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Notes to Accounts of Rexnord Electronics and Controls Ltd.

Mar 31, 2015

1. The company has issued only one class of equity shares having a par value of Rs, 10/- per share. Each shareholder is entitled to one vote per share. The dividend proposed by the board of directors is subject to the approval of shareholders, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company, after distribution of preferential amounts, in proportion of their shareholding.

2. Shareholders holding more than 5% of share capital at the end of the year :

A Nature of security:

(I) Term loans from HDFC Bank Limited are :

(a) primarily secured by hypothecation of stocks, book debts and plant & machineries of the company ;

(b) further secured by way of equitable mortgage of land and building at Plot No. 92-D Government Industrial Estate, Charkop, Kandivli (W), Mumbai 400067:

(c) further collaterally secured by way of equitable mortgage of Residential Flats at 802A and 802B, Beach Classic, J.P. Road, Versova, Andheri (W) Mumbai 400061 belonging to Shri Kishore Chand Talwar, Smt. Sharda Talwar and Shri Kundan Talwar and a plot of land at Survey No. 62, 74, 75, 20 Village Devdal (Sagpada), Kaman, Vasai (E), Palghar 401202 belonging to Shri Kundan Talwar; and

(d) also personally guaranteed by Chairman & Managing Director, Whole time Director and two relatives of the Chairman & Managing Director of the Company

(II) All the vehicle loans are secured by hypothecation of specific vehicles acquired from the loans.

Nature of security:

Working capital loans from HDFC Bank Limited are :

(a) primarily secured by hypothecation of stocks, book debts and plant & machineries of the company ;

(b) further secured by way of equitable mortgage of land and building at Plot No. 92-D Government Industrial Estate, Charkop, Kandivli (W), Mumbai - 400 067:

(c) further collaterally secured by way of equitable mortgage of Residential Flats at 802Aand 802B, Beach Classic, J.P. Road, Versova, Andheri (W) Mumbai 400061 belonging to Shri Kishore Chand Talwar, Smt. Sharda Talwar and Shri Kundan Talwar and a plot of land at Survey No. 62, 74, 75, 20 Village Devdal (Sagpada), Kaman, Vasai (E), Palghar 401202 belonging to Shri Kundan Talwar; and

(d) also personally guaranteed by Chairman & Managing Director, Whole time Director and two relatives of the Chairman & Managing Director of the Company.

3 (i) Cost of factory building include Rs, 1000.00 (previous year Rs, 1000.00) being cost of shares in the Kandivli Co-operative Industrial Estate Limited.

3 (ii) Pursuant to the requirements of the Companies Act, 2013 ("the Act") the Company has revised the depreciation rates based on the estimated economic useful lives of the fixed assets as prescribed by the Schedule II to the Act from 1st April 2014. Accordingly the unamortized carrying value is being depreciated / amortized over the revised / remaining useful lives. In respect of fixed assets whose useful life is already exhausted as on 1st April 2014, depreciation of Rs, 1255949.79 (net of deferred tax) has been adjusted in opening balance of the Statement of Profit and Loss in accordance with the requirements of the Schedule II of the Act.

(b) Defined benefit plan:

Compensated absences:

Rs, 105998.00 (previous year Rs, 129051.00) is charged off to the statement of profit and loss for the cost of

compensated absences for the year.

Gratuity :

The employee's gratuity scheme is non -fund based. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation

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

NOTE 4: SEGMENT REPORTING

The segment reporting as required under Accounting Standard 17 "Segment Reporting" is not applicable to the company as the company's operations are predominantly comprises of only one business segment - Instrument cooling fans/ motors.

NOTE 5: RELATED PARTY DISCLOSURES:

I) Names of related parties and description of relationships

a) Individuals owning directly or indirectly, an interest in the voting power of the Company that gives him significant influence over the Company. Shri Kishore Chand Talwar

b) Key management personnel :

Shri Kishore Chand Talwar (Chairman & Managing Director) Smt. Nainy K. Tanna (Whole time Director)

c) Relatives of persons referred in a) and b) above

Smt. Sharda Talwar (Wife of Chairman and Managing Director of the company)

Shri Kundan Talwar (Son of Chairman and Managing Director of the company)

Shri Kunal Tanna (Spouse of Smt. Nainy K. Tanna, Whole time Director of the company)

Excelum Enterprises (A proprietary concern of Shri Kunal Tanna)

NOTE 6: LEASES

The company has taken various residential premises / industrial galas under operating lease or on leave and license basis. These are generally not non- cancellable and for a period ranging between 11 months and above and are renewable at mutual consent on mutually agreeable terms. The company has given refundable interest free security deposits in accordance with the agreed terms. The rent paid in accordance with these agreements is debited to the statement of profit and loss for the year.

NOTE 7: DISCLOSURE UNDER MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006

Based on the information available, there are certain vendors who have confirmed that they are registered under the Micro, Small and Medium Enterprises Development Act, 2006 as micro and small enterprises. Disclosures as required by section 22 of The Micro, Small and Medium Enterprises Development Act, 2006, are given below:

NOTE 8: TAXATION MATTERS:

a) The sales tax assessments of the company have been completed up to financial year 2006-2007 for its Daman unit and up to financial year 2011-12 for its Kandivali unit.

b) The income tax assessments of the company have been completed up to assessment Year 2012-2013.

NOTE 9: ISSUE OF SHARE WARRANTS, THEIR CONVERSION AND UTILIZATION OF ITS PROCEEDS

(a) (i) The Company, during the year, has allotted 3478800 Warrants at a price of Rs, 13.40 per warrant carrying an entitlement to subsribe to an equivalent

number of equity shares of face value of Rs, 10/- each within 18 months from the date of allotment of warrants to promoter/promoter group and non promoter group in accordance of Regulations for Preferential Issue contained in Chapter VII of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 as amended, on 23rd September 2014 and received 25% of issue price as warrant allotment money aggregating to Rs, 1,16,53,980. The company has utilized this proceeds for its working capital requirements and other corporate purposes in accordance with the object of the issue.

(ii) Out of the above warrants, the Company has allotted 1098300 equity shares on conversion of 1098300 warrants on 13th December 2014 and realized the balance 75% allotment money aggregating to Rs, 11037915. The Company has utilized this proceed for its working capital requirements and other corporate purposes in accordance with the objects of the said Issue.

(b) The Company, further during the year, has allotted 1200000 Warrants at a price of Rs, 24.50 per warrant carrying an entitlement to subscribe to an equivalent number of equity shares of face value of Rs, 10/- each within 18 months from the date of allotment of warrants to promoter/promoter group in accordance of Regulations for Preferential Issue contained in Chapter VII of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 as amended, on 23rd December 2014 and received 25% of issue price as warrant allotment money aggregating to Rs, 73,50,000. The company has utilized this proceeds for its working capital requirements and other corporate purposes in accordance with the object of the issue.

NOTE 10: The Company is in process of appointing professional directors to compose the Nomination and Remuneration Committee in conformity with the provisions of the Section 178 of the Companies Act, 2013.

NOTE 11: (i) As per the consistent practice followed by the company in earlier years, the excise duty payable in respect of goods manufactured during the year but not cleared from factory premises at the end of year, are neither included in expenses nor considered in valuation of the inventories of such goods which is contrary to the guidance note "Accounting Treatment for Excise Duty" issued by the Institute of Chartered Accountant Of India . However the same does not have any impact on the profit of the year.

(ii) As per the consistent practice followed by the company in earlier years, the custom duty payable in respect of imported materials lying at custom bonded warehouse at the end of year, are neither included in expenses nor considered in valuation of the inventories of such materials. However this practice does not have any impact on the profit of the year.


Mar 31, 2014

1.b The company has issued only one class of equity shares having a par value of Rs. 10/- per share. Each shareholder is entitled to one vote per share. The dividend proposed by the board of directors is subject to the approval of shareholders, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company, after distribution of preferential amounts, in proportion of their shareholding.

2.c Shareholders holding more than 5% of share capital at the end of the year:

(I) Term loans from HDFC Bank Limited are :

(a) primarily secured by hypothecation of stocks, book debts and plant & machineries of the company ;

(b) further secured by way of equitable mortgage of land and building at Plot No. 92-D Government Industrial Estate, Charkop, Kandivli (W), Mumbai 400067;

(c) further collaterally secured by way of equitable mortgage of Residential Flats at 802Aand 802B, Beach Classic, J.P. Road, Versova, Andheri (W) Mumbai 400061 belonging to Shri Kishore Chand Talwar, Smt. Sharda Talwar and Shri Kundan Talwar and a plot of land at Survey No. 62, 74, 75, 20 Village Devdal (Nagpada), Kaman, Vasal (E) Thane 401202 belonging to Shri Kundan Talwar; and

(d) also personally guaranteed by Chairman & Managing Director, Whole time Director and two relatives of the Chairman & Managing Director of the Company.

Working capital loans from HDFC Bank Limited are :

(a) primarily secured by hypothecation of stocks, book debts and plant & machineries of the company ;

(b) further secured by way of equitable mortgage of land and building at Plot No. 92-D Government Industrial Estate, Charkop, Kandivli (W), Mumbai 400067;

(c) further collaterally secured by way of equitable mortgage of Residential Flats at 802Aand 802B, Beach Classic, J.P. Road, Versova, Andheri (W) Mumbai 400061 belonging to Shri Kishore Chand Talwar, Smt. Sharda Talwar and Shri Kundan Talwar and a plot of land at Survey No. 62, 74, 75, 20 Village Devdal (Nagpada), Kaman, Vasal (E) Thane 401202 belonging to Shri Kundan Talwar; and

(d) also personally guaranteed by Chairman & Managing Director, Whole time Director and two relatives of the Chairman & Managing Director of the Company.

NOTE 3: CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR)

(Amount in Rs.)

As at 31.03.2014 As at 31.03.2013 (i) Contingent liabilities:

(a) Letter of credit issued by the bankers of the company 18578767.18 9216224.52

(b) Export sales bills discounted with the bankers of the company 11468000.88 0.00

(c) Disputed demand in the matters of Income tax 528937.00 364467.00

(d) Bonds/Undertakings given under duty exemption under advance licence scheme pending fulfilment of export 66950000.00 28473000.00 obligation.

(ii) Contingent commitments

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of 221255.72 361800.00 advances).

NOTE 4: SEGMENT REPORTING

The segment reporting as required under Accounting Standard 17 "Segment Reporting" is not applicable to the company as the company''s operations are predominantly comprises of only one business segment - Instrument cooling fans/ motors.

NOTE 5: RELATED PARTY DISCLOSURES:

I) Names of related parties and description of relationships

a) Individuals owning directly or indirectly, an interest in the voting power of the Company that gives him significant influence over the Company. Shri Kishore Chand Talwar

b) Key management personnel :

Shri Kishore Chand Talwar (Chairman & Managing Director) Smt. Nainy K. Tanna (Whole time Director)

c) Relatives of persons referred in a) and b) above

Smt. Sharda Talwar (Wife of Chairman and Managing Director of the company) Shri Kundan Talwar (Son of Chairman and Managing Director of the company) Shri Kunal Tanna (Spouse of Smt. Nainy K. Tanna, Whole time Director of the company)

NOTE 6: LEASES

The company has taken various residential premises / industrial galas under operating lease or on leave and license basis. These are generally not non- cancellable and for a period ranging between 11 months and above and are renewable at mutual consent on mutually agreeable terms. The company has given refundable interest free security deposits in accordance with the agreed terms. The rent paid in accordance with these agreements is debited to the statement of profit and loss for the year.

NOTE 7: TAXATION MATTERS:

a) The sales tax assessments of the company have been completed upto financial year 2006-2007 for its Daman unit and upto financial year 2010-11 for its Kandivali unit.

b) The income tax assessments of the company have been completed upto assessment Year 2011-2012.


Mar 31, 2013

NOTE 1: CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR)

As at 31.03.2013 As at 31.03.2012

(i) Contingent liabilities:

(a) Guarantees given by the banks on behalf of the company 0.00 5372.00

(b) Letter of credit issued by the bankers of the company 9216224.52 177413.37

(c) Disputed demand in the matters of Income tax 364467.00 364467.00

(d) Bonds/Undetakings given under duty exemption under advance licence scheme pending fulflment of export obligation 28473000.00 0.00

(ii) Contingent commitments

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) 361800.00 0.00

NOTE 2: SEGMENT REPORTING

The segment reporting as required under Accounting Standard 17 "Segment Reporting" is not applicable to the company as the company''s operations are predominantly comprises of only one business segment – Instrument cooling fans/ motors.

NOTE 3: RELATED PARTY DISCLOSURES:

I) Names of related parties and description of relationships

a) Individuals owning directly or indirectly, an interest in the voting power of the Company that gives him signifcant infuence over the Company. Shri Kishore Chand Talwar

b) Key management personnel :

Shri Kishore Chand Talwar (Chairman & Managing Director) Smt. Nainy K. Tanna (Wholetime Director)

c) Relatives of persons referred in a) and b) above

Smt. Sharda Talwar (Wife of Chairman & Managing Director of the company) Shri Kundan Talwar (Son of Chairman & Managing Director of the company) Shri Kunal Tanna (Spouse of Smt. Nainy K. Tanna, Wholetime Director of the company)

NOTE 4: LEASES

The company has taken various residential premises / industrial galas under operating lease or on leave and license basis. These are generally not non- cancellable and for a period ranging between 11 months and above and are renewable at mutual consent on mutually agreeable terms. The company has given refundable interest free security deposits in accordance with the agreed terms. The rent paid in accordance with these agreements is debited to the statement of proft and loss for the year.

NOTE 5: DISCLOSURE UNDER MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006

Based on the information available, there are certain vendors who have confrmed that they are registered under the Micro, Small and Medium Enterprises Development Act, 2006 as micro and small enterprises. Disclosures as required by section 22 of ‘The Micro, Small and Medium Enterprises Development Act, 2006, are given below:

NOTE 6: TAXATION MATTERS:

a) The sales tax assessments of the company have been completed upto fnancial year 2006-2007 for its Daman unit and upto fnancial year 2004-05 for its Kandivali unit.

b) The income tax assessments of the company have been completed upto assessment Year 2011-2012.

NOTE 7: (i) As per the consistent practice followed by the company in earlier years, the excise duty payable in respect of goods manufactured during the year but not cleared from factory premises at the end of year, are neither included in expenses nor considered in valuation of the inventories of such goods which is contrary to the guidance note "Accounting Treatment for Excise Duty" issued by the Institute of Chartered Accountant Of India . However the same does not have any impact on the proft of the year.

(ii) As per the consistent practice followed by the company in earlier years, the custom duty payable in respect of imported materials lying at custom bonded warehouse at the end of year, are neither included in expenses nor considered in valuation of the inventories of such materials. However this practice does not have any impact on the proft of the year.

NOTE 8: Previous year fguers have been regrouped, rearranged and recasted to make them comparable with the current year fgures in view of change of classifcation of items.


Mar 31, 2012

1.a The company has issued only one class of equity shares having a par value ofrS. 10/- per share. Each shareholder is entitled to one vote per share. The dividend proposed by the board of directors is subject to the approval of shareholders, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company, after distribution of preferential amounts, in proportion of their shareholding.

Gratuity :

The employee's gratuity scheme is non -fund based. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

Note 2: Segment reporting

The segment reporting as required under Accounting Standard 17 "Segment Reporting" is not applicable to the company as the company's operations are predominantly comprises of only one business segment - Instrument cooling fans/ motors.

Note 3: Related Party Disclosures:

I) Names of related parties and description of relationships

(a) Individuals owning directly or indirectly, an interest in the voting power of the company that gives him significant influence over the company

Shri. Kishore Chand Talwar

(b) Key management personnel:

Shri. Kishore Chand Talwar (Chairman & Managing Director) Smt. Nainy K. Tanna (Wholetime Director)

(c) Relatives of persons referred in a) and b) above

Smt. Sharda Talwar (Wife of Chairman & Managing Director of the company) Shri. Kundan Talwar (Son of Chairman & Managing Director of the company) Shri. Kunal Tanna (Spouse of Smt. Nainy K. Tanna, Wholetime Director of the company)

Note 4: Leases

a) The company has taken various residential premises industrial galas under operating lease or on leave and license basis. These are generally not non-cancellable and for a period ranging between 11 months and above and are renewable at mutual consent on mutually agreeable terms. The company has given refundable interest free security deposits in accordance with the agreed terms. The rent paid in accordance with these agreements is debited to the statement of profit and loss for the year.

Note 5: Taxation Matters:

a) The sales tax assessments of the company have been completed upto financial year 2006-2007 for its Daman unit and upto financial year 2004-05 for its Kandivali unit.

b) The income tax assessments of the company have been completed upto assessment Year 2010-2011.

Note 6: (i) As per the consistent practice followed by the company in earlier years, the excise duty payable in respect of goods manufactured during the year but not cleared from factory premises at the end of year, are neither included in expenses nor considered in valuation of the inventories of such goods which is contrary to the guidance note "Accounting Treatment for Excise Duty" issued by the Institute of Chartered Accountant Of India . However the same does not have any impact on the profit of the year.

(ii) As per the consistent practice followed by the company in earlier years, the custom duty payable in respect of imported materials lying at custom bonded warehouse at the end of year, are neither included in expenses nor considered in valuation of the inventories of such materials. However this practice does not have any impact on the profit of the year.

Note 7 :Till the year ended 31 st March 2011, the company was using pre-revised Schedule VI to the companies Act, ] 956, for preparation and presentation of its financial statements. During the year ended 31 st March, 2012, the revised Schedule VI notified under the companies Act, 1956, has become applicable to the company. The company has accordingly reclassified previous period figures to conform to this year's classification.


Mar 31, 2011

1. In the opinion of Board, the current assets, loans and advances are approximately of the value stated if realized in the ordinary course of business. The provisions for all the known liabilities are adequate.

2. Managerial remuneration (remuneration to whole-time directors) paid during the year Rs. 30,00,000/- (excluding the provision for gratuity for which separate figures are not available) (previous year Rs. 24,79,884/-), which is minimum managerial remuneration payable, hence no computation of managerial remuneration under section 349 of the Companies Act, 1956, is given.

*inclusive of service tax wherever applicable however debited to profit & loss account net of cenvat credit of service tax wherever available.

3. A. Contingent liabilities not provided for -

a. Guarantees given by the banks on behalf of the Company Rs. 5,372/- (previous year Rs. 30,372/-)

b. Letter of credit issued by the bankers of the Company Rs. 37,10,200.32 (previous year Rs. 46,66,358.73 )

c. Disputed income tax demand of Rs. 47,308/- (previous yearRs. 47,308/-) for the assessment year 2006-07 against which the Company has filed an application for rectification with the Assessing Officer, which is yet to be decided.

d. Disputed fringe benefit tax demand of Rs. 13,430/- (previous year Rs. 13430/-) for the Assessment year 2007-08 against which the Company has filed an application for rectification with the Assessing Officer, which is yet to be decided.

e. Disputed excise demand of Rs. 5,49,010/- (previous year Rs. 5,49,010/-) plus interest raised by the excise authorities reduced to Rs. 2,90,005/- (previous year Rs. 2,90,005/-) by the Commissioner (Appeal). The excise authorities have preferred an appeal with the Custom Excise & Service Tax Appellate Tribunal (the CESTAT) challenging the order of the Commissioner (Appeal). The Company has also preferred a further appeal with the CESTAT against the order of the Commissioner (Appeal). The CESTAT has stayed the recovery of the said demand. The Company has already provided and paid Rs. 2,59,005/- (previous year Rs. 2,59,005/-) against the said demand.

f Liability, if any, arising on account of Bonds/Undertakings given by the Company under concessional duty / exemption schemes to Custom and Excise authorities, pending fulfillment of specified export obligation.

B. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 54,37,061/- (previous year Rs. Nil).

4. The Company had revalued its fixed assets except furniture, factory building and vehicles on 31st March 1994, based on the report of an approved valuer at replacement value. The resultant increase in the book value of the said assets amounting to Rs. 1,13,65,701.78 was credited to Revaluation Reserve.

5. The Company had one foreign national shareholder holding 300000 equity shares ofRs. 10/- each during the year (Previous year - 300000 equity shares).

6. The Sales Tax Assessments of the Company have been completed upto financial year 2006-2007 for its Daman Unit and upto financial year 2004-05 for its Kandivali Unit.

7. The Income Tax Assessments of the Company have been completed upto Assessment Year 2008-2009.

8. The office of the Company Secretary has been vacant since 31st August 1999. The Company is in process of appointing a full time company secretary.

9. Under the Micro Small and Medium Enterprises Development Act, 2006, (MSMED) which came into force 2 October 2006, certain disclosures are required to be made relating to Micro Small and Medium enterprises.

On the basis of the information and records available with Company, the following disclosures are made for the amounts due to the Micro and Small Medium Enterprises:

10. Disclosure as required under Accounting Standard 15 "Employee Benefits".

B. Defined Benefit Plans :

Compensated absences:

Rs. 19195/- (previous yearRs. 31901/-) is charged off to the profit and loss account for the cost of compensated absences.

Gratuity:

The employee's gratuity scheme is non fund based. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

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

11. a. During the previous year, the Company, for the first time, made provision for gratuity on actuarial valuation method which was, till earlier year, charged off to profit and loss account on cash basis, therefore, gratuity pertaining to earlier years Rs. 3,41,074/- was taken under the head "Prior period items"; and

b. During the previous year, a sum of Rs. 7,795/-, representing payment towards compensated absences which was, till earlier year, charged off to profit and loss account on cash basis, being pertaining to earlier years, was taken under the head "Prior period items".

12. The segment reporting as required under Accounting Standard 17 "Segment Reporting" is not applicable to the Company as the Company's operations are predominantly comprises of only one business segment - Instrument Cooling Fans/ Motors.

13.a) The Company has taken various residential premises / industrial galas under operating lease or on leave and license basis. These are generally not non-cancellable and for a period ranging between 11 months and above and are renewable at mutual consent on mutually agreeable terms. The Company has given refundable interest free security deposits in accordance with the agreed terms. The rent paid in accordance with these agreements is debited to profit and loss account for the year.

14. Disclosures as required under Accounting Standard 18 "Related Party Disclosure".

1. Relationships:

Key managerial personnel and their relatives:

Shri Kishore Chand Talwar (Chairman & Managing Director)

Smt. Nainy K. Tanna (Wholetime Director)

Shri Ram Bahadur Roka (Wholetime Director till 2nd March 2010)

Smt. Sharda K. Talwar (Wife of Chairman and Managing Director of the Company)

Shri Kundan Talwar (Son of Chairman and Managing Director of the Company)

Shri Kunal Tanna (Spouse of Smt. Nainy K. Tanna, Wholetime Director of the Company)

Note: Related party relationship is identified by the Company and relied upon by the auditors.

15.The Company has taken a land at Village-Devdal, Taluka-Vasai, Dist-Thane on lease for construction of its factory premises. Capital work in progress includes the following expenditure for site development and factory building on the said leasehold land:

16. a. As per the consistent practice followed by the Company in earlier years, the excise duty payable in respect of goods manufactured during the year but not cleared from factory premises at the end of year, are neither included in expenses nor considered in valuation of the inventories of such goods which is contrary to the guidance note "Accounting Treatment for Excise Duty" issued by the Institute of Chartered Accountants of India. However the same does not have any impact on the profit of the year.

b. As per the consistent practice followed by the Company in earlier years, the custom duty payable in respect of imported materials lying at custom bonded warehouse at the end of year, are neither included in expenses nor considered in valuation of the inventories of such materials. However this practice does not have any impact on the profit of the year.

17. Deposit includes deposit given to Mr. Kishore Chand Talwar, Chairman and Managing Director and Mrs. Sharda K. Talwar, Vice President - Facilities Rs.18,25,000/- each as lease deposit for the premises taken on lease from them.

b) Premium (difference between the exchange rate at the date of the inception of the forward exchange contract and forward rate specified in the contract), paid to hedge the risk associated with foreign currency fluctuations relating to existing liabilities, of FEC amortized over the life of the contract, pertaining to the year under review has been accounted for under the head Interest and financial charges;

c) A sum of Rs. 0.85 lacs representing deferred premium on the FEC, adjustable against the profit and loss account of subsequent year, has been clubbed under Loans and advances; and

d) Net of, Forward contracts receivable amounting to Rs. 171.04 lacs and forward contracts payable amounting to Rs. 181.40 lacs, has been clubbed under Current Liabilities.

18. During the previous year, insurance claim receivable Rs. 39,30,341.84, on account of loss of inventories due to flood on 3rd August 2004, being, in the opinion of the management, irrecoverable, was written off to the profit and loss account.

19. Previous year figures have been regrouped, rearranged and recasted wherever necessary to make them comparable with the current year figures.

20. Additional information pursuant to the paragraph 3, 4C and 4D of part II of Schedule VI of the Companies Act, 1956.

I Manufacturing Activities

(a) Particulars of Capacity, Production, Sales and Stock Licensed Capacity : Not Applicable

Installed Capacity : Instrument Cooling Fan 1602000 Pieces

Note: The licensed capacity and installed capacity as mentioned above has been certified by the directors on which auditors have relied without verifying the same.

# It is impracticable to furnish quantitative information of components consumed in view of considerable number of items of diverse size & number.

(c) Separately percentage and value of imported and indigenous raw material, spare parts, components consumed are not exactly ascertainable.


Mar 31, 2010

1. In the opinion of Board, the current assets, loans and advances are approximately of the value stated if realized in the ordinary course ofbusiness. The provisions for all the known liabilities are adequate.

2. Managerial remuneration (salary) paid during the year Rs. 24,79,8847- (excluding the provision for gratuity for which separate figures are not available) (Previous Year Rs.24,40,500/-), which is minimum managerial remuneration payable, hence no computation of managerial remuneration under section 349 ofthe Companies Act, 1956, is given.

3. The Company had revalued its fixed assets except furniture, factory building and vehicles on 31" March 1994, based on the report of an approved valuer at replacement value. The resultant increase in the book value ofthe said assets amounting to Rs. 1,13,65,701.78 wascreditedto Revaluation Reserve.1

4. The office ofthe Company Secretary has been vacant since 31 "August 1999. The Company is in process of appointing a full time company secretary.

5. The Sales Tax Assessments ofthe company have been completed upto financial year 2006-2007 for its Daman Unit and upto financial year 2004-05 for its Kandivali Unit.

6. The Income Tax Assessments of the company have been completed upto Assessment Year 2008-2009.

7. Contingent Liabilities not provided fora. Guarantees given by the banks on behalf oftheCompanyRs. 30,3727- (PreviousyearRs.30,372/-)

b. Letter of Credit issued by the bankers ofthe company Rs. 2,54,27,099.96 (Previous year Rs.2,58,10,324.23)

c. Disputed Income Tax demands of Rs. Nil (Previous Year Rs. 289,6487-) for the Assessment year 1999-2000 against which the company has preferred an appeal with the Commissioner of Income Tax (Appeals), which is yet to be decided by the said authority.

d. Disputed Income Tax demands of Rs. 47,3087- (Previous Year Rs. 47,3087-) for the Assessment year 2006-07 against which the company has filed an application for rectification with the Assessing Officer, which is yet to be decided.

e. Disputed Fringe Benefit Tax demands of Rs. 13,4307- (Previous Year Nil) for the Assessment year 2007-08 against which the company has filed an application for rectification with the Assessing Officer, which is yet to be decided.

f. Disputed Excise Demand of Rs. 5,49,0107-plus interest raisedbythe Excise Authorities reduced to Rs. 2,84,0057-by the Commissioner (Appeal). The excise authorities have preferred an appeal with the Central Excise & Service Tax Appellate Tribunal (the SESTAT) challenging the order ofthe Commissioner (Appeal). The company has also preferred a further appeal with the CESTAT against the order ofthe Commissioner (Appeal). The CESTAT has stayed the recovery ofthe said demand. The company has alreadyprovided and paid Rs. 2,59,0057- against the said demand.

g. Liability, if any, arising on account of Bonds/Undertakings given by the company under concessional duty/exemption schemes to Custom and Excise authorities, pending fulfillment of specified export obligation.

8. Deposit includes deposit given to Mr. KishoreChandTalwar, Chairman and Managing Director and Mrs. Sharda K.Talwar, Vice President-Facilities Rs. 18,25,0007-each as lease deposit for the premises taken on lease from them.

9. The company has taken a land at village DevdalTalukaVasaiDist- Thane on lease for construction of its factory premises. Capital work in progress includes the following expenditure for site development and factory building on the said leasehold land:

10. a. As per the consistent practice followed by the company earlier years, the excise duty pay able in respect of goods manufactured during the year but not cleared from factory premises at the end of year, are neither included in expenses nor considered in valuation of the inventories of such goods which is contrary to the guidance note "Accounting Treatment for Excise Duty" issued by the Institute of Chartered Accountants of India. However the same does not have any impact on the profit of the year,

b. As per the consistent practice followed by the company in earlier years, the custom duty payable in respect of imported materials lying at custom bonded warehouse at the end of year, are neither included in expenses nor considered in valuation ofthe inventories of such materials. However this practice does not have any impact on the profit ofthe year.

11. Disclosure as required under Accounting Standard 15 "Employee Benefits".

2. Defined Benefit Plans: Compensated absences? During the year 2009-10, Rs. 319017- are charged off to the profit and loss account for the cost of compensated absences.

12. The segment reporting as required under Accounting Standards 17 "Segment Reporting" is not applicable to the company, as the companys operations are predominantly comprises of only one business segment -Instrument Cooling Fans/Motors.

13. Disclosures as required under Accounting Standard 18 "Related Party Disclosure".

1. Relationships:

(a) Key Management Personnel and their relatives:

Shri Kishore Chand Talwar (Chairman & Managing Director)

Smt. Sharda K. Talwar (Wholetime Director till 2nd March 2010)

Smt. Nainy K. Tanna (Wholetime Director)

Shri Ram Bahadur Roka (Wholetime Director till 2"" March 2010)

Shri Kundan Talwar (Son of Chairman and Managing Director of the company)

Shri Kunal Tanna (Spouse of Smt. Nainy K. Tanna, Wholetime Director of the company)

(b) Enterprises over which key management personnel and their relatives have significant influence.

Camy Electronics, Sagar Engineering Works, Shree Engineering Works, Subham Electrnonics (All proprietorship concern of Shri Kundan Talwar) Magnus International (Proprietorship Concern of Shri Kunal Tanna) Gratuity:

The employees gratuity scheme is non fund based. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

14. The company has, during the year, shifted its Kandivali and Daman manufacturing facilities at Vasai.

15. Insurance claim receivable Rs. 39,30,341.84, on account of loss of inventories due to flood on 3rd August 2004, being, in the opinion of the management, irrecoverable, written off to profit and loss account.

16. Previous year figures have been regrouped, rearranged and recasted wherever necessary to make them comparable with the current year figures. 28. Additional information pursuant to the paragraph 3, 4C and 4D of part II of Schedule VI of the Companies Act, 1956. cost of respective material accounts.

 
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