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Notes to Accounts of Rico Auto Industries Ltd.

Mar 31, 2015

A. Income tax department has raised demand for Rs. 0.18 crores (previous year Rs. 0.15 crores). This is on account of filing of incorrect particulars regarding challans deposited as compared to actual challans deposited.

Sales Tax Cases

b. Demand order of assessment received under Haryana VAT Act 2003 for Rs.0.43 crores for disallowing the input tax on purchase of furnace oil. An appeal has been filed on May 15, 2010 before the Joint Excise & Taxation Commissioner (Appeals), Faridabad. The appeal was decided by the Joint Commissioner (Appeals) and the case was remanded back to the Deputy Excise and Taxation Commissioner, Gurgaon (West). During the year the Company has received an order from the Deputy Excise and Taxation Commissioner, Gurgaon (West) in its favour.

c. A demand was raised under Haryana VAT Act 2003 for denial of input credit availed on purchase of furnace oil. The demand was confirmed by Joint Commissioner (Range) for Rs. 0.04 crores (previous year Rs. 0.04 crores). An appeal was filed with Haryana Sales Tax Tribunal on February 23, 2013. Tribunal has remanded the case back to Joint Commissioner, Gurgaon.

d. During the year ended March 31, 2015 a demand was raised under Haryana VAT Act 2003 for denial of input credit availed on purchase of furnace oil. The order passed by the Deputy Excise and Taxation Commissioner, Rewari for Rs. 0.22 crores. The Company has filed an appeal with Haryana Sales Tax Tribunal on August 25, 2014 and is presently pending before it.

Excise and Service Tax Cases

e. Department has issued a show cause notice dated August 23, 2007 on the ground that the capital goods namely roof ventilator and evaporating cooling machine are not capital goods for the purpose of availment of CENVAT credit. Commissioner of Central Excise has confirmed the demand along with an equal amount of penalty. The Company aggrieved by the order field an appeal before CESTAT on April 28, 2009 against the decision. However, the CESTAT has granted unconditional stay from recovery of impugned amount on deposit of Rs. 0.03 crores. Amount involved is Rs. 0.47 crores (previous year Rs. 0.44 crores). No hearing has taken place since June 15, 2009. Current year movement represents interest.

f. A show cause notice was issued by the Commissioner on removal of dies for job work without payment of duty. Commissioner passed the order on September 15, 2008 demanding excise duty of Rs. 0.75 crores, penalty of equal amount, interest at the applicable rate and a fine in lieu of confiscation of Rs. 0.10 crores on the dies released provisionally. Further, Company has also furnished a bond of Rs 0.42 crores and a bank guarantee of Rs 0.004 crores. A stay application was filed before the CESTAT. Total amount involved is Rs. 2.71 crores (previous year Rs. 2.57 crores). Current year movement represents interest.

g. A show cause notice was received from the Joint Commissioner of Central Excise towards cenvat credit availed on custom house agent and courier export related services during previous years 2004-05 to 2007-08. The Commissioner has confirmed the demand against which the Company filed an appeal before CESTAT. CESTAT ordered pre deposition of Rs. 0.24 crores. The amount involved is Rs. 1.47 crores (previous year Rs. 1.40 crores). Current year movement represents interest.

h. A show cause notice was received from Additional Commissioner of Central Excise on a ailment of cenvat on construction and other repair and maintenance service during previous years 2005-06 to 2010-11. Commissioner of Central Excise confirmed the demand against which the Company filed an appeal before the CESTAT on June 29, 2012. CESTAT has granted an unconditional stay on February 19, 2013.. Matter is pending for final decision before the Tribunial amount involved is Rs. 2.15 crores (previous year Rs. 2.04 crores). Current year movement represents interest.

i. Department has issued a show cause notice dated January 17, 2011 in respect of claim of cenvat on insurance, catering, tent house and taxi & travels for the period 2010-11. Joint commissioner has confirmed the demand against reply filed. An appeal was filed before the commissioner of central excise (appeals) Delhi-Ill, Gurgaon on January 31, 2012. Commissioner (Appeals) in its order dated January 21, 2013 decided the appeal in favour of Company on May 7, 2013, department has been filed Appeal before Tribunal against said order. The amount involved is Rs.0.42 crores (Previous year Rs. 0.40 crores). Current year movement represents interest.

j. Department has issued a show cause notice received from Joint Commissioner of Central Excise dated October 08, 2008 in respect of claim of cenvat on insurance, catering, tent house and taxi & travels for the period 2004-05 to 2007-08. Demand confirmed by Additional Commissioner, against reply filed. Appeal filed before the commissioner of central excise (appeals) Delhi-Ill, Gurgaon on March 21, 2014. The amount involved is Rs. 1.30 crores (Previous year Rs. 1.23 crores). Current year movement represents interest.

k. Department has issued a show cause notice dated April 17, 2009 in respect of claim of cenvat on insurance, catering, tent house and taxi & travels for the period 2008-09. On January 30, 2014 Additional Commissioner has confirmed the demand against the reply filed. Appeal filed before the commissioner of central excise (appeals) Delhi-Ill, Gurgaon on March 21, 2014. The amount involved is Rs. 0.19 crores (Previous year Rs. 0.18 crores). Current year movement represent interest.

I. Department has issued a show cause notice dated February 18, 2010 in respect of claim of cenvat on insurance, catering, tent house and taxi & travels for the period February, 2009 to December, 2010 . On January 30, 2014 Additional Commissioner has confirmed the demand against the reply filed. Appeal filed before the commissioner of central excise (appeals) Delhi-Ill, Gurgaon on March 21, 2014. The amount involved is Rs. 0.29 crores (Previous year Rs. 0.27 crores). Current year movement represent interest.

m. Department has issued a show cause notice dated December 27, 2011 in respect of claim of cenvat on insurance, catering, tent house and taxi & travels for the period January, 2011 to November, 2011. On January 30, 2014 Additional Commissioner has confirmed the demand against the reply filed. Appeal filed before the commissioner of central excise (appeals) Delhi-Ill, Gurgaon on March 21, 2014. The amount involved is Rs. 0.01 crores (Previous year Rs. 0.01 crores).

n. Department has issued a show cause notice dated December 31, 2012 in respect of claim of cenvat on insurance, catering, tent house and taxi & travels for the period December, 2011 to November, 2012. On January 30, 2014 Additional Commissioner has confirmed the demand against the reply filed. Appeal filed before the commissioner of central excise (appeals) Delhi-Ill, Gurgaon on March 21, 2014. The amount involved is Rs. 0.73 crores (Previous year Rs. 0.68 crores).

o. Additional commissioner disallowed cenvat credit availed on consultancy charges, courier charges etc. for the period March 2005 to December 2010 amounting to Rs. 0.39 crores, imposed penalty of Rs. 0.39 crores and provisional interest of Rs. 0.18 crores. The Company filed an appeal against the order before the Commissioner (Appeals) which was adjudged in favor of the Company on February 15, 2013. Department has filed further Appeal before CESTAT against the order on June 06, 2013. The amount involved was Rs. 0.96 crores. During the year the Company has received an order from the CESTAT in its favour.

p. Assistant Commissioner disallowed cenvat credit availed on service tax paid on different activities. Amount involved is Rs. 0.06 crores. The case wass decided by Commissioner (Appeals) against the Company on February 11, 2011. Company has filed an appeal before the Tribunal. During the year the Company has received an order from the CESTAT in its favour.

q. Department has issued a show cause notice dated December 14, 2011 in respect of claim of cenvat on input services namely courier, insurance, bank processing, transport, travel agency for the period 2011-12. On February 3, 2014. Commissioner of Central Excise has confirmed the demand. Appeal filed before the Commissioner of Central excise (Appeals) on April 7, 2014. The amount involved is Rs.0.11 crores. During the year the Company has received an order from the Commissioner of Central Excise (Appeals) in its favour.

r. A show cause notice was issued disallowing cenvat credit related to service tax. An appeal was filed before the Commissioner (Appeals) and the decision was given in favor of the department. The Company filed an appeal before Tribunal against the decision and the Tribunal remanded back the case to Commissioner (Appeals). The amount involved is Rs. 0.05 crores. During the year the Company has received an order from the Commissioner (Appeals) in its favour.

s. A show cause notice has been received from the Additional Commissioner of Central Excise towards Cenvat availed on outward freight during 2005-06 and 2006-07. The Joint Commissioner confirmed the demand against which the Company appealed before CESTAT. The Tribunal remanded back the case to the Commissioner (Appeals) and it is pending before it. Amount involved is Rs.0.25 crores (previous year Rs. 0.24 crores). Current year movement represents interest.

Others

t. Dakshin Haryana Bijli Vitran Nigam (DHBVN) has demanded Rs. 5.60 crores (previous year Rs. 5.60 crores) for overdrawing power as compared to approved load limit. DHBVN filed a writ petition before Honorable High Court of Punjab and Haryana and presently the case is pending and hearing is now adjourned to September 4, 2015. The Company has deposited Rs 3.60 crores during the financial year 2011-12.

u. A demand was raised under Haryana Local Area Development Tax Act, 2000 for tax on central purchase of certain items. An appeal was filed before with Joint Commissioner (Appeal) and the amount involved is Rs. 0.01 crores (Previous year Rs. 0.01 crores).

I) Guarantees

a. On behalf of subsidiary companies:

The Company has given Corporate Guarantees to the Bankers for the loan taken by following Subsidiaries:

Note 1 – CURRENT ASSETS, LOANS & ADVANCES

In the opinion of the Board of Directors, current assets, loans and advances are having the value at which they are stated in the Balance Sheet, if realized in the ordinary course of business save as otherwise stated in this Balance Sheet.

Note 2 - The Company's operating lease payments are due on premises and certain other items taken on lease for operating activities. Aggregate rental expenses under operating leases amounted to Rs.1.34 crores (previous year Rs. 1.80 crores) for the year, has been charged to the Statement of Profit and Loss.

* A Subsidiary Company namely Rico Investments Limited has been incorporated on January 7, 2015. The Company has made an investment of Rs.46.00 crores in the Equity Share Capital and Rs.44.00 crores in the Preference Share Capital, (Compulsorily convertible Preference Shares) in aggregate amounting to Rs.90.00 crores. Rico Investments Limited is a Core Investment Company (CIC) - NBFC, incorporated for the purpose of acquiring and holding strategic Investments in the Group Companies of Rico Auto Industries Limited. The Company holds investment in three subsidiaries, namely Rasa Autocom Limited, Rico Jinfei Wheels Limited and Rico Aluminum and Ferrous Auto components Limited (formerly known as RAA Autonomy Limited).

Note 3 – Segment information as required under AS-17 "Segment Reporting", has been provided in the consolidated financial statements of the Company and therefore no separate disclosure on segment information is given in these standalone financial statements.

Note 4 – In accordance with Accounting Standard 11 "The effects of Changes in Foreign Exchange Rates", the Company has chosen to avail the option to capitalize exchange differences arising on long term foreign currency monetary items to the cost of the relevant fixed assets and amortizing it over the remaining useful life of the fixed assets. Amount remaining to be amortized is as under:

Note 5 – During the current year, the Company has carried out a comprehensive review of its business activities/investment in Subsidiaries and has identified certain businesses undergoing continuing pressure. In order to turnaround these business divisions, the management has, with a strategic view and bring in more focused attention on these businesses, have decided to restructure its business activities to ensure optimize operational efficiency and consequently maximize the shareholders' value. As part of the restructuring, the Company after obtaining the shareholders approval on March 14, 2015.

A. Sold its (i) Ferrous based Auto Components Business Division located at Gurgaon and Manesar (Haryana) ("Ferrous Undertaking") and (ii) Non-ferrous based Auto Components Business Division located at Sanand (Non-ferrous undertaking) (collectively may be referred as "Undertaking"); to its one of the Subsidiary Companies namely Rico Aluminum and Ferrous Auto Components Limited "RAFA" (formerly known as RAA Autocom Limited) as going concern on a slump sale basis and on arm's length. The lump sum sale consideration for Ferrous and Non-ferrous Undertaking is Rs.39.59 crores and Rs.4.81 crores respectively, which has been arrived at without values being assigned at individual assets and liabilities, is received by the Company. Consequently, loss of Rs.173.62 crores has been recorded under exceptional items. The following statement shows the revenue and expenses of continuing and discontinuing operations:

Note 6 - Exceptional items include the following:

a. Sale of shares in the Joint Venture, FCC Rico Limited

Consequent to the sale of all shares held by the Company in the joint venture for a total gross consideration of Rs. 495.00 crores, the Company has recorded a gain of Rs. 491.05 crores. Further, legal and professional expenses of Rs. 4.42 crores are incurred in relation to sale of investment in FCC Rico Limited, have been netted from the sale consideration.

b. Loss on sale of business divisions

As detailed in Note 48A above, the Company has sold its (a) Ferrous Undertaking and (b) Non- Ferrous based auto components business division on a going concern basis and has recorded a loss of Rs. 173.62 crores.

c. Loss on sale of investments in subsidiaries

As detailed in Note 48B above, the Company has sold its investment in Rico Aluminum and Ferrous Auto Components Limited (formerly known as RAA Autocom Limited), Rasa Autonomy Limited and Rico Jinfei Wheels Limited and has recorded a loss of Rs. 49.07 crores.

d. Loss on diminution in the value of loans and advances

During the year, the Company entered into settlement agreement with Rico Aluminum and Ferrous Auto Components Limited (formerly known as RAA Autocom Limited), Uttrakhand Automotive limited, Rico Jinfei Wheels Limited and Rasa Autocom limited for recovery of loans aggregating to Rs. 100.19 crores given by the Company over the past few years. As per the settlement agreement, out of Rs. 100.19 crores, an aggregate of Rs. 30.49 crores, representing interest accrued on such loans and Rs. 8.67 crores of the loan balance recoverable from Uttrakhand Automotive Limited has been provided for.

e. Other items

Exceptional item also include expenditure incurred pursuant to voluntary retirement scheme of the Company amounting to Rs. 2.58 crores and assets write off amounting to Rs. 1.25 crores.

Note 7 - Effective from April 1, 2014, the Company has charged depreciation based on the revised remaining useful life of the assets as per the requirement of Schedule II of the Companies Act, 2013. Further, based on transitional provision provided in Note 7(b) of Schedule II, an amount of Rs. 2.89 crores (depreciation of Rs. 4.28 crores, related tax impact of Rs.1.39 crores) has been adjusted against retained earnings. Based on the technical estimate and history of usage, the Company has retained useful life of certain categories of plant and machinery which is higher than the useful life as indicated in Schedule II. Owing to aforementioned change in estimate (except for certain categories of plant and machinery where the earlier useful life is retained), depreciation charge for the year is lower by Rs. 0.79 crores.

Note 8 – During the year, the Company completed the sale of all of its shares in the Joint Venture, FCC Rico Limited, a joint venture between the Company and FCC Co. Ltd., Japan for a total gross consideration of Rs.495.00 crores to FCC Co. Ltd., Japan and/or its affiliates as on December 23, 2014. The transaction was carried out at arm's length based on valuation performed by the valuation expert.

Note 9 – As per the transfer pricing norms applicable in India, the Company is required to use certain specified methods in computing arm's length price of transactions between the associated enterprises and maintain prescribed information and documents related to such transactions. The appropriate method to be adopted will depend on the nature of the transactions/class of transactions, class of associated persons, functions performed and other factors, which have been prescribed. The Company is in the process of conducting a transfer pricing study for the current financial period. However, in the opinion of the management the same would not have a material impact on these financial statements. Accordingly, these financial statements do not include any adjustments for the transfer pricing implications, if any.

Note 10 – Previous year's amounts have been regrouped/ reclassified, wherever considered necessary to make them comparable with those of the current year.


Mar 31, 2014

Note 1 - CORPORATE INFORMATION

Rico Auto Industries Limited was incorporated in India on 7 March, 1983. Rico supplies a broad range of high-precision fully machined aluminum and ferrous components and assemblies to Original Equipment Manufacturers across the globe. Its integrated services include design, development, tooling, casting, machining, assembly and research and development across aluminium and ferrous products. The Company is in the business of manufacturing and sale of auto components for two wheelers and four wheelers.

I) Others

a. Surety bonds executed in favor of the President of India, under Export Promotion Capital Goods Scheme (EPCG) for importing capital goods at concessional rate of custom duty, amounting to Rs.120.83 crores (previous year Rs.120.83 crores).

Note 2 - A fire broke out on December 7, 2012 at one section of the Company''s ferrous foundry unit located at the Gurgaon plant. As a result, fixed assets having a written down value of Rs.1.55 crores and stores and spares amounting to Rs.0.29 crore were destroyed. Net amount of Rs. 0.02 crore (last year Rs.1.02 crores) has been shown as receivable from insurance Company in the books of accounts. The management has lodged a claim with the insurance Company and does not foresee any financial loss on this account.

Note 3 - The Company has performed a detailed assessment involving an independent valuer to determine whether there is any permanent diminution in the value of investments in two subsidiaries namely Rasa Autocom Limited and Rico Jinfei Wheels Limited and if advances or other receivables as of March 31,2014, from such subsidiaries are recoverable. Material estimates and judgments used for the purposes of business plans of these subsidiaries, which form the basis of such assessment, continue to be appropriate, accordingly, the management has concluded that no adjustments to the carrying values of underlying investments aggregating to Rs.50.53 crores and advances or other receivables aggregating to Rs.54.07 crores pertaining to these subsidiaries are required to be made in the financial statements for the year ended March 31,2014.

Note 4 - The Company''s operating lease payments are due on premises taken on lease for operating activities. Aggregate rental expenses under operating leases amounted to Rs.1.80 crores (previous year Rs.1.33 crores) for the year, has been charged to the statement of profit and loss.

Note 5 - RELATED PARTY DISCLOSURES

A. Related Parties where control exists

Name of the Related Parties Description of Relationship

Rico Auto Industries Inc. USA Subsidiary

Rico Auto Industries (UK) Limited, UK Subsidiary

Rasa Autocom Limited Subsidiary

Uttarakhand Automotives Limited Subsidiary

RAA Autocom Limited Subsidiary

Rico Jinfei Wheels Limited Subsidiary

AAN Engineering Industries Limited Subsidiary

FCC Rico Limited Joint Venture

Magna Rico Powertrain Private Limited Joint Venture

Kapsons Associates Investments Private Limited Entity in which KMP exercise significant influence

Rico Castings Limited Entity in which KMP exercise significant influence

Higain Investments Private Limited Entity in which KMP exercise significant influence

Octan Media Limited Entity in which KMP exercise significant influence

Kapbros Engineering Industries Limited Entity in which KMP exercise significant influence

Raasaa Retail Private Limited Entity in which KMP exercise significant influence

Haridwar Estates Private Limited Entity in which KMP exercise significant influence

B. Key Management Personnel

Details of Key Managerial Personnel are as under:

i) Shri Arvind Kapur - Chairman, CEO & Managing Director

ii) Shri Arun Kapur - Joint Managing Director

Note 5 - Segment Information, as required under AS-17 "Segment Reporting", has been provided in the consolidated financial statements of the company and therefore no separate disclosure on segment information is given in these standalone financial statements.

Note 6 - As per the transfer pricing norms applicable in India, the Company is required to use certain specified methods in computing arm''s length price of transactions between the associated enterprises and maintain prescribed information and documents relating to such transactions. The appropriate method to be adopted will depend on the nature of the transactions/class of transactions, class of associated persons, functions performed and other factors, which have been prescribed. The Company is in the process of conducting a transfer pricing study for the current financial period. However, in the opinion of the management the same would not have a material impact on these financial statements. Accordingly, these financial statements do not include any adjustments for the transfer pricing implications, if any.

Note 7 - Previous year''s amounts have been regrouped/ reclassified, wherever considered necessary to make them comparable with those of the current year.


Mar 31, 2013

Note 1 - CORPORATE INFORMATION

Rico Auto Industries Limited was incorporated in India on 7th March, 1983. Rico supplies a broad range of high-precision fully machined aluminium and ferrous components and assemblies to Original Equipment Manufacturers across the globe. Its integrated services include design, development, tooling, casting, machining, assembly and research and development across aluminium and ferrous products. The Company is in the business of manufacturing and sale of auto components for two wheelers and four wheelers.

Note 2 - CONTINGENT LIABILITIES

I) Demand against the Company not acknowledged as Liability

(Rs. in Crores) Year ended Year ended Particulars March 31, 2013 March 31, 2012

i) Income Tax 0.16 4.58

ii) Sales Tax 0.79 0.49

iii) Excise and Service Tax 11.42 10.46

iv) Others 5.61 5.61

Income Tax Cases

a. Income tax department has raised demand for Rs.0.12 crore (previous year Rs.4.54 crores). This is on account of filing of incorrect particulars regarding challans deposited as compared to actual challans deposited. The Company has rectified error of Rs.4.54 crores during the year ended March 31, 2013.

b. Demand of Rs.0.04 crore (previous year Rs.0.04 crore), including interest, for the assessment year 2005-06 was issued in relation to disallowance of certain expenses amounting to Rs.0.05 crore. The demand was set aside by Commissioner (Appeals) and a further appeal was filed on November 27, 2012 before Income Tax Appellate Tribunal, Chandigarh. Hearing before ITAT was held on May 14, 2013 and the matter was decided in favor of the Company. The order copy of the ITAT is awaited.

Sales Tax Cases

a. Demand order of assessment received under Haryana VAT Act, 2003 for Rs.0.45 crore (previous year Rs.0.45 crore) for disallowing the input tax on purchase of furnace oil. An appeal has been filed on May 15, 2010 before the Joint Excise & Taxation Commissioner (Appeals), Faridabad.

b. The Deputy Excise and Taxation Commissioner-cum-assessing authority, Gurgaon has raised demand order dated March 29, 2013 of Rs.0.30 crore (previous year Nil) against short submission of C forms. The Company is required to submit the relevant C forms by May 30, 2013.

c. A demand was raised under Haryana VAT Act, 2003 for denial of input credit availed on purchase of furnace oil. The demand was confirmed by Joint Commissioner (Range) for Rs.0.04 crore (previous year Rs.0.04 crore). An appeal was filed with Haryana Sales Tax Tribunal on February 23, 2013. The matter is yet to be decided by the Tribunal.

Excise and Service Tax Cases

a. Department has issued a show cause notice dated August 23, 2007 on the ground that the capital goods namely roof ventilator and evaporating cooling machine are not capital goods for the purpose of availment of CENVAT credit. Commissioner of Central Excise has confirmed the demand along with an equal amount of penalty. Appeal filed to CESTAT on April 28, 2009 against the decision. However, the CESTAT has granted unconditional stay from recovery of impugned amount on deposit of Rs.0.03 crore. Amount involved is Rs.0.42 crore (previous year Rs.0.36 crore). No hearing has taken place since June 15, 2009.

b. A show cause notice was received from the Commissioner of Central Excise on March 16, 2004 by Dharuhera division. Through order of Commissioner of Central Excise, Cenvat credit disallowed is Rs.0.55 crore and penalty and interest is also levied. Total amount involved is Rs.1.91 crores (previous year Rs.1.81 crores). CESTAT has in its order dated May 8, 2013 decided the appeal in favor of the Company. But the time limit for the department to file further appeal against the decision has not lapsed.

c. Central Excise Authority had denied MODVAT/CENVAT availed for wrong description of material and tariff number on invoice of the vendor. The amount involved is Rs.0.15 crore (previous year Rs.0.14 crore). The Additional Commissioner, Central Excise, Delhi has decided in favor of the Company. An appeal was filed by Commissioner of Central excise, Delhi, before CESTAT on July 29, 2008, against the order. CESTAT upheld the decision given by Commissioner (Appeals) in favor of the Company. But the time limit for the department to file further appeal against the decision has not lapsed, hence this is considered as contingent liability.

d. A show cause notice was issued by the Commissioner on removal of dies for job work without payment of duty. Commissioner passed the order on September 15, 2008 demanding excise duty of Rs.0.75 crore, penalty of equal amount, interest at the applicable rate and a fine in lieu of confiscation of Rs.0.10 crore on the dies released provisionally. Further, Company has also furnished a bond of Rs.0.42 crore and a bank guarantee of Rs.0.004 crore. A stay application was filed before the CESTAT. Total amount involved is Rs.2.36 crores (previous year Rs.2.22 crores).

e. A show cause notice has been received from the Additional Commissioner of Central Excise towards Cenvat availed on outward freight during 2005-06 and 2006-07. The Joint Commissioner confirmed the demand against which the Company appealed before CESTAT. The Tribunal remanded back the case to the Commissioner (Appeals) and it is pending before it. Amount involved is Rs.0.22 crore (previous year Rs.0.21 crore).

f. A show cause notice was received from the Joint Commissioner of Central Excise towards cenvat credit availed on custom house agent and courier export related services during previous years 2004-05 to 2007-08. The Commissioner has confirmed the demand against which the Company filed an appeal before CESTAT. CESTAT ordered pre deposition of Rs.0.24 crore. The amount involved is Rs.1.33 crores (previous year Rs.1.01 crores).

g. A show cause notice was received from Additional Commissioner of Central Excise on availment of cenvat on construction and other repair and maintenance service during previous years 2005-06 to 2010-11. Commissioner of Central Excise confirmed the demand against which the Company filed an appeal before the CESTAT on June 29, 2012. CESTAT has granted an unconditional stay on February 19, 2013. The amount involved is Rs.1.92 crores (previous year Rs.1.81 crores).

h. Additional Commissioner disallowed cenvat credit availed on consultancy charges, courier charges etc. for the period March, 2005 to December, 2010 amounting to Rs.0.39 crore, imposed penalty of Rs.0.39 crore and provisional interest of Rs.0.09 crore. The Company filed an appeal against the order before the Commissioner (Appeals) which was adjudged in favor of the Company on February 15, 2013. But the time limit to file further appeal against the decision has not lapsed. The amount involved is Rs.0.88 crore (previous year Rs.0.81 crore).

i. Assistant Commissioner disallowed cenvat credit availed on service tax paid on different activities. Amount involved is Rs.0.06 crore (previous year Rs.0.06 crore). The case is decided by Assistant Commissioner against the Company on February 11, 2011. Company has filed an appeal before the Commissioner against the order. Hearing for the appeal is on June 5, 2013.

j. A show cause notice was issued by the department as the Company did not charge service tax on the amount charged for modification of dies on request of customers. Amount involved is Rs.0.24 crore (previous year Rs.0.24 crore). The case is decided by Additional Commissioner in favor of the Company on May 25, 2013. But the time limit for the department to file further appeal against the decision has not lapsed.

k. A show cause notice was issued disallowing cenvat credit related to service tax. An appeal was filed before the Commissioner (Appeals) and the decision was given in favor of the department. The Company intends to file an appeal to Tribunal against the decision. The amount involved is Rs.0.04 crore (previous year Rs.0.04 crore).

l. The department has issued a show cause notice for selling identical parts at two different assessable values to the same customer at the same time and place of removal. Amount involved is Rs.1.89 crores (previous year Rs.1.75 crores). Company has submitted their reply against show cause order to the Commissioner of Central Excise.

Others

a. Dakshin Haryana Bijli Vitran Nigam (DHBVN) has demanded Rs.5.60 crores (previous year Rs.5.60 crores) for overdrawing power as compared to approved load limit. Case is pending at Hon''ble High court of Punjab and Haryana through writ petition filed on January 22, 2013 by DHBVN. The case came up for hearing on March 5, 2013 and is adjourned till September 10, 2013 for further hearing.

b. A demand was raised under Haryana Local Area Development Tax Act, 2000 for tax on central purchase of certain items. An appeal was filed before Joint Commissioner (Appeal) and the amount involved is Rs.0.01 crore (previous year Rs.0.01 crore).

III) Others

a. Letters of Credit outstanding in favour of suppliers for Rs.6.14 crores (previous year Rs.5.82 crores).

b. Surety bonds executed in favor of the President of India, under Export Promotion Capital Goods Scheme (EPCG) for importing capital goods at concessional rate of custom duty, amounting to Rs.120.83 crores (previous year Rs.120.83 crores).

Note 3 — The management has identified enterprises which have provided goods and services to the Company and which qualify under the definition of micro and small enterprises, as defined under Micro, Small and Medium Enterprises Development Act, 2006 (MSMEDA). Accordingly, the disclosure in respect of the amounts payable to such enterprises as at March 31, 2013 has been made in the financial statements based on information received and available with the Company.

Note 4 — A fire broke out on December 7, 2012 at one section of the Company''s ferrous foundry unit located at the Gurgaon plant. As a result, fixed assets having a written down value of Rs.1.55 crores and raw materials amounting to Rs.0.29 crore were destroyed. Net amount of Rs.1.02 crores (after considering the salvage value of Rs.0.82 crore) has been shown as receivable from insurance Company in the books of accounts. The management has lodged a claim with the insurance Company and does not foresee any financial loss on this account.

Note 5 — Until March 31, 2012, the Company was recording dies and moulds as stores and spares in inventory which was charged to consumption in the year of use. During the year ended March 31, 2013 the Company, based on the technical evaluation and keeping in view the industry practice, has changed its accounting policy wherein such inventory is treated as fixed assets. Dies are now depreciated over their respective useful lives based on a technical estimate. Due to this change in accounting policy, reported profit for the current year is higher by Rs.9.07 crores whereas fixed assets are higher by Rs.21.43 crores and inventory is lowgr by Rs.12.36 crores.

Note 6 — CURRENT ASSETS, LOANS & ADVANCES

In the opinion of the Board of Directors, current assets, loans and advances are having the value at which they are stated in the Balance Sheet, if realized in the ordinary course of business save as otherwise stated in this Balance Sheet.

Note 7 — The Company''s operating lease payments are due on premises taken on lease for operating activities. Aggregate rental expenses under operating leases amounted to Rs.1.33 crores (previous year Rs.0.28 crore) for the year, has been charged to the statement of profit and loss.

Note 8 — The Company has taken advantage of the exemption contained in Accounting Standard (AS) 17 on "Segment Reporting" and therefore not disclosed segment information in its standalone financial statements. The segment information has been disclosed in the summary of significant accounting policies and other explantory notes of the consolidated financial statements.

Note 9 — Pursuant to the notification issued by The Ministry of Corporate Affairs dated May 11, 2011 read with the notification issued on March 31, 2009, the Company has chosen to avail the option to capitalise exchange differences arising on long term foreign currency monetary items to the cost of the relevant fixed assets and amortising it over the remaining useful life of the fixed assets. Amount remaining to be amortised is as under:

Note 10 — Previous year''s amounts have been re-grouped/re-classified, wherever considered necessary to make them comparable with those of the current year.


Mar 31, 2011

1. Lease hold land includes Rs.16.91 Crores (Gross) of lands situated at Bhiwadi (Rajasthan), Oragadam (Chennai) & Singur (West Bengal) (Previous year Rs.25.88 Crores).

2. In the opinion of the Board of Directors, the Current Assets, Loans and Advances are having the value at which they are stated in the Balance Sheet, if realized in the ordinary course of business save as otherwise stated in this Balance Sheet elsewhere.

3. During the year Commercial Production was started on 21st January, 2011 at Sanand (Gujarat).

4. The Company after obtaining the approval of Karnataka Industrial Areas Development Board (KIADB) has transferred on 30th October, 2010 lease hold rights of plot of land measuring 80,937 Sq. Mtrs. situated at Plot No. 283, Bommasandra - Jigani Link Road Industrial Area, Bangalore, to the Joint Venture & Subsidiary Company KRP Auto Industries Limited for a consideration of Rs.20.25 Crores received by way of Equity Shares of the said Company.

5. The Other Income includes amounts of Rs.10.61 Crores and Rs.9.29 Crores being the Profits on transfer of leasehold rights/interests of the Company in the immovable properties at Ambernath (Mumbai) and Bommasandra (Bangalore) respectively.

6. As a temporary support to its Wholly Owned Subsidiary Rasa Autocom Limited, the Company has allowed to utilize its letters of credit limits with Yes Bank Limited to the extent of Rs.5.00 Crores out of which actual utilization was Rs.3.84 Crores. Yes Bank Limited has already given an In-principle Letter sanctioning funded and non-funded limits to Rasa Autocom Limited independently and this arrangement is till its final sanction and disbursement only.

7. RELATED PARTY DISCLOSURES

Related Party Disclosures as required under Accounting Standard (AS-18), issued by the Institute of Chartered Accountants of India.

B. Key Management Personnel

Details of Key Managerial Personnel are as under:

i) Shri Arvind Kapur - Vice Chairman, CEO & Managing Director

ii) Shri Arun Kapur - Joint Managing Director

8. CONTINGENT LIABILITIES

i) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs.14.90 Crores (Previous year Rs.17.38 Crores).

ii) Banks have given guarantees on behalf of the Company worth of Rs.4.01 Crores (Previous year Rs.2.49 Crores).

iii) Letters of Credit outstanding in favour of suppliers for Rs.34.22 Crores (Previous year Rs.30.88 Crores).

iv) The Company has given counter guarantees to the extent of Rs.13.04 Crores, Rs.7.20 Crores, Rs.6.72 Crores, Rs.5.81 Crores and Rs.4.31 Crores respectively to Axis Bank Limited, State Bank of Patiala, Standard Chartered Bank, DBS Bank Limited & Yes Bank Limited for the payment of Buyers' Credits arranged through them from Foreign Banks.

v) Disputed statutory demands in appeals before relevant Hon'ble Appellate Authorities:

a) Sales Tax Rs.6.54 Crores (Previous Year Rs.7.95 Crores).

b) Central Excise & Service Tax Rs.5.79 Crores (Previous year Rs.4.35 Crores).

c) Local Area Development Tax (LADT) Rs.0.01Crore (Previous year Rs.0.01 Crore).

d) Income Tax Rs.11.15 Crores (Previous year Rs.1.78 Crores).

Based on favourable judgements in similar cases, legal opinion taken by the Company, discussions with the solicitors etc. the Company believe that there is fair chance of decisions in our favour in respect of the items listed at (v) (a) (b) (c) and (d) above. Hence no provision has been considered necessary against the same.

vi) Surety Bonds executed in favour of The President of India, under Export Promotion Capital Goods Scheme (EPCG) for importing Capital goods at concessional rate of custom duty, amounting to Rs.120.83 Crores (Previous year Rs.122.19 Crores).

9. During the year 64,30,000 Warrants out of the 97,00,000 Warrants allotted to the Promoter Group Company namely M/s. Kapsons Associates Investments Private Limited have been converted by way of second & final tranche into 64,30,000 Equity Shares of Re.1/- each at a premium of Rs.16.50 per share (already received Rs.4.40 per warrant alongwith application) and the balance amount of Rs.13.10 per equity share aggregating to Rs.8,42,33,000/- collected from the allottee against the allotment of 64,30,000 equity shares, has been utilized for the purpose it has been raised. The Paid-up Share Capital has increased to Rs.13,52,85,000/- after this allotment during the year.

ii) The amount of interest accrued & remaining unpaid at the end of the financial year 2010-2011 is Nil (Previous year Nil).

iii) There is no any interest remaining due & payable for any of the earlier years.

10. The amount has been given in Crore Rupees unless otherwise stated.

11. Previous year figures have been re-grouped or re-arranged wherever found necessary.

12. Schedules 1 to 15 form an integral part of the Balance Sheet and Profit & Loss Account.

 
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