fee Rs. 0.80 lakh (Previous period Rs. 0.80 lakh).

(c) Other Services Certification and other Jobs Rs.7.00 lakhs (Previous pericd Rs. 9.50 lakhs).

17. Remuneration to Cost Auditors

Audit Fee Rs. 0.35 lakh (Previous period Rs. 0.52 lakh).

18. Figures of this year and previous period are twelve months and eighteen months respectively and hence they are not comparable hgures for the previous period have been regrouped and recasted wherever necessary to make them comparable

Notes 1 to 50 form an integral part of the Balance Sheet and Profit and Loss Account


Mar 31, 2011

1. Contingent Liabilities

(a) Income-tax, Sales-tax, Customs and Excise Duty matters pending in appeals etc. Rs. 16840.23 lakhs (Previous year Rs. 16831.09 lakhs) (net of Bank Guarantee of Rs 3.00 lakhs included in (b) below (Previous year Rs. 3.00 lakhs)

(b) Outstanding guarantees furnished by Bankers Rs. 10.64. lakhs (Previous year Rs.10.64 lakhs).

(c) Claims against the Company not acknowledged as debts Rs. 12919.22 lakhs (Previous year Rs. 6853.22 lakhs).

2. Unexecuted capital commitments (net of advances) Rs. 51.35 lakhs (Previous year Rs. 1160.58 lakhs).

3. Balances of some of the sundry debtors, creditors, lenders, loans and advances are subject to confir- mation from the respective parties and consequen- tial adjustments arising from reconciliation, if any. The management however is of the view that there will be no material adjustment in this regard.

4. The Company is in the process of restructuring/re- vival of its business under the aegis of BIFR which inter alia includes finalization of the product plan. The process of possible utilization of slow / non-moving items of inventory will be undertaken upon - finaliza- tion of the product plan and the restructuring/revival plan. Pending such ascertainment/ determination the management has considered the inventories except finished goods at cost of Rs. 8322.94 lakhs. Requi- site accounting effect, if any, will be given upon such ascertainment/ determination and approval of revival plan.

5. Interest in respect of Long Term Loans/Debentures/ Deferred Credits (for acquisition of Fixed Assets) availed / issued during the financial years 1982-83 to 1984-85 had been capitalised for the full period of Long Term Loans/Debentures/Deferred Credits in the year of availment/issue as per practice prevailing then. No such capitalisation has since been made. In view of such capitalisation, the charge to Profit and Loss Account on account of depreciation is higher by Rs. 9.74 lakhs (Previous Year Rs. 6.49 lakhs).

6. Expenditure on Research & Development Activities during the period amounted to Rs. 410.07 lakhs (pre- vious year Rs. 211.66 lakhs) has been charged to P&L Account.

7. The Company became a Sick Industrial Company within the meaning of Section 3(1)(O) of Sick Indus- trial Companies (Special Provisions) Act, 1985 (SICA) due to erosion of its net worth and the Company - was declared a Sick Industrial Company by BIFR on 8th May, 2007.The Company which restarted its op- erations from April, 2007 is working on the develop- ment of various new products and technologies and production of new generation 4-stroke scooter has since commenced. During the year the Company has also submitted its Draft Revival Scheme to BIFR. In view of this, the accounts have been prepared on the basis of going concern.

8. A. In respect of Rs. 945 lakhs recoverable by the

Company from Esslon Synthetics Limited (ESL) against the sale consideration for transfer of undertakings, other debts and amounts, no pay- ment has been received. The said sum of Rs. 945 lakhs was to be received by the Company on or before 31.03.1992 which was guaranteed by Saraswati Trading Company Limited (STCO).

Considering the settlement reached with STCO and the decree of the Hon'ble High Court of Delhi dated 23.02.2011, Rs 746.44 lakhs (previous year – Nil) has been written off.

B. The outstanding dues / advances (Net) due from VCCL Ltd. (promoted by the Company) is Rs. 1525.08 lakhs. Based on the available assets with VCCL and considering the possible recov- ery therefrom, Rs. 1320.15 lakhs (previous year – Nil) has been provided for.

C. Miscellaneous loans and advances (doubtful of recovery) amounting to Rs. 612.09 lakhs (previ- ous year – Nil) written off.

D. Provision for amount of Rs. 12.00 lakhs (previous

year – Nil) due from Shri Sita Ram Singhania (in litigation for around 15 years).

9. Restructuring of Loans

(a) The Company has executed with the Secured Lenders (SL) on 28th March, 2005 a Multipartite Agreement (MPA). The Company is in default towards payment of interest since December 2006 and principal amount since March 2007 to the SL. Applicable penal interest has been pro- vided on the above overdues. The Draft Revival Scheme submitted to BIFR inter-alia takes into consideration the dues of the SL.

(b) In terms of the MPA the outstanding amounts are repayable to the SL as per the repayment schedule over eight years alongwith interest at increasing rate (on yield to maturity basis). Ac- cordingly, the Company has provided interest at the rate specified for the financial period in the MPA and not at the Yield to Maturity (YTM) rate. The amount of interest so provided for the fi- nancial period ended 31st March, 2011 amounts to Rs 2590.73 lakhs. As compared to the YTM rate, there is an excess provision of Rs. 239.20 lakhs for the year (cumulative short provision Rs. 125.34 lakhs)

10. Deferred Taxation

In terms of para 26 of AS-22 "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, the Company has reviewed the Deferred Tax Assets (DTA), recognized as on 31st March, 2011 at the Balance Sheet date. In the context of - uncertainty of generation of profits in near future, Deferred Tax Assets has not been recognized.

11. Disclosure in pursuance of Accounting Standard 15 (Revised) "Employees Benefit" issued by the ICAI During the year, Company has recognized the fol- lowing amounts in the financial statements:

Defined Benefit Plan

The employees gratuity fund is partly managed by Life Insurance Corporation is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit en- titlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in the same manner as gratuity.

Note : The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.

12. The Company had made an assessment as at 31st March 2011 for any indication of impairment in the carrying amount of the Company's fixed assets and Capital Work in Progress. The impairment loss of Rs. 435.37 lakhs has been debited to profit and loss account.

13. In the absence of information from Sundry Creditors regarding status under The Micro, Small and Medium Enterprises Development Act, 2006, the liability of interest cannot be reliably estimated, nor required disclosures can be made.

14. Related Party Disclosures

(i-a) Associates/ Joint Venture

VCCL Limited, Trident Auto Components (P) Ltd.

(i-b) Key Management Personnel

Shri Deepak Singhania - Chairman & Managing Director,

Shri. L K Singhania - Wholetime Director,

Shri Sanjeev Shriya - Wholetime Director,

Shri Anurag Singhania - Wholetime Director,

Shri R K Srivastava - Wholetime Director.

(i-c) Companies controlled by Directors/ Relatives

Smart Chips Limited, Suryodaya Investment & Trading. Co. Limited, Mahalaxmi Holdings Limited, Payal Investments & Trading Limited, Mimosa Finance & Trading Limited, Bina Fininvest P. Limited, Ginideep Finance & Investments P. Limited, Gold Rock Investments Limited, Gold Rock Metals Limited, Gold Rock World Trade Limited, Blue Point Leasing Limited, Gold Rock Agro-Trading Limited, Tridhar Finance & Trading Limited, Picanova Investments P. Limited, Inlac Granston Limited, Shree Dhan Sharda Mercantile P Limited, B.S. Infotech P. Limited, Ind Hi-Tech Enterprises Pvt. Limited, R.S. Softech (I) Limited, Saryu Investment & Trading P. Limited, Panki Roadlines Pvt. Limited, Sugata Investment Limited, Inlac Trading & Agencies P. Limited, Gold Rock Agrotech Limited, Syscom Corporation Limited, Seattle Ontime P. Limited

(ii) There is no provision for doubtful debts or amounts written off or written back during the period in respect of dues from or to related parties, except amounting to Rs. 1320.15 lakhs from VCCL Limited has been provided.

15. Business Segment

(a) Primary (Business) Segment

The operations of the Company relate to only one segment viz. Motorized Two-Wheelers.

(b) Secondary (Geographical) Segment

1. Secondary segment reporting is on the basis of geographical location of the customers. The Company's revenue during the period by geo- graphical markets are :

Domestic Sales Rs. 13853.54 lakhs (Previous Year Rs. 5457.15 lakhs)

and Export sales Rs. 20652.30 lakhs (Previous Year Rs. 10155.88 lakhs)

2. Geographical segmentwise loss and capital employed are not given since the production unit and administrative expenses are common.

16. Remuneration to Auditors

(a) Statutory Audit Fee Rs. 13.50 lakhs (Previous Year Rs. 8.0 lakhs)

(b) Tax Audit Fee Rs. 0.80 lakh (Previous Year Rs. 0.80 lakh).

(c) Other Services – Certification and other Jobs Rs. 9.50 lakhs (Previous Year Rs. 9.00 lakhs).

17. Remuneration to Cost Auditors

Audit Fee Rs. 0.48 lakh (Previous Year Rs. 0.32 lakh).

18. Information pursuant to the provisions of paragraphs 3, 4C and 4D of Part II of Schedule VI to the Companies Act, 1956.

19. Figures of this period and previous year are eighteen months and twelve months respectively and hence they are not comparable. Figures for the previous year have been regrouped and wherever necessary to make them comparable.

20. Figures in brackets pertain to previous year.


Sep 30, 2009

1. Contingent Liabilities

(a) Income-tax, Sales-tax, Customs and Excise Duty matters pending in appeals etc. Rs.16831.09 lakhs (Previous year Rs. 12934.46 lakhs) (net of Bank Guarantee of Rs 3.00 lakhs included in (b) below (Previous year Rs. 3.00 lakhs)

(b) Outstanding guarantees furnished by Bankers Rs. 10.64. lakhs (Previous year Rs.10.64 lakhs).

(c) Claims against the Company not acknowledged as debts Rs. 6853.22 lakhs (Previous year Rs. 4064.75 lakhs).

2. Unexecuted capital commitments (net of advances) Rs. 1160.58 lakhs (Previous year Rs. 1160.58 lakhs)

3. Balances of some of the sundry debtors, creditors, lenders, loans and advances are subject to confir- mation from the respective parties and consequen- tial adjustments arising from reconciliation, if any. The management however is of the view that there will be no material adjustment in this regard.

4. The Company is in the process of restructuring/re- vival of its business under the aegis of BIFR which inter alia includes finalization of the product plan. The process of ascertaining slow/non moving/obsolete items of inventory and possible utilization/realization thereof will be undertaken upon - finalization of the product plan and the restructuring/revival plan. Pend- ing such ascertainment/ determination the manage- ment has considered the inventories except finished goods at cost of Rs. 8082.10 lakhs. Requisite ac- counting effect, if any, will be given upon such ascer- tainment/determination and approval of revival plan.

5. During the year, the Company has relinquished its title on imported goods lying in CWC bonded ware- house, to Government of India (Custom). Accordingly loss of Rs. 1316.55 lakhs (Previous year Nil) has been charged to Profit and Loss Account, net of provision of Custom Duty & interest there on.

6. Interest in respect of Long Term Loans/Debentures/ Deferred Credits (for acquisition of Fixed Assets) availed / issued during the financial years 1982-83 to 1984-85 had been capitalised for the full period of Long Term Loans/Debentures/Deferred Credits in the year of availment/issue as per practice prevailing then. No such capitalisation has since been made. In view of such capitalisation, the charge to Profit and Loss Account on account of depreciation is higher by Rs. 6.49 lakhs (Previous Year Rs. 6.49 lakhs).

7. Expenditure on Research & Development Activities during the year amounted to Rs.211.66 lakhs (previous year Rs. 154.72 lakhs) has been charged to P&L Account.

8. In respect of Rs. 945 lakhs recoverable by the Company from Esslon Synthetics Limited (ESL) against the sale consideration for transfer of undertakings, other debts and amounts, no payment has been re ceived. The said sum of Rs. 945 lakhs was to be received by the Company on or before 31.03.1992 which was guaranteed by Saraswati Trading Company Limited (STCO).

The Company has made an application in the Honble Delhi High Court u/s 20 of the Arbitration Act, 1940 for appointment of Arbitrators, recovery of dues from ESL and also to adjudicate upon other related mat ters. The Honble Delhi High Court has disposed of the petition with the observation that same may be revived as and when permission of Company Court, Allahabad High Court which is dealing with liquida tion of ESL is obtained to pursue the matter.

The winding up process of ESL pursuant to the order of the Honble Allahabad High Court on the recom mendation of BIFR is in progress.

In respect of the overdue unpaid sale consideration of Rs. 945 lakhs, the Company alongwith its Manag ing Director and one Whole-time Director has filed a suit in Honble Delhi High Court invoking the guaran tee given by STCO whereupon the Honble High Court has confirmed the order of injunction which was passed earlier restraining STCO and its Director Late Shri IP. Shroff from transferring, creating any charge, encumbering or exercising any voting rights in respect of 2728706 Equity Shares of the Company held by STCO other than in favour of Promoters. STCO has filed an appeal against the order before Honble Delhi High Court which is pending adjudication.

Considering the aforementioned guarantee of STCO and the confirmation of order of injunction by Honble Delhi High Court and pending outcome of the case, the sum of Rs. 945 lakhs (included in Loans & Ad vance in Schedule 6) is considered good. Adjustment of loss, if any, which may arise in respect of the said outstanding will he made on final judicial adjudica- tion of the matter.

9. Loans and Advances include a sum of Rs. 12 lakhs (Previous year Rs. 12 lakhs) due from Mr. Sitaram Singhania, Promoter and erstwhile Managing Direc tor of Esslon Synthetics Ltd. (ESL) on account of shares of ESL sold by the Company to him in the financial year ended 3.1st March, 1991. The Com pany has filed a suit in the Honble Delhi High Court for recovery of the said sum from Mr. Sitaram Singhania together with interest thereon. The case has been transferred to the District Court and the matter is sub-judice.

10. The Company is promoter of VCCL Limited. The out standing debts/advances (Net) due from VCCL Lim ited as on 30.09.2009 is Rs. 1516.52 lakhs (As at 30.09.2008 Rs. 1514.26 lakhs). As per the latest available audited accounts, the net worth of VCCL Limited is negative and the said Companys manufacturing operations continued to be suspended as in the past. The management is pursuing the matter of re- covery of above dues from VCCL Limited, inter alia, by way of start up/use/ acquisition/disposal of its assets. Adjustment for loss, if any, which may arise in respect of the said outstanding will be made on its determination.

11. FCCB Series B

On 31.08.2005, Company had issued 6000 Foreign

Currency Convertible Bonds (FCCB) Series B of US$ 1000 each redeemable at par on 30:08.2010. 5000 FCCBs had already been converted in earlier period and the balance 1000 FCCBs have been converted into 1631657 Equity Shares at the conversion price of Rs. 26.66 per share on 31.07.2009.

12. Restructuring of Loans

(a) The Company has executed with the Secured Lenders (SL) on 28th March, 2005 a Multipartite Agreement (MPA). The Company is in default towards payment of interest since December 2006 and principal amount since March 2007 to the SL. The restructuring / revival plan would interalia take into consideration the overdues of the SL. However, applicable penal interest has been provided on the above overdues.

(b) In terms of the MPA the outstanding amounts are repayable to the SL as per the repayment schedule over eight years alongwith interest at increasing rate (on yield to maturity basis). Accordingly, the Company has provided interest at the rate specified for the financial period in the MPA and not at the Yield to Maturity. (YTM) rate. The amount of interest so provided for the financial year ended 30th September, 2009 amounts to Rs 1384.00 lakhs. As compared to the YTM rate, there is a excess provision of Rs. 193.93 lakhs for the year (cumulative short pro- vision Rs.253.15 lakhs)

13. Deferred Taxation :

in terms of para 26 of AS-22 "Accounting for Taxes on Income" issued by the Institute of Chartered Ac countants of India, the Company has reviewed the Deferred Tax Assets (DTA), recognized as on 30th September,2009 at the Balance Sheet date. In the context of uncertainty of generation of profits in near future, Deferred Tax Assets has been not been rec ognized.

Defined Benefit Plan

The employees gratuity fund is partly managed by Life insurance Corporation is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in the same manner as gratuity.

Note : The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.

14. Accounting Standard 28 (AS- 28), Impairment of Assets issued by The Institute of Chartered Accountants of India has become applicable to the Company from 1st April, 2005. The Company is in process of restructuring / revival of its business under the aegis of BIFR which, inter alia, includes finalization of the product plan. The process of determining the impairment of loss, if any, on its assets including capital work in progress will be undertaken upon finalization of the product plan and the restructuring / revival plan. Requisite accounting effect, if any, will be given upon such ascertainment / determination and approval of revival plan.

15. The Company has become a Sick Industrial Com pany within the meaning of Section 3(1 )(0) of Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) due to erosion of its net worth. In view of the aforesaid, the Company has made reference to Board for Industrial and Financial Reconstruction (BIFR) under provision of Section 15.(1) of the said Act and the Company has since been declared a Sick Indus trial Company by BIFR. The Company is working on the development of various new products and tech nologies and production of new generation 4-stroke scooter has since commenced. The Company is working for formulation of a Draft Revival Scheme for consideration by BIFR.

16. The Company has restarted its operations from April, 2007 and is in the process of restructuring / revival of its business. The Company is also working for for mulation of a Draft Revival Scheme for consideration by BIFR and in view of this Accounts have been pre pared on the basis of going concern.

17. Leases:

(a) Operating Leases :

The Company has taken various residential/ commercial premises and Plant and Machinery under operating leases. These lease arrange

18. In the absence of information from Sundry Creditors regarding status under The Micro, Small and Medium Enterprises Development Act, 2006, the liability of interest cannot be reliably estimated, nor required disclosures can be made.

19. Related Party Disclosures

(i-a) Associates/ Joint Venture

VCCL Limited, Trident Auto Components (P) Ltd.

(i-b) Key Management Personnel

Shri Deepak Singhania - Chairman & Manag- ing Director, Shri. L K Singhania - Wholetime Director, Shri Sanjeev Shriya -Wholetime Director, Shri Anurag Singhania - Wholetime Director, Shri R K Srivastava - Wholetime Director.

(i-c) Companies controlled by Directors/ Relatives

Smart Chips Limited, Suryodaya Investment & Trading. Co. Limited, Mahalaxmi Holdings Limited, Payal Investments & Trading Limited, Mimosa Finance & Trading Limited, Bina Fininvest P. Limited, Ginideep Finance & Investments P. Limited, Gold Rock Investments Limited, Gold Rock Metals Limited, Gold Rock World Trade Limited, Blue Point Leasing Limited, Gold RockAgro-Trading Limited, Tridhar Finance & Trading Limited, Picanova Investments P. Limited, Inlac Granston Limited, Shree Dhan Sharda Mercantile P Limited, B.S. Infotech P. Limited, Ind Hi-Tech Enterprises Pvt. Limited, R.S. Softech (I) Limited, Saryu Investment & Trading P. Limited, Panki Roadlines Pvt. Limited, Sugata Investment Limited, Inlac Trading & Agencies P. Limited, Gold Rock Agrotech Limited, Syscom Corporation Limited, Seattle Ontime P. Limited.

(ii) There is no provision for doubtful debts or amounts written off or written back during the period in respect of dues from or to related parties.

20. Business Segment

The operations of the Company relate to only one segment viz. Motorized Two-Wheelers.

21. Remuneration to Auditors

(a) Statutory Audit Fee Rs. 8.00 lakhs (Previous Year Rs. 8.0 lakhs)

(b) Tax Audit Fee Rs. 0.80 lakh (Previous Year Rs. 0.80 lakh).

(c) Other Services - Certification and other Jobs Rs. 9.00 lakhs (Previous Year Rs. 8.13 lakhs).

22. Remuneration to Cost Auditors

Audit Fee Rs. 0.32 lakh (Previous Year Rs. 0.32 lakh).

23. Information pursuant to the provisions of paragraphs 3, 4C and 4D of Part II of Schedule VI to the Companies Act, 1956.

24. Figures of the previous year have been regrouped and recasted wherever necessary to make them comparable.

25. Figures in brackets pertain to previous year.

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