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Notes to Accounts of Lumax Industries Ltd.

Mar 31, 2015

1. Corporate Information

Lumax Industries Limited (''the Company'') is a leading manufacturer and supplier of auto components, mainly automotive lighting systems for four wheeler and two wheeler applications. The Company has technical as well as financial collaboration with Stanley Electric Co. Ltd., Japan. Its shares are listed on two exchanges in India.

2. Basis of preparation

The financial statements of the Company have been prepared and presented in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply with all material respects with the accounting standards specified under section 133 of the Companies Act, 2013, read together with paragraph 7 of the Com- panies (Accounts) Rules, 2014. The financial statements have been prepared on an accrual basis and under the historical cost convention. The accounting policies adopted in the preparation of financial statements are consistent with those of previous year except for the change in accounting policy explained below.

3. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs.10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended March 31,2015, the amount of per share dividend recognized as distributions to equity shareholders was Rs. 5.50 (Previous year: Rs. 3.50).

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

4 Indian Rupee Loan from Bank includes:

(a) Rs. 72,637,500/- (Previous year Rs. 89,400,000/-) taken in the Financial Year 2013-14 carries interest @ 10% p.a. at present. The loan is repayable in 16 equal quarterly installments of Rs. 5,587,500/- (excluding interest) after one year moratorium period from the disbursement date i.e. from 04.04.2013. The Loan is secured by way of first pari passu charge on the land and building situated at Sohna, Gurgaon (Haryana) unit.

(b) Rs. 33,718,750/- (Previous year Rs. Nil) taken in the Financial Year 2014-15 carries interest @ 10.70% p.a. at present. The loan is repayable in 16 equal quarterly installments of Rs. 2,593,750/- (excluding interest) from the disbursement date i.e. from 10.06.2014. The Loan is secured by way of first pari passu charge on the land and building situated at Sohna, Gurgaon (Haryana) unit.

(c) Rs. Nil (Previous year Rs. 52,044,266/-) taken in the financial year 2010-11 carried interest @ base Rate 10.25 3% i.e. 13.25% p.a. The loan was repayable in 16 equal quarterly installments of Rs. 10,410,750/- (excluding interest) after one year moratorium period from the disbursement date i.e. from 10.05.2011. The Loan was secured by way of first pari passu charge on the land and building along with all the plant and machineries, situated at Sanand (Gujarat) unit both present and future. The loan has been repaid during the year.

(d) Rs. 17,057,152/- (Previous year Rs. 12,442,265/-) vehicle loans from banks at interest @ 8% - 12% aggregating to are secured by way of hypothecation of the respective vehicles acquired out of the proceeds thereof. These loans are repayable over a period of three years from the date of availment.

5 Foreign Currency Loan from Bank includes:

(a) Rs. 97,656,246/- (Previous year Rs. 168,510,935/-) taken in the financial year 2011-12 carries interest @ LIBOR plus 260 BSP. The loan is repayable in 16 quarterly installments of Rs. 14,026,563/- after one year moratorium period from the disbursement date i.e. from

03.06.2012. The loan is secured by way of first & exclusive charge on the land and building along with all the plant and machineries, situated at Bawal (Haryana) unit both present and future.

(b) Rs. 234,375,000/- (Previous year Rs. 374,468,750/-) taken in the financial year 2011-12 carries interest @ LIBOR plus 260 BSP. The loan is repayable in 16 quarterly installments of Rs. 30,568,750/- after one year moratorium period from the disbursement date i.e. from

29.09.2012. The loan is secured by way of first & exclusive charge on the land and building along with all the plant and machineries, situated at Bawal (Haryana) unit both present and future.

(c) Rs. 156,250,000/- (Previous year Rs. 224,681,250/-) taken in the financial year 2011-12 carries interest @ LIBOR plus 350 BSP. The loan is repayable in 16 quarterly installments of Rs. 15,521,875/- after one year moratorium period from the disbursement date i.e. from 31.01.2013. The loan is secured by way of first and exclusive pari passu charge on the land and building alongwith all other moveable fixed assets, situated at Pant Nagar (Uttrakhand) unit both present and future.

(d) Rs. 195,312,500/- (Previous year Rs. 262,128,125/-) taken in the financial year 2012-13 carries interest @ LIBOR plus 350 BSP. The loan is repayable in 16 quarterly installments of Rs. 17,437,500/- after one year moratorium period from the disbursement date i.e. from 28.08.2013. The loan is secured by way of first and exclusive pari passu charge on the land and building alongwith all other moveable fixed assets, situated at Haridwar (Uttrakhand) and all other movable fixed assets of Bangalore (Karnataka) unit both present and future.

6 Indian Rupee Loan from other than Bank includes Vehicle loans at interest @ 8% - 12% aggregating to Rs. Nil (Previous year Rs. 14,546/-) are secured by way of hypothecation of the respective vehicles acquired out of the proceeds thereof. These loans are repayable over a period of three years from the date of availment.

7 Deferred sales tax loan was interest free and repayable monthly after seven year from its due months respectively starting from July, 2007. The loan has been repaid during the year.

(a) Provision for warranties

A provision is recognized for expected warranty claims on products sold during the last one year, based on past experience of the level of repairs and returns. It is expected that all of these costs will be incurred in next financial year after the reporting date. Assumptions used to calculate the provision for warranties were based on current sales levels and current information available about warranty based on the one-year period for all products sold.

(a) Cash credit facility of Rs. Nil (Previous year Rs. 50,081,965/-) was secured by way of first pari passu charge on all current ssets of the Company. This facility was further secured by way of equitable mortgage on Land and Buildings and first pari passu charges against movable Fixed Assets at Chinchwad Unit of the Company, repayable on demand & carried interest @ 13.50% . The amount has been repaid during the year.

(b) Cash credit facility of Rs. 2,466,665/- (Previous year Rs. 35,079,855/-) is secured by way of first pari passu charge on all current as- sets of the Company. This facility is further secured by way of equitable mortgage on Land and Buildings and first pari passu charges against movable Fixed Assets at Chinchwad Unit of the Company, repayable on demand & carries interest @ 12.30% .

(c) Cash credit facility of Rs. 38,468,402/- (Previous year Rs. 97,714,016/-) is secured by way of first pari passu charge on all current assets of the Company. This facility is further secured by extension of charge by way of hypothecation on the Plant and Machinery along with the UREM on Land and Building situated at Chakan Unit of the Company, repayable on demand & carries interest @ 11%.

(d) WCDL Facility of Rs. 100,000,000/- (Previous year Rs. 75,000,000/-) & Cash Credit facility of Rs. Nil (Previous year Rs. 23,630,829/-) is secured by way of first pari passu charge on all current assets of the Company. This facility is further secured by way of equitable mortgage on Land and Buildings and first pari passu charges against movable Fixed Assets at Chinchwad Unit of the Company, repayable on demand & carries interest @ 10.10% & 11% respectively.

(e) Cash Credit Facility of Rs. 97,169,179/- (Previous year Rs. 98,458,752/-) is secured by way of first pari passu charge on all current assets of the Company. This facility is further secured by way of equitable mortgage on Land and Buildings and first pari passu charges against movable Fixed Assets at Chinchwad Unit of the Company, repayable on demand & carries interest @ 11.75%.

(f) WCDL Facility of Rs. 150,000,000/- (Previous year Rs. Nil) & Cash Credit facility of Rs. Nil (Previous year Rs. Nil) is secured by way of first pari passu charge on all current assets of the Company. This facility is further secured by way of equitable mortgage on Land and Buildings and first pari passu charges against movable Fixed Assets at Chinchwad Unit of the Company, repayable on demand & carries interest @ 10.60% & 11% respectively.

(g) Vendor Finance Facility from MSIL of Rs.399,600,090 /- (Previous year Rs. NIL) is repayable on 60 days from respective drawdown & carries interest @ 10.70%.

8. Gratuity benefit plan

The Company operates defined benefit plan for gratuity for its employees. Under the gratuity plan, every employee who has completed atleast five years of service gets a gratuity on departure @ 15 days of last drawn basic salary including DA for each completed year of service, subject to a maximum amount of Rs. 1,000,000. The scheme is funded with an insurance Company in the form of qualifying insurance policy.

The following tables summarize the components of net (benefit) / expense recognized in the statement of profit and loss and the funded status and amounts recognized in the balance sheet for the gratuity plan.

9. Depreciation

(a) Till 31st March, 2014, depreciation was being provided on straight line method as per the rates prescribed in Schedule XIV of the Companies Act, 1956. The Schedule XIV has been replaced by Schedule II of the Companies Act, 2013 and the depreciation has been charged on straight line method on the basis of useful lives of the assets in the manner as prescribed in Schedule II of Companies Act, 2013.

(b) Till 31st March, 2014, the assets for a value not exceeding Rs. 5000/- were written off in the year of purchase as per Schedule

XIV of the Companies Act, 1956. Schedule II of the Companies Act, 2013 does not recognize such practice. The depreciation on assets for a value not exceeding Rs. 5000/- has been provided on the basis of their useful lives in the manner as prescribed in the Schedule II of the Companies Act, 2013.

10. Segment information

Business Segments:

The Company produces various types of automotive lighting systems. Since the Company''s business activity falls within a single business segment, there are no additional disclosures to be provided under Accounting Standard-17 ''Segment Reporting'' other than those already provided in the Financial Statements.

Geographical Segments

The geographical segment comprises of domestic and overseas market. The following table shows the distribution of the Company''s consolidated sales by geographical market, regardless of where the goods were produced:

11. Related party disclosures

Names of related parties and related party relationship

Related parties with whom transactions have taken place during the year

S. Particulars Name of Related Parties No.

1. Enterprise having significant influence

Stanley Electric Co. Ltd., Japan

2. Associate SL Lumax Limited

3. Key Management Personnel Mr. D. K. Jain (Chairman)

Mr. Deepak Jain (Managing Director)

Mr. Anmol Jain (Joint Managing Director)

Mr. E. Hirooka (Sr. Executive Director)

Mr. N. Sato (Executive Director)

4. Relatives of Key Management Personnel

Mr. U. K. Jain (Brother of Chairman)

Mr. M. K. Jain (Brother of Chairman)

Mrs. Usha Jain (Spouse of Chairman)

5. Enterprise owned or significantly influenced

Lumax Auto Technologies Limited

by Key Management Personnel or their Relatives

Lumax DK Auto Industries Limited

Lumax Tours & Travels Limited Lumax Finance Private Limited Lumax Ancillary Limited Mahavir Udyog D.K. Jain & Sons (HUF)

Lumax Automotive Systems Limited Bharat Enterprises

Lumax Cornaglia Auto Technologies Private Limited Lumax Gill Austem Auto Technologies Limited Lumax Mannoh Allied Technologies Limited

12. Contingent liabilities

S. Particulars March March No. 31, 2015 31,2014 (Rs.) (Rs.)

(i) Bills of exchange discounted from a bank 569,689,110 357,107,357

(ii) Demand raised by ESIC department against short contribution paid by the Company, being disputed by the Company - 1,480,605

(iii) Demand raised by Sales Tax authorities against purchase tax on inter unit stock transfers, being disputed by the Company - 781,111

(iv) Various other claims of Sales Tax Matters made against the Company not 1,488,551 1,318,497 acknowledged as debts, being disputed by the Company

(v) Various other claims of Sales Tax Matters made against the Company on account of non-submission of statutory forms etc. being disputed by the Company. 2,520,457 2,520,457

(vi) Demand of Central Sales Tax for FY 2010-11 which is subject to submission of C-Form & H-Form. 2,140,602 -

(vii) Demand in respect of non-reversal of proportionate cenvat credit @ 0.6% against providing exempt services i.e. trading 986,000 -

(viii) In respect of additions made by the Assessing officer for Assessment Year 2004-05 for which the department has filed an appeal before Hon''ble High Court against the order of Income Tax Appellate Tribunal (ITAT). 1,243,823 1,243,823

(ix) In respect of additions made by the Assessing officer for Assessment Year 2005-06 for which the department has filed an appeal before Hon''ble High Court against the order of ITAT. 11,535,338 11,535,338

(x) In respect of additions made by the Assessing officer for Assessment Year 2006-07 and confirmed by DRP for which the Company has filed an appeal before ITAT. 4,022,761 4,319,110

(xi) In respect of additions made by the Assessing officer for Assessment Year 2007-08 for which the department has filed an appeal before Hon''ble High Court against the order of ITAT. 14,444,388 14,444,388

(xii) In respect of additions made by the Assessing officer for Assessment Year 2008-09 for which the department has filed an appeal before Hon''ble High Court against the order of ITAT. 20,973,571 26,851,164

(xiii) In respect of additions made by the Assessing officer for Assessment Year 2009-10 and confirmed by DRP for which the Company has filed an appeal before ITAT 23,322,834 27,806,888

(xiv) In respect of additions made by the Assessing officer for Assessment Year 2010-11 and confirmed by DRP for which the Company has filed an appeal before ITAT 31,909,776 32,334,792

(xv) In respect of additions made by the Assessing officer in his draft order for Assessment Year 2011-12 in relation to transfer pricing for which the Company has filed its objection before DRP. 40,567,463 -

(xvi) Liability of Customs duty towards export obligation undertaken by the Company under EPCG licenses 184,810,876 115,591,506

(xvii) Letter of credit 17,845,664 156,407,683

(xviii) Bank Guarantees 349,747,839 183,075,350

*The current year amount relating to income tax does not include interest.

Based on the favourable decisions in similar cases/advice taken by the Company& based on management''s internal assessment, the Company believes that it has good case in respect of all the items listed above and hence no provision there against is considered necessary.

13. Corporate Social Responsibility ( CSR)

As per the provisions of section 135 of the Companies Act, 2013, the Company had to spend atleast 2% of the average profits of the preceding three financial years towards CSR. Accordingly, a CSR committee has been formed for carrying out the CSR activities as per Schedule VII of the Companies Act, 2013 which amounts to Rs. 2,188,228. The Company has been able to spend an amount of Rs. 1,279,372 and has accordingly charged the same to the statement of Profit & Loss.

14. The Company has filed the writ petition against Government of West Bengal challenging Singur Land Rehabilitation & Development Act, 2011 for cancellation of allotment of land allotted by West Bengal Industrial Development Corporation. The court has clubbed the vendors'' petitions with Tata Motors Petition and the matter is pending for decision. The management is confident that no losses are expected in this regard.

15. The assets of Rs.151,375,402 (Previous year Rs.125,633,410) recognized by the Company as ''MAT Credit Entitlement'' under ''Loans and Advances'' represents that portion of MAT, which can be recovered and set off in subsequent years based on provisions of Section 115JAA of the Income Tax Act, 1961. The management, based on present trend of profitability and also the future profitability projections, is of the view that there would be sufficient taxable income in foreseeable future, which will enable the Company to utilize MAT credit assets.

16. Previous year''s figures have been regrouped / reclassified, where necessary, to conform to this year''s classification.


Mar 31, 2014

1. Gratuity benefit plan

The Company operates defined benefit plan for gratuity for its employees. Under the gratuity plan, every employee who has completed atleast five years of service gets a gratuity on departure @ 15 days of last drawn basic salary including DA for each completed year of service, subject to a maximum amount of Rs.1,000,000. The scheme is funded with an insurance Company in the form of qualifying insurance policy.

The following tables summarize the components of net (benefit) / expense recognized in the statement of profit and loss and the funded status and amounts recognized in the balance sheet for the gratuity plan.

Statement of profit and loss

Net employee (benefit) / expense recognized in the employee cost

2. Segment information

Business Segments

The Company produces various types of automotive lighting systems. Since the Company''s business activity falls within a single business segment, there are no additional disclosures to be provided under Accounting Standard-17 ''Segment Reporting'' other than those already provided in the Financial Statements.

Geographical Segments

The geographical segment comprises of domestic and overseas market. The following table shows the distribution of the Company''s consolidated sales by geographical market, regardless of where the goods were produced:

3. Contingent liabilities

S. No. Particulars March 31, 2014 March 31, 2013

(Rs.) (Rs.)

(i) Bills of exchange discounted from a bank 357,107,357 343,269,211

(ii) Demand raised by ESIC department against short contribution paid by the Company, being disputed by the Company 1,480,605 1,480,605

(iii) Demand raised by Sales Tax authorities against purchase tax on inter unit stock transfers, being disputed by the Company 781,111 906,111

(iv) Various other claims of Sales Tax Matters made against the Company not acknowledged as debts, being disputed by the Company 1,318,497 1,318,497

(v) Various other claims of Sales Tax Matters made against the Company on account of non-submission of statutory forms etc. being disputed by the Company. 2,520,457 7,014,753

(vi) In respect of additions made by the Assessing officer for Assessment Year 2004-05 for which the department has filed an appeal before Honble High Court against the order of Income Ta x Appellate Tribunal (ITAT). 1,243,823 1,441,121

(vii) In respect of additions made by the Assessing officer for Assessment Year 2005-06 for which the department has filed an appeal before Honble High Court against the order of ITAT. 11,535,338 27,884,526

(viii) In respect of additions made by the Assessing officer for Assessment Year 2006-07 for which the department has filed an appeal before ITAT against the additions confirmed by DRP. 4,319,110 5,699,097

(ix) In respect of additions made by the Assessing officer for Assessment Year 2007-08 for which the department has filed an appeal before Honble High Court against the order of ITAT. 14,444,388 30,685,279

(x) In respect of additions made by the Assessing officer for Assessment Year 2008-09 for which the department has filed an appeal before Honble High Court against the order of ITAT. 26,851,164 38,855,315

(xi) In respect of additions made by the Assessing officer for Assessment Year 2009-10 for which the department has filed an appeal before ITAT against the additions confirmed by DRP. 27,806,888 84,556,059*

(xii) The Company is currently under litigation against the draft order of Assessing Officer in relation to transfer pricing additions and disallowances of leave encashment expense, provision for warranty and expenses under section 14A of the Income Tax Act, 1961 in relation to Assessment year 2010-11. The Company has filed an appeal before DRP against the said order. 32,334,792 -

(xiii) Liability of Customs duty towards export obligation undertaken by the Company under EPCG licenses 115,591,506 112,689,546

(xiv) Letter of credit 156,407,683 57,691,315

(xv) Bank Guarantees 183,075,350 133,960,218

* The amount reflects disallowances made by the assessing officer.

The current year amount relating to income tax does not include interest.

Based on the favourable decisions in similar cases/advice taken by the Company & based on management''s internal assessment, the Company believes that it has good case in respect of all the items listed above and hence no provision there against is considered necessary.

4. The Company has filed the writ petition against Government of West Bengal challenging Singur Land Rehabilitation & Development Act, 2011 for cancellation of allotment of land allotted by West Bengal Industrial Development Corporation. The court has clubbed the vendors'' petitions with Tata Motors Petition and the matter is pending for decision. The management is confident that no losses are expected in this regard.

5. The assets of Rs. 125,633,410 (Previous year Rs.123,500,000) recognized by the Company as ''MAT Credit Entitlement'' under Loans and Advances'' represents that portion of MAT, which can be recovered and set off in subsequent years based on provisions of Section 115JAA of the Income Ta x Act, 1961. The management, based on present trend of profitability and also the future profitability projections, is of the view that there would be sufficient taxable income in foreseeable future, which will enable the Company to utilize MAT credit assets.

6. Previous year''s figures have been regrouped / reclassified, where necessary, to conform to this year''s classification.


Mar 31, 2013

1. Corporate Information

Lumax Industries Limited (''the Company'') is a leading manufacturer and supplier of auto components'' mainly automotive lighting systems for four wheeler and two wheeler applications. The Company has technical as well as financial collaboration with Stanley Electric Co. Ltd.'' Japan. Its shares are listed on two exchanges in India.

2. Basis of preparation

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The financial statements have been prepared to comply in all material respects in accordance with the notified Accounting Standards issued under Companies (Accounting Standards) Rules'' 2006 (as amended) and the relevant provisions of the Companies Act'' 1956. The financial statements have been prepared under the historical cost convention on an accrual basis except in case of assets for which revaluation is carried out.

The accounting policies have been consistently applied by the Company and are consistent with those applied in the previous year

3. Gratuity benefit plan

The Company operates defined benefit plan for gratuity for its employees. Under the gratuity plan'' every employee who has com- pleted atleast five years of service gets a gratuity on departure @ 15 days of last drawn basic salary including DA for each completed year of service'' subject to a maximum amount of Rs. 1''000''000. The scheme is funded with an insurance Company in the form of qualifying insurance policy.

The following tables summarize the components of net (benefit) / expense recognized in the statement of profit and loss and the funded status and amounts recognized in the balance sheet for the gratuity plan.

4. Leases

Operating lease: Company as lessee

The Company has entered into commercial leases on Plant & machinery (DG Set) and warehouse. There are no contingent rents in the lease agreements. The lease terms is for 1-5 years and are renewable at the mutual agreements of both the parties. There are no restrictions imposed by lease arrangements. There are no sublease and all the leases are non cancellable in nature.

5. Details of Research and Development expenses are as follows:

A. The Company has incurred expenses on its research and development centre at Gurgaon approved and recognised by the Ministry of Science & Technology'' Government of India.

6. The Company has filed the writ petition against Government of West Bengal challenging Singur Land Rehabilitation & Development Act'' 2011 for cancellation of allotment of land allotted by West Bengal Industrial Development Corporation. The court has clubbed the vendors'' petitions with Tata Motors Petition and the matter is pending for decision. The management is confident that no losses are expected in this regard.

7. The assets of Rs.123''500''000 (Previous year Rs. 93''500''000) recognized by the Company as ''MAT Credit Entitlement'' under '' Loans and Advances'' represents that portion of MAT'' which can be recovered and set off in subsequent years based on provisions of Section 115JAA of the Income Tax Act'' 1961. The management'' based on present trend of profitability and also the future profitability projections'' is of the view that there would be sufficient taxable income in foreseeable future'' which will enable the Company to utilize MAT credit assets.

8. Previous year''s figures have been regrouped / reclassified'' where necessary'' to conform to this year''s classification.


Mar 31, 2012

1. Corporate Information

Lumax Industries Limited ('the Company') is a leading manufacturer and supplier of auto components, mainly automotive lighting systems for four wheeler and two wheeler applications. The Company has technical as well as financial collaboration with Stanley Electric Co. Ltd., Japan. Its shares are listed on two exchanges in India.

2. Basis of preparation

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The financial statements have been prepared to comply in all material respects in accordance with the notified Accounting Standards issued under Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis except in case of assets for which revaluation is carried out.

The accounting policies have been consistently applied by the Company and are consistent with those applied in the previous year, except for the change in accounting policy explained below.

a Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended March 31, 2012, the amount of per share dividend recognized as distributions to equity shareholders was Rs. 6 (Previous year: Rs. 6).

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Notes :

1 Indian Rupee Loan from Bank includes:

(a) Rs. 87,529,965/- (Previous year Rs. 175,053,938/-) taken in financial year 2008-09 carries interest @ PLR -2.50% i.e. 12.50% p.a. at present. The loan is repayable in 16 equal quarterly installments of Rs. 21,875,000/- (excluding interest) after one year moratorium period from the disbursement date 27.03.2008. The Loan is secured by way of first charge on the plant and machineries along with the unregistered equitable mortgage (UREM) on land and building, situated at Chakan-ll unit (except assets exclusively hypothecated to banks and body corporate).

(b) Rs. 118,143,216/- (Previous year Rs. 202,533,294/-) taken in Financial Year 2008-09 carries interest @ PLR -0.5% i.e. 14.50% p.a. at present. The loan is repayable in 16 equal quarterly installments of Rs. 16,875,000/- after one year moratorium period from disbursement date 01.11.2008. The Loan is secured by extension of charges by way of hypothecation on the plant and machineries along with the UREM on land and building, situated at Chakan-ll Unit. This facility is further secured by UREM of land and building of Dharuhera Unit along with hypothecation on plant & machinery of Dharuhera (both present and future) and those of Gurgaon Unit (acquired from proceeds of this facility).

(c) Rs. 135,330,266/- (Previous year Rs. 166,572,000/-) taken in the financial year 2010-11 carries interest @ Base Rate 3% i.e. 13.50% p.a. at present. The loan is repayable in 16 equal quarterly installments of Rs. 10,410,750/- (excluding interest) after one year moratorium period from the disbursement date 10.05.2010. The Loan is secured by way of first pari passu charge on the land and building along with all the plant and machineries, situated at Sanand (Gujarat) unit both present and future.

(d) Vehicle loans from banks at interest @ 10% - 13% aggregating to Rs. 9,408,057 (Previous year Rs 5,528,737). These are secured by way of hypothecation of the respective vehicles acquired out of the proceeds thereof.

2 Foreign Currency Loan from Bank includes :

(a) Rs. 257,400,000/- (Previous year Rs. Nil) taken in the financial year 2011-12 carries interest @ LIBOR plus 260 BSP. The loan is repayable in 16 quarterly installments of Rs. 14,026,563/- after one year moratorium period from the disbursement date i.e.

03.06.2012. The loan is secured by way of first & exclusive charge on the land and building along with all the plant and machineries, situated at Bawal (Haryana) unit both present and future.

(b) Rs. 514,800,000/- (Previous year Rs. Nil) taken in the financial year 2011-12 carries interest @ LIBOR plus 260 BSP. The loan is repayable in 16 quarterly installments of Rs. 30,568,750/- after one year moratorium period from the disbursement date i.e.

29.09.2012. The loan is secured by way of first & exclusive charge on the land and building along with all the plant and machineries, situated at Bawal (Haryana) unit both present and future.

(c) Rs. 257,400,000/- (Previous year Rs. Nil) taken in the financial year 2011-12 carries interest @ LIBOR plus 475 BSP. The loan is repayable in 16 quarterly installments of Rs. 15,521,875/- after one year moratorium period from the disbursement date i.e.

31.01.2013. The loan is secured by way of first and exclusive pari passu charge on the land and building along with all other moveable fixed assets, situated at Pant Nagar (Uttrakhand) unit both present and future.

3 Indian Rupee Loan from other than Bank includes Vehicle loans at interest @ 10% -13% aggregating to Rs 2,567,256 (Previous year Rs. 4,433,537). These are secured by way of hypothecation of the respective vehicles acquired out of the proceeds thereof.

4. Deferred sales tax loan is interest free and repayable monthly after seven year from its due months respectively started from July, 2007.

Provision for warranties

A provision is recognized for expected warranty claims on products sold during the last one year, based on past experience of the level of repairs and returns. Assumptions used to calculate the provision for warranties were based on current sales levels and current information available about warranty based on the one-year period for all products sold.

The table below gives information about movement in warranty provisions.

Notes:

(a) Cash credit/Buyer's Credit facility of Rs. 15,516,105/- (Previous year Rs. 127,238,132/-) is secured by way of first pari passu charge on all present and future stock and book debts along with pari passu charge on all fixed assets at Chinch wad Unit and equitable mortgage on Land and Building at Chinch wad Unit, repayable on demand & carries interest @ 13.00%.

(b) Cash credit facility of Rs. 97,596,643/- (Previous year Rs. 63,560,948/-) is secured by way of first pari passu charge on all current assets of the Company. This facility is further secured by way of equitable mortgage on Land and Buildings and first pari passu charges against movable Fixed Assets at Chinch wad Unit of the Company, repayable on demand & carries interest @ 13% to 14.25%.

(c) Cash credit facility of Rs. 87,395,160/- (Previous year Rs. 69,079,356/-) is secured by way of first pari passu charge on all the Stock and Book Debts of the Company, both present and future. This facility is further secured by extension of charge by way of hypothecation on the Plant and Machinery along with the UREM on Land and Building situated at Chakan -II Unit, repayable on demand & carries interest @ 11%-14.50%.

(d) WCDL Facility of Rs. 100,000,000/- (Previous year Rs. NIL) is secured by way of first pari passu charge on all current assets of the Company. This facility is further secured by way of equitable mortgage on Land and Buildings and first pari passu charges against movable Fixed Assets at Chinch wad Unit of the Company, repayable on demand & carries interest @ 11.55%.

Notes:

i) Leasehold land includes Rs. 10,461,489 (Previous year Rs. 10,461,489) paid to the developer as land development charges.

ii) Fixed Assets comprising of Land, Buildings and Plant & Equipment were revalued by a firm of valuers on different dates in earlier years, resulting in increase in their net values by Rs.82,669,280, Rs.1,351,067 and Rs. 24,251,565 respectively, which was credited to Revaluation Reserve.

iii) Depreciation for the year includes Rs. 247,915 (Previous year Rs. 451,320) being depreciation either capitalized / transferred on in-house development of tools.

iv) Leasehold land includes Rs. 16,050,000 (Previous Year Rs.16,050,000) & Freehold land includes Rs. Nil (Previous year Rs. 41,683,814) & software includes Rs. Nil (Previous Year Rs. 7,296,391) pending registration in the name of the Company.

v) Cost of building constructed on Leasehold land is Rs. 88,619,782 (Previous year Rs 102,756,569).

vi) The borrowing cost capitalized during the year ended 31 March 2012 was Rs. 24,986,571 (Previous year: Rs. Nil).

vii) Leasehold land includes Gross block Rs. 232,916,250 (Previous year Rs. 232,916,250) and WDV of Rs. 213,584,201 (Previous year Rs. 220,245,606) lease rights for use of land.

Margin money deposits given as security

Margin money deposits with a carrying amount of Rs. 26,300,496 (Previous year Rs. 18,009,138) are subject to first charge to secure the Company's cash credit facility.

3. Gratuity benefit plan

The Company operates defined plan for gratuity for its employees. Under the gratuity plan, every employee who has completed atleast five years of service gets a gratuity on departure @ 15 days of last drawn basic salary including DA for each completed year of service, subject to a maximum amount of Rs. 1,000,000. The scheme is funded with an insurance Company in the form of qualifying insurance policy.

The following tables summarize the components of net (benefit) expense recognized in the statement of profit and loss and the funded status and amounts recognized in the balance sheet for the gratuity plan.

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

The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

4. Leases

Operating lease: Company as lessee

The Company has entered into commercial leases on Plant & machinery (DG Set) and warehouse. There are no contingent rents in the lease agreements. The lease terms is for 1-5 years and are renewable at the mutual agreements of both the parties. There are no restrictions imposed by lease arrangements. There are no sublease and all the leases are non cancellable in nature.

Finance lease commitments - Company as lessor

The Company has entered into commercial property leases on its plant & machinery and furniture on finance lease. The lease term is for three years after which the legal title is passed to the lessee. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements.

5. Segment information

Business Segments:

The Company produces various types of automotive lighting systems. Since the Company's business activity falls within a single business segment, there are no additional disclosures to be provided under Accounting Standard-17 'Segment Reporting' other than those already provided in the Financial Statements.

6. Contingent liabilities

S.No. Particulars March 31, 2012 March 31, 2011 (Rs.) (Rs)

(i) Bills of exchange discounted from a bank 155,433,577 155,278,747

(ii) Demand raised by ESIC department against short contribution 2,880,138 2,880,138 paid by the Company, being disputed by the Company

(iiii) Demand raised by Sales Tax authorities against purchase tax 906,111 906,111 on inter unit stock transfers, being disputed by the Company

(iv) Various other claims of Sales Tax Matters made against the Company1, 402,682 1,402,682 not acknowledged as debts, being disputed by the Company

(v) Demand raised by Sales Tax authorities on account of non-submission 6,964,753 - of statutory forms etc., being disputed by the Company _

(vi) Income Tax demand on trans fer pricing additions and disallowance 1,441,121 1,441,121 of foreign travelling expense and demerger expense in respect of Assessment Year 2004-05 for which the department has filed an appeal with ITAT

(vii) Income Tax demand on transfer pricing additions and other 27,884,526 27,884,526 disallowances in respect of Assessment Year 2005-06 for which the Department has filed an appeal with ITAT

(viii) Income Tax demand on transfer pricing additions and disallowance 5,699,097 5,699,097 of provision for warranty and expense under section 14A of the

Income Tax Act, 1961, in respect of Assessment Year 2006-07 for which the Company has filed an appeal before ITAT

(ix) Income Tax demand on transfer pricing additions and disallowance 30,685,279 31,275,736 of leave encashment expense, provision for warranty and other

expenses in respect of Assessment Year 2007-08 for which the Company has filed an appeal before Dispute Resolution Panel against the Draft Assessment order

(x) Income Tax demand on transfer pricing additions and disallowance 38,855,315 - of leave encashment expense, PF on leave encashment expense,

provision for warranty and other expenses in respect of Assessment Year 2008-09 for which the Company has filed an appeal before Dispute Resolution Panel against the Draft Assessment order

(xi) Liability of Customs duty towards export obligation undertaken 80,890,487 22,665,071 by the Company under EPCG licenses

Based on the favorable decisions in similar cases/advice taken by the Company, the Company believes that it has good cases in respect of all the items listed under (ii) to (x) above and hence no provision there against is considered necessary.

7. Transfer pricing

The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under section 92-92F of the Income Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company is in the process of updating the documentation for the international transactions entered into with the associated enterprises during the financial year and expects such records to be in existence as required under law. The management is of the opinion that its international transactions are at arm's length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and the provision for taxation.

8. During the year, in respect of remuneration of Rs. 17,079,085 paid to certain directors, an amount of Rs. 2,679,085 is in excess of the limits specified by the relevant provisions of the Companies Act, 1956. The Company has made an application to the appropriate regulatory authorities for approval regarding the payment of such excess remuneration. The Company is confident that the approval will be received in due course. Further, the Company has obtained undertaking from directors that they will refund such excess amount paid to them if the concerned authority does not accord its approval. Hence, no adjustments have been made in the financial statements.

Further, due to inadequacy of profits during the year, directors have waived off their rights to receive commission and therefore, the same has not been provided for in the books of account.

9. The Company has filed the writ petition against Government of West Bengal challenging Singur Land Rehabilitation & Development Act, 2011 for cancellation of allotment of land allotted by West Bengal Industrial Development Corporation. The court has clubbed the vendors' petitions with Tata Motors Petition and the matter is pending for decision. The management is confident that no losses are expected in this regard.

10. The assets of Rs. 93,500,000 (Previous year Rs. 66,500,000) recognized by the Company as "MAT Credit Entitlement' under Loans and Advances' represents that portion of MAT liability, which can be recovered and set off in subsequent years based on provisions of Section 115JAA of the Income Tax Act, 1961. The management, based on present trend of profitability and also the future profitability projections, is of the view that there would be sufficient taxable income in foreseeable future, which will enable the Company to utilize MAT credit assets.


Mar 31, 2011

1. Nature of operations

Lumax Industries Limited (the Company) is a leading manufacturer and supplier of auto components, mainly automotive lighting systems for four wheeler and two wheeler applications. The Company has technical as well as financial collaboration with Stanley Electric Co. Ltd., Japan.

2. Segment Information

Business Segments:

The Company produces various types of automotive lighting systems. Since the Companys business activity falls within a single business segment, there are no additional disclosures to be provided under Accounting Standard-17 Segment Reporting other than those already provided in the Financial Statements.

Geographical Segments*

The geographical segment comprises of domestic and overseas market. The following table shows the distribution of the Companys consolidated sales by geographical market, regardless of where the goods were produced:

3. Related Party Disclosure

Key Management Personnel

Mr. D. K. Jain (Chairman & Managing Director)

Mr. Deepak Jain (Sr. Executive Director)

Mr. Anmol Jain (Sr. Executive Director)

Mr I. Abe (Sr. Executive Director)

Mr A. Ishii (Executive Director)

Relatives of Key Management Personnel

Mr. U. K. Jain (Brother of Chairman)

Mr. M. K. Jain (Brother of Chairman)

Mrs. Usha Jain (Spouse of Chairman)

Mr. Rajan Jain (Nephew of Chairman)

Enterprise significantly influenced by

Key Management Personnel or their Relatives

Lumax Auto Technologies Ltd.

Lumax DK Auto Industries Ltd.

Lumax Tour & Travels Ltd.

Lumax Investment and Finance (P) Ltd. (Merged with Sheela

Finance Pvt. Ltd.)

Lumax Finance Private Limited (Formerly Sheela Finance Pvt. Ltd)

Deepak Auto Ltd.

Mahavir Udyog

D.K. Jain & Sons (HUF)

Lumax Automotive Systems Ltd.

Lumax International (P) Ltd.

Lumax Auto (P) Ltd.

Bharat Enterprises

Lumax Cornaglia Auto Technologies Pvt. Ltd.

Associate Stanley Electric Co. Ltd., Japan

Joint Venture SL Lumax Ltd.

In case of assets given on Lease

a) Finance Lease

The Company has leased out plant and machinery and furniture on finance lease. The lease term is for three years after which the legal title is passed to the lessee. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements.

4. Contingent Liabilities not provided for

S.No. Particulars 2010-11 2009-10 (Rs.) (Rs.)

(i) Bills of exchange discounted from a bank. 155,278,747 136,109,465

(ii) Demand raised by ESIC department against short contribution paid by the Company, being disputed by the Company. 2,880,138 2,880,138

(iiii) Demand raised by Sales Tax authorities against purchase tax on inter unit stock transfers, being disputed by the Company. 906,111 1,736,251

(iv) Various other claims made against the Company not acknowledged as debts, being disputed by the Company. 1,402,682 391,081

(v) Income Tax demand in respect of Assessment Year 2004-05 for which the Department has filed an appeal with ITAT. 93,072 934,369

(vi) In respect of additions made by the Assessing officer for Transfer Pricing for Assessment Year 2004-05 for which the 1,441,121 1,441,121 department has filed an appeal with ITAT.

(vii) Income Tax demand in respect of Assessment Year 2005-06 for which the Department has filed an appeal with ITAT. 27,884,526 27,884,526

(viii) Income Tax demand in respect of Assessment Year 2006-07 for which the Company has filed an appeal before ITAT. 5,699,097 -

(ix) Income Tax demand in respect of Assessment Year 2007-08 for which the Company has filed an appeal before Dispute Resolution Panel 31,275,736 - against the Draft order

(x) Demand raised by BSES Rajdhani Power Ltd for which the Company has filed a writ petition in High Court of Delhi. - 2,260,541

(xi) Export Obligation to be undertaken by the Company under EPCG licenses. 22,665,071 17,677,486

(xii) Claims against the Company not acknowledged as debts. - 6,870,264

Based on the favourable decisions in similar cases/legal opinions taken by the Company, the Company believes that it has good cases in respect of all the items listed under (ii) to (ix)above and hence no provision there against is considered necessary.

5. Gratuity

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The following tables summarise the components of net benefit expense recognised in the profit and loss account and the funded status and amounts recognised in the balance sheet for gratuity.

6. Details of Research and Development expenses are as follows:

A. The Company has incurred expenses on its research and development centre at Gurgaon, approved and recognised by the Ministry of Science & Technology, Government of India.

7. Pursuant to completion of negotiations with its customer in relation with the Companys investment in a plant at Singur, West Bengal and after giving consideration to its alternative plans, management has assessed the carrying value of its assets and made adequate provisions as considered necessary in the last year.

8. At the instance of a customer who has initiated International Financial Reporting Standards (IFRS) implementattion, the Company has negotitated and has, at the year end, sold certian moulds which were financed by the said customer. For the settlement of transaction, moulds of the net book value of Rs. 2,616.81 lacs have been sold for Rs. 1,797.28 lacs resulting in loss on sale of fixed assets amounting to Rs. 819.53 lacs.

9. Excise duty on sales amounting to Rs. 883,819,416 (Previous year Rs.570,947,081) has been reduced from Sales in Profit & Loss Account and Excise Duty on Decrease/ (Increase) in Stock amounting to Rs.(605,466) (Previous year Rs. 5,547,489) has been considered as (income)/ expense in Schedule 18 of the financial statements.

10. Previous Year Comparatives

Previous years figures have been regrouped where necessary to conform to this years classification.


Mar 31, 2010

1. Nature of operations

Lumax Industries Limited (the Company) is a leading manufacturer and supplier of auto components, mainly automotive lighting systems for four wheeler and two wheeler applications. The Company has technical as well as financial collaboration with Stanley Electric Co. Ltd., Japan.

2. Segment Information

Business Segments:

The Company produces various types of automotive lighting systems. Since the Companys business activity falls within a single business segment, there are no additional disclosures to be provided under Accounting Standard-17 Segment Reporting other than those already provided in the Financial Statements.

Geographical Segments *

The geographical segment comprises of domestic and overseas market. The following table shows the distribution of the Companys consolidated sales by geographical market, regardless of where the goods were produced:

3. Related Party Disclosure

S.No. Particulars Names of Related Parties

1. Key Management Personnel Mr. D. K. Jain (Chairman & Managing Director)

Mr. Deepak Jain (Sr. Executive Director) Mr. Anmol Jain (Sr. Executive Director) Mr I. Abe (Sr. Executive Director) Mr A. Ishii (Executive Director)

2. Relatives of Key Management Personnel Mr. S.C. Jain (Father of Chairman)

Mr. U. K. Jain (Brother of Chairman) Mr. M. K. Jain (Brother of Chairman) Mrs. Usha Jain (Spouse of Chairman) Mr. Rajan Jain (Nephew of Chairman)

3. Enterprise significantly influenced by Lumax Auto Technologies Ltd.

Key Management Personnel or their Relatives ( Formerly Dhanesh Auto Electricals Ltd.)

Lumax DK Auto Industries Ltd. Lumax Tour & Travels Ltd.

Lumax Investment and Finance Pvt. Ltd. Sheela Finance Pvt. Ltd. Deepak Auto Ltd. Mahavir Udyog D.K. Jain & Sons (HUF) Lumax Automotive Systems Ltd. Lumax International Pvt Ltd. Lumax Auto Pvt Ltd. Bharat Enterprises

4. Associate Stanley Electric Co. Ltd., Japan

5. Joint Venture SL Lumax Ltd.

5. Leases

In case of assets taken on lease

a) Finance Lease

The Company has acquired plant and machinery, moulds and vehicles under finance leases, the cost of which is included in the gross block of Plant and Machinery and Vehicles respectively under Fixed Assets. The lease term is for 5 years in case of moulds and 3 years in case of vehicles, after which the legal title will pass on to the Company. There is no escalation clause in the lease agreements. There are no restrictions imposed by lease arrangements. There are no sub leases:

b) Operating Leases

Lease payments of Rs 24,378,217 (previous year - Rs 12,020,108) have been recognised as an expense in the profit and loss account for the year ended March 31, 2010.

a) Finance Lease

The Company has leased out plant and machinery and furniture on finance lease. The lease term is for three years after which the legal title is passed to the lessee. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements.

5. Contingent Liabilities not provided for

S.No. Particulars 2009-10 2008-09 (Rs.) (Rs.)

(i) Bills of exchange discounted from a bank. 136,109,465 130,523,592

(ii) Demand raised by Central Excise department against the rejected goods sent on 57(f) (4) challans, being disputed by the Company. 7,755,448 7,755,448

(iii) Other Excise Duty Demands, being disputed by the Company. 2,026,701 2,422,335

(iv> Demand raised by Service Tax department for the service tax on Royalty and Technical know how, being disputed by the Company. 3,451,809 3,451,809

(v) Demand raised by ESIC department against short contribution paid by the Company, being disputed by the Company. 2,880,138 2,880,138

(vi) Demand raised by Sales Tax Authorities against purchase tax on inter-unit stock transfers, being disputed by the Company. 1,736,251 1,736,251

(vii) Various other claims made against the Company not acknowledged as debts, being disputed by the Company. 391,081 391,081

(viii) Income Tax demand in respect of Assessment Year 2004-05 for which the Company has filed an appeal with CIT (Appeals). 2,375,490 2,375,490

(ix) Income Tax demand in respect of Assessment Year 2005-06 for which the Company has filed an appeal with CIT (Appeals). 27,884,526 27,884,526

(x) Income Tax demand in respect of Assessment Year 2006-07 for which the Company has filed an appeal before Dispute Resolution Panel against the draft order. 12,831,256 -

(xi) Demand raised by BSES Rajdhani Power Ltd for which the Company has filed a writ petition in High Court of Delhi. 2,260,541 -

(xii) Export Obligation to be undertaken by the Company under EPCG licenses. 17,677,486 -

(xiii) Claims against the Company not acknowledged as debts. 6,870,264 -

Based on the favourable decisions in similar cases/legal opinions taken by the Company, the Company believes that it has good cases in respect of all the items listed under (ii) to (xi) above and hence no provision there against is considered necessary.

6. Gratuity

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The following tables summarise the components of net benefit expense recognised in the profit and loss account and the funded status and amounts recognised in the balance sheet for gratuity.

7. Derivative Instruments and Unhedged Foreign Currency Exposure a. Forward contract outstanding as at Balance Sheet date

No Forward Contract is outstanding as at 31st March2010 (Previous year JPY 63,925,554).

8. Details of Research and Development expenses are as follows:

The Company has incurred expenses on its research and development centre approved and recognised by the Ministry of Science & Technology, Government of India.

9. During the year, an amount of Rs Nil (Previous Year Rs. 303,152,581) has been utilized by the Company for modernisation / expansion of its existing plants out of the Preferential Issue proceeds, in line with the objects of the Preferential Issue and the unutilized money is Rs. Nil (Previous Year Rs Nil).

10. Pursuant to completion of negotiations with its customer in relation with the Companys investment in a plant at Singur, West Bengal and after giving consideration to its alternative plans, management has assessed the carrying value of its assets and made adequate provisions as considered necessary.

11. Excise duty on sales amounting to Rs. 570,947,081 (Previous year Rs. 675,618,715) has been reduced from Sales in Profit & Loss Account and Excise Duty on Decrease/ (Increase) in Stock amounting to Rs. 5,547,489 (Previous year Rs. (10,567,029)) has been considered as (income)/ expense in Schedule 19 of the financial statements.

12. Previous Year Comparatives

Previous years figures have been regrouped where necessary to conform to this years classification.

 
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