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Notes to Accounts of Rico Auto Industries Ltd.

Mar 31, 2016

Note 1 - 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 2 - 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 3 - 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 4 - On March 14, 2016, the Company submitted an application along with the draft Scheme of Amalgamation of Uttarakhand Automotives Limited, wholly owned subsidiary with its Holding Company Rico Auto Industries Limited, as required by Regulation 37 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 to BSE Limited and National Stock Exchange of India Limited. Once approved, Company will proceed to file the petition before the Hon’ble High Court of Punjab and Haryana at Chandigarh.

Note 5 - During the year ended March 31, 2015, 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. The transaction was carried out at arm’s length based on valuation performed by the valuation expert. Consequently, upon disposal, income and expenses are recorded up to the date of disposal and all assets and liabilities are derecognized from the consolidated financial statements.

Note 6 - During the year ended March 31 2015, the Company had 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, decided to restructure its business activities to ensure optimize operational efficiency and consequently maximize the shareholders’ value. As part of the restructuring, the Company:

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 Aluminium 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, was received by the Company. Consequently, loss of Rs.173.62 crores had been recorded under exceptional items.

B. Sold investments in Subsidiaries namely RAFA , Rasa Autocom Limited and Rico Jinfei Wheels Limited for an aggregate consideration of Rs.1.50 crores to another Subsidiary Company namely Rico Investments Limited incorporated for the purpose of holding the investment in the Group Companies as a Core Investment Company. The aforesaid consideration has been determined on arm’s length based on valuation report of an Independent Valuer. Consequently, loss of Rs.49.07 crores had been recorded under exceptional items.

Note 7 - Exceptional items for the current year include expenditure incurred pursuant to Voluntary Retirement Scheme of the Company amounting to Rs.2.85 crores.

Previous year exceptional items included:

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 had recorded a gain of Rs.491.05 crores. Further, legal and professional expenses of Rs.4.42 crores were 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 52A above, the Company had sold its (a) Ferrous Undertaking and (b) Non- Ferrous based auto components business division on a going concern basis and had recorded a loss of Rs.173.62 crores.

c. Loss on sale of investments in subsidiaries:

As detailed in Note 52B above, the Company had sold its investment in RAFA (formerly known as RAA Autocom Limited), Rasa Autocom Limited and Rico Jinfei Wheels Limited and had recorded a loss of Rs.49.07 crores.

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

The Company entered into settlement agreement with RAFA (formerly known as RAA Autocom Limited), Uttarakhand Automotives 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 Uttarakhand Automotives Limited has been written off.

e. Other items:

Expenditure incurred pursuant to Voluntary Retirement Scheme of the company amounting to Rs.2.58 crores and Land written off amounting to Rs.1.26 crores.

Note 8 - Corporate Social Responsibility

As per Section 135 of the Companies Act, 2013, a CSR committee has been formed by the Company. The areas of CSR activities are promoting education among children. The funds were primarily allocated and utilized for the activities which are specified in Schedule VII of the Companies Act, 2013.

a) Gross amount required to be spent by the Company during the year is Nil.

b) Amount spent during the year on :

Note 9 - Prior period tax represents depreciation adjustment between current tax and deferred tax.

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

This is the summary of significant accounting policies and other explanatory information referred to in our report of even date.


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, 2012

Note 1 - CORPORATE INFORMATION

Rico Auto Industries Limited was incorporated in India on 7th March, 1983. Rico is a dynamic world-class engineering group, supplying a broad range of high-precision fully machined aluminium and ferrous components and assemblies to OEMs across the globe. Its integrated services include design, development, tooling, casting, machining, assembly and R&D across aluminium and ferrous products. The Company is in the business of manufacturing and sale of Auto Components for Two Wheelers & Four Wheelers.

SECURED LOANS

Security Details of Current Year:

a) Foreign Currency USD Term Loans, Non-Funded Capex Limits and Rupee Term Loans are secured by hypothecation of movable fixed assets, both present & future, of the Company ranking first pari-passu charge basis among Axis Bank Limited, Export- Import Bank of India, IndusInd Bank Limited, Kotak Mahindra Bank Limited, State Bank of Hyderabad, State Bank of Patiala and Yes Bank Limited. These Loans are also secured by mortgage by way of deposit of title deeds of the immovable properties of the Company situated at Dharuhera and Gurgaon ranking pari-passu charge basis amongst the said banks.

b) Term Loan of Rs.25.00 Crores from Yes Bank Limited is additionally secured by corporate guarantee of an Associate Company and personal guarantees of Managing Director, Joint Managing Director and a Director of the Company.

c) Capex - Non Funded Facilities of Rs.11.00 Crores & Rs.10.00 Crores availed from IDBI Bank Limited and Yes Bank Limited respectively are secured by exclusive charge on all machineries/assets imported/acquired by utilising the said facilities.

Terms of Repayment:

— Axis Bank Limited - Loan-I, Terms: Originally taken for Rs.30.00 Crores in March, 2010 repayable in 14 quaterly instalments after moratorium of six quarters. Last Instalment is repayable in March, 2015, Rate of Interest as on 31st March, 2012: 13.75% (Previous Year: 12.50%).

— Axis Bank Limited - Loan-II, Terms: Originally taken for Rs.25.00 Crores in March, 2011 repayable in 14 quaterly instalments after moratorium of six quarters. Last Instalment is repayable in March, 2016, Rate of Interest as on 31st March, 2012: 13.50% (Previous Year: 12.25%).

— State Bank of Hyderabad - Loan-I, Terms: Originally taken for Rs.40.00 Crores in November, 2009 repayable in 14 quaterly instalments after moratorium of six quarters. Last Instalment is repayable in November, 2014. Rate of Interest as on 31st March, 2012: 13.50% (Previous Year: 13.00%).

— State Bank of Hyderabad - Loan-II, Terms: Originally taken for Rs.30.00 Crores in September, 2010 repayable in 14 quaterly instalments after moratorium of six quarters. Last Instalment is repayable in September, 2015. Rate of Interest as on 31st March, 2012: 13.50% (Previous Year: 13.00%).

— State Bank of Patiala - Loan-I, Terms: Originally taken for Rs.35.00 Crores in September, 2009 repayable in 14 quaterly instalments after moratorium of six quarters. Last Instalment is repayable in September, 2014. Rate of Interest as on 31st March, 2012: 14.25% (Previous Year: 12.50%).

— State Bank of Patiala - Loan-II, Terms: Originally taken for Rs.50.00 Crores in January, 2011 repayable in 12 quarterly instalments after moratorium of eight quarters. Last Instalment is repayable in January, 2016. Rate of Interest as on 31st March, 2012: 14.25% (Previous Year: 12.50%).

— Kotak Mahindra Bank Limited - Loan-I, Terms: Originally taken for Rs.30.00 Crores in September, 2009 repayable in 12 quarterly instalments after moratorium of zero quarters. Last Instalment is repayable in September, 2012. Rate of Interest as on 31st March, 2012: 11.00% (Previous Year: 11.00%).

— Yes Bank Limited - Loan-I, Terms: Originally taken for Rs.25.00 Crores in December, 2008 repayable in 30 monthly instalments after moratorium of eighteen months. Last Instalment is repayable in December, 2012. Rate of Interest as on 31st March, 2012: 14.95% (Previous Year: 12.95%).

— Export-Import Bank of India - Loan-I, Terms: Originally taken for Rs.15.97 Crores in February, 2011 repayable in 20 quarterly instalments after moratorium of eight quarters. Last Instalment is repayable in February, 2018. Rate of Interest as on 31st March, 2012: 11.72% (Previous Year: 10.99%).

— Export-Import Bank of India - Loan-II, Terms: Originally taken for USD Two Millions in February, 2011 repayable in 20 quarterly instalments after moratorium of eight quarters. Last Instalment is repayable in February, 2018. Rate of Interest as on 31st March, 2012: L 4.50% (Previous Year: L 4.50%).

— IndusInd Bank Limited - Loan-I, Terms: Took over Rs.39.29 Crores Rupee Term Loan of IDBI Bank Limited in equivalent USD in April, 2011. Last Instalment is repayable to IndusInd Bank in March, 2014. Rate of Interest as on 31st March, 2012: 8.05% (Previous Year: IDBI Bank Limited: Taken for Rs.50.00 Crores in March, 2009 repayble in 14 quaterly instalments after moratorium of six quarters. Rate of Interest as on 31st March, 2011: 14.00%).

Security Details of Previous Year:

a) Foreign Currency ECB Loan, USD Loan, Non-Funded Capex Limits and Rupee Term Loans are secured by hypothecation of movable fixed assets, both present & future, of the Company ranking first pari-passu charge basis among Axis Bank Limited, Citibank N.A., IDBI Bank Limited, Export-Import Bank of India, Kotak Mahindra Bank Limited, State Bank of Hyderabad, State Bank of Patiala, Standard Chartered Bank and Yes Bank Limited. These Loans are also secured by mortgage by way of deposit of title deeds of the immovable properties of the Company situated at Dharuhera and Gurgaon ranking pari-passu charge basis amongst the said banks except that of USD/INR Loan equivalent to Rs.50.00 Crores from Export-Import Bank of India, Rupee Term Loan/ Non- Funded Limit of Rs.40.00 Crores from State Bank of Hyderabad, Rupee Term Loan of Rs.50.00 Crores from State Bank of Patiala and Rupee Term Loan from Axis Bank Limited for Rs.25.00 Crores which are yet to be secured by mortgage of deposit of title deeds of abovesaid properties of the Company.

b) Term Loan of Rs.25.00 Crores from Yes Bank Limited is additionally secured by corporate guarantee of an Associate Company and personal guarantees of Managing Director, Joint Managing Director and a Director of the Company.

c) Capex - Non Funded Facilities of Rs.11.00 Crores, Rs.11.00 Crores & Rs.10.00 Crores availed from IDBI Bank Limited, Kotak Mahindra Bank Limited and Yes Bank Limited respectively are secured by exclusive charge on all machineries/assets imported/ acquired by utilising the said facilities.

UNSECURED LOANS

Security Details of Current Year:

Term Loan of Tata Capital Limited is secured by personal guarantee of Managing Director of the Company.

Terms of Repayment:

— Tata Capital Limited - Terms : Taken for Rs.5.82 Crores in June, 2011 repayable in 60 monthly instalments after moratorium of twelve months. Last Instalment is repayable in June, 2017. Rate of Interest as on 31st March, 2012 : 14.50% (Previous Year: Not Applicable).

WORKING CAPITAL LOANS

Working Capital Loans from Banks are secured by hypothecation of current assets including receivables & inventories, both present & future, ranking first pari-passu charge basis among Axis Bank Limited, Citibank N.A., DBS Bank Limited, HDFC Bank Limited, IDBI Bank Limited, Kotak Mahindra Bank Limited, Standard Chartered Bank, State Bank of Hyderabad, State Bank of India, State Bank of Patiala, The Hongkong & Shanghai Banking Corporation Limited and Yes Bank Limited.

Security Details of Current Year:

— State Bank of India for Working Capital of Rs.14.00 Crores & Non-Funded Rs.1.00 Crore: First pari-passu charge on all the current assets of the Company including all types of Stocks of raw material, stores, spares, stock-in-process, finished goods etc, lying in their premises, godowns, elsewhere including goods in transit and Company's book debts/receivables, both present and future.

— IDBI Bank Limited for Working Capital of Rs.20.00 Crores & Non-Funded Rs.5.00 Crores: First pari-passu charge on the entire current assets of the Company in the form of stock of raw materials, packaging materials, stock-in-process, finished goods, stores and consumables & receivables.

— HDFC Bank Limited for Working Capital of Rs.10.00 Crores: Hypothecation of Company's entire current assets including inventories, book debts both present and future.

— The Hongkong and Shanghai Banking Corporation Limited for Working Capital of Rs.20.00 Crores: First pari-passu charge on currents assets of the Company.

— Yes Bank Limited for Working Capital of Rs.5.00 Crores: First pari-passu charge on current assets of the Company.

— Citibank N.A. for Working Capital of Rs.12.54 Crores & Non-Funded Rs.1.36 Crores: First pari-passu charge on all present and future book debts and stocks of the Company.

— Standard Chartered Bank for Working Capital of Rs.41.20 Crores: First pari-passu charge on stock and book debts of the Company.

— DBS Bank Limited for Working Capital of Rs.10.00 Crores: First pari-passu charge on stock and book debts of the Company.

— State Bank of Patiala for Working Capital of Rs.30.00 Crores & Non-Funded Rs. 20.00 Crores: First charge over current assets of the Company ranking pari-passu basis with other lenders, both present & future.

— Kotak Mahindra Bank Limited for Working Capital of Rs.2.00 Crores: First charge on all existing and future current assets of the Company.

— State Bank of Hyderabad for Working Capital of Rs.5.00 Crores: First charge over current assets of the Company, both present and future, ranking pari-passu basis with other lenders.

— Axis Bank Limited for Non-Funded limits of Rs.25.00 Crores: First pari-passu charge on current assets of the Company.

Security Details of Previous Year:

— State Bank of India for Working Capital of Rs.14.00 Crores & Non-Funded Rs.1.00 Crore: First pari-passu charge on all the current assets of the Company including all types of Stocks of raw material, stores, spares, stock-in-process, finished goods etc, lying in their premises, godowns, elsewhere including goods in transit and Company's book debts/receivables, both present and future.

— IDBI Bank Limited for Working Capital of Rs.20.00 Crores & Non-Funded Rs.5.00 Crores: First pari-passu charge on the entire current assets of the Company in the form of stock of raw materials, packaging materials, stock-in-process, finished goods, stores and consumables & receivables.

— HDFC Bank Limited for Working Capital of Rs.10.00 Crores: Hypothecation of Company's entire current assets including inventories, book debts both present and future.

— The Hongkong and Shanghai Banking Corporation Limited for Working Capital of Rs.20.00 Crores: First pari-passu charge on currents assets of the Company.

— Yes Bank Limited for Working Capital of Rs.5.00 Crores: First pari-passu charge on current assets of the Company.

— Citibank N.A. for Working Capital of Rs.12.54 Crores & Non-Funded Rs.1.36 Crores: First pari-passu charge on all present and future book debts and stocks of the Company.

— Standard Chartered Bank for Working Capital of Rs.41.20 Crores: First pari-passu charge on stock and book debts of the Company.

— DBS Bank Limited for Working Capital of Rs.10.00 Crores: First pari-passu charge on stock and book debts of the Company.

— State Bank of Patiala for Working Capital of Rs.30.00 Crores & Non-Funded Rs. 20.00 Crores: First charge over current assets of the Company ranking pari-passu basis with other lenders, both present & future.

— Kotak Mahindra Bank Limited for Working Capital of Rs.2.00 Crores: First charge on all existing and future current assets of the Company.

— State Bank of Hyderabad for Working Capital of Rs.5.00 Crores: First charge over current assets of the Company, both present and future, ranking pari-passu basis with other lenders.

— Axis Bank Limited for Non-Funded limits of Rs.25.00 Crores: First pari-passu charge on current assets of the Company.

OTHER LOANS

Security Details of Current Year:

Other Loans from Banks and Companies are secured against hypothecation of the vehicles financed.

Security Details of Previous Year:

Other Loans from Banks and Companies are secured against hypothecation of the vehicles financed.

UNSECURED LOANS

Security Details of Current Year:

Unsecured Foreign Currency Loans are Buyers' Credit Facility taken from various Banks located outside India under secured Non-Funded Facilities sanctioned and guaranteed by Banks in India viz. Axis Bank Limited, DBS Bank Limited, IDBI Bank Limited, State Bank of Patiala, Standard Chartered Bank and Yes Bank Limited. It also includes a Packing Credit Foreign Currency Facility of Rs.40.00 Crores with sub limits of INR facility of Rs.30.00 Crores of Kotak Mahindra Bank Limited.

Security Details of Previous Year:

Unsecured Foreign Currency Loans are Buyers' Credit Facility taken from various Banks located outside India under secured Non-Funded Facilities sanctioned and guaranteed by Banks in India viz. Axis Bank Limited, DBS Bank Limited, State Bank of Patiala, Standard Chartered Bank and Yes Bank Limited. It also includes a Packing Credit Foreign Currency Facility of Rs.30.00 Crores with sub limits of INR facility of Rs.20.00 Crores of Kotak Mahindra Bank Limited.

Note 2 - CONTINGENT LIABILITIES AND COMMITMENTS

I) Contingent Liabilities

Claims against the Company/disputed liabilities not acknowledged as debts

(Rs. in Crores)

Year ended Year ended Particulars March 31, 2012 March 31, 2011

i) Excise Duty 4.71 4.41

ii) Service Tax 4.50 1.38

iii) Income tax demands 4.73 11.15

iv) Sales tax/VAT 0.43 6.54

v) LADT 0.01 0.01

vi) Dakshin Haryana Bijili Vitran Nigam 5.60

i) In relation to 36(I)(i) above Excise Duty cases contested by the Company comprise of:

Show Cause Notice has been received from Assistant Commissioner of Central Excise on dated 23rd August, 2007 in respect of claim of cenvat on roof ventilator, evaporating cooling machine etc. appeal rejected by Commissioner Central Excise.

Appeal filed to CEATAT for fresh decision on dated 28th April, 2009. The amount involved is Rs.0.39 Crore (Previous year Rs.0.37 Crore).

Show Cause Notice received from Commissioner of Central Excise on dated 16th March, 2004. Disallowed the cenvat credit on the basis of sub heading by the Commissioner of Central Excise. The amount involved is Rs.1.91Crores (Previous year Rs.1.74 Crores).

SCN No. V (87) 15 CE-Adj/D-III/Com/161/07 dated 09.09.2008 issued by Commissioner, (Central Excise Delhi- III) office of Commissioner Central Excise, Delhi III Udyog Vihar, Gurgaon (Case: Removal of dies under Rule 67/95 without payment of Duty). The Commissioner passed the order dated 15th September, 2008 demanding excise duty of Rs.0.75 Crore on dies sent on job work, penalty equal to the amount of duty i.e. Rs.0.75 Crore along with interest at the applicable rates and a fine of Rs.10.00 lacs on the dies released provisionally. Stay application was filed with the Tribunal. The amount involved is Rs.2.26 Crores (Previous year Rs.2.16 Crores).

Modvat of Central Excise duty on purchase of raw material from M/s Agsons Agencies (India) Private Limited has been denied by the Central Excise Authority for wrong description of material & tariff. No. The Addl. Commissioner, Central Excise, Delhi vide Order No. 04/4039 dated 28.03.2007 had dropped the proceedings & the case was decided in our favour. Appeal No. E/2191/2008 dated 29.07.2008 in CESTAT filed by CCE, Delhi III, Guragon against the order passed in favour of Rico (Case: Agsons Agencies) The amount involved is Rs.0.14 Crore (Previous Year Rs.0.13 Crore).

(ii) In relation to 36(I)(ii) above Service Tax cases disputed by the Company comprise of:

Show Cause Notice has been received from Addl. Commissioner of Central Excise on dated 23rd August, 2007 in respect of claim of cenvat on out ward freight for the period 2005-06 to 2006-07. Demand confirmed by Joint Commissioner Central Excise, and again appeal filed to Commissioner of Central Excise for fresh decision on dated 2nd June, 2008. The amount involved is Rs.0.21Crore (Previous year Rs.0.20 Crore).

Show Cause Notice has been received from Joint Commissioner of Central Excise on dated 11th November, 2008 in respect of claim of cenvat on CHA & Courier Export related services for the period 2004-05 to 2007-08. Demand confirmed by the Commissioner Central Excise against appeal filed and again appeal filed to CESTAT for fresh decision on dated 2nd July, 2010. The amount involved is Rs.1.26 Crores (Previous year Rs.1.18 Crores).

Show Cause Notice has been received from Addl. Commissioner of Central Excise on dated 17th January, 2011 in respect of claim of cenvat on insurance, ctering, tent house and taxi & travels for the period 2010-11. Demand confirmed by joint commissioner, against reply filed. Appeal filed before the Commissioner of Central Excise (Appeals) Delhi-III, Gurgaon on 31.01.2012. The amount involved is Rs.0.35 Crore (Previous year Rs.Nil).

Show cause notice has been received from Addl. Commissioner of Central Excise on dated 28th July, 2010 in respect of claim of cenvat on Constraction & other repair & maintenance service for the period 2005-06 to 2010-11. Demand confirmed by Commissioner of Central Excise, Delhi-III, Gurgaon. Pending for appeal filing to CESTAT. The amount involved is Rs.1.81 Crores (Previous year Rs.Nil).

Show Cause Notice issued to Rico under Rule 14&15 of Cenvat Credit on Service Tax for denial of Cenvat Credit for indirect/direct services related to business. Dy. Commissioner Division-5 Central Excise disallowed the amount of Rs.0.06 Crore. Rico appeal Commissioner Appeal Central Excise, Delhi-III, Gurgaon. Appeal is decided on 30.03.2012 in which Rs.0.05 Crore allowed on services & few services related to building repair & foundation of machinery, repair of vehicle etc. for Rs.0.01 Crore disallowed for which we are filling appeal in Tribunal Appeal to be filed upto 12.06.2012.

Show Cause Notice issued to Rico under Rule 2(1) of Cenvat Credit Rule 2004 for denial of input credit for direct/indirect services, Additional Commissioner Excise Delhi-III disallowed Rs.0.39 Crore Credit & Imposed Penalty of Rs.0.39 Crore & Interest Rs.0.09 Crore (provisional up to March,12). Rico is filling appeal against this order before Commissioner Appeal Delhi-III, Gurgaon, Last date for appeal on 12.06.2012 so we will submit appeal before due date.

(iii) In relation to 36(I)(iii) above Income Tax cases disputed by the Company comprise of:

Income Tax TDS department has raised demand for Rs.11.15 Crores upto previous year and Rs.0.70 Crore during current year. These demands pertain to technical error on account of recent e-governance system of Income Tax department. We have rectified TDS Returns for Rs.11.15 Crores and NIL Orders have been received for Rs.7.31 Crores till 31.3.2012. For remaining amount of Rs.4.54 Crores demand, the cases are in process and will be settled favourably as above and so no provision has been considered necessary.

A demand u/s 156 of the Income Tax Act,1961 for the assessment year 2005-06 for Rs.0.17 Crore out of which 50% demand was paid i.e. Rs.0.08 Crore issued to us, in relation to disallowance u/s 14A with respect to Rule 8D of Income Tax Rules, 1962 amounting to Rs.0.26 Crore. The appeal was filed in December, 2011 to the Commissioner of Income Tax (Appeals)-I/II, Ludhiana.

A demand u/s 156 of the Income Tax Act,1961 for the assessment year 2008-09 for Rs.0.10 Crore issued to us, in relation to disallowance u/s 14A with respect to Rule 8D of Income Tax Rules, 1962 amounting to Rs.0.30 Crore, disallowance in

Director's Foreign Travelling amounting to Rs.0.01Crore and relating to publicity and advertising to the tune of Rs.0.01 Crore. The appeal was filed in December, 2011 to the Commissioner of Income Tax (Appeals)- I/II, Ludhiana.

iv) In relation to 36(I)(iv) above notice for the Sales Tax demand of Rs.0.43 Crore for assessment year 2006-07:

This demand order of assessment arises u/s 9(2b) read with Section 14(6) of HVAT Act, 2003 of Rs.0.43 Crore raised by Sales Tax Department by disallowing the Input Tax on the purchase of furnace oil. It includes interest amount Rs.0.20 Crore. The entire amount of Sales Tax has not been deposited. Appeal against demand was filed on 15.05.2010, before the Joint Excise & Taxation Commissioner (Appeals), Faridabad.

vi) In relation to 36(I)(vi) above notice for short assessment on account of Maximum Demand Indicator Rs.5.60 Crores:

We applied for extension of load from 9000 KW to 18000 KW with contract demand from 10000 KVA to 20000 KVA on 21.10.2005. The same was to be sanctioned by the Director (Oprn.) DHBVN. The load was to be fed at 66KV level as such the approval of HVPNL Authority was required prior to sanction of the extended load.

The Director HVPNL approved the release of extension of load from 10000 KVA to 20000 KVA temporarily from existing Mahrauli Road S/s. and finally from 66 KV sub-station at Sector 38, Gurgaon.

Rico complied with all the terms and conditions of the Demand Notice and thereafter the extension of load was released temporarily from 66 KV Mahrauli Road S/s as a time gap arrangement till completion of Bay at 66 KV substation sector-38, Gurgaon.

The extension of load was shifted to 66 KV sub-station Sector-38, Gurgaon in the month of November, 2008 as a permanent feeding arrangement. As per the mandatory requirement of the distribution companies a Tripartite Agreement on this account was executed in between DHBVN, HVPNL and Rico on 03.08.2009 for extension of load from 9000 KW to 18000 KW with contract demand from 10000 KVA to 20000 KVA.

In view of above it is very well clear that our Contract Demand from 10000 KVA to 20000 KVA has been considered, sanctioned and approved by DHBVN and HVPNL. Also we have been continuously billed per month right from 2006 to May, 2011 for our contract demand as 20000 KVA in each and every monthly electricity bill.

Aggrieved by the demand of DHBVN we filed a civil suit for declaration with consequential relief of permanent injunction in the Court of Civil Judge, Gurgaon on 14.10.2011. The court pronounced its judgment with the direction to DHBVN. That "To decide the reply/representation/objection of the plaintiff on merit after affording a reasonable opportunity of hearing to the plaintiff before recovering the proposed amount Rs.5.60 Crores as per law."

The DHBVN passed final order without personal hearing in violation of civil court and has directed to deposit the entire amount Rs.5.60 Crores with in 7days.

Aggrieved by unjustified demand notice we filed a petition before HERC on 07.12.2011. The commission heard the case on 12.01.12 & 06.03.12 and directed us to exhaust CGRF and Ombudsman before coming to them.

Thereafter we filed a complaint in the CGRF at Hisar on 12.03.2012 the forum heard the complaint on 28.03.12 and passed his order that this forum has no jurisdiction to entertain the present complaint.

Thereafter we filed a petition before the Ombudsman at Panchkula on 08.05.2012 against the erroneous order passed by CGRF Hisar, where this case to be heard on 06.06.2012.

II) Guarantees:

i) Banks have given guarantees on behalf of the Company for Rs.3.63 Crores (Previous year Rs.4.01 Crores).

ii) Letters of Credit outstanding in favour of suppliers for Rs.5.82 Crores (Previous year Rs.34.22 Crores).

iii) The Company has given corporate guarantees to the banks of two of its subsidiaries (a) Rasa Autocom Limited (wholly owned) for Rs.43.00 Crores (Previous Year Rs.Nil), (b) Rico Jinfei Wheels Limited (92.5% owned) for Rs.10.00 Crores during the year (Previous Year Rs.Nil).

iv) 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.120.83 Crores).

III) Commitments:

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs.11.69 Crores (Previous year Rs.14.90 Crores).

Note 3 - Current Assets, Loans & Advances:

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.

Note 4 - The Company has sold the entire 475680 fully paid-up equity shares of Rs.100/- each of its Joint Venture and Subsidiary Company namely KRP Auto Industries Limited to other Joint Venture Partner namely Kailash Royal Premium Projects Private Limited. The entire consideration of Rs. 20.30 Crores including the amount of premium towards our investment has been received and consequently, said Joint Venture & Subsidiary ceased on 12th December, 2011. The transaction does not involve any profit/loss and also there is no impact on business operation of the Company.

Note 5 - The Company has sold the entire 5,50,00,000 fully paid-up equity shares of Rs.10/- each of its Joint Venture Company namely Continental Rico Hydraulic Brakes India Private Limited to the other Joint Venture Partner Group Company namely Continental Automotive Holding Netherlands BV. The entire consideration of Rs.48,61,06,000/- towards our investment has been received and consequently, said Joint Venture ceased on 9th March, 2012.

Note 6 - The amount has been given in Crore Rupees unless otherwise stated.

Note 7 - Previous Year Figures:

For the year ended 31st March, 2011, the Company has prepared and presented its financial statements as per applicable pre revised Schedule VI of the Companies Act, 1956. For the year ended 31st March, 2012, the revised Schedule VI notified under the Companies Act, 1956 has become applicable to the Company. The Company has reclassified previous year figures to confirm to this year's classification. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it significantly impacts presentation and disclosures made in the financial statements, particularly the presentation of balance sheet.


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.


Mar 31, 2010

1. Building includes cost of leasehold land & building at Ambernath (Mumbai) Maharashtra amounting to Rs.0.44 Crore (Previous year Rs.0.44 Crore).

2. Lease hold land includes Rs.25.88 Crores (Gross) of land situated at Oragadam (Chennai), Bommasandra (Bangalore), Singur (West Bengal) and Bhiwadi (Rajasthan) (Previous year Rs.15.30 Crores). Title of lease hold land at Bhiwadi is yet to be registered in the name of Company.

3. The Company had acquired the Land in Singur (West Bengal) for setting up the plant to cater the demand of components for Tata Nano Car Project. The Company has invested some amount of money on this project. But due to some abnormal circumstances beyond the control of the Company the work of the project has been stopped.

4. 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.

5. During the year Commercial Production was started on 22nd March, 2010 at Haridwar.

6. During the year, Company has incorporated a Company under the name "KRP Auto Industries Limited" jointly with M/s. Kailash Royal Premium Projects Private Limited, for manufacturing of Auto Components at the Company’s Industrial Plot at Bangalore. The Company has invested Rs.0.05 Crore in the Subsidiary Company constituting 95% of its paid-up capital.

7. Disclosure under Accounting Standard (AS)19 on leased assets and lease rent.

i) Minimum lease rent payments of Rs.1.93 Crores (Previous year Rs.5.40 Crores) has been recognized in the statement of Profit & Loss Account for the year ended 31st March, 2010.

ii) Total amount of future minimum lease rent payments under non-cancellable operating lease periods:

a) Not later than one year Rs. Nil (Previous year Rs.1.84 Crores).

b) Later than one year but not later than five year Rs.Nil (Previous year Rs.0.03 Crore).

c) Lease tenure 42 to 72 months.

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.17.38 Crores (Previous year Rs.30.59 Crores).

ii) Banks have given guarantees on behalf of the Company worth of Rs.2.49 Crores (Previous year Rs.1.98 Crores).

iii) Letters of Credit outstanding in favour of suppliers for Rs.30.88 Crores (Previous year Rs.4.15 Crores).

iv) The Company has given counter guarantees to the extent of Rs.22.03 Crores, Rs.16.43 Crores, Rs.5.72 Crores and Rs.1.33 Crores respectively to Axis Bank Limited, State Bank of Patiala, Standard Chartered Bank and DBS Bank Limited for the payment of Buyers’ Credits arranged through them from Foreign Banks.

v) The Company has executed General Surety Bonds for Rs.1.00 Crore (Previous year Rs.1.00 Crore) in favour of The President of India, under Central Excise Act, 1944.

vi) Disputed statutory demands in appeals before relevant Hon’ble Appellate Authorities:

a) Sales Tax Rs.7.95 Crores (Previous year Rs.6.34 Crores).

b) Central Excise & Service Tax Rs.4.35 Crores (Previous year Rs.3.79 Crores).

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

d) Income Tax Rs.1.78 Crores (Previous year Rs.0.91 Crore).

vii) 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.122.19 Crores (Previous year Rs.122.19 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 (vi) (a) (b) (c) and (d) above. Hence no provision has been considered necessary against the same.

9. During the year:

i) the Company has allotted 97,00,000 Warrants convertible into equivalent number of Equity Shares of Re.1/- each at a premium of Rs.16.50 per share on preferential basis to the Promoter Group Company in accordance with SEBI Guidelines. The Warrant holder has the option of subscribing for 1 equity share of the Company of Re.1/- per warrant at a premium of Rs.16.50 per equity share to be exercised within a period of 18 months from the date of allotment i.e. 11th July, 2009. In case, the options are not exercised, the amount paid of Rs.4.40 per Warrant is liable to be forfeited. The Company has received an amount of Rs.4.40 per warrant being not less than 25 per cent of the offer price, aggregating to Rs.4.26 crores from the Warrant holder against allotment of warrants. The amount collected against warrants shall be adjusted against the price payable subsequently for subscribing the share by exercising the option. The money received towards allotment of said warrants has been used for the working capital requirement of the Company.

ii) 32,70,000 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 first tranche into 32,70,000 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.4,28,37,000/- collected from the allottee against the allotment of 32,70,000 equity shares, will be utilized for the purpose it has been raised. The Paid-up Share Capital has increased to Rs.12,88,55,000/- after this allotment.

10. Consequent to the labour unrest in the Company during the period from 21st September, 2009 to 5th November, 2009 production was disrupted, resulting in production loss of around Rs.42.00 Crores both for domestic and overseas customers.

ii) The amount of interest accrued & remaining unpaid at the end of the financial year 2009-2010 is Nil. iii) There is no any interest remaining due & payable for any of the earlier years.

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

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

13. Schedules 1 to 14 form an integral part of the Balance Sheet and Profit & Loss Account.

NOTE : 1. Sales includes interunit/intraunit Rs.22.72 Crores (Previous year Rs.25.74 Crores). 2. Closing Stock includes Ware House Stock 52474 Nos.

NOTE : Consumption includes interunit/intraunit Rs.20.76 Crores (Previous year Rs.22.00 Crores).

It is not feasible to furnish quantitative information of other materials, components and stores & spares parts consumed in view of considerable number of items diverse in size and volume.

Notes :

1. The above statement has been prepared under indirect method except in case of dividend which has been considered on the basis of actual movement of cash, with corresponding adjustments in assets and liabilities.

2. Cash and cash equivalents represent cash and bank balances only.

3. Additions to fixed assets are stated inclusive of movements of Capital work-in-progress between beginning and end of the year and treated as part of investing activities.

4. Previous year figures have been re-grouped/recast, wherever necessary.