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Notes to Accounts of Majestic Auto Ltd.

Mar 31, 2015

1. Rights, preferences and restrictions attached to Equity shares

Equity shares: The company has one class of equity shares having a par value of Re. 10/- per share. Each shareholder is eligible for one vote per share held. The dividend if any proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amount, in proportion to their shareholding.

2. There are NO securities (Previous year No) convertible into Equity/ Preferential Shares.

3. There are NO calls unpaid (Previous year No) including calls unpaid by Directors and Officers as on balance sheet date.

4. 1500 equity shares of Rs. 10/- each were forfeited by Company against unpaid call money of Rs.5/- per equity share.

5. Nature of Security

i) The Secured working capital Loans from Banks are secured by hypothecation of stock in trade and book debts and other current assets of the Company both present and future on pari-passu basis and also secured by second pari-passu charge on the immovable properties and entire fixed assets (both present & future) of the Company. These Loans are further secured by personal guarantee of Managing Director of the Company.

ii) The Secured working capital Loans are secured by Subservient charge on all the Current Assets and Movable Fixed Assets of the Borrower (both present and future) of the Company. These Loans are further secured by personal guarantee of Managing Director of the Company.

6. CONTINGENT LIABILITIES AND COMMITMENTS

(I) Contingent Liabilities

(a) Claims against the company not acknowledged as debts Sales Tax matters under U.P. Trade Tax Act 198,108 198,108

(b) Bank Guarantees 25,418,900 18,996,800

(c) Letter of Credit 8,293,917 10,369,934

(d) Excise duty /Sale Tax paid under protest amounting to Rs.66,036 (Previous Year Rs.220,036) is appearing under the head amounts recoverable.

a) It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above pendingresolution of the respective proceedings.

b) The Company does not expect any reimbursement in respect of the above contigent liabilities.

c) Future cash outflows in respect of the above are determinable only on receipt of judgements / decisions pending with various forums / authorties.

(II) Commitments

Estimated value of contracts in capital accounts remaining to be executed and not provided for (net of advance) 12,088,474 3,115,411

7. SUPERANNUATION BENEFIT

Apart from being covered under the Gratuity Plan, certain employees of the Company participate in a Superannuation Benefit; a defined contribution plan administrated by Life Insurance Corporation (""LIC""). The Company makes contributions based on a specified percentage of salary of each covered employee. The Company does not have any further obligation to the superannuation plan beyond making such contributions. Upon retirement or separation (only after completion of 5 years of services) an employee becomes entitled for superannuation benefit, as determined by LIC, which is paid directly to the concerned employee. The Company contributed Rs.901,810 (Previous Year Rs.973,645) to the Superannuation Plan."

8. Borrowing costs amounting to Rs. Nil (previous year Rs. Nil) attributable to acquisition and construction of fixed assets have been capitalized during the year.

9. In the opinion of the Board, all assets other than fixed assets and non-current investments have a value on realization in the ordinary course of business at least equal to the value at which they are stated in the foregoing Balance Sheet.

10. Related party disclosure under Accounting Standard 18

During the year the company had entered into transactions with related parties. Those transactions along with related balances as at March 31,2015 and for the year then ended are presented in the following table. List of related parties along with nature and volume of transaction is given below:

a) Holding Company : M/s Anadi Investments Pvt. Ltd.

b) Subsidiary Company : M/s Majestic IT Services Ltd.

c) Enterprises in which the Company has significant influence : -

d) Key Management Personnel : Mr. Mahesh Munjal (Managing Director)

e) Relatives of Key Management : Mr. Ayush Munjal & personnel Ms. Ashima Munjal

f) Other Key Management Personnel : Mr. Rajesh Saini (Company Secretary)

: Mr. Prakash Chandra Patro (Chief Financial Officer)

g) Enterprises over which key management personnel and their relatives are able to exercise significant influence : M/s Munjal Showa Ltd.

h) Employee welfare trust where : i) Majestic Auto Ltd. - there is control Employee Gratuity Fund

ii) Majestic Auto Ltd. - Superannuation Fund

11. As per Section 135 of the Companies Act, 2013, a Corporate Social Responsibility (CSR) committee has been formed by the Company. The areas for CSR activities are of promoting education, eradicating poverty, hunger and malnutrition, sanitation and empowering women etc. projects which are specified in Schedule VII of the Companies Act, 2013.

12. During the financial year 2014-15, Company has not spent towards schemes of Corporate Social Responsibility as prescribed under section 135 of the Companies Act, 2013.


Mar 31, 2014

1 CONTINGENT LIABILITIES AND COMMITMENTS

(I) Contingent Liabilities Year Ended Year Ended 31.03.2014 31.03.2013 (Rs.) (Rs.)

(a) Claims against the company not acknowledged as debts

Sales Tax matters under Punjab Value Added Tax Act, 2005 - 42,700

Sales Tax matters under U.P. Trade Tax Act 198,108 198,108

(b) Guarantees Bank Guarantees 18,996,800 24,996,800

(c) Letter of Credit 10,639,934 9,503,520

(i) Excise duty /Sale Tax paid under protest amounting to Rs. 191,636 (Previous Year Rs.234,336) is appearing under the head amounts recoverable.

a) It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above pending resolution of the respective proceedings.

b) The Company does not expect any reimbursement in respect of the above contigent liabilities.

c) Future cash outflows in respect of the above are determinable only on receipt of judgements / decisions pending with various forums / authorties.

SUPERANNUATION BENEFIT

Apart from being covered under the Gratuity Plan, certain employees of the Company participate in a Superannuation Benefit; a defined contribution plan administrated by Life Insurance Corporation ("LIC"). The Company makes contributions based on a specified percentage of salary of each covered employee. The Company does not have any further obligation to the superannuation plan beyond making such contributions. Upon retirement or separation (only after completion of 5 years of services) an employee becomes entitled for superannuation benefit, as determined by LIC, which is paid directly to the concerned employee. The Company contributed Rs.300,000 (Previous Year Nil) to the Superannuation Plan.

2. Borrowing costs amounting to Rs. Nil (previous year Rs. 9,860,154) attributable to acquisition and construction of fixed assets have been capitalized during the year.

3. In the opinion of the Board, all assets other than fixed assets and non-current investments have a value on realization in the ordinary course of business at least equal to the value at which they are stated in the foregoing Balance Sheet.

4. Related party disclosure under Accounting Standard 18

During the year the company had entered into transactions with related parties. Those transactions along with related balances as at March 31, 2014 and for the year then ended are presented in the following table. List of related parties along with nature and volume of transaction is given below:

a) Holding Company : M/s Anadi Investments Pvt. Ltd.

b) Subsidiary Company : M/s Majestic IT Services Ltd.

c) Enterprises in which the Company has significant influence : M/s. Brij Mohan Lall & Associates (Dissolved in June-2013)

d) Key Management Personnel : Mr. Mahesh Munjal (Managing Director)

e) Relatives of Key Management personnel : Mr. Aayush Munjal & Ms. Ashima Munjal

f) Enterprises over which key management personnel and their relatives are able to exercise significant influence : M/s Munjal Showa Ltd.

g) Employee welfare trust where there is control : i) Majestic Auto Ltd. - Employee Gratuity Fund

ii) Majestic Auto Ltd. - Superannuation Fund

5. The Companies (Accounting Standards) (Second Amendment) Rules 2011 has further amended AS-11, "The effects of changes in foreign exchange rates" vide Notification No. G.S.R 914(E) dated December 29, 2011 which amends the principal regulation published vide Notification No. G.S.R 739(E) dated December 7, 2006, and subsequently amended vide Notification No. G.S.R 212(E) dated March 27, 2008, G.S.R 225(E) dated March 31,2009 and G.S.R 378(E) dated May 11,2011. Before these amendments, AS-11 required the exchange gain/losses on the long term foreign currency monetary items in so far as they relate to the acquisition of depreciable Capital Asset to be charged off fully in the Profit & Loss Account. The amended AS-11 provides an irrevocable option to the company to add or deduct the exchange rate fluctuation on long term foreign currency monetary items from the cost of the Capital asset and depreciate the same over the balance life of the Capital asset. The amendment is applicable retrospectively from the financial year beginning on or after December 7, 2006. The Company had not earlier exercised the option as per above said principal regulation and opts not to exercise the option under Companies (Accounting Standards) (Second Amendment) Rules 2011 for accounting year ended on March 31, 2014 and accordingly has charged exchange difference related to the long term foreign currency monetary items to the statement of profit and loss.


Mar 31, 2013

1. Borrowing costs amounting to Rs. 98,60,154 (previous year Rs. 31,59,784) attributable to acquisition and construction of fixed assets have been capitalized during the year.

2. In the opinion of the Board, all assets other than fixed assets and non-current investments have a value on realization in the ordinary course of business at least equal to the value at which they are stated in the foregoing Balance Sheet.

3. Related party disclosure under Accounting Standard 18

During the year the company had entered into transactions with related parties. Those transactions along with related balances as at March 31, 2013 and for the year then ended are presented in the following table. List of related parties along with nature and volume of transaction is given below:

a) Holding Company : M/s Anadi Investments Pvt. Ltd.

b) Subsidiary Company : M/s Majestic IT Services Ltd.

c) Enterprises in which the Company has significant influence : M/s. Brij Mohan Lall&Associates

d) Key Management Personnel : Mr. Mahesh Munjal (Managing Director)

e) Relatives of Key Management personnel : Mr. Ayush Munjal & Ms. Ashima Munjal

f) Enterprises over which key management personnel and their relatives are able to exercise significant influence : M/s Munjal Showa Ltd.

: M/s Highway Industries Ltd.

: M/s Munjal Auto Ind. Ltd.

: M/s Satyam Auto Component Ltd.

g) Employee welfare trust where there is control : i) Majestic Auto Ltd. - Employee Gratuity Fund

ii) Majestic Auto Ltd. - Superannuation Fund

4. The Companies (Accounting Standards) (Second Amendment) Rules 2011 has further amended AS-11, "The effects of changes in foreign exchange rates" vide Notification No. G.S.R 914(E) dated December 29, 2011 which amends the principal regulation published vide Notification No. G.S.R 739(E) dated December 7, 2006, and subsequently amended vide Notification No. G.S.R 212(E) dated March 27, 2008, G.S.R 225(E) dated March 31,2009 and G.S.R 378(E) dated May 11,2011. Before these amendments, AS-11 required the exchange gain/losses on the long term foreign currency monetary items in so far as they relate to the acquisition of depreciable Capital Asset to be charged off fully in the Profit & Loss Account. The amended AS-11 provides an irrevocable option to the company to add or deduct the exchange rate fluctuation on long term foreign currency monetary items from the cost of the Capital asset and depreciate the same over the balance life of the Capital asset. The amendment is applicable retrospectively from the financial year beginning on or after December 7, 2006. The Company had not earlier exercised the option as per above said principal regulation and opts not to exercise the option under Companies (Accounting Standards) (Second Amendment) Rules 2011 for accounting year ended on March 31, 2013 and accordingly has charged exchange difference related to the long term foreign currency monetary items to the statement of profit and loss.


Mar 31, 2012

A) Rights, preferences and restrictions attached to Equity shares

Equity shares: The company has one class of equity shares having a par value of Re. 10/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amount, in proportion to their shareholding.

a) Nature of Security

The Term Loans are secured by mortgage over the immovable properties on pari-passu basis and first charge on entire fixed assets of the Company both present & future on pari-passu basis and also secured by Second Charge on entire current assets of the Company both present and future. These Term Loans are also further secured by personal guarantee of Managing Director of the Company.

a) The Secured working capital Loans from Banks are secured by hypothecation of stock in trade and book debts and other current assets of the Company both present and future on pari-passu basis and also secured by second pari-passu charge on the immovable properties and entire fixed assets (both present & future) of the Company. These Loans are further secured by personal guarantee of Managing Director of the Company.

b) The Unsecured working capital Loans from Banks are secured by personal guarantee of Directors of the Company.

c) The Unsecured working capital Loans from others are secured by personal guarantee of Managing Director of the Company.

Disclosure as per amendment to clause 32 of the Listing Agreement (Loans and advances in the nature of loans to subsidiaries)The company has given loans & advances of Rs. 43,650,000 (Previous Year Rs. 21,850,000) in the nature of loans to Majestic IT Services Limited (MITSL), the Wholly Owned Subsidiary Company and the maximum balance outstanding during the year is Rs.43,650,000 (Previous Year Rs. 21,850,000. This loan is interest free with no specified re-payment schedule. MITSL has not made any investment in the shares of the parent company. MITSL is also company under the same management as defined under section 370 (I-B) of the Companies Act, 1956.

1. CONTINGENT LIABILITIES AND COMMITMENTS

(I) Contingent Liabilities

(a) Claims against the company not acknowledged as debts

Sales Tax matters under Punjab Value Added Tax Act, 2005 42,700 220,057

Sales Tax matters under U.P. Trade Tax Act 198,108 198,108

(b) Guarantees

Bank Guarantees# 32,687,562 31,177,992

(c) Other money for which the Company is contingently liable Bills Discounted with the Company's bankers - 1,690,000

# Including Bank Guarantee of USD235,000 (Rs. 11,987,562) Previous year USD235,000 (Rs.10,477,992)

(i) Excise duty/Sale Tax paid under protest amounting to Rs. 142,254 (Previous Year Rs. 201,374) is appearing under the head amounts recoverable.

(ii) The Company has taken legal and other steps necessary to protect its position in respect of the claims mentioned at point no. 20 (I) (a) which in its opinion, based on legal advice are not expected to devolve. It is not possible to make any further determination of the liabilities which may arise or the amounts which may be refundable in respect of these claims.

(II) Commitments

Estimated value of contracts in capital account remaining to be executed and not provided for (net of advance) 73,076,449 71,041,447

SUPERANNUATION BENEFIT

Apart from being covered under the Gratuity Plan, certain employees of the Company participate in a Superannuation Benefit; a defined contribution plan administrated by Life Insurance Corporation (""LIC""). The Company makes contributions based on a specified percentage of salary of each covered employee. The Company does not have any further obligation to the superannuation plan beyond making such contributions. Upon retirement or separation (only after completion of 5 years of services) an employee becomes entitled for superannuation benefit, as determined by LIC, which is paid directly to the concerned employee. The Company contributed Rs. Nil (Previous Year Nil) to the Superannuation Plan.

2. Borrowing costs amounting to Rs. 31,59,784 (previous year Rs. Nil) attributable to acquisition and construction of fixed assets have been capitalized during the year.

3. In the opinion of the Board, all assets other than fixed assets and non current investments have a value on realization in the ordinary course of business at least equal to the value at which they are stated in the foregoing Balance Sheet.

4. The financial statement for the year ended 31 March 2011 had been prepared as per the then applicable pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notification of the revised schedule VI under the Companies Act, 1956, the financial statement for the year have been prepared as per revised schedule VI. Accordingly, the previous year figures have been classified to conform this year classification. The adoption of revised schedule VI for the previous year figures does not impact the recognition and measurement principles followed for the preparation of the financial statements.

5. The Companies (Accounting Standards) (Second Amendment) Rules 2011 has further amended AS-11, "The effects of changes in foreign exchange rates" vide Notification No. G.S.R 914(E) dated December 29, 2011 which amends the principal regulation published vide Notification No. G.S.R 739(E) dated December 7, 2006, and subsequently amended vide Notification No. G.S.R 212(E) dated March 27, 2008, G.S.R 225(E) dated March 31,2009 and G.S.R 378(E) dated May 11,2011. Before these amendments, AS-11 required the exchange gain/losses on the long term foreign currency monetary items in so far as they relate to the acquisition of depreciable Capital Asset to be charged off fully in the Profit & Loss Account. The amended AS-11 provides an irrevocable option to the company to add or deduct the exchange rate fluctuation on long term foreign currency monetary items from the cost of the Capital asset and depreciate the same over the balance life of the Capital asset. The amendment is applicable retrospectively from the financial year beginning on or after December 7, 2006. The Company had not earlier exercised the option as per above said principal regulation and opts not to exercise the option under Companies (Accounting Standards) (Second Amendment) Rules 2011 for accounting year ended on March 31, 2012 and accordingly has charged exchange difference related to the long term foreign currency monetary items to the statement of profit and loss.


Mar 31, 2011

1. CONTINGENT LIABILITES

Year ended Year ended 31.03.2011 31.03.2010 (Rs. in lacs) ( Rs. in lacs)

i) a) Bank Guarantee/Margin Money Guarantee 217.83 208.00

b) Bills Discounted with the Company's bankers 16.90 Nil

ii) Penalty u/s 51(7) (b) of Punjab Value Added Tax Act, 2005 of Rs. 2,20,057/- (Previous year Rs.2,20,057/-) was disputed by the Company for which appeal has been filed with Dy. Excise & Taxation Commissioner (Appeals), Patiala.

iii) Penalty under U.P. Trade Tax of Rs.1,98,108/-(Previous year Rs.1,98,108/-) was disputed by the Company for which appeal has been filed with Assistant Commissioner (Appeals), U.P. Trade Tax Act, Noida. The Company has taken legal and other steps necessary to protect its position in respect of the claims mentioned at point no. (ii) & (iii) which in its opinion, based on legal advice are not expected to devolve. It is not possible to make any further determination of the liabilities which may arise or the amounts which may be refundable in respect of these claims.

2. Excise duty/Sale Tax paid under protest amounting to Rs. 2.01 Lacs (Previous Year Rs. 2.01 Lacs) is appearing under the head amounts recoverable.

3. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.1,132.69 Lacs (Previous Year Rs.1,302.56 lacs) against which a sum of Rs.84.70 Lacs (Previous Year Rs.408.69 Lacs) has been paid as advance.

4. In the opinion of management, current assets have a value on realization in the ordinary course of business at least equal to the value at which they are stated in the foregoing Balance Sheet.

5. The staff quarter at Dugri Road, Ludhiana have been allotted in the name of an Ex-Director of the Company.

6. Loans and Advances in the nature of loans:

The company has given loans & advances of Rs. 218.50 Lacs (Previous Year - Nil) in the nature of loans to Majestic IT Services Limited (MITSL), the Wholly Owned Subsidiary Company and the maximum balance outstanding during the year is Rs.218.50 Lacs. This loan is interest free with no specified re-payment schedule. MITSL has not made any investment in the shares of the parent company. MITSL is also company under the same management as defined under section 370 (I-B) of the Companies Act,1956.

7. Previous year's figures have been regrouped/rearranged wherever considered necessary. Figures have been rounded off to the nearest rupee.

8. Borrowing cost capitalized during the Current year Rs. Nil (Previous year Rs. Nil).

9. During the year the company has migrated to a new ERP system wherein stocks have been valued on "Moment Moving weighted average Basis" as against the "Monthly Moving Weighted average", for more appropriate and relevant presentation of the financial statements. The impact resulting from such change is not ascertainable.

10. During the year, the company has executed transfer deeds with the original allottee's / lessee's for acquiring 90 years lease hold rights for industrial property situated at Greater Noida, (U.P.) at a total cost of Rs. 32,45,74,589. The aforesaid amount including registration and other charges directly related to the acquisition of the said rights have been capitalized under the head "Leasehold Land". Considering the limited useful life and absence of any clause for renewal or extension of lease and/or transfer of ownership at the end of lease term, the said amount has been amortised over the period of lease.

11. Related party disclosure under Accounting Standard 18

a) Holding Company M/s Anadi Investments Pvt. Ltd.

b) Subsidiary Company M/s Majestic IT Services Ltd.

c) Enterprises which has significant influence over the Company Hero Cycles Ltd

d) Enterprises in which the Company has significant influence M/s.Brij Mohan Lall& Associates f e) Key Management Personnel Mr. Mahesh Chander Munjal

Managing Director

f) Enterprises over which key management personnel and their relatives are able to exercise significant influence :

M/s Munjal Showa Ltd. M/s Highway Industries Ltd.

M/s Amar Sons M/s Amar Udyog

M/s Munjal Auto Ind. Ltd. M/s Amtier Infotech Ltd.

M/s Aayush Finance Investment (P) Ltd.

g) Employee welfare trust where there is control :

i) Majestic Auto Ltd. - Employee Gratuity Fund

ii) Majestic Auto Ltd. - Superannuation Fund

12. GRATUITY PLANS :

SUPERANNUATION BENEFIT

Apart from being covered under the Gratuity Plan, certain employees of the Company participate in a Superannuation Benefit; a defined contribution plan administrated by Life Insurance Corporation ("LIC"). The Company makes contributions based on a specified percentage of salary of each covered employee. The Company does not have any further obligation to the superannuation plan beyond making such contributions. Upon retirement or separation (only after completion of 5 years of services) an employee becomes entitled for superannuation benefit, as determined by LIC, which is paid directly to the concerned employee. The Company contributed Rs. Nil (Previous Year Nil) to the Superannuation Plan.


Mar 31, 2010

1. CONTINGENT LIABILITES

Year ended Year ended

31.03.2010 31.03.2009

(Rs. in lacs) ( Rs. in lacs)



i) Bank Guarantee/Margin

Money Guarantee 208.00 203.00

ii) Penalty u/s 51 (7) (b) of Punjab Value Added Tax Act, 2005 of Rs. 2,20,057/- (Previous year Rs.2,20,057/-) was disputed by the Company for which appeal has been filed with Dy. Excise & Taxation Commissioner (Appeals), Patiala.

iii) Penalty under U.P. Trade Tax of Rs. 1,98,108/- (previous year of Rs. 1,98,108/-) was disputed by the Company for which appeal has been filed with Assistant Commissioner (Appeals), U.P. Trade Tax Act, Noida.

2. Excise duty/Sale Tax paid under protest amounting to Rs. 2.01 Lacs (Previous Year Rs. 2.01 Lacs) is appearing under the head amounts recoverable.

3. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.1302.56 Lacs (Previous Year Rs. 43.53 lacs) against which a sum of Rs. 408.69 Lacs (Previous Year Rs. 13.43 Lacs) has been paid as advance.

4. The Company is a member of M/s Brij Mohan Lall & Associates (AOP), whose constitution as at 31.03.2010 is as under:

SI.No. Name of the Members Profit Sharing Ratio

1. M/s Satyanand & Sons (HUF) 20%

2. M/s Brij Mohan Lall & Sons (HUF) 20%

3. Mr. Naveen Munjal 20%

4. Majestic Auto Limited 20%

5. Mr. Pankaj Munjal 20%



The Company has contributed Rs.12,00,000/- as fixed capital and balance of Rs. 9,64,470/- (Previous Year Rs. 8,96,515/-) is in the current account with the above AOP.

5. In the opinion of management, current assets have a value on realization in the ordinary course of business at least equal to the value at which they are stated in the foregoing Balance Sheet.

6. There are no Loans and Advances in the nature of Loans given to Subsidiaries/Associates/Firms and Companies in which directors are interested.

7. Previous years figures have been regrouped/rearranged wherever considered necessary. Figures have been rounded off to the nearest rupee.

8. Borrowing cost capitalized during the current year Rs. Nil (Previous year Rs. Nil).

9. The Board of Directors of the Company in its meeting held on 26th October, 2009 agreed to form a new Wholly Owned Subsidiary for setting up business of providing a broad range of information and technology related services and accordingly a company under the name and style of "MAJESTIC IT SERVICES LIMITED" has been incorporated & registered at Registrar of Companies, NCT of Delhi & Haryana with an authorized capital of Rs. 4,75,00,000/- divided into 47,50,000 equity shares of Rs. 10/- each.

 
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