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Notes to Accounts of Rane Engine Valve Ltd.

Mar 31, 2019

1. General Information

Rane Engine Valve Limited (The “Company”) is engaged in manufacture of engine valves, Guides and Tappets for passenger cars, commercial vehicles, farm tractors, stationery engines, railway/marine engines and two/three wheelers and as such operates in a single reportable business segment of ‘components for transportation industry’. The Company is having five manufacturing facilities at Chennai, Hyderabad(2), Trichy and Tumakuru. The Company is a Public Limited Company and listed on Bombay Stock Exchange Limited, Mumbai and National Stock Exchange of India Limited, Mumbai.

2. Critical accounting judgements, assumptions and key sources of estimation uncertainty

The following are the critical judgements, assumptions concerning the future, and key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

2.1 Useful lives of property, plant and equipment

As described at Note 2.3 above, the charge in respect of periodic depreciation for the year is derived after determining an estimate of an asset’s expected useful life and the expected residual value at the end of its life.The useful lives and residual values of Company’s assets are determined by the management at the time the asset is acquired and reviewed annually. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technical or commercial obsolescence arising from changes or improvements in production or from a change in market demand of the product or service output of the asset.

2.2 Employee Benefits

The cost of defined benefit plans are determined using actuarial valuation, which involves making assumptions about discount rates, expected rates of return on assets, future salary increases, and mortality rates. Due to the long-term nature of these plans, such estimates are subject to significant uncertainty.

2.3 Taxation

Significant assumptions and judgements are involved in determining the provision for tax based on tax enactments, relevant judicial pronouncements and tax expert opinions, including an estimation of the likely outcome of any open tax assessments / litigations. Deferred income tax assets are recognized to the extent that it is probable that future taxable income will be available, based on estimates thereof.

2.4 Provisions and contingencies

Critical judgements are involved in measurement of provisions and contingencies and estimation of the likelihood of occurrence thereof based on factors such as expert opinion, past experience etc.

3. Recent accounting pronouncements Standards issued but not yet effective

Amendments to Ind AS 12 - Income Taxes

Appendix C to Ind AS 12, Uncertainty over Income Tax Treatments: On March 30, 2019, Ministry of Corporate Affairs (“MCA”) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2019 containing Appendix C to Ind AS 12, Uncertainty over Income Tax Treatments which clarifies the application and measurement requirements in Ind AS 12 when there is uncertainty over income tax treatments. The current and deferred tax asset or liability shall be recognized and measured by applying the requirements in Ind AS 12 based on the taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates determined by applying this appendix. The amendment is effective for annual periods beginning on or after April 1, 2019.

On March 30, 2019, the Ministry of Corporate Affairs has notified limited amendments to Ind AS 12 - Income Taxes. The amendments require an entity to recognise the income tax consequences of dividends as defined in Ind AS 109 when it recognises a liability to pay a dividend. The income tax consequences of dividends are linked more directly to past transactions or events that generated distributable profits than to distributions to owners. Therefore, an entity shall recognize the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognised those past transactions or events. The amendment will come into force for accounting periods beginning on or after April 1, 2019.

Amendment to Ind AS 19 - Employee Benefits

On March 30, 2019, the Ministry of Corporate Affairs has notified limited amendments to Ind AS 19 -Employee Benefits in connection with accounting for plan amendments, curtailments and settlements. The amendments require an entity to use updated assumptions to determine current service cost and net interest for the remainder of the period after a plan amendment, curtailment or settlement and to recognise in profit or loss as part of past service cost, or a gain or loss on settlement, any reduction in a surplus, even if that surplus was not previously recognised because of the impact of the asset ceiling. The amendment will come into force for accounting periods beginning on or after April 1, 2019, though early application is permitted.

New Accounting Standard : Ind AS 116 - Leases

On March 30, 2019, the Ministry of Corporate Affairs notified the Companies (Indian Accounting Standards) Amendment Rules, 2019 containing Ind AS 116 -Leases and related amendments to other Ind ASs. Ind AS 116 replaces Ind AS 17 - Leases and related interpretation and guidance. The standard sets out principles for recognition, measurement, presentation and disclosure of leases for both parties to a contract i.e., the lessee and the lessor. Ind AS 116 introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. Currently, operating lease expenses are charged to the statement of profit and loss. The Standard also contains enhanced disclosure requirements for lessees. Ind AS 116 substantially carries forward the lessor accounting requirements as per Ind AS 17. Ind AS 116 is effective for annual periods beginning on or after April 1, 2019.

The Company is currently evaluating the effect of the above on its standalone financial statements.

4.1 The cost of inventories recognized as an expense during the year is as per Note No. 21 to 23.

4.2 The cost of inventories recognized as an expense includes Rs. 1.78 crores (during 2017-18:Rs. 1.38 crores) in respect of write-downs of inventory to net realizable value.

4.3 The mode of valuation of inventories has been stated in note 2.8

5.1 Trade Receivables

The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience. The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates as given in the provision matrix.

5.2 Trade Receivables - considered good includes due from related parties of Rs. 0.88 crores (Rs. 0.91 crores)

6.1 The Company has not issued any securities convertible into equity/preference shares.

6.2 The Company has one class of shares i.e. equity shares having a par value of Rs. 10 per share. Each holder of equity share is entitled to one vote per share. The dividend if any proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General meeting. In the event of liquidation, the equity share holders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to share holding.

6.3 Details of shares issued for consideration other than cash during the period of five years immediately preceding the reporting date

Pursuant to clause 5.1 of the Scheme of Amalgamation between Kar Mobiles Limited and the Company, 15,68,000 equity shares of Rs. 10/- each fully paid up were allotted on 04-May-2015, to shareholders of Kar Mobiles Limited in the proportion of 7 fully paid up equity shares of Rs. 10 each in the Company for every 10 equity shares of Rs. 10/- each held in the Kar Mobiles Limited .

7.1 Term loans are secured by Pari-passu basis first charge on the Company’s immovable and movable fixed assets (other than properties situated at Peenya and Tumakuru) both present and future.

7.2

i) Short term borrowings amounting to Rs. 8.32 crores (Rs. 12.30 crores) from State Bank of India are secured by hypothecation of raw materials, work in progress, finished goods, stores & spares and book debts of the Company’s Tumakuru Unit and also secured by first charge on land and buildings and plant and machineries of the Company’s Peenya Unit and Tumakuru Unit.

ii) Other Short term borrowings amounting to Rs. 70.36 crores (Rs. 41.60 crores) from banks are secured by hypothecation of raw materials, work in progress, finished goods, stores & spares and book debts of the Company on Pari-passu basis (other than Property situated at Peenya Unit and Tumakuru Unit).

iii) Bill discounting from Banks represents liability in respect of vendor financing facility availed by certain Customers with recourse to the Company.

iv) None of the above loans have been guaranteed by any Directors or others.

7.3 Represents liability arising out of deferment of sales tax for a period of 14 years from 1996 to 2010. The Company should continue to be in operation and there should not be any change in location or management of the Company until the loan is fully repaid.

7.4 There has been no default as on Balance Sheet date in repayment of principal and interest.

a) It is not practicable for the Company to estimate the timings of cash outflows, if any, pending resolution of the respective proceedings. Future cash outflows in respect of the above are determinable only on receipt of the judgements/decisions pending with various forums/authorities.

b) The Company does not expect any reimbursements from third parties in respect of the above contingent liabilities.

8.1 Other commitments

Based on expert opinion obtained by the Company, no liability has been presently created in the books towards the levies and costs in connection with mutating / substituting the title in the revenue records pertaining to certain immovable properties that stand vested with the Company pursuant to a merger in earlier years.

9.1 The revenue from operations for the year ended March 31, 2018 is inclusive of excise duty up to the period June 30, 2017 and is therefore not comparable with the revenue from operations for the year ended March 31, 2019, which is presented net of GST consequent to introduction of Goods and Services Tax (GST) w.e.f July 1, 2017.

10.1 Includes Rs. 1.08 crores (previous year Rs. 1.26 crores), paid towards certain operating lease arrangement with third party vendors.

Note 11 : Related Party Disclosures List of related parties where control exists

Holding Company : Rane Holdings Limited (RHL)

Other related parties where transactions have taken place during the year

Fellow Subsidiaries : Rane Madras Limited (RML)

Rane Holding America Inc (RHAI)

Rane Holding Europe GmbH (RHEG)

Key Management Personnel : Mr L Ganesh - Chairman and Managing Director

Mr Harish Lakshman - Vice Chairman

Relatives of Key Management Personnel : Mr L Lakshman

Joint ventures of Holding Company : JMA Rane Marketing Limited (upto 14.11.2018)

Post employment benefit plan of the entity : Rane Engine Valve Limited Employees Gratuity Fund

Rane Engine Valve Limited Senior Executives Pension Fund

Note 12 : Employee Benefit Plans

A. Defined contribution plans

The Company participates in a number of defined contribution plans on behalf of relevant personnel. Any expense recognised in relation to these schemes represents the value of contributions payable during the period by the Company at rates specified by the rules of those plans. The only amounts included in the balance sheet are those relating to the prior months contributions that were not due to be paid until after the end of the reporting period.

(a) Provident fund and pension

In accordance with the Employee’s Provident Fund and Miscellaneous Provisions Act, 1952, eligible employees of the Company are entitled to receive benefits in respect of provident fund, a defined contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employees’ salary.

(b) Superannuation fund

The Company has a superannuation plan for the benefit of its employees. Employees who are members of the defined benefit superannuation plan are entitled to benefits depending on the years of service and salary drawn.

Separate irrevocable trusts are maintained for employees covered and entitled to benefits. The Company contributes up to 15% of the eligible employees’ salary to the trust every year. Such contributions are recognised as an expense as and when incurred. The Company does not have any further obligation beyond this contribution.

The total expense recognised in profit or loss of Rs. 3.76 crores (for the year ended March 31,2018: Rs. 4.43 crores) represents contributions payable to these plans by the Company at rates specified in the rules of the plans.

B. Defined benefit plans

The defined benefit plans operated by the Company are as below:

The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for a lump-sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 to 30 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The Company makes annual contributions to gratuity funds established as trusts or insurance companies. The Company accounts for the liability for gratuity benefits payable in the future based on an actuarial valuation.

The defined benefit plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

The current service cost and the net interest expense for the year are included in the ‘Employee benefits expense’ line item in the statement of statement of profit and loss.

The remeasurement of the net defined benefit liability is included in other comprehensive income.

(v) Risk Exposure

The Company has invested the plan assets with the insurer managed funds. The expected rate of return on plan asset is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligation.

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 expected rate of return on plan assets is based on the composition of plan assets held (through LIC), historical results of the return on plan assets, the Company’s policy for plan asset management and other relevant factors.

Significant actuarial assumptions for the determination of the defined obligation are discount rate and expected salary increase. The sensitivity analysis below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognized in the balance sheet. There was no change in the methods of assumptions used in preparing the sensitivity analysis from prior years.

Defined benefit liability and employer contributions

The weighted average duration of the defined benefit obligation is 10.72 years (2018-11.9 years). The expected maturity analysis of undiscounted gratuity is as follows:

D. Other Long Term Employee Benefits - Leave Obligations

The leave obligations cover the Company’s liability for earned leave.

The key assumptions used for the calculation of provision for long term compensated absences are as under:

Note 13 : Segment Reporting

The Company is engaged in the activities related to manufacture and supply of auto components for transportation industry. Since the Chief Operating Decision Maker (Board of Directors) review the operating results as a whole for purposes of making decisions about resources to be allocated and to assess its performance, the entire operations are to be classified as a single business segment, namely components for transportation industry. The geographical segments considered for disclosure are - India and Rest of the World. All the manufacturing facilities are located in India:

13.1 Information about major customers

Revenue from sale of auto components to largest customers (greater than 10% of total sales) is Rs. 94.26 crores (previous year Rs. 84.58 crores)

Note 14 : Financial Instruments

14.1 Capital management

For the purpose of the Company’s capital management, capital includes issued capital, other equity reserves attributable to the equity shareholders of the Company and debt. The primary objective of the Company when managing capital is to safeguard its ability to continue as a going concern, and to maintain an optimal capital structure so as to maximize shareholder value and reduce the cost of capital. The Company determines the capital funding requirement based on it’s long term budgets, which are met through equity, internal accruals and a combination of both long-term and short-term borrowings.

The Company carries equity investment in two companies which were made at the respective face values. As per the Share Subscription agreements entered into by the Company in respect of these investments, the shares shall be bought back at face value by the promoters of those companies upon termination of the agreement. Accordingly, the face value of these investments are regarded as the best estimate if its fair value. In view of the above, disclosure of the sensitivity of fair value measurement in unobservable inputs is not considered relevant.

In the opinion of the management, the carrying amounts of financial assets and financial liabilities recognised in the financial statements are a reasonable approximation of their fair values. Hence no separate disclosures of fair value has been made.

14.2 Financial risk management

The Company is exposed to Market risk, Credit risk and Liquidity risk. The Board of Directors (‘Board’) oversee the management of these financial risks through its Risk Management Committee. The Company monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyse exposures by degree and magnitude of risks.

The following disclosures summarize the Company’s exposure to financial risks and information regarding use of derivatives employed to manage exposures to such risks. Quantitative sensitivity analysis have been provided to reflect the impact of reasonably possible changes in market rates on the financial results, cash flows and financial position of the Company.

14.2.1 Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market conditions. Market risk mainly comprises of interest rate risk, currency risk . Financial instruments affected by market risk includes borrowings, investments, trade payables, trade receivables and derivative financial instruments. The Company’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates, interest rates and other price risk.

There has been no change to the Company’s exposure to market risks or the manner in which these risks are being managed and measured.

(a) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to changes in interest rates primarily relates to the companies outstanding floating rate debt. The Company has mainly INR denominated long term debt which are subject to annual interest rate reset. Based on the past experience the variability of interest on such INR denominated loans is not expected to be material. Further there are only short term foreign currency debt in the form of buyer’s credit which are subject to minimal changes in interest rate during it’s term.

(b) Foreign Currency risk

The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilising derivative contracts. The risk management objective of the Company is to hedge risk of change in the foreign currency exchange rates associated with it’s direct & indirect transactions denominated in foreign currency. Since most of the transactions of the Company are denominated in its functional currency (INR), any foreign exchange fluctuation affects the profitability of the Company and its financial position. Hedging provides stability to the financial performance by estimating the amount of future cash flows and reducing volatility. The Company does not enter into a foreign exchange transaction for speculative purposes i.e. without any actual / anticipated underlying exposures.

Foreign Currency sensitivity analysis

The below table demonstrates the sensitivity to a 5% increase or decrease in the relevant foreign currency against INR, with all other variables held constant. The sensitivity analysis is prepared on the net unhedged exposure of the Company as at the reporting date. 5% represents management’s assessment of reasonably possible change in foreign exchange rate.

In management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period does not reflect the exposure during the year.

Forward foreign exchange contracts

It is the policy of the Company to enter into forward exchange contracts to cover specific foreign currency risk in accordance with the Board approved policy. The following table details the forward foreign currency (FC) contracts outstanding at the end of the reporting period:

14.2.2 Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults. The Company’s exposure of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the management.

Trade receivables consist of a large number of customers, ongoing credit evaluation is performed on the financial condition of accounts receivable and, where appropriate, credit guarantee insurance cover is purchased. Credit risk arising from investment in mutual funds, derivative financial instruments and other balances with banks is limited and there is no collateral held against these because the counterparties are banks and recognized financial institutions with high credit ratings assigned by the international credit rating agencies.

The Company’s trade and other receivables consists of a large number of customers, across geographies, hence the Company is not exposed to concentration risk.

14.2.3 Liquidity risk

Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidity risk management framework for the management of the Company’s short-term, medium-term and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

The following tables detail the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay.

Note 15 : As per Section 135 of the Companies Act, 2013, a Corporate Social Responsibility (CSR) committee has been formed by the Company. However there is no applicability u/s.135 to make contribution.

Note 16 : There are no amounts due and outstanding to be credited to the Investor Education and Protection Fund as on 31st March 2019.

Note 17 : Revenue expenditure during the year on Research & Development activities shown under the various heads of account amounted to Rs. 1.69 crores (Previous Year Rs. 1.49 crores)

Note 18 : Disclosure required under the Micro, Small and Medium Enterprises Development Act, 2006 are given as follows:

The above information regarding micro enterprise and small enterprises has been determined on the basis of information available with the Company. This has been relied upon by the auditors.

Note 19 : The previous year’s figures have been re-grouped, reclassified wherever necessary so as to make them comparable with the current year’s figures.

Note 20 : Figures in brackets in the Schedules and Notes pertain to previous year.


Mar 31, 2018

Note 1 : Summary of Significant Accounting Policies, critical judgements and key estimates

1. General Information

Rane Engine Valve Limited (The “Company”) is engaged in manufacture of engine valves, guides and tappets for passenger cars, commercial vehicles, farm tractors, stationery engines, railway/marine engines and two / three wheelers and as such operates in a single reportable business segment of ‘components for transportation industry’. The Company is having five manufacturing facilities at Chennai, Hyderabad (2), Trichy and Tumkur. The Company is a Public Limited Company and listed on BSE Limited, Mumbai and National Stock Exchange of India Limited, Mumbai.

2. Critical accounting judgements, assumptions and key sources of estimation uncertainty

The following are the critical judgements, assumptions concerning the future, and key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

2.1 Useful lives of property, plant and equipment

As described at Note 2.3 above, the charge in respect of periodic depreciation for the year is derived after determining an estimate of an asset’s expected useful life and the expected residual value at the end of its life. The useful lives and residual values of Company’s assets are determined by the management at the time the asset is acquired and reviewed annually. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technical or commercial obsolescence arising from changes or improvements in production or from a change in market demand of the product or service output of the asset.

2.2 Employee Benefits

The cost of defined benefit plans are determined using actuarial valuation, which involves making assumptions about discount rates, expected rates of return on assets, future salary increases, and mortality rates. Due to the longterm nature of these plans, such estimates are subject to significant uncertainty.

2.3 Taxation

Significant assumptions and judgements are involved in determining the provision for tax based on tax enactments, relevant judicial pronouncements and tax expert opinions, including an estimation of the likely outcome of any open tax assessments / litigations. Deferred income tax assets are recognized to the extent that it is probable that future taxable income will be available, based on estimates thereof.

2.4 Provisions and contingencies

Critical judgements are involved in measurement of provisions and contingencies and estimation of the likelihood of occurrence thereof based on factors such as expert opinion, past experience etc.

3. Recent accounting pronouncements

a) Appendix B to Ind AS 21, Foreign currency transactions and advance consideration: On 28 March, 2018, Ministry of Corporate Affairs (“MCA”) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment will come into force from 01 April, 2018. The Company has evaluated the effect of this on the financial statements and the impact is not material.

b) I nd AS 115 - Revenue from Contract with Customers: On 28 March, 2018, Ministry of Corporate Affairs (“MCA”) has notified the Ind AS 115, Revenue from Contract with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts with customers. The management has evaluated the effect of adoption of Ind AS 115 on the accounts and the same is not expected to be material.

(i) The Company had classified certain assets as held for sale in the previous years. In view of certain practical difficulties, the intended sale did not materialise and hence, the remaining carrying value of such assets have been written off in the books during the year.

4.1 Trade Receivables

The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience. The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates as given in the provision matrix.

The Company as a policy provides for 100% for outstanding above 120 days past due.

4.2 Trade Receivables - considered good includes due from related parties of Rs. 0.91 crores (Rs. 1.22 crores)

5.1 The Company has not issued any securities convertible into equity/preference shares.

5.2 The Company has one class of shares i.e. equity shares having a par value of Rs. 10 per share. Each holder of equity share is entitled to one vote per share. The dividend if any proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General meeting. In the event of liquidation, the equity share holders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to share holding.

5.3 Details of shares issued for consideration other than cash during the period of five years immediately preceding the reporting date

Pursuant to clause 5.1 of the Scheme of Amalgamation between Kar Mobiles Limited and the Company, 15,68,000 equity shares of Rs. 10/- each fully paid up were allotted on 04 May, 2015, to shareholders of Kar Mobiles Limited in the proportion of 7 fully paid up equity shares of Rs. 10/- each in the Company for every 10 equity shares of Rs. 10/- each held in the Kar Mobiles Limited.

General reserve is created from time to time by transferring profits from retained earnings and can be utilized for purposes such as dividend payout, bonus issue, etc.

6.1 On 18 May, 2017, a dividend of Rs. 2.5 per share (total dividend, including dividend distribution tax Rs. 2.02 Cr) was paid to the holders of fully paid equity shares as final dividend for the year 2016-17.

7.1 Term loans are secured by Pari-passu basis first charge on the Company’s immovable and movable fixed assets (other than properties situated at Peenya and Tumkur) both present and future.

7.2

i) Short term borrowings amounting to Rs. 12.30 crores (Rs. 7.11 crores) from State Bank of India are secured by hypothecation of raw materials, work in progress, finished goods, stores & spares and book debts of the Company’s Tumkur Unit and also secured by first charge on land and buildings and plant and machineries of the Company’s Peenya Unit and Tumkur Unit.

ii) Other Short term borrowings amounting to Rs. 49.15 crores (Rs. 31.53 crores) from banks are secured by hypothecation of raw materials, work in progress, finished goods, stores & spares and book debts of the Company on Pari-passu basis (other than Property situated at Peenya Unit and Tumkur Unit).

iii) None of the above loans have been guaranteed by any Directors or others.

7.3 Represents liability arising out of deferment of sales tax for a period of 14 years from 1996 to 2010. The Company should continue to be in operation and there should not be any change in location or management of the Company until the loan is fully repaid.

7.4 There has been no default as on Balance Sheet date in repayment of principal and interest.

a) I t is not practicable for the Company to estimate the timings of cash outflows, if any, pending resolution of the respective proceedings. Future cash outflows in respect of the above are determinable only on receipt of the judgements / decisions pending with various forums/authorities.

b) The Company does not expect any reimbursements from third parties in respect of the above contingent liabilities.

Estimated amount of contracts remaining to be executed on capital account and not provided for

8.1 Other commitments

Based on expert opinion obtained by the Company, no liability has been presently created in the books towards the levies and costs in connection with mutating / substituting the title in the revenue records pertaining to certain immovable properties that stand vested with the Company pursuant to a merger in earlier years.

9.1 Consequent to introduction of Goods and Services Tax (GST) w.e.f July 2017, revenue for the year ended 31 March, 2018 is presented net of GST in compliance with Indian Accounting Standard (Ind AS) 18 - “Revenue”. The revenue from operations for the year ended 31 March, 2017 are inclusive of excise duty, and hence are not comparable with the revenue from operations for the year ended 31 March, 2018 to that extent.

10.1 Includes Rs. 1.26 crores (previous year Rs. 1.07 crores), paid towards certain operating lease arrangement with third party vendors.

Note 11 : Employee Benefit Plans

A. Defined contribution plans

The Company participates in a number of defined contribution plans on behalf of relevant personnel. Any expense recognised in relation to these schemes represents the value of contributions payable during the period by the Company at rates specified by the rules of those plans. The only amounts included in the balance sheet are those relating to the prior months contributions that were not due to be paid until after the end of the reporting period.

(a) Provident fund and pension

I n accordance with the Employee’s Provident Fund and Miscellaneous Provisions Act, 1952, eligible employees of the Company are entitled to receive benefits in respect of provident fund, a defined contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employees’ salary.

(b) Superannuation fund

The Company has a superannuation plan for the benefit of its employees. Employees who are members of the defined benefit superannuation plan are entitled to benefits depending on the years of service and salary drawn.

Separate irrevocable trusts are maintained for employees covered and entitled to benefits. The Company contributes up to 15% of the eligible employees’ salary to the trust every year. Such contributions are recognised as an expense as and when incurred. The Company does not have any further obligation beyond this contribution.

The total expense recognised in profit or loss of Rs. 4.43 crores (for the year ended 31 March, 2017: Rs. 4.39 crores) represents contributions payable to these plans by the Company at rates specified in the rules of the plans.

B. Defined benefit plans

The defined benefit plans operated by the Company are as below:

The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for a lump-sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 to 30 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The Company makes annual contributions to gratuity funds established as trusts or insurance companies. The Company accounts for the liability for gratuity benefits payable in the future based on an actuarial valuation.

The defined benefit plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

The current service cost and the net interest expense for the year are included in the ‘Employee Benefits Expense’ line item in the statement of profit and loss.

The remeasurement of the net defined benefit liability is included in other comprehensive income.

(v) Risk Exposure

The Company has invested the plan assets with the insurer managed funds. The expected rate of return on plan asset is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligation.

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 expected rate of return on plan assets is based on the composition of plan assets held (through LIC), historical results of the return on plan assets, the Company’s policy for plan asset management and other relevant factors.

Significant actuarial assumptions for the determination of the defined obligation are discount rate and expected salary increase. The sensitivity analysis below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognized in the balance sheet.

There was no change in the methods of assumptions used in preparing the sensitivity analysis from prior years.

Defined benefit liability and employer contributions

The weighted average duration of the defined benefit obligation is 11.9 years (2017 - 10.2 years, 2016 - 13.9 years). The expected maturity analysis of undiscounted gratuity is as follows:

D. Other Long Term Employee Benefits - Leave Obligations

The leave obligations cover the Company’s liability for earned leave.

The key assumptions used for the calculation of provision for long term compensated absences are as under:

Note 12 : Segment Reporting

The Company is engaged in the activities related to manufacture and supply of auto components for transportation industry. Since the Chief Operating Decision Maker (Board of Directors) review the operating results as a whole for purposes of making decisions about resources to be allocated and to assess its performance, the entire operations are to be classified as a single business segment, namely components for transportation industry. The geographical segments considered for disclosure are - India and Rest of the World. All the manufacturing facilities are located in India.

12.1 Product wise break up - Refer Note 19.1

** Non - current assets are used in the operations of the Company to generate revenues both in India and outside India.

12.2 Information about major customers

Revenue from sale of auto components to largest customers (greater than 10% of total sales) is Rs. 84.58 crores (previous year Rs. 40.50 crores)

The tax rate used for the 2017-18 and 2016-17 reconciliations above is the corporate tax rate of 34.608% payable by corporate entities in India on taxable profits under the Indian tax law.

Note 13 : First-time Ind AS adoption reconciliations

13.1 First-time adoption - Mandatory exceptions and optional exemptions

The Company has prepared the opening balance sheet as per Ind AS as of 01 April, 2016 (the transition date) by recognising, de-recognising, re-classifying and re-measuring all assets and liabilities in accordance with the requirements of Ind AS. However, this principle is subject to certain mandatory exceptions and optional exemptions availed by the Company as detailed below:

13.1.1 Deemed cost for property, plant and equipment, investment property and intangible assets

The Company has elected to continue with the carrying value of all of its property, plant and equipment, investment property and intangible assets as of 01 April, 2016 (transition date) measured as per the previous GAAP as its deemed cost as of the transition date.

13.1.2 Impairment of financial assets

The Company has applied the impairment requirements of Ind AS 109 retrospectively; however, as permitted by Ind AS 101, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognised in order to compare it with the credit risk at the transition date. Further, the Company has not undertaken an exhaustive search for information when determining, at the date of transition to Ind AS, whether there have been significant increases in credit risk since initial recognition, as permitted by Ind AS 101.

13.1.3 Government Grants

The Company has applied Ind AS 109 ‘Financial Instruments’ and Ind AS 20 ‘Accounting for Government Grants and Disclosure of Government Assistance’ prospectively to government loans existing at the date of transition and the Company has not recognised the corresponding benefit of the government loans at the below-market rate of interest as a government grant. Consequently, the Company has used the previous GAAP carrying amounts of the government loans at the date of transition as the carrying amount of these loans in the opening Ind AS Balance Sheet.

(a) Under previous GAAP, provision for bad and doubtful debts was recognized as per the internal policy of the Company based on ageing of Trade Receivables. Under Ind AS, the impairment loss allowance on account of Trade receivables is created based on a provision matrix computed under the Expected credit loss method.

As a result of the above change, net carrying value of Trade Receivables as at the transition date is lower by Rs. 0.13 crores and as at 31 March, 2017 is higher by Rs. 0.11 crores with corresponding decrease in the opening balance of retained earnings (as at the transition date) by Rs. 0.08 crores (net of deferred tax impact of Rs. 0.05 crores) and increase in the profit for the year 2016-17 by Rs. 0.02 crores (net of deferred tax impact of Rs. 0.01 crores).

The above transition has also resulted in a decrease in equity by Rs. 0.08 crores as at the transition date and by Rs. 0.06 crores as at 31 March, 2017.

(b) Under previous GAAP, liability towards bills discounted with recourse under vendor financing facility was not being recognized in the books. Under Ind AS such transactions are recognized in books as short term borrowings with corresponding increase to that extent in Trade Receivables.

Accordingly Trade receivables and short term borrowings at the transition date and as at 31 March, 2017 is respectively higher by Rs. 3.66 crores and Rs. 3.57 crores.

(c) Reclassification of other bank balances as required under Ind AS.

(d) Under the previous GAAP, foreign currency derivatives in respect of Buyer’s Credit and Trade receivables was being accounted as per the principles laid down in para 36 of AS 11. Under IND AS, the underlying asset/liability are reinstated at the rates prevailing as at the reporting date and marked-to-market gain/loss on the foreign currency derivatives are also recognized.

As a result of this change, Buyer’s credit loan is lower by Rs. 0.25 crores, Trade receivables is lower by Rs. 0.07 crores and provision for MTM loss (net) is higher by Rs. 0.16 crores as at the transition date, with corresponding increase in the reserves as on the same date by Rs. 0.01 crores (net of deferred tax impact of Rs. 0.01 crores).

Similarly as at 31 March, 2017, Buyer’s credit loan is lower by Rs. 0.20 crores, Trade receivables is lower by Rs. 0.28 crores and provision for MTM loss (net) is lower by Rs. 0.10 crores, with corresponding increase in the reserves as on the same date by Rs. 0.01 crores (net of deferred tax impact of Rs. 0.01 crores). Also profit for the year 2016-17 is lower by Rs. 0.00 crores (net of deferred tax impact of Rs. 0.00 crores).

(e) Under Previous GAAP, foreign currency loans in respect of which the rupee equivalent (including interest) had been firmly fixed by way of derivative contracts were not being reinstated since there is no impact in the Statement of Profit & Loss arising out of exchange fluctuations during the loan tenure. Under Ind AS, such loans are measured at exchange rate as on the reporting date. The Marked to Market position on the corresponding derivatives are also recognized as an asset / liability on the reporting date.

As a result of this change, borrowings is higher by Rs. 2.83 crores and other financial assets (on account of recognition of Asset on MTM position as above) is higher by Rs. 2.85 crores as at the transition date. The difference of Rs. 0.01 crores (net of deferred tax impact of Rs. 0.01 crores) has been reflected in the opening balance of retained earnings (as at the transition date).

Similarly as at 31 March, 2017, borrowings is higher by Rs. 0.36 crores and other financial assets (on account of recognition of Asset on MTM position as above) is higher by Rs. 0.35 crores with corresponding impact in reserves by Rs. 0.01 crores (net of deferred tax impact of Rs. 0.00 crores). Also profit for the year 2016-17 is lower by Rs. 0.02 crores (net of deferred tax impact of Rs. 0.01 crores).

(f) Under previous GAAP, liabilities were recorded at their transaction value. Under Ind AS, financial liabilities are initially measured at fair value and subsequently measured at amortized cost. As a result of the above, carrying value of certain financial liabilities as on the transition date is lower by Rs. 0.14 crores with corresponding increase in the opening balance of retained earnings as on the said date. Further, profit for the year 2016-17 is lower by Rs. 0.04 crores on account of recognition of finance cost on such liabilities.

The above transition has also resulted in an increase in equity by Rs. 0.14 crores as at transition date and by Rs. 0.10 crores as at 31 March, 2017.

(g) Under previous GAAP, minimum alternate tax entitlements were classified under other non-current assets. Under Ind AS, the same is classified as unused tax credits under deferred tax. The movement in MAT Credit entitlement also forms part of deferred tax expense in the Statement of Profit and loss.

(h) Under previous GAAP, cash discounts and rebates passed on to customers were recorded in other expenses under the head selling expenses. Under Ind AS, these are reflected as adjustments to revenue for sale of products. Under previous GAAP, excise duty on sale of goods was adjusted in revenue from sale of products whereas under Ind AS, it is considered as a production cost and hence, disclosed separately as an expense in the statement of profit and loss. As a result of the above changes, revenue from sale of products has increased by Rs. 29.12 crores with corresponding increase in excise duty by Rs. 34 crores and decrease in other expenses by Rs. 4.88 crores in the Statement of Profit and Loss for the year ended 31 March, 2017.

(i) Under Previous GAAP, actuarial gains / losses arising out of remeasurement of defined benefit obligation were recognized as employee benefits expense in the statement of profit and loss. Under Ind AS, such re-measurement of gains / losses are recognized in OCI. Consequently, the tax effect of the same has also been recognized in OCI. The above change has resulted in decrease in employee benefits expense and loss in OCI by Rs. 1.02 crores for year ended 31 March, 2017; net tax effect thereon is Rs. 0.35 crores.

13.6 Effect of Ind AS adoption on the statement of cash flows for the year ended 31 March, 2017

There are no changes to the cash flows from operating, financing and investing activities as reported in the cash flow statement for the year ended 31 March, 2017 drawn up under the previous GAAP on account of transition to Ind AS, other than those arising due to reclassification of the previous year figures to conform to the current year’s layout.

Note 14 : Financial Instruments

14.1 Capital management

For the purpose of the Company’s capital management, capital includes issued capital, other equity reserves attributable to the equity shareholders of the Company and debt. The primary objective of the Company when managing capital is to safeguard its ability to continue as a going concern, and to maintain an optimal capital structure so as to maximize shareholder value and reduce the cost of capital. The Company determines the capital funding requirement based on it’s long term budgets, which are met through equity, internal accruals and a combination of both long-term and short-term borrowings.

The fair value of the equity investment in TCW energy Private Limited is based on price of prior transactions. The said investment has subsequently been transferred at its carrying value during the financial year 2017-18. Accordingly, disclosure of the sensitivity of fair value measurement in unobservable inputs is considered not relevant. Other than the effect of disposal as stated above, there are no other changes in the fair value of such investments.

In the opinion of the management, the carrying amounts of financial assets and financial liabilities recognised in the financial statements are a reasonable approximation of their fair values. Hence no separate disclosures of fair value has been made.

14.2 Financial risk management

The Company is exposed to Market risk, Credit risk and Liquidity risk. The Board of Directors (‘Board’) oversee the management of these financial risks through its Risk Management Committee. The Company monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyse exposures by degree and magnitude of risks.

The following disclosures summarize the Company’s exposure to financial risks and information regarding use of derivatives employed to manage exposures to such risks. Quantitative sensitivity analysis have been provided to reflect the impact of reasonably possible changes in market rates on the financial results, cash flows and financial position of the Company.

14.2.1 Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market conditions. Market risk mainly comprises of interest rate risk, currency risk . Financial instruments affected by market risk includes borrowings, investments, trade payables, trade receivables and derivative financial instruments. The Company’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates, interest rates and other price risk.

There has been no change to the Company’s exposure to market risks or the manner in which these risks are being managed and measured.

(a) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to changes in interest rates primarily relates to the companies outstanding floating rate debt. The Company has mainly INR denominated long term debt which are subject to annual interest rate reset. Based on the past experience the variability of interest on such INR denominated loans is not expected to be material. Further there are only short term foreign currency debt in the form of buyer’s credit which are subject to minimal changes in interest rate during it’s term.

(b) Foreign Currency risk

The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilising derivative contracts. The risk management objective of the Company is to hedge risk of change in the foreign currency exchange rates associated with it’s direct & indirect transactions denominated in foreign currency. Since most of the transactions of the Company are denominated in its functional currency (INR), any foreign exchange fluctuation affects the profitability of the Company and its financial position. Hedging provides stability to the financial performance by estimating the amount of future cash flows and reducing volatility. The Company does not enter into a foreign exchange transaction for speculative purposes i.e. without any actual /anticipated underlying exposures.

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows :

Foreign Currency sensitivity analysis

The below table demonstrates the sensitivity to a 5% increase or decrease in the relevant foreign currency against INR, with all other variables held constant. The sensitivity analysis is prepared on the net unhedged exposure of the Company as at the reporting date. 5% represents management’s assessment of reasonably possible change in foreign exchange rate.

In management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period does not reflect the exposure during the year.

Forward foreign exchange contracts

It is the policy of the Company to enter into forward exchange contracts to cover specific foreign currency risk in accordance with the Board approved policy. The following table details the forward foreign currency (FC) contracts outstanding at the end of the reporting period:

The line-items in the balance sheet that include the above hedging instruments are “Other Financial Assets” and “Other Financial Liabilities”.

14.2.2 Credit risk

Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counter parties as a means of mitigating the risk of financial loss from defaults. The Company’s exposure of its counter parties are continuously monitored and the aggregate value of transactions concluded is spread amongst counter parties. Credit exposure is controlled by counter party limits that are reviewed and approved by the management.

Trade receivables consist of a large number of customers, ongoing credit evaluation is performed on the financial condition of accounts receivable and, where appropriate, credit guarantee insurance cover is purchased. Credit risk arising from investment in mutual funds, derivative financial instruments and other balances with banks is limited and there is no collateral held against these because the counter parties are banks and recognized financial institutions with high credit ratings assigned by the international credit rating agencies.

The Company’s trade and other receivables consists of a large number of customers, across geographies, hence the Company is not exposed to concentration risk.

14.2.3 Liquidity risk

Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidity risk management framework for the management of the Company’s short-term, medium-term and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

The following tables detail the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay.

Note 15 : As per Section 135 of the Companies Act, 2013, a Corporate Social Responsibility (CSR) committee has been formed by the company. However there is no applicability u/s.135 to make contribution.

Note 16 : There are no amounts due and outstanding to be credited to the Investor Education and Protection Fund as on 31 March, 2018.

Note 17 : Revenue expenditure during the year on Research & Development activities shown under the various heads of account amounted to Rs. 1.49 crores (Previous Year Rs. 1.87 crores)

Note 18 : Exceptional Item represents

18.1 Profit on sale of Company’s part land in Alandur, Chennai amounts to ‘ Nil (net of selling expenses of ‘ Nil crores) (Previous Year Rs. 94.01 crores (net of selling expenses of Rs. 0.80 crores))

18.2 Loss on Sale / Retirement of assets on rationalization of facilities amounting to ‘ Nil (Previous Year Rs. 3.57 crores)

Note 19 : Disclosure required under the Micro, Small and Medium Enterprises Development Act, 2006 are given as follows:

The above information regarding micro enterprise and small enterprises has been determined on the basis of information available with the Company. This has been relied upon by the auditors.

Note 20 : The application for renewal for Consent For Operations (CFO) under the pollution control regulations in one of the manufacturing plants located in the State of Telangana has been returned by the regulatory authority citing that industries located in the specified area were not issued CFO in the light of G.O.Ms.No.111 dated 08 March, 1996. However, the Company is of the opinion that this does not impact the going concern status of the Company and its future operations. The Company has examined the matter and is taking necessary action to present its case that it is neither a polluting nor a potentially polluting industry before the pollution control authorities.

Note 21 : The previous year’s figures have been re-grouped, reclassified wherever necessary so as to make them comparable with the current year’s figures.

Note 22 : Figures in brackets in the Schedules and Notes pertain to previous year.


Mar 31, 2017

1 Related party Disclosures

List of related parties where control exists

Holding company : Rane Holdings Limited (RHL)

Fellow Subsidiaries : Rane Madras Limited (RML)

Rane Brake Linings Limited (RBL)

Rane Holding America Inc (RHAI)

Enterprises significantly influenced by Key Management Personnel : Rane Foundation (RF)

Rane TRW Steering systems Limited RT Automative Systems Private Limited Savithur Enterprises Private Limited HL Hill Station Properties Private Limited

Key Management Personnel : Mr L Ganesh - Chairman and Managing Director

Relatives of Key Management Personnel : 1. Mr L.Lakshman 2. Mr.L.Ganesh (HUF)

3. Mrs.Meenakshi Ganesh 4. Ms. Aparna Ganesh

5. Mr.Aditya Ganesh 6. Mrs.Hema C.Kumar

7,Mrs.Vanaja Aghoram 8. Mrs.Shanthi Narayan

Other Related Parties : SasMos HET Technologies Limited

(Under common Control of Holding Company) Rane TRW Steering Systems Private Limited (RTSSPL)

Rane Precision Diecast Inc. (RPDC)

Rane (Madras) International Holdings B.V (RMIH)

Rane NSK Steering Systems Private Limited (RNSSPL)

2 As per Section 135 of the Companies Act, 2013, a Corporate Social Responsibility (CSR) committee has been formed by the company. There is no applicability u/s.135(1) to make contribution.

3 In the opinion of the Board, none of the assets have a value lower on realization in the ordinary course of business than the amount at which they are stated in the Balance Sheet.

4 There are no amounts due and outstanding to be credited to the Investor Education and Protection Fund as on March 31, 2017.

5 Revenue expenditure during the year on Research & Development activities shown under the various heads of account amounted to Rs,.1.87 Crores (Previous Year Rs, 1.53 Crores)

6 Exceptional Item represents

7 Profit on sale of company''s part land in Alandur,Chennai amounts to '' 94.01 Crores (net of selling expenses of Rs, 0.80 Crores) (Previous Year Rs,.27.54 Crores (net of selling expenses of Rs, 0.21 Crores))

8 Loss on Sale / Retirement of assets on rationalization of facilities amounting to Rs, 3.57 Crores (Previous Year Rs, Nil Crores)

9 Voluntary Retirement Scheme (VRS) expenditure in the nature of employee benefits paid to employees opted for VRS amounts to Rs, Nil Crores (Previous Year Rs, 10.05 Crores)

10 The application for renewal for Consent For Operations (CFO) under the pollution control regulations in one of the manufacturing plants located in the State of Telangana has been returned by the regulatory authority citing that industries located in the specified area were not issued CFO in the light of G.O.Ms.No.111 dated 08.03.1996. However, the company is of the opinion that this does not impact the going concern status of the Company and its future operations. The company has examined the matter and is taking necessary action to present its case that it is neither a polluting nor a potentially polluting industry before the pollution control authorities.

11 The previous year''s figures have been re-grouped, reclassified wherever necessary so as to make them comparable with the current year''s figures.

12 Figures in brackets in the Schedules and Notes pertain to previous year.


Mar 31, 2016

1 Short term borrowings amounting to Rs. 24.98 Crores (Rs. 24.74 Crores) taken over pursuant to Merger (State Bank of India and Karur Vysya Bank) are secured by hypothecation of raw materials, work in progress, finished goods, stores & spares and book debts of the company''s Peenya Unit and Tumakuru Unit on Pari-passu basis and also secured by second charge on land and buildings and plant and machineries of the company''s Peenya Unit and Tumakuru Unit.

2 Other Short term borrowings amounting to Rs. 30.08 Crores (Rs. 35.70 Crores) from banks are secured by hypothecation of raw materials, work in progress, finished goods, stores & spares and book debts of the company (other than Property situated at Alandur-Chennai, Peenya Unit and Tumakuru Unit).

3 None of the above loans have been guaranteed by any Directors or others.

4 Derivative Instrument and hedge accounting

As per Accounting Standard AS 30 "Financial Instruments: Recognition and Measurement", the Company has provided for the effective portion amounting to Rs. Nil Crores (Rs. 0.03 Crores) of the changes in the fair values of forward contracts and options designated as cash flow hedges directly in ''Hedge Reserve Account'' being part of the shareholders'' funds the changes in fair value relating to the ineffective portion amounting to Rs. 0.11 Crores (Rs. 0.23 Crores) of the cash flow hedges and forward contracts / options are recognized in the profit and loss account.

5 Segment Reporting

The entire operations of the company relate only to one segment, viz, "Components for Transport Industry" As the exports are predominantly to developed countries, geographical risk is not different from domestic market and hence no separate secondary segment disclosure is required.

6 As per Section 135 of the Companies Act, 2013, a Corporate Social Responsibility (CSR) committee has been formed by the company. There is no applicability u/s.135(1) to make contribution.

7 In the opinion of the Board, none of the assets have a value lower on realization in the ordinary course of business than the amount at which they are stated in the Balance Sheet.

8 There are no amounts due and outstanding to be credited to the Investor Education and Protection Fund as on March 31, 2016.

9 Revenue expenditure during the year on Research & Development activities shown under the various heads of account amounted to Rs. 1.53 Crores (Previous Year Rs. 1.20 Crores).

10. Exceptional Item represents

11 Profit on sale of company''s part land in Alandur, Chennai amounts to Rs. 27.54 Crores (net of selling expenses of Rs. 0.21 Crores) (Previous Year Rs. 44.58 Crores) (net of selling expenses of Rs. 0.41 Crores).

12 Voluntary Retirement Scheme (VRS) expenditure in the nature of employee benefits paid to employees opted for VRS amounts to Rs. 10.05 Crores (Previous Year Rs. Nil Crores).

13 During the year, the application for renewal for Consent For Operations (CFO) under the pollution control regulations in one of the manufacturing plants located in the State of Telangana has been returned by the regulatory authority citing that industries located in the specified area were not issued CFO in the light of G.O.Ms.No.111 dated 08.03.1996. However, the company is of the opinion that this does not impact the going concern status of the Company and its future operations. The company has examined the matter and take appropriate action to present its case that it is neither a polluting nor a potentially polluting industry before the pollution control authorities.

14 Long Term Settlement (LTS) with the workmen unions in the case of two of its plants had expired during the year and the new agreements are pending since these matters are being discussed. Hence, the company has made suitable provisions in the financial statements based on its estimates of the expenditure. The company believes that the provision made is sufficient to discharge the liability.

15 The previous year''s figures have been re-grouped, reclassified wherever necessary so as to make them comparable with the current year''s figures.

16 Figures in brackets in the Schedules and Notes pertain to previous year.


Mar 31, 2014

1.1 The Company has only one class of shares i.e. equity shares having a par value of Rs.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 Annual General Meeting. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to shareholding.

2.1 Notes on Secured Long Term Borrowings

Term loans are secured by Pari-passu basis first charge on the company''s immovable properties (other than Property situated at Alandur,Chennai) both present and future and also secured by hypothecation of company''s movable properties both present and future.

2.2 Notes on Unsecured Long Term Borrowings

2.2.1 Fixed Deposit accepted from public carry interest @ 9.0 % to 10.0 % and are for a tenure of 2 to 3 years

2.2.2 Fixed Deposit includes due to related parties of Rs. 1.25 Crores (Rs. 0.92 Crores)

2.2.3 The company is entitled for deferment of sales tax for a period of 14 years from 1996 to 2010 and the first year loan is repayable during March 2010 and the second year''s loan is repayable in the year 2011 and the amount deferred in year 2010 is repayable in the year 2024.The company should continue to be in operation and there should not be any change in location or management of the company until the loan is fully repaid.

3.1 Amount payable on investment as per the agreement with TCW Renewable Energy (India) Private Limited

4.1 Short term borrowings from banks are secured By hypothecation of raw materials, work in progress, finished goods, stores & spares and book debts.

4.2 None of the above loans have been guaranteed by any Directors or others.

Rs. Crores

Particulars Year ended Year ended 31 March 2014 31 March 2013

5 CONTINGENT LIABILITIES AND COMMITMENTS

5.1 Contingent Liabilities

Claims against the company not acknowledged as debt

Labour Disputes 0.16 0.16

Income Tax 2.31 1.90

Other Liabilities 0.73 0.71

Guarantees & Letter of Credits issued by the banks 0.36 3.79

Liability on bills discounted with banks 6.69 5.99

10.25 12.55

5.2 Capital Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for 2.13 2.26

5.3 Other commitments

5.3.1 The Company has imported Capital Goods under the Export Promotion Capital Goods Scheme, of the Government of India, at concessional rates of duty on an undertaking to fulfil quantified exports amounting to Rs. 9.97 Crores within the period allowed under the scheme.

6 Derivative Instrument and hedge accounting

As per Accounting Standard AS 30 "Financial Instruments: Recognition and Measurement", the Company has provided for the effective portion amounting to Rs. Nil (Rs. Nil) of the changes in the fair values of forward contracts and options designated as cash flow hedges directly in ''Hedge Reserve Account'' being part of the shareholders'' funds the changes in fair value relating to the ineffective portion amounting to Rs. Nil (Rs. Nil) of the cash flow hedges and forward contracts / options are recognised in the profit and loss account.

7 Segment Reporting

The entire operations of the company relate only to one segment, viz, "Components for Transport Industry". As the exports are predominantly to developed countries, geographical risk is not different from domestic market and hence no separate secondary segment disclosure is required.

8 In the opinion of the Board, none of the assets have a value lower on realization in the ordinary course of business than the amount at which they are stated in the Balance Sheet.

9 There are no amounts due and outstanding to be credited to the Investor Education and Protection Fund as on 31st March 2014.

10 Revenue expenditure during the year on Research & Development activities shown under the various heads of account amounted to Rs. 0.72 Crores (Previous Year Rs. 0.71 Crores)

11 Exceptional Item represents

11.1 Profit on sale of company''s surplus land near Chennai amounts to Rs. 0.49 Crores (Previous Year Rs. Nil Crores)

11.2 Voluntary Retirement Scheme (VRS) expenditure in the nature of employee benefits paid to employees opted for VRS amounts to Rs. 40.76 Crores (Previous Year Rs. 0.08 Crores)

12 The previous year''s figures have been re-grouped, reclassified wherever necessary so as to make them comparable with the current year''s figures.

13 Figures in brackets in the Schedules and Notes pertain to previous year.


Mar 31, 2013

1.1 The Company has only one class of shares i.e. equity shares having a par value of Rs.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 Annual General Meeting. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to shareholding.

2.1 Notes on Secured Long Term Borrowings

Term loans are secured by pari-passu basis first charge on the company''s immovable properties both present and future and also secured by hypothecation of company''s movable properties both present and future.

2.2 Notes on Unsecured Long Term Borrowings

2.2.1 Fixed Deposit accepted from public carry interest @ 8.5 % to 10.0 % and are for a tenure of 2 to 3 years.

2.2.2 Fixed Deposit includes due to related parties of Rs..0.92 Crores (Rs..0.57 Crores).

2.2.3 The company is entitiled for deferment of sales tax for a period of 14 years from 1996 to 2010 and the first year loan is repayable during March 2010 and the second year''s loan is repayable in the year 2011 and the amount deferred in year 2010 is repayable in the year 2024.The company should continue to be in operation and there should not be any change in location or management of the company until the loan is fully repaid.

3.1 Short term borrowings from banks are secured on pari-passu basis by hypothecation of raw materials, work in progress, finished goods, stores & spares and book debts.

3.2 Maximum amount of Commercial Paper outstanding at any time during the year was Rs..10 Crores (Rs.10 Crores)

3.3 None of the above loans have been guaranteed by any Directors or others.

4.1 Foreign currency fluctuation loss of Rs. NIL (fluctuation loss of Rs. 0.09 Crores) arising on settlement / translation of long tern borrowings utilised for acquisition of capital assets are adjusted to the cost of the assets.

4.2 Borrowing Cost of Rs. 0.34 Crores (Rs. 0.28 Crores) is capitalised along with the cost of capital asset.

5.1 Other commitments

5.1.1 The Company has imported Capital Goods under the Export Promotion Capital Goods Scheme, of the Government of India, at concessional rates of duty on an undertaking to fulfill quantified exports amounting to Rs. 9.97 Crores within the period allowed under the scheme.

5.1.2 Voluntary Retirement Scheme (VRS) was offered in one of the plants. The commitment under VRS implemented during April 2013 amounts to Rs..40.76 Crores.

6 Derivative Instrument and hedge accounting

As per Accounting Standard AS 30 "Financial Instruments: Recognition and Measurement", the Company has provided for the effective portion amounting to Rs. Nil (Rs. NIL) of the changes in the fair values of forward contracts and options designated as cash flow hedges directly in ''Hedge Reserve Account'' being part of the shareholders'' funds the changes in fair value relating to the ineffective portion amounting to Rs. Nil (Rs. Nil) of the cash flow hedges and forward contracts / options are recognised in the profit and loss account.

7 Segment Reporting

The entire operations of the company relate only to one segment, viz, "Components for Transport Industry". As the exports are predominantly to developed countries, geographical risk is not different from domestic market and hence no separate secondary segment disclosure is required.

8 In the opinion of the Board, none of the assets have a value lower on realization in the ordinary course of business than the amount at which they are stated in the Balance Sheet.

9 There are no amounts due and outstanding to be credited to the Investor Education and Protection Fund as on 31st March 2013.

10 Revenue expenditure during the year on Research & Development activities shown under the various heads of account amounted to Rs. 0.71 Crores (Previous Year Rs. 0.65 Crores).

11 Exceptional Item represents:

11.1 Profit on sale of company''s surplus land near Chennai along with appurtenant building amounts to Rs. Nil (Previous Year Rs. 16.27 Crores).

11.2 Voluntary Retirement Scheme (VRS) expenditure in the nature of employee benefits paid to employees opted for VRS amounts to Rs. 0.08 Crores (Previous Year Rs. 4.06 Crores).

12 Quality Claims is net of claims received / receivable of Rs. Nil (Rs. 6.22 Crores).

13 Power and Fuel Cost includes a) Rs. 0.24 Crores incurred towards providing dedicated feeder for availing private power, b) Fuel Surcharge Adjustment (FSA) charges amounting to Rs. 1.69 Crores relating to earlier financial years.

14 The previous year''s figures have been re-grouped, reclassified wherever necessary so as to make them comparable with the current year''s figures.

15 Figures in brackets in the Schedules and Notes pertain to previous year.


Mar 31, 2012

1.1 The Board of Directors in their meeting on January 24, 2012 declared an interim dividend of Rs.7.50 per equity share. Further the Board of Directors, in their meeting on May 21, 2012 proposed a final dividend of Rs.3/- per equity share. The proposal is subject to approval of shareholders at the Annual General Meeting to be held on July 23, 2012.

1.2 The Company has only one class of shares i.e. equity shares having a par value of Rs10/- 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 Annual General Meeting. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to shareholding.

2.1 Notes on Secured Long Term Borrowings

Term loans are secured by pari-passu basis first charge on the company's immovable properties both present and future and also secured by hypothecation of company's movable properties both present and future.

2.2 Notes on Unsecured Long Term Borrowings

2.2.1 Fixed Deposit accepted from public carry interest @ 8.5 % to 11.0 % and are for a tenure of 2 to 3 years.

2.2.2 Fixed Deposit includes due to related parties of Rs.0.57 Crores (Rs.1.55 Crores)

2.2.3 The company is entitiled for deferment of sales tax for a period of 14 years from 1996 to 2010 and the first year loan is repayable during March 2010 and the second year's loan is repayable in the year 2011 and the amount deferred in year 2010 is repayable in the year 2024.The company should continue to be in operation and there should not be any change in location or management of the company until the loan is fully repaid.

3.1 Short term borrowings from banks are secured by hypothecation of raw materials, work in progress, finished goods, stores & spares and book debts.

3.2 Maximum amount of Commercial Paper outstanding at any time during the year was Rs.10 Crores (Rs10 Crores)

3.3 None of the above loans have been guaranteed by any Directors or others.

4.1 Foreign currency fluctuation loss of Rs 0.09 Crores (fluctuation gain of Rs 0.08 Crores) arising on settlement / translation of long tern borrowings utilised for acquisition of capital assets are adjusted to the cost of the assets.

4.2 Borrowing Cost of Rs 0.28 Crores (Rs 0.18 Crores) is capitalised along with the cost of capital asset.

4.3 In compliance with the Notification No.GSR226 (E), dated 31st March, 2009 issued by Ministry of Corporate Affairs, the company has exercised the option in terms of newly inserted paragraph 46 to the Accounting Standard - AS -11 "the effect of changes in Foreign Exchange Rates". Accordingly, the exchange differences, fluctuation loss of Rs 0.09 Crores (fluctuation gain of Rs 0.08 Crores) adjusted to cost of fixed assets arising on settlement / translation of foreign currency monetary items utilised to acquire depreciable capital assets.

Rs. Crores

Particulars Year ended Year ended 31March 2012 31March 2011

5 CONTINGENT LIABILITIES AND COMMITMENTS

5.1 Contingent Liabilities

Claims against the company not acknowledged as debt

Labour Disputes 0.16 0.16

Income Tax 1.59 0.89

Other Liabilities 0.39 0.30

Guarantees & Letter of Credits issued by the banks 1.75 7.94

Liability on bills discounted with banks 2.60 3.59

6.49 12.88

5.2 Other commitments

5.2.1 The Company has imported Capital Goods under the Export Promotion Capital Goods Scheme, of the Government of India, at concessional rates of duty on an undertaking to fulfill quantified exports amounting to Rs 9.97 Crores within the period allowed under the scheme.

5.2.2 The Company may have liability on account of Fuel Surcharge Adjustment, if any, to be notified by Southern Power Distribution Company of A.P. Limited (APSPDCL) for the earlier years on the power supplied by them.

6 Derivative Instrument and hedge accounting

As per Accounting Standard AS 30 "Financial Instruments: Recognition and Measurement", the Company has provided for the effective portion amounting to Rs Nil (Rs NIL) of the changes in the fair values of forward contracts and options designated as cash flow hedges directly in 'Hedge Reserve Account' being part of the shareholders' funds the changes in fair value relating to the ineffective portion amounting to Rs Nil (Rs 0.027 crores) of the cash flow hedges and forward contracts / options are recognised in the profit and loss account.

7 Segment Reporting

The entire operations of the company relate only to one segment, viz, "Components for Transport Industry". As the exports are predominantly to developed countries, geographical risk is not different from domestic market and hence no separate secondary segment disclosure is required.

8 In the opinion of the Board, none of the assets have a value lower on realization in the ordinary course of business than the amount at which they are stated in the Balance Sheet.

9 There are no amounts due and outstanding to be credited to the Investor Education and Protection Fund as on 31st March 2012.

10 Revenue expenditure during the year on Research & Development activities shown under the various heads of account amounted to Rs 0.65 Crores (Previous Year Rs 0.46 Crores)

11 Exceptional Item represents:

11.1 Profit on sale of company's surplus land near chennai along with appurtenant building amounts to Rs. 16.27 Crores.

11.2 Voluntary Retirement Scheme (VRS) expenditure in the nature of employee benefits paid to employees opted for VRS amounts to Rs. 4.06 Crores.

12 During the year, the company has settled a Quality Claim of an earlier year with a customer and the company has preferred the claim with the Insurance company and received part of the amount and the balance claim is under process.

13 Quality Claims is net of claims received / receivable of Rs. 6.22 Crores (Rs. 0.47 Crores)

14 The Financial Statements for the year ended March 31, 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to the Notification of Revised Schedule VI under the Companies Act, 1956, the Financial Statements for the year ended March 31, 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year's figures have also been reclassified to conform to this year's classification.

15 Figures in brackets in the Schedules and Notes pertain to previous year.


Mar 31, 2011

1. Share Capital

1.1 5,150,992 Equity Shares of Rs. 10/- each were allotted on February 06, 2008, as fully paid for consideration other than cash, pursuant to the scheme of arrangement of the company with erstwhile Rane Engine Valves Limited.

1.2 2,759,686 Equity Shares of Rs. 10/- each are held by Rane Holdings Ltd., the holding company

2. Loans

2.1 Foreign Currency Term Loan and Rupee Term Loans from Banks are secured on pari-passu basis by a first charge on the Companys immovable properties both present and future and also secured by hypothecation of companys movable properties both present and future.

2.2 Cash credit from banks is secured by hypothecation of raw materials, work in progress, finished goods, stores & spares and book debts.

2.3 Term Loans repayable within one year Rs. 183,095,107 (Rs. 175,858,242).

2.4 The Interest Free Sales Tax Loan from Government of Andhra Pradesh is due and repayable on completion of period of deferral starting from the month of February 2010. Amount due within one year amounts to Rs. 3,888,507 (Rs. 4,913,834).

2.5 Fixed Deposits outstanding include Rs. 1,850,000 (Rs. 1,250,000) from Directors.

2.6 Fixed Deposit maturing within a period of one year amounts to Rs. 34,870,000 (Rs. 22,550,000)

2.7 Maximum amount of Commercial Paper outstanding at any time during the period was Rs. 100,000,000 (Rs. 50,000,000)

3. Fixed Assets

3.1 Foreign currency fluctuation Gain of Rs. 788,772 (fluctuation loss of Rs. 9,853,024) arising on settlement / translation of long term borrowings utilized for acquisition of capital assets are adjusted to the cost of the assets.

3.2 Borrowing cost of Rs. 1,772,056 Rs. 2,110,793) is capitalized along with the cost of capital asset.

4. In compliance with the Notification No.GSR226 (E), dated 31 st March, 2009 issued by Ministry of Corporate Affairs, the company has exercised the option in terms of newly inserted paragraph 46 to the Accounting Standard - AS -11 "the effect of changes in Foreign Exchange Rates". Accordingly, the exchange differences, fluctuation gain of Rs. 788,722 (fluctuation loss of Rs. 9,853,024) adjusted to cost of fixed assets arising on settlement / translation of foreign currency monetary items utilized to acquire depreciable capital assets.

4. Related Party Disclosures:

5.1 Related parties and their relationship

Holding Company : Rane Holdings Limited

Fellow Subsidiaries : Rane (Madras) Limited

Rane Brake Lining Limited Rane Diecast Limited

Enterprise Significantly influenced by

Key Management Personnel : Kar Mobiles Limited

Rane Foundation

Key Management Personnel : Mr L Ganesh

Relatives of Key Management Personnel : 1. Mr L Lakshman

2. Mrs Meenakhi Ganesh

3. Ms Aparna Ganesh

4. Mr Aditya Ganesh

5. Mrs Hema C Kumar

6. Mrs Vanaja Aghoram

7. Mrs Shanthi Narayan

20.3 The details of amount paid as remuneration to key management personnel are given in the note 16.

6. Segment Reporting:

6.1 The entire operations of the company relate only to one segment, viz, "Components for Transport Industry". As the exports are predominantly to developed countries, geographical risk is not different from domestic market and hence no separate secondary segment disclosure is required.

7. The Company has included an amount of Rs. 2,391,030 (Rs. 2,480,200) representing the excise duty on finished goods manufactured but not cleared as on 31st March, 2011, for valuation and charging off the excise duty to Profit and Loss Account. This has, however, no impact on profit of the year.

8. There are no amounts due and outstanding to be credited to the Investor Education and Protection Fund as on 31st March 2011.

9. Revenue expenditure during the year on Research & Development activities shown under the various heads of account amounted to Rs. 4,649,238 (Previous Year Rs. 2,992,302)

10. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) is Rs. 88,358,946 (Rs.16,158,657).

11. Derivative Instrument and hedge accounting

As per Accounting Standard AS 30 "Financial Instruments: Recognition and Measurement", the Company has provided for the effective portion amounting to Rs. Nil (Rs. 2.06 Mio) of the changes in the fair values of forward contracts and options designated as cash flow hedges directly in Hedge Reserve Account being part of the shareholders funds, the changes in fair value relating to the ineffective portion amounting to Rs. 0.27 Mio (Rs. 0.08 Mio) of the cash flow hedges and forward contracts / options are recognised in the profit and loss account.

12. The company in an earlier year received an intimation of product recall on account of product defect from one of the Original Equipment Manufacturer (OEM) customer. The company has not accepted the facts and the claim made by the OEM customer. The Gompany is adequately insured for claims on account of product defect liability. In the opinion of the management, the potential claim net of insurance coverage would not be material.

13. Contingent Liabilities not provided for 31.03.2011 31.03.2010 Rs. 000 Rs. 000

Liability on bills discounted with bank 35,914 22,678

Liability on letter of credits & guarantees issued by the Banks 79,397 142,771

Labour Disputes 1,600 18,691

Income tax 8,875 11,320

Other Liabilities 2,991 1,097

14. Figures in brackets in the Schedules and Notes pertain to previous year.


Mar 31, 2010

NOTES

1. Share Capital

1.1 5,150,992 Equity Shares of Rs.10/- each were allotted on February 06, 2008, as fully paid for consideration other than cash, pursuant to the scheme of arrangement of the company with erstwhile Rane Engine Valves Limited.

1.2 2,754,521 Equity Shares of Rs.10/- each are held by Rane Holdings Ltd., the holding company (inclusive of 40,444 Equity Shares of Rs.10 each held in trust pending transfer to Rane Holdings Limited as on 31.03.2010).

2. Loans

2.1 Foreign Currency Term Loan and Rupee Term Loans from Banks are secured on pari-passu basis by a first charge on the Companys immovable properties both present and future and also secured by hypothecation of companys movable properties both present and future.

2.2 Cash credit from banks is secured by hypothecation of raw materials, work in progress, finished goods, stores & spares and book debts.

2.3 Term Loans repayable within one year Rs. 175,858,242 (Rs.163,505,974)

2.4 The Interest Free Sales Tax Loan from Government of Andhra Pradesh is due and repayable on completion of period of deferral starting from the month of February 2010. Amount due within one year amounts to Rs.4,913,834 (Rs.2,422,180)

2.5 Fixed Deposits include Rs.1,250,000 (Rs. 550,000) from Directors.

2.6 Fixed Deposit maturing within a period of one year amounts to Rs.22,550,000 (Rs.17,715,000)

2.7 Maximum amount of Commercial Paper outstanding at any time during the period was Rs.50,000,000 (Rs. Nil)

3. Fixed Assets

3.1 Foreign currency fluctuation Gain of Rs.9,853,024 (fluctuation loss of Rs.27,338,136) arising on settlement / translation of long term borrowings utilized for acquisition of capital assets are adjusted to the cost of the assets.

3.2 Borrowing cost of Rs.2,110,793 (Rs.10, 710,015) is capitalized along with the cost of capital asset.

4. In compliance with the Notification No.GSR226 (E), dated 31st March, 2009 issued by Ministry of Corporate Affairs, the company has exercised the option in terms of newly inserted paragraph 46 to the Accounting Standard - AS -11 " the effect of changes in Foreign Exchange Rates". Accordingly, the exchange differences, fluctuation gain of Rs.9,853,024 (fluctuation loss of Rs.27,338,136) adjusted to cost of fixed assets arising on settlement / translation of foreign currency monetary items utilized to acquire depreciable capital assets.

5. Related Party Disclosures:

5.1 Related parties and their relationship Holding Company : Rane Holdings Limited Fellow Subsidiaries : Rane Madras Limited Rane Brake Lining Limited Enterprise Significantly influenced by Key Management Personnel : Kar Mobiles Limited Key Management Personnel : Mr L Ganesh Relatives of Key Management Personnel : 1. Mr L Lakshman 2. Mrs Meenakhi Ganesh 3. Ms Aparna Ganesh 4. Mr Aditya Ganesh 5. Mrs Hema C Kumar 6. Mrs Vanaja Aghoram 7. Mrs Shanthi Narayan

6. Segment Reporting:

6.1 The entire operations of the company relate only to one segment, viz, "Components for Transport Industry". As the exports are predominantly to developed countries, geographical risk is not different from domestic market and hence no separate secondary segment disclosure is required.

7. The Company has included an amount of Rs.2,480,200 (Rs. 1,934,145) representing the excise duty on finished goods manufactured but not cleared as on 31st March, 2010, for valuation and charging off the excise duty to Profit and Loss Account. This has, however, no impact on profit of the year.

8. There are no amounts due and outstanding to be credited to the Investor Education and Protection Fund as on 31st March 2010.

9. Revenue expenditure during the year on Research & Development activities shown under the various heads of account amounted to Rs.3,117,302 (Previous Year Rs.8,895,123)

10. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) is Rs.16,158,657 (Rs.56,213,349)

11. Employee Benfits

The company has implemented Revised AS-15 and made the provisions accordingly. The disclosure as per Revised AS-15 produced below:-

12. Derivative Instrument and hedge accounting

As per Accounting Standard AS 30 "Financial Instruments: Recognition and Measurement", the Company has provided for the effective portion amounting to Rs.2.06 Mio (Rs.0.71 Mio) of the changes in the fair values of forward contracts and options designated as cash flow hedges directly in Hedge Reserve Account being part of the shareholders funds, the changes in fair value relating to the ineffective portion amounting to Rs.0.08 Mio (Rs.Nil) of the cash flow hedges and forward contracts / options are recognised in the profit and loss account.

13. The company has during the year received an intimation of product recall on acount of product defect from one of the Original Equipment Manufacturer (OEM) customer. The company has not accepted the facts and the claim made by the OEM customer. The company is adequately insured for claims on account of product defect liability. In the opinion of the management, the potential claim net of insurance coverage would not be material.

14. Contingent Liabilities not provided for 31.03.2010 31.03.2009 Rs.000 Rs. 000 Liability on bills discounted with bank 22,678 29,642 Liability on letter of credits & guarantees issued by the Banks 142,771 86,030 Labour Disputes 18,691 25,577 Income tax 11,320 9,912 Other Liabilities 1,097 6,226

15. Figures in brackets in the Schedules and Notes pertain to previous year.

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