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Notes to Accounts of Saint-Gobain Sekurit India Ltd.

Mar 31, 2015

I. GENERAL INFORMATION:

Saint-Gobain Sekurit India Limited (the 'Company') is engaged primarily in business of automotive glass. The Company has two manufacturing plants in Pune at Bhosari and Chakan and sells primarily in India. The Company is a public limited company and is listed on the Stock Exchange, Mumbai (BSE).

1. Rights, preferences and restrictions attached to the shares

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

Note: Saint-Gobain India Private Limited (Formerly Saint-Gobain Glass India Limited) had diluted their shareholding in the Company via Offer for sale on May 30, 2013 from 24.5% to 13.74% to comply with the Clause 40 A of Listing agreement.

As per Accounting Standard-22 'Accounting for Taxes on Income', the Company had recorded the cumulative deferred tax liability as at March 31, 2014 of Rs. 43,557,998 and recognized the cumulative deferred tax asset on the basis of prudence, only to the extent of the cumulative deferred tax liability as at March 31, 2014.

Details of provisions and movements in each class of provisions as required by the Accounting Standard on Provisions, Contingent Liabilities and Contingent Assets (Accounting Standard-29):

Provision for litigation/disputes represents civil suits and Provision for excise disputes are for Excise demands related to claims against the Company not acknowledged as debts that are expected to materialise in respect of matters in litigation respectively.

Notes:

1. Interest rates on the above loans range between 0.99% to 1.26% (March 31,2014: 0.82% to 1.30%)

2. Buyers' Line of Credit from bank is secured by hypothecation of stocks and book debts on a pari passu basis.

Disclosures required under the Micro, Small and Medium Enterprises Development Act, 2006

The above information has been determined to the extent such parties have been identified on the basis of information available with the Company.

Note:

* Plant and Machinery includes Machinery costing Rs. 5,436,927 (March 31,2014: Rs. 5,436,927) Net block Rs. 447,755 (March 31, 2014: Rs. 706,008) and depreciation for the year Rs. 258,253 (March 31, 2014: Rs. 258,255) given under operating lease arrangement.

Depreciation of Rs. 1,463,724 with respect to assets whose useful life is already completed as on April 1, 2014 has been charged to Retained Earnings as on that date. Refer Note 34.

All Intangible assets held by the Company are purchased and not internally generated.

NOTE 2 - DETAILS OF EMPLOYEE BENEFITS AS REQUIRED BY THE ACCOUNTING STANDARD 15 (REVISED) EMPLOYEE BENEFITS

A. Defined Contribution Plans:

The Company has recognised the following amounts in the Statement of Profit and Loss for the year:

B. Defined Benefit Plans:

Gratuity: The Company operates a gratuity plan through the "Saint-Gobain Sekurit India Employees Gratuity Trust". Every eligible employee is entitled to a benefit equivalent to fifteen days salary last drawn for each completed year of service in line with the Payment of Gratuity Act, 1972. The same is payable at the time of separation from the Company or retirement, whichever is earlier. The benefits vest after five years of continuous service. Valuation in respect of Gratuity has been carried out by independent actuary, as at the Balance Sheet date.

Note - Fair value of plan asset at the year end is as confirmed by Life Insurance Corporation.

NOTE 3 - SEGMENT INFORMATION

The Company is engaged in the business of "Automotive Glass" which, as per the Accounting Standard - 17 Segment Reporting is considered as the only reportable primary business segment. The geographical segment is not considered as reportable segment as exports are insignificant.

NOTE 4 - RELATED PARTY DISCLOSURES (As per AS 18)

Related Party Disclosures:

1. (a) Name of the related party and the nature of relationship where control exists:

Name of the related Party Nature of Relationship

Compagnie de Saint-Gobain, France Ultimate Holding Company

Saint-Gobain Sekurit S.A. France Holding Company

(b) Other Relationships (to the extent there were transactions during the year):

(i) Fellow Subsidiaries

Saint-Gobain India Private Limited (Formerly Saint-Gobain Glass India Limited)

Saint-Gobain Glass, France

Saint-Gobain Seva, France

Grindwell Norton Limited, India

Saint-Gobain Autover International B.V.

Saint-Gobain Sekurit Deutschland Gmbh & Co KG, Germany

Saint-Gobain Consulting Information Organization, France

(ii) Key Managerial Personnel

Mr. A. Dinakar (Managing Director)

(Conversion done using the closing exchange rates of March 31, 2015 and March 31,2014 respectively)

NOTE 5 - CONTINGENT LIABILITIES AND COMMITMENTS (a) Contingent liabilities:

Claims against the Company not acknowledged as debts (Amount in Rupees)

Particulars As at As at March 31,2015 March 31,2014

Bills discounted (With recourse) 8,126,988 55,410,615

Income Tax Matters 20,066,750 -

Sales Tax Matters 12,281,098 9,454,061

Excise Matters 32,906,732 20,286,563

Entry Tax Matters (Octroi) 56,213 56,213

Total 73,437,781 85,207,452

* Claims not acknowledged as debts with respect to Excise matters does not include Interest since it has not been quantified in the Order.

It is not practicable for the Company to estimate the timings of each outflow (if any) in respect of the above, pending resolution of the respective proceedings.

(b) Commitments:

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 18,929,394 (March 31, 2014: Rs. 34,548,883) [Net of Advance of Rs. 2,916,373 - (March 31, 2014 - Rs. 5,265,617)]

(b) During the earlier years, the Company had imported an asset costing Rs. 165,055,220 under Export Promotion Capital Goods Scheme by not paying duty amounting to Rs. 38,192,341 and accordingly had an export obligation of Rs. 229,154,046. Against the obligation, the Company has met an export obligation subject to documentation and DGFT Audit of Rs. 37,012,565/- up to March 31, 2015 (March 31, 2014 - Rs. 11,484,969) and has provided a bond of Rs. 32,238,198 (March 31, 2014: Rs. 32,238,198) to the Commissioner of Customs. In the opinion of the management, the Company will be able to fulfil its obligation over the prescribed time limit. However, for one of the license, on November 1, 2014, the Company has filed for extension of timeline for fulfillment of the obligation which had an export obligation of Rs. 17,835,429 to be fulfilled by October 2014. The said license has been endorsed for further period of 2 years. The net duty liability with respect to unfulfilled obligation as on March 31, 2015 is Rs. 32,023,580 excluding interest and penalty.

NOTE 6

Pursuant to notification dated August 29, 2014 issued by the Ministry of Corporate Affairs (MCA) amending the Schedule II of the Companies Act, 2013 (the "Act"), the Company during the current year has revised the useful lives of its fixed assets (effective April 01, 2014) to those specified in Schedule II of Companies Act, 2013 or useful life as assessed by the Company based on a technical evaluation, as considered appropriate. The carrying amount of the fixed assets as at April 1, 2014 will be depreciated over the remaining revised useful lives. The summary of the differences in the revised useful lives of assets compared to those mentioned in Schedule II of Companies Act, 2013 is as follows:

The Depreciation amount for the year ended March 31, 2015 is higher by Rs. 189.11 Lacs on account of the revision. Further, depreciation of Rs. 14.63 lacs with respect to the assets whose useful life is already completed as on April 1, 2014 has been charged to the retained earnings as on that date.

NOTE 7

The Company in the earlier years purchased certain equipment from a Saint-Gobain Group company in order to increase its existing tempered glass facility at Bhosari plant. The equipment was received in the years 2012 and 2015 and has a carrying value of Rs. 54,935,541 as on March 31, 2015. In the current year, the Company has reassessed its plans in view of the decline in the market conditions for tempered glass and has proposed to sell these back to the Saint-Gobain Group owing to the proprietary nature of these assets, and has accordingly classified these assets as "Assets Held for Sale" under Other current assets as at March 31.2015. The sale is subject to approval of the shareholders.

NOTE 8

Previous year figures have been regrouped and reclassified to conform to the current year's classification.


Mar 31, 2014

I. GENERAL INFORMATION:

Saint-Gobain Sekurit India Limited (the ''Company'') is engaged primarily in business of automotive glass. The Company has two manufacturing plants in Pune at Bhosari and Chakan and sells primarily in India. The Company is a public limited company and is listed on the Stock Exchange, Mumbai (BSE).

NOTE 1 - SEGMENT INFORMATION

The Company is engaged in the business of "Automotive Glass" which, as per the Accounting Standard - 17 Segment Reporting is considered as the only reportable primary business segment. The geographical segment is not considered as reportable segment as exports are insignificant.

NOTE 2 - RELATED PARTY DISCLOSURES Related Party Disclosures:

1. (a) Name of the related party and the nature of relationship where control exists:

Name of the related Party

Compagnie de Saint-Gobain, France Saint-Gobain Sekurit S.A. France

Nature of Relationship

Ultimate Holding Company Holding Company

(b) Relationships:

(i) Entity in respect of which the Company is an Associate

Saint-Gobain Glass India Limited, India (ii) Fellow Subsidiaries

Saint-Gobain Glass, France

Saint-Gobain Seva, France

Grindwell Norton Limited, India

Saint-Gobain Sekurit Italia, SRL

Saint-Gobain Autover International B.V.

Saint-Gobain Sekurit Deutschland Gmbh & Co. KG, Germany

Saint-Gobain Consulting Information Organization, France

Saint-Gobain Research (Shanghai) Co. Ltd.

(iii) Key Managerial Personnel

Mr. A. Dinakar (Managing Director)

NOTE 3 - CONTINGENT LIABILITIES AND COMMITMENTS:

a) Contingent liabilities:

(Amount in Rupees)

Particulars As at As at

March 31, 2014 March 31, 2013

Bills discounted not matured 55,410,615 47,284,017

Disputed Central Excise Duty and Service Tax 20,286,56 3 20,286,563

Sales Tax Matters 9,454,061 2,285,445

Octroi 56,213 56,213

Total 85,207,452 69,912,238

b) Commitments:

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs 34,548,883 (March 31, 2013: Rs. 26,109,186).

(b) During the earlier year, the Company imported an asset costing Rs. 165,055,220 under Export Promotion Capital Goods Scheme and accordingly had an export obligation of Rs. 229,154,046. Against the obligation, the Company has met an export obligation subject to documentation and DGFT Audit of Rs.11,484,969 up to March 31, 2014 (March 31, 2013 - Nil) and has provided a bond of Rs. 32,238,198 (March 31, 2013: Rs. 32,238,198) to the Commissioner of Customs. In the opinion of the management, the Company will be able to fulfl its obligation over the prescribed time limit. However, for one of the license, on March 28, 2014, the Company has fled for extension of timeline for fulfllment of the obligation which had an export obligation of Rs 17,835,429 to be fulflled by October 2014. Approval from the authorities for the extension is awaited.

NOTE 4

The Board of Directors of the Company in their meeting dated April 19, 2013 approved a scheme of amalgamation to merge the Company, on a going concern basis, with Grindwell Norton Limited, to be effective from the appointed date of April 1, 2013, subject to approval of the members of the Company, High Court of judicature of Bombay and other regulatory compliances as may be necessary. The Shareholders of the Company approved the Scheme vide court convened meeting held on November 27, 2013 and through Postal ballot. However the shareholders of Transferee Company ( other than promoter and promoter group company) did not pass the resolution by postal ballot with the requisite majority.

NOTE 5

The Management has carried out the analysis of the impact of transfer pricing rules on its transactions with associated persons Defined in relevant rules, in the last fiscal year, which did not result in any accounting adjustments. The management is currently analysing the continuing impact thereof on similar and new transactions together with new associated persons Defined in the relevant rules, for the period from April 01, 2013 to March 31, 2014. In the opinion of the management, no such transfer pricing related adjustments for the current year are anticipated and accordingly no provision has been considered on account of transfer pricing adjustments while determining tax liability for the current period.

NOTE 6

Previous year figures have been reclassified to conform to this year''s classification.


Mar 31, 2013

NOTE 1 - SEGMENT INFORMATION

The Company is engaged in the business of "Automotive Glass" which, as per the Accounting Standard - 17 Segment Reporting is considered as the only reportable primary business segment. The geographical segment is not considered as reportable segment as exports are insignificant.

NOTE 2 - RELATED PARTY DISCLOSURES Related Party Disclosures:

1. (a) Name of the related party and the nature of relationship where control exists:

(b) Relationships:

i) Holding Company

Saint-Gobain Sekurit S.A., France

ii) Entity in respect of which the Company is an Associate

Saint-Gobain Glass India Limited, India

iii) Fellow Subsidiaries

Saint-Gobain Glass, France

Saint-Gobain Seva, France

Grindwell Norton Limited, India

Saint-Gobain Sekurit (Thailand) Co. Limited, Thailand

Saint-Gobain Seva Engineering India Limited, India

Saint-Gobain Sekurit Deutschland Gmbh & Co. KG, Germany

Saint-Gobain Hanglass Clfg Qingdao Glass Co. Ltd., China

Saint-Gobain Sekurit Italia, Italy

Saint-Gobain Hanglass Sekurit (Shanghai)

Hankuk Sekurit Limited, Korea

CDI Saint-Gobain Glass, France

Saint-Gobain Research (Shanghai) Co.

iv) Key Managerial Personnel:

Mr. A. Dinakar (Managing Director)

NOTE 3 - CONTINGENT LIABILITIES AND COMMITMENTS

a) Contingent liabilities: (Amount in Rupees)

Particulars As at As at March 31, 2013 March 31, 2012

Bills discounted not matured 47,284,017 39,363,617

Claims against the Company not acknowledged as debts 183,384

Disputed Central Excise Duty Service Tax 20,286,563 19,879,053

Sales Tax Matters 2,285,445 3,460,240

Octroi 56,213 56,213

Total 69,912,238 62,942,507

b) Commitments:

a) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 26,109,186 (March 31, 2012: Rs. 15,199,069).

b) The Company has imported an asset costing Rs. 165,055,220 (March 31, 2012: Rs. 165,055,220) under Export Promotion Capital Goods Scheme and accordingly has an export obligation of Rs. 193,429,188 (March 31, 2012: Rs. 193,429,188). Against the obligation, the Company has met Rs. NIL up to March 31, 2013 and has provided a bond of Rs. 32,238,198 (March 31, 2012: Rs. 32,238,198) to the Commissioner of Customs. In the opinion of the management, the Company will be able to fulfil its obligation over the defined period of 6 years.

NOTE 4

The Board of Directors of the Company in their meeting dated April 19, 2013 have, subject to approval of the members of the Company, High Court of judicature of Mumbai and other regulatory compliances as may be necessary, approved a scheme of amalgamation to merge the Company, on a going concern basis, with Grindwell Norton Limited, to be effective from the appointed date of April 1, 2013. Since the proposed merger is prospective to the date of the balance sheet on a going concern basis, no adjustments to the financial statements for the year ended March 31, 2013 are considered necessary.

NOTE 5

The Management has carried out the analysis of the impact of transfer pricing rules on its transactions with associated persons defined in relevant rules, in the last fiscal year, which did not result in any accounting adjustments. The management is currently analysing the continuing impact thereof on similar and new transactions together with new associated persons defined in the relevant rules, for the period from April 01, 2012 to March 31, 2013. In the opinion of the management, no such transfer pricing related adjustments for the current year are anticipated and accordingly no provision has been considered on account of transfer pricing adjustments while determining tax liability for the current period.

NOTE 6

Previous year figures have been reclassified to conform to this year''s classification.


Mar 31, 2012

Notes:

1. Rights, preferences and restrictions attached to the shares

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

Note:

Details of provisions and movements in each class of provisions as required by the Accounting Standard on Provisions, Contingent Liabilities and Contingent Assets (Accounting Standard-29):

Provision for litigation/disputes represents claims against the Company not acknowledged as debts that are expected to materialise in respect of matters in litigation

Notes:

1. Buyers' Line of Credit and Cash Credit Facilities from banks are secured by hypothecation of stocks & book debts on a pari passu basis.

2. Interest rates on the above loans range between 3.00% to 15.50%.

Note:

Disclosure under Micro, Small & Medium Enterprises Development Act, 2006:

The above information has been determined to the extent such parties have been identified on the basis of information available with the Company.

During the year, the Company has utilised deferred tax asset of Rs 32,826,078 (March 31, 2011: Rs. 2,319,281). Based on the orders on hand, growth prospects of the automobile industry, the demand for the Company's products, the long term plans of the Company's customers and the history of order fulfillment by the Company's customers, the Company is positive of generating adequate profits in the years to come, to fully set off the balance deferred tax assets.Deferred Tax Assets and Deferred Tax Liabilities have been offset as they relate to the samegoverning taxation laws.

Note:

THE NET EXCHANGE DIFFERENCES ARISING DURING THE YEAR:

(i) Recognised appropriately in the Statement of Profit and Loss - net gain - Rs. NIL (March 31, 2011: Rs.2,653,268).

2. THE NET EXCHANGE DIFFERENCES ARISING DURING THE YEAR:

(i) Recognised appropriately in the Statement of Profit and Loss - net loss - Rs. 5,402,958 (March 31, 2011: Rs.NIL).

Additional Information pursuant to the requirements of Schedule VI and Accounting Standards:

NOTE 1 - DETAILS OF EMPLOYEE BENEFITS AS REQUIRED BY THE ACCOUNTING STANDARD 15 (REVISED) EMPLOYEE BENEFITS:

The Company has classified various employee benefits as under:

A. Defined Contribution Plans:

The Company has recognised the following amounts in the Statement of Profit and Loss for the year:

NOTE 2 - SEGMENT INFORMATION

The Company is engaged in the business of "Automotive Glass" which, as per the Accounting Standard - 17 Segment Reporting is considered as the only reportable primary business segment. The geographical segment is not considered as reportable segment as exports are insignificant.

(b) Relationships:

i) Holding Company

Saint-Gobain Sekurit S.A., France

ii) Entity in respect of which the Company is an Associate Saint-Gobain Glass India Limited, India

iii) Fellow Subsidiaries

Saint-Gobain Glass, France

Saint-Gobain Seva, France

Grindwell Norton Limited, India

Saint-Gobain Sekurit (Thailand) Co. Limited, Thailand

Saint-Gobain Seva Engineering India Limited, India

Saint-Gobain Sekurit Deutschland Gmbh & Co KG, Germany

iv) Key Managerial Personnel:

Dr. Sreeram Srinivasan -Managing Director (upto June 11, 2011) Mr A .Dinakar (w.e.f. October 25, 2011)

NOTE 3 - CONTINGENT LIABILITIES AND COMMITMENTS:

a) Contingent liabilities:

(Amount in Rupees)

Particulars As at As at 31st March, 2012 31st March, 2011

a) Bills discounted not matured 39,363,617 78,081,397

b) Claims against the Company not acknowledged as debts 183,384 183,384

c) Bank Gurantees 8,214,850 8,214,850

d) Disputed Central Excise Duty Service Tax 19,879,053 19,879,053

e) Sales Tax Matters 3,460,240 4,294,440

f) Octroi 56,213 56,213

b) Commitments:

a) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.15,199,069 (March 31, 2011: Rs.82,111,360).

b) The Company has imported an asset costing Rs. 165,055,220 (March 31, 2011: Rs. 37,074,106) under Export Promotion Capital Goods Scheme and accordingly has an export obligation of Rs. 193,429,188 (March 31, 2011: Rs. 35,724,858). Against the obligation, the Company has met Rs.NIL up to March 31, 2012 and has provided a bond of Rs. 32.238.198 (March 31, 2011: Rs. 5,954,143) to the Commissioner of Customs. In the opinion of the management, the Company will be able to fulfill its obligation over the defined period of 6 years.

NOTE 4 - The financial statements for the year ended March 31, 2011 had been prepared as per the then applicable, pre- revised Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended March 31,2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year's classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of financial statements.

Signatures to Notes 1 to 34 forming part of Financial Statements

1 The above Cash Flow has been prepared under the 'Indirect Method' as set out in Accounting Standard - 3 on Cash Flow Statements issued by the Institute of Chartered Accountants of India.

Previous period figures have been regrouped / rearranged , wherever considered necessary. This is the Cash Flow Statement referred to in our report of even date.


Mar 31, 2011

1) Contingent Liabilities :

Particulars As at As at 31st March, 31st March, 2011 2010 (Rs.) (Rs.)

a) Bills Discounted and outstanding 78,081,397 65,246,786

b) Claims against the Company not

Acknowledged as debts 183,384 2,713,464

c) Bank Guarantees 8,214,850 -

d) Disputed Central Excise Duty / 19,879,053 19,879,053 Service Tax

e) Sales Tax Matters 4,294,440 4,294,440

f) Octroi 56,213 56,213

2) Estimated amount of contracts remaining to be executed on Capital Account and not provided for [Net of advance Rs.41,505,056 (Previous Year Rs. 1,467,049] is Rs.82,111,360 (Previous Year: Rs. 1,549,312)].

3) Revenue Expenditure on Research & Development charged to the Profit & Loss Account during the year in Schedule 14 aggregates Rs.787,548 (Previous period Rs.1,177,196).

4) TThe Company is engaged in the business of "Automotive Glass" which, as per the Accounting Standard - AS-17 Segment Reporting is considered as the only reportable primary business segment. The geographical segment is not considered as a reportable segment as exports are insignificant.

5) Related Party Disclosures:

1(a) Name of the related party and the nature of relationship where control exists:

Name of the Nature of

related party relationship

Compagnie de Ultimate Holding

Saint-Gobain, France Company

Saint-Gobain Sekurit Holding Company

S.A., France

(b) Relationships:

i) Holding Company

Saint-Gobain Sekurit S.A., France

ii) Entity in respect of which the Company is an Associate

Saint-Gobain Glass India Limited, India

iii) Fellow Subsidiaries

Saint-Gobain Glass, France

Saint-Gobain Seva, France

Grindwell Norton Limited, India

Saint-Gobain Sekurit (Thailand) Co. Limited, Thailand

Saint-Gobain Seva Engineering India Limited, India

Saint-Gobain Sekurit Deutschland Gmbh & Co KG, Germany

Saint-Gobain Hanglass Clfg Qingdao Glass Co. Ltd, China

Saint-Gobain Sekurit Italia, Italy

Saint-Gobain Hanglass Sekurit (Shanghai)

Hankuk Sekurit Limited, Korea

iv) Key Management Personnel

Dr. Sreeram Srinivasan - Managing Director

6) The previous year's figures, wherever necessary, have been regrouped to conform with the current year's classification.


Mar 31, 2010

1. EMPLOYEE BENEFITS

1) Post Employment Benefits a) Defined Contribution Plans:

The Company contributes on a defined contribution basis to the Employees Provident Fund and Superannuation Fund (for few eligible

employees) towards post employment benefits, all of which are administered by the respective Government authorities, and has no further obligation beyond making its contribution. The contribution is expensed in the year to which it pertains.

b) Defined Benefit Plans:

Funded Plan: The Company has a Defined Benefit Plan namely Gratuity for all its employees. The liability for the defined benefit plan of Gratuity is determined on the basis of an actuarial valuation by an independent actuary at the year end, which is calculated using projected unit credit method, which is administered through Life Insurance Corporation (LIC).

Actuarial gains and losses which comprise experience adjustment and the effect of changes in actuarial assumptions are recognised in the Profit and Loss Account.

2) Other Long Term Employee Benefits

The employees of the Company are entitled to leave as per the leave policy of the Company. The liability in respect of unutilised leave balances is provided based on an actuarial valuation carried out by an independent actuary as at the year end and charged to the Profit and Loss Account.

3. LEASES

Lease Income from Operating Leases are recognised as rent income on a straight line basis over the lease term.

4. TAXATION

a) Current Taxation:

Provision for current taxation is based on the taxable profits of the current accounting year. Adjustments for taxation relating to previous years, if any, are based on the returns filed for the fiscal year ended March 31 and cognizance is taken of assessment/ appeal orders received by the Company.

b) Deferred Taxation:

Deferred tax resulting from timing differences between book and tax profits is accounted for under the Liability method at the current rate of tax to the extent that the timing differences are expected to crystallise/capable of reversal as a deferred tax charge/credit in the Profit and Loss Account and as deferred tax liability/asset in the Balance Sheet.

In cases where there is unabsorbed tax depreciation and unabsorbed losses, deferred tax asset are recongnised only to the extent that there is virtual certainty of their realisation supported by convincing evidence.

5. IMPAIRMENT OF ASSETS

The Company assesses at each balance sheet date whether there is an indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Profit and Loss Account. If at the Balance Sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

6. PROVISIONS & CONTINGENCIES

The Company recognizes a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation but the likelihood of outflow of resources is remote, no provision or disclosure is made, as required by Accounting Standard 29 on Provisions, Contingent Liabilities and Contingent Assets issued by the Institute of Chartered Accountants of India.

7. ACCOUNTING ESTIMATES

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of financial statements and the reported amounts of revenue and expenses during the reporting period. Difference between the actual results and the estimates are recognized in the period in which the results are known / materialised.

8) The previous financial statements are for the fifteen months period from January 2008 to March 2009. Hence, previous period figures are not strictly comparable with that of current year.

9) During the previous period, the Company had reassessed the estimated useful lives of certain fixed assets like computers and vehicles. Due to this reassessment, depreciation for the previous period was higher by Rs. 1,386,603 and profit for the previous period before tax was lower by the same amount.

10) During the previous period, management had scrapped certain assets having written down value of Rs. 13,584,750. As a result, there was a charge of Rs. 11,889,852 (net of recovery of Rs. 1,694,898) in the Profit and Loss Account under the head Manufacturing & other Expenses-Loss on Assets sold/written off (net).

 
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