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Notes to Accounts of Setco Automotive Ltd.

Mar 31, 2015

1 SHARE CAPITAL

a. The company has only one class of equity shares having a par value of Rs. 10 per share. Each shareholder of equity share is entitled to one vote per share.

b. The company declares and pays dividends in Indian rupees. The Board of Directors, in their meeting held on 11th November, 2014, declared an interim dividend of Rs. 1.50 per Share (Previous year Rs. NIL). Further, the board of directors in their meeting held on 26th May, 2015 have proposed final dividend of Rs. 1.50/- per share (Previous year Rs. 2.65/-) for financial year ended 31st March, 2015. The proposed final dividend is subject to the approval of the share holders at the ensuing Annual General Meeting. The total dividend appropriation for the year ended 31st March, 2015 would amount to approximately Rs. 9,63,05,300/- (Previous year Rs. 7,06,96,764/-) including coporate dividend tax of Rs. 1,61,68,372/- (Previous year Rs. 1,20,49,915/-).

c. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.

Indian Rupee Term Loan from Bank of Baroda is repayable in 16 quarterly installments each of Rs. 46,87,500/- to be repaid by May, 2017. The loan is secured by first pari passu charge on company's fixed assets (excluding cars / vehicles) and the second charge on pari passu basis on stocks and book debts as collateral security.

Indian Rupee Term Loan from Bank of Baroda is repayable in 16 quarterly installments each of Rs. 2,40,00,000/- to be repaid by August, 2019. The loan is secured by first pari passu charge on company's fixed assets (excluding cars / vehicles) and the second charge on pari passu basis on stocks and book debts as collateral security.

Indian Rupee Corporate Loan from Bank of Baroda is repayable in 16 quarterly installments each of Rs. 3,12,50,000/- to be repaid by August, 2019. The loan is secured by first pari passu charge on company's fixed assets (excluding cars/vehicles) and the second charge on pari passu basis on stocks and book debts as collateral security and personal guarantee of Mr. Harish Sheth & Mr Udit Sheth.

Indian Rupee Term Loan from ICICI Bank is repayable in 16 quarterly installments each of Rs. 62,50,000/- to be repaid by January, 2020. The loan is secured by first pari passu charge on company's fixed assets (excluding cars/vehicles) and the second charge on pari passu basis on stocks and book debts as collateral security.

Working Capital Loans are secured by first charge by way of hypothecation of current assets including stocks, book debts etc. and second charge on entire fixed assets of the company on paripassu basis.

Unsecured Loan is from ICICI Bank Rs. Nil tRs. 10,00,00,000/-) and is Guaranteed by Chairman & Managing Director of the Company.

2 TRADE PAYABLES

The information has been determined to the extent such parties could be identified on the basis of the information available with the company regarding the status of suppliers under MSME.

Interest paid/payable to the enterprises registered under MSME is Rs. NIL tRs. NIL).

2.1 Investments in other related entities, Subsidiary/Joint Venture have been made in terms of investment limits approved by Board of Directors of the company from time to time.

2.2 The Company has entered into a joint venture agreement with Lingotes Especiales, Spain to establish a Foundry Project in Lava Cast Private Limited. The Company holds 72.95% Equity shares as on 31st March, 2015 in this joint venture and accordingly Lava Cast Private Limited has been reported as subsidiary company in financial statements.

2.3 As per Legal Experts' opinion obtained by the Company on its investment (along with Corporate Guarantee extended to the Bankers of investee company), Lava Cast Private Limited qualifies to be treated as both, Subsidiary and Joint Venture for legal purposes and the Company's exposure in Lava Cast Private Limited is in compliance with the provisions of Sections 185 & 186 of the Companies Act, 2013 and relevant Rules prescribed thereunder.

2.4 For Detailed Investment Strategies Refer Note No. 44.

3 EXCEPTIONAL ITEMS

Exceptional Items of Rs. NIL (Previous year Rs. 7,67,21,699/- represents gain recognized on sale of Land to related party.)

4 MAT CREDIT

During the year, company has recognized MAT Credit of Rs. 94,24,987/- for current financial year (Previous year Rs. 4,33,47,930/-) and Rs. 16,28,432/- (Previous year Rs. 85,74,654/-) in respect of previous periods and same is shown as adjustment from the current tax amount in the statement of profit and loss.

5 SALES-IN-TRANSIT

The Products dispatched from the factory, which remained in transit in respect of which the risk and reward have not been transferred till the date of approval of financial statements amounts to Rs. 3,18,80,276/- tRs. 1,38,47,921/-). With a view to reflect true and correct position of revenue, the said amount is reduced from total sales of the year and the stock value there of Rs. 2,65,35,212/- tRs. 1,12,56,855/-) is shown under the head "Finished Goods" in Note 14 under the head "Inventories".

6 SEGMENT INFORMATION

The Company is operating only in one business segment viz. Auto Components

7 CONTINGENT LIABILITIES & COMMITMENTS

A. Contingent Liabilities :

i) Guarantees given by the bank on behalf of the Company Rs. 1,07,93,861/- tRs. 45,17,390/-).

ii) Guarantee given for £ 1.40 million t£ 1.40 million) to ICICI Bank Limited, U.K. for Wholly Owned Ultimate Foreign Subsidiary's credit facilities Rs. 13,04,66,000/- tRs. 14,05,32,000/-).

iii) Guarantee given for $ 0.65 million ($ 0.65 million) to ICICI Bank Limited, Singapore for Wholly Owned Ultimate Foreign Subsidiary's credit facilities Rs. 4,09,69,500/- tRs. 3,92,27,500/-).

iv) Guarantee given for $ 4.000 million ($ 4.000 million) to Bank of Baroda, New York, USA for Wholly Owned Ultimate Foreign Subsidiary's credit facilities Rs. 25,21,20,000/- tRs. 24,14,00,000/-).

v) Guarantee given for Rs. 1,17,05,00,000/- tRs. Nil) to Bank of Baroda, Mumbai, India, for subsidiary's credit facilities.

vi) Warranty Claims raised by Customer but not acknowledged Rs. 1,84,41,563/- tRs. 1,09,61,258/-).

vii) Sales tax demand under dispute Rs. Nil tRs. 22,77,634/-).

B. Note on Pending Litigation :

i) The Pollution Control Department had filed a Civil / Criminal case against the Company and all the Directors in 1993. The Civil matter was disposed in favour of the Company.

In criminal matter against the Company and the Directors, Hon. High Court had quashed the case against all the Nominee Directors. The case will now proceed against the Company and the Managing Director in Local Court.

ii) "The Company had filed a case against a competitor for cancellation of registration of design granted by Controller of Patents and Designs in Kolkata High Court. In view of the settlement of differences under a consent terms, the said case became infructuous, and the process of withdrawal of the case is under process. "

The Company's Management does not reasonably expect that these cases when ultimately concluded / adjudicated will have any material or adverse effect on the Company's results of the Operations or financial condition.

C. Commitments :

i) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 5,97,37,347/- (Rs. 12,76,56,891/-).

8 TRADE RECEIVABLES & PAYABLES

i) Trade payables' balances are under reconciliation process. Necessary adjustments, if any, will be accounted when the same is reconciled. In respect of Trade receivables and other debit/credit balances, balance confirmations have not been obtained and therefore, are subject to reconciliation and adjustment if any.

ii) In the opinion of the management, current and non-current assets are recoverable in the normal course of business.

9 VALUE OF IMPORTED AND INDIGENEOUS RAW MATERIALS, COMPONENTS AND STORES AND SPARES CONSUMED AND PRECENTAGE OF EACH TO TOTAL CONSUMPTION

The Consumption of Raw Materials & Components includes consumption of Imported Components Rs. 75,95,03,767/- tRs. 62,25,20,292/-) which is 27.70% (30.95%) in total consumption.

10 EMPLOYEE BENEFITS

Disclosure pursuant to AS - 15 (Revised) 'Employee Benefits'

i) Defined Contribution Plans

An amount of Rs 2,53,89,927/- tRs. 2,07,10,804/-) (Provident Fund & ESIC) is recognized as an expense and included in Note 22 under the head "Employee Benefits".

ii) Defined Benefit Plans

Contribution to Gratuity Fund

11 Employee Stock Option Plan - ESOP 2010.

The members of the Company in September 2010 approved grant of equity shares under "Setco Automotive Limited Employee Stock Option Scheme 2010", which was framed in accordance with Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 as amended from time to time.

Stock Options exercised after the Balance Sheet date rank pari passu with the equity shares as on the Balance Sheet date and hence are entitled to dividend. If exercised before the record date for the dividend declaration. Accordingly proposed final dividend of current year includes dividend on such equity shares issued and allotted up to the date these financial statements are approved by the board of directors. Dividend on subsequently allotted equity shares is accounted under "Appropriations" as 'Dividend of Previous year including tax thereon'.

12 Investment Strategies :

Over a period, considering the Company's growth prospects and overall economic scenario from time to time, necessitating building strength to withstand the challenges, the Company initiated/followed strategies to integrate, expand the base and diversify. In the process, the Company not only invested in Capex, but also ventured into inorganic developments by investments made into subsidiaries/joint ventures and related entities. These investments may not directly give returns in short term on year to year basis but will contribute to the Company, long term enduring benefits which will be reflected in growth in top and bottom line of the company.

1) Rs. 5,07,59,533/- Invested in equity and preference share of WEW Holdings Limited (Mauritius) a Wholly Owned Ultimate Foreign subsidiary to oversee global investments.

2) Rs. 6,48,40,000/- Invested in Equity shares of Setco Automotive (UK) Limited a Technical know How and development Hub of the group and Brand owner (LIPE) for the Company's products in domestic and international market.

3) Rs. 25,20,50,000/- Invested in Equity shares of Lava Cast Private Limited a Subsidiary established as a backward integration project to augment the supply of critical casting components. The Company has entered in to joint venture agreement with Lingotes Especiales to carry out said economic activity.

4) Rs. 4,85,00,000/- Invested in Equity shares of SE Transstadia Private Limited, a Unique and State of the Art Sports Infrastructure Project with the latest modern Technology, a first of its kind project in India.

5) Rs. 40,35,00,000/- Invested in preference shares of Setco Engineering Private Limited, predominantly an Investment Company. The said Investment in Preference Shares has yielded reasonable tax free returns to the company on year to year basis.

13 Research & Development

In year 2012-2013 the company had set up a separate Research & Development Centre tR&D Centre) which is approved/recognized by the Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India. The new R&D Centre envisages reduction in costs through value engineering and research with new material and processes, development of new range of products, research & development, innovation, up gradation & improvement in the existing range of products on regular basis.

14 During the year, the company has made contribution of Rs. 35,00,000/- to Bhartiya Janta Party (Political Party).

15 Prior Period Expenses of Rs. 51,08,348/- tRs. 30,70,377/-) has been recognised under relevant heads in Statement of Profit & Loss.

16 Figures in brackets represent previous year's figures.

17 Previous year's figures have been regrouped/ reclassified wherever necessary to correspond with the current year's classification/ disclosure.


Mar 31, 2014

1. a. The company has only one class of equity shares having a par value of Rs. 10 per share. Each shareholder of equity share is entitled to one vote per share. The company declares and pays dividends in Indian rupees; the dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

b. During the year ended 31st March 2014. Dividend of Rs. 2.65/- per share (Previous year Rs. 2.65/- per share) is recognized as amount distributable to equity share holders.

c. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.

2. Indian rupee Term Loan from Bank of Baroda is repayable in 16 quarterly installments each of Rs. 71,87,500/- to be repaid by March, 2015. The loan is secured by first pari passu charge on company''s fixed assets [excluding cars/vehicles] and the second charge on pari passu basis an stocks and book debts as collateral security.

Indian rupee Term Loan from Bank of Baroda is repayable in 16 quarterly installments each of Rs. 46,87,500/- to be repaid by June, 2017. The loan is secured by first pari passu charge on company''s fixed assets [excluding cars/Vehicles] and the second charge on pari passu basis an stocks and book debts as collateral security.

Indian rupee Term Loan from Bank of Baroda is repayable in 16 quarterly installments each of Rs. 2,40,06,000/- to be repaid by May, 2019. The loan is secured by first pari passu charge an company''s fixed assets [excluding cars/Vehicles] and the second charge on pari passu basis an stocks and book debts as collateral security.

Indian rupee Term Loan from HDFC Bank is repayable by March 2015 in varying monthly installments ranging from Rs. 78214/- to Rs. 85695/- and is secured against the vehicles purchased.

3. I. investments in other related entities have been made in terms of investments limits approved by Board of Directors of the Company from time to time.

II. includes fresh investment of Rs. 2765,00,000 (2,76,50,000 preference shares of Rs. 10 each) and sale of Investment of Rs. 30,90,00,000 (3,09,00,000 Preference shares of Rs. 10 each) at par an Ex-dividend basis.

4. EXCEPTIONAL ITEMS

Exceptional Items of Rs. 7,67,21,699/- (Previous year Rs. Nil) represents gain recognized on sale of Land to related party.

5. MAT CREDIT

During the year, company has recognized MAT Credit of Rs. 85.74.654/- in respect of previous periods and 4,33,47,930/- (Previous year Rs 3,96,31,788/-) for current financial year and same is shown as adjustment from the current tax amount in the statement of profit and loss.

6. GALES- IN- TRANSIT

The Products dispatched from the factory, which remained in transit in respect of which the risk and reward have not been transferred till the date of approval of financial statements amounts to Rs. 1,38.47.921 /- (Rs. 3,17, 87,995/-). With a view to reflect true and correct position of revenue, the said amount is reduced from total sales of the year and the stock value there of Rs. 1,12,56,855/- (Rs. 2,37,66,621/-) is shown under the heed "Finished Goads" in Note 15 under the head "Inventories"

7. CONTINGENT LIABILITIES & COMMITMENTS

A. Contingent Liabilities:-

i) Guarantees given by the bank on behalf of the Company Rs. 4,51 7,390 (Rs Nil )

ii) Guarantee given for Rs. 1.40 million (Rs. 1.40 million) to ICICI Bank Limited, U.K. for ultimate subsidiary''s credit facilities Rs. 14,05,32,000 [Rs. 11.59,06,000]

iii) Guarantee given for $ 0.65 million ($ 0.65 million) to ICICI Bank Limited, Singapore, for ultimate subsidiary''s credit facilities Rs.3,92,27,500 (Rs. 3,55,16,000)

iv) Guarantee given for $ 4.000 million ($ 5.995 million) to Bank of Baroda, New York, USA for ultimate subsidiary''s credit facilities Rs 24,14,00,000 (Rs. 32,75,65,800)

v) Warranty Claims raised by Customer but nat acknowledged Rs. 1,09,61,258 (Rs. 1,53,11.238).

vi) Sales tax demand under dispute Rs. 22,77,634 (Rs. Nil)

B. Commitments:-

i) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.12,76,56,891 (Rs. 3,93,62,394)

8. TRADE RECEIVABLES & PAYABLES

i) Trade payables'' balances are under reconciliation process. Necessary adjustments, if any, will be accounted when the same is reconciled. In respect of Trade receivables and other debit/credit balances, balance confirmations have not been obtained and therefore, are subject to reconciliation and adjustment if any.

ii) In the opinion of the management, current and non-current assets are recoverable in the normal course of business.

9. VALUE OF IMPORTED AND INDIGENEOUS RAW MATERIALS, COMPONENTS AND STORES AND SPARES CONSUMED AND PRECENTAGE OF EACH TO TOTAL CONSUMPTION

The Consumption of Raw Materials & Components includes consumption of Imported Components Rs. 62,25,20,292 (Rs. 66,79,30,377) which is 30.95% (31.08%) in total consumption.

10. Employee Stock Option Plan - ESOP 2010.

The members of the Company in September 2010 approved grant of equity shares under "Setco Automotive Limited Employee Stock Option Scheme 2010", which was framed in accordance with Securities and Exchange Board of India (Employee Stack Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 as amended from time to time

11. Research & Development

In year 2012-2013 the company had set up a separate Research & Development Centre (R&D Centre) which is approved/recognized by the Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India The new R&D Centre envisages reduction in costs through value engineering and research with new material and processes, development of new range of products, research & development, innovation, up gradation & improvement in the existing range of products an regular basis.

12. The whale time Company Secretary had resigned in December 2013. Since there is no Company secretary as on the date, the account are not signed by the Company Secretary. However, a certificate of compliance of Provisions of the Companies Act, 1956 is obtained from e practicing Company Secretary.

13. Figures in brackets represent previous year''s figures.

14. Previous year''s figures have been regrouped/ reclassified wherever necessary to correspond with the current year''s classification/ disclosure.


Mar 31, 2013

1 EXCEPTIONAL ITEM

The exceptional item of Rs. NIL (Previous year Rs. 2,84,40,454/-) represents amount of charge towards sharing of cost saving benefits in respect of Uttarakhand unit, as recovered by a major customer,

2 MAT CREDIT

During the year, Company has recognized MAT Credit of Rs. 3,96,91,788/- (Previous year Rs. 9,14,38,334/-) and same is shown as adjustment from the current tax amount in the statement of profit and loss.

3 SALES- IN- TRANSIT

The Products dispatched from the factory, which remained in transit in respect of which the risk and reward have not been transferred till the date of approval of financial statements amounts to Rs. 3,17,87,995/- tRs. 3,14,36,815/-). With a view to reflect true and correct position of revenue, the said amount is reduced from total sales of the year and the stock value there of Rs, 2,37,60,321/- CRs. 2,27,30,187/-) is shown under the head "Finished Goods" in Note 17 under the head "Inventories"

4 CONTINGENT LIABILITIES & COMMITMENTS

A. Contingent Liabilities:-

i) Guarantee given by the bank on behalf of the Company Rs. Nil (Rs. 21,35,170/-)

ii) Guarantee given for £1.40 million ( £2.3 million) to iCICI Bank Limited, U.K. for ultimate subsidiary''s credit facilities Rs. 11,59,06,000/-(Rs. 18,91,06,000/-)

iii) Guarantee given for $ 0.65 million C$ 0.65 million ) to ICICI Bank Limited, Singapore, for ultimate subsidiary''s credit facilities Rs. 3,55,16,000/-CRs. 3,34,23,000/-)

iv) Guarantee given for $ 5.995 million ($ 5.995 million) to Bank of Baroda, New York, USA for ultimate subsidiary''s credit facilities Rs. 32,75,66,800/-- (Rs. 30,82,62,900/-)

v) Warranty Claims raised by Customer but not acknowledged Rs. 1,53,11,238/- (Rs. 1,18,58,292/-).

B. Commitments:-

i) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 3,93,82,394/- (Rs. 3,54,79,767/-)

5 TRADE RECEIVABLES & PAYABLES

i) Trade payables'' balances are under reconciliation process. Necessary adjustments, if any, will be accounted when the same is reconciled. In respect of Trade receivables and other debit/credit balances, balance confirmations have not been obtained and therefore, are subject to reconciliation and adjustment if any.

ii) In the opinion of the management, current and non-current assets are recoverable in the normal course of business.

6 VALUE OF IMPORTED AND INDIGENEOUS RAW MATERIALS, COMPONENTS AND STORES AND SPARES CONSUMED AND PRECENTAGE OF EACH TO TOTAL CONSUMPTION

The Consumption of Raw Materials & Components includes consumption of Imported Components Rs. 66,79,30,377/- (Rs. 52,91,84,782/-) which is 31,08% [23.05%) in total consumption.

7. EMPLOYEE BENEFITS

Disclosure pursuant to AS - 15 (Revised! ''Employee Benefits''

i) Defined Contribution Plans

An amount of Rs 1,79,61,804/- (Rs. 1,55,34,984/-) (Provident Fund S. ESIC) is recognized as an expense and included in Note 25 under the head "Employee Benefits",

ii) Defined Benefit Plans

8 Research & Development

During the year, the Company has set up a separate Research & Development Centre (R&D Centre) which is approved/recognized by the Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India. The new R&D Centre envisages reduction in costs through value engineering and research with new material and processes, development of new range of products, research & development, innovation, upgradation & improvement in the existing range of products on regular basis.

9 Figures in brackets represent previous year''s figures.

10 Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.


Mar 31, 2012

A. The company has only one class of equity shares having a par value of Rs. 10 per share. Each shareholder of equity share is entitled to one vote per share. The company declares and pays dividends in Indian rupees; the dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuring Annual General Meeting.

b. During the year ended 31st March 2012, Dividend of Rs. 4/- per share (Previous year Rs. 4/- per share) is recognized as amount distributable to equity share holders.

c. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. However, no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

Indian rupee term loan from Bank of Baroda is repayable in 16 quarterly installments each of Rs. 71,87,500/- to be repaid by March, 2015. The loan is secured by first pari passu charge on company's fixed assets (excluding cars/ vehicles) and the second charge on pari passu basis on stocks and book debts as collateral security Indian rupee term loan from HDFC Bank is repayable in equated monthly installments each of Rs. 86,410/-, by March 2015,and is secured against the vehicles purchased.

Indian rupee term loan from Kotak Mahindra Prime Ltd is repayable in equated monthly installments each of Rs.71,251/-, by April, 2013 and is secured against the vehicles purchased.

Indian rupee term loan from Bank of Baroda is repayable in 16 quarterly installments each of Rs. 2,29,00,000/- to be repaid by December, 2012. The loan is secured by first pari passu charge on company's fixed assets (excluding cars/ vehicles) and the second charge on pari passu basis on stocks and book debts as collateral security.

Indian rupee term loan from HDFC Bank is repayable in 16 quarterly installments each of Rs. 56,25,000/- to be repaid by December, 2012. The loan is secured by first pari passu charge on company's fixed assets (excluding cars/vehicles) and the second charge on pari passu basis on stocks and book debts as collateral security

1.1 Investment in SE Trasstadia Pvt. Ltd. and SETCO Engineering Pvt. Ltd., associate concerns have been made in terms of approval given by the members of the company in the Annual General Meeting of the company held on 24th September 2009.

1.2 Investment in the equity shares of Rs. 10/- each of SE Transtadia Pvt. Ltd., have been made at a premium of Rs. 40/- based on the future projections and relative worth of the company.

2 EXCEPTIONAL ITEM

The exceptional item of Rs. 2,84,40,454/- represents amount of charge towards sharing of cost saving benefits in respect of Uttarakhand unit, as recovered by a major customer.

3 MAT CREDIT

During the year, company has recognised MAT Credit of Rs.5,08,84,979/- in respect of previous periods and Rs.4,05,53,355/- for current financial year and same is shown as adjustment from the current tax amount in the statement of profit and loss.

4 SALES-IN-TRANSIT

The Products dispatched from the factory, which remained in transit in respect of which the risk and reward have not been transferred till the date of approval of financial statements amounts to Rs.3,14,36,815/- (Rs.1,57,89,695/-). With a view to reflect true and correct position of revenue, the said amount is reduced from total sales of the year and the stock value there of Rs.2,27,30,187/- (Rs.1,32,37,006/-) is shown under the head "Finished Goods" in Note 18 under the head "Inventories".

5 INCOME TAX SURVEY AND TAX OF PREVIOUS PERIODS

During the year, income tax department ('department') carried out survey operations in the company premises. Consequent to the review of records by the department representatives, declarations and submissions made on the basis of legal advice, Company re-worked certain tax benefits and also offered additional income of Rs 17,00,00,000/- to make up for deficiencies, if any, in respect of earlier years taxable income. The revised working resulted into additional tax liability of Rs. Nil, after adjusting MAT credit entitlement of Rs. 9,04,26,348/- there by changing the tax base from MAT to normal taxation for preceding financial year.

6 RELATED PARTY DISCLOSURES

A. Names of related parties and nature of relationship :

a. Shri Harish Sheth, the Chairman & Managing Director of the Company is interested in Setco Engineering Private Limited, SE Transstadia Private Limited, Transstadia (Ahmedabad) Private Limited, Transstadia Technologies Private Limited as director, and Western Engineering Works as partner.

b. Mr. Shvetal Vakil is Executive Director of the Company.

c. Mr. Udit Sheth - the Executive Director is a relative of the Chairman &Managing Director and also interested as Director in SE Transstadia Private Limited and Transstadia (Ahmedabad) Private Limited, Transstadia Technologies Private Limited and as partner in Western Engineering Works.

d. Mrs. Urja Harshal Shah (President - Corporate office) & Mr. Harshal J. Shah (Director) are relatives of Mr. Harish K. Sheth and Mr. Udit H. Sheth the Chairman & Managing and Executive Director respectively.

e. List of Foreign Subsidiaries :

- Setco Automotive UK Limited (UK)

- Setco Automotive N.A. Inc. (USA)

- WEW Holdings Limited, Mauritius

f. List of Associate Concerns :

- SE Transstadia Private Limited

- Transstadia (Ahmedabad) Private Limited

- Transstadia Technologies Private Limited

- Setco Engineering Private Limited

- Transstadia Capital Private Limited.

In terms of approval by the Central Government u/s 297 of the Companies Act, 1956 commission is payable to a firm (in which the directors are interested) on OE and SPD sales achieved @2% based on the sales figures reported in the audited accounts. Commission payable in respect of sales during the period 2010-2011 has been accounted during the year under review. Advance of Rs. 5,67,99,559/- (Rs. 4,93,50,282/-) due from the firm represents amount paid during the year to be adjusted against commission to be determined on approval of accounts for the year ended 31st March, 2012 as per consistent policy followed from year to year.

7 CONTINGENT LIABILITIES & COMMITMENTS

A. Contingent Liabilities

i) Guarantees given by the bank on behalf of the Company Rs. 21,35,170 (Rs. 24,62,937).

ii) Guarantee given to ICICI Bank Limited, U.K. for ultimate subsidiary's credit facilities Rs.18,91,06,000 (Rs. 16,70,26,000 ) (£2.3 million).

iii) Guarantee given to ICICI Bank Limited, Singapore. for ultimate subsidiary's credit facilities Rs.3,34,23,000 (Rs. Nil ) ($ 0.65 million).

iv) Guarantee given to Bank of Baroda, New York, USA for ultimate subsidiary's credit facilities Rs.30,82,62,900 (Rs. 26,95,35,200 ) ($ 5.995 million).

v) Bills Receivable discounted with the Bank and not matured Rs. Nil (Rs 12,06,646).

vi) Warranty Claims raised by Customer but not acknowledged of Rs. 1,18,58,292 (Rs.51,14,338).

B. Commitments

i) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.3,54,79,767 (Rs. 3,02,14,100)

8 TRADE RECEIVABLES & PAYABLES

i) Trade receivables and Trade payables balances are under reconciliation process. Necessary adjustments, if any, will be accounted when the same is reconciled. In respect of other debit/credit balances, balance confirmations have not been obtained and therefore, are subject to reconciliation and adjustment if any.

ii) In the opinion of the management, current and non-current assets are recoverable in the normal course of business.

9 EMPLOYEE BENEFITS

Disclosure pursuant to AS - 15 (Revised) 'Employee Benefits'

i) Defined Contribution Plans

An amount of Rs 1,55,34,984/- (Rs. 1,21,42,637/-) (Provident Fund & ESIC) is recognized as an expense and included in Note 27 under the head "Employee Benefits".

ii) Defined Benefit Plans Contribution to Gratuity Fund

10 EMPLOYEE STOCK OPTION PLAN - ESOP 2010.

The company instituted "Setco Automotive Limited Employee Stock Option Scheme 2010" as approved in earlier year by the shareholders of the company and administered by the Compensation Committee of the Board.

Setco Automotive Limited Employee Stock Option Scheme 2010

11 Research and development expenses aggregating to Rs.24,59,716/- in the previous financial year have been regrouped and debited to respective revenue expenses account.

12 Figures in brackets represent previous year's figures.

13 The revised schedule VI has become effective from 1st April 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped/ reclassified wherever necessary to correspond with the current year's classification/ disclosure.


Mar 31, 2010

1. The figures of previous year are reclassified/regrouped / restated for consistent presentation, wherever necessary.

2. Figures in brackets represent previous years figures.

3. The Company has repaid its entire term liabilities to Financial Institutions. The additional claim, if any, on final reconciliation and confirmation by financial institutions will be considered as and when communicated.

4. During the year under audit, the Companys wholly owned subsidiary (WEW Holding Limited - Mauritius) disinvested its 100% stake in Setco Global Gmbh- Austria. The said disinvestment has no major impact on the operations of the Company. On such disinvestment, Setco Global Gmbh has now ceased to be the Companys step subsidiary. The Company is in the process of necessary compliances with relevant authorities and in the opinion of the management, Company does not expect any material liability on account of disinvestment.

5. The company has purchased the land and factory buildings situated at village Alindra, Taluka Kalol. The company has paid Rs 259.28 lacs towards full price consideration and other incidental expenses including stamp duty etc. for the land and buildings. Possession of the land and buildings is also given to the Company by the concerned authorities. Execution of Conveyance Deed is in progress with Revenue Authorities. In the opinion of management, Company has a clear and marketable title to the land, and hence, the price consideration paid is capitalised and disclosed in Block of Fixed Assets in Schedule - 5 of the Balance Sheet.

6. Exceptional/ Extraordinary items charged to profit & loss account for the year include:

i) An old excise Duty matter, contested in Gujarat High court/Supreme Court adjudicated during the year of Rs. NIL (Rs. 14,271,256.)

ii) Loss Rs.NIL (Rs. 122, 68,700) in respect of Derivative transaction on account of adverse foreign exchange fluctuation.

7. i) Secured Credit facilities are from Bank of Baroda & HDFC Bank Limited. They are secured on pari passu basis as under:

a) Term Loans are secured by first charge by way of equitable mortgage of immovable properties and hypothecation of movable properties and the second charge on stocks and book debts present and future.

b) Cash Credits are secured by first charge by way of hypothecation of stocks, stores and components etc. and book debts and the second charge by way of equitable mortgage of immovable properties and hypothecation of movable properties present and future.

ii) Unsecured loan from Tata Capital Limited is guaranteed by pledge of shares of SAL held by Shri Harish Sheth, the Chairman & Managing Director and by his personal guarantee.

8. Contingent Liabilities

i) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 10,394,134 (Rs. 16,260,508)

ii) Guarantees given by the bank on behalf of the Company Rs. 1,773,000 (Rs. 1,773,000)

iii) Guarantee given to ICICI Bank Limited, U.K. For ultimate subsidiary credit facilities Rs. 157,573,000 (Rs.168,958,000) (£ 2.3 million)

iv) Guarantee given to Bank of Baroda, New York, USA for ultimate subsidiary credit facilities Rs.272,412,800 (Rs.307,363,650) ($ 5.995 million)

v) Bills Receivable discounted with the Bank and not matured Rs. 1,142,795 (Rs. 5,663,272) vi) Warranty is extended on products sold, undertaking to repair or replace the items that fail during the warranty period. The warranty expenses are accrued / accounted as and when claim are accepted.

vii) Income Tax demand under dispute of Rs. 2,785,755 (Rs. 7,02,265)

9. The Products dispatched from the factory, which remained in transit in respect of which the risk and reward have not been transferred till the date of adoption of this financial statements amounts to Rs. 220.08 lacs. With a view to reflect the true and correct position of revenue the said amount is reduced from the total turn-over during the year and the stock value thereof of Rs. 171.15 lacs is shown under the head "Sales in Transit" in Schedule 7 under the head "Inventories".

Earlier Company was recognizing sales on despatches from works without having regard to transfer of risk & rewards to the customers. Rs. 1465.50 lacs is the amount of products dispatched during the year whose risk & rewards have been transferred by the time of adoption of these accounts. This change is adopted with a view to consider commercial prudence, past consistent practices of major customers and to present realistic position of revenue. The profit recognized / realized on such sales is Rs.385.70 lacs.

10. Disclosure pursuant to AS - 15 (Revised) Employee Benefits i) Transitional Obligations

During the year, company has adopted Accounting Standard (AS) - 15 "Employee Benefits" (Revised 2005) in respect of accounting for compensated absences. Consequent to its first time adoption, transitional liability difference of Rs. 1,539,029 /- has been adjusted against the opening balance of General Reserve. The current year liability of Rs. 177, 495/- is charged to Profit & Loss Account. This aggregate liability has been worked out by actuarial valuation using project unit credit method.

ii) Defined Contribution Plans

An amount of Rs. 8,711,258 (Rs.7,114,046) (Provident Fund & ESIC) is recognized as an expense and included in schedule 13 under the head "Personnel Expenses".

iii) Defined Benefit Plans

Contribution to Gratuity Fund

11. The Company has not received information from suppliers or service providers, whether they are covered under Micro, Small and Medium Enterprises (Development) Act, 2006 and hence, it has not been possible to give the required information relating to such suppliers and amounts unpaid, if any, as at year end.

12. In the previous year, the Company has initiated the process of obtaining balance confirmations in respect of sundry debtors / sundry creditors. Such balance confirmations are under reconciliation process. Necessary adjustments, if any, will be accounted when the same is reconciled. In respect of other debit / credit balances, balance confirmations have not been obtained, and therefore, are subject to reconciliation and adjustment, if any.

13. In the absence of notification specifying the effective date and the applicable rate and amount of cess to be levied towards a fund to be established for rehabilitation and revival of Sick Industrial Units in terms of section 441A of the Companies Act, 1956 as inserted by the Companies (Second Amendment) Act, 2003, no provision is made for the cess in the accounts for the year.

14. During the year, valuation of inventories is carried out on weighted average basis for all units other than Sitarganj unit on account of implementation of SAP computerized system. Profit for the year are higher by Rs. 2.33 lacs on account of this change.

15. Related Party information

i) Names of related parties and nature of relationship :

Shri Harish Sheth, Managing Director of the Company is interested in Setco Engineering Private Limited (formerly Setco Auto Private Limited), SE Transstadia Private Limited, Transstadia (Ahmedabad) Private Limited, Western Engineering Works as director/ partner, whereas one of his relatives is a partner in Gujarat Engineering Company.

Mr. Shvetal Vakil is Executive Director of the Company.

Mr. Udit Sheth - the Executive Director is a relative of the Managing Director and also interested as Director in SE Transstadia Private Limited and Transstadia ( Ahmedabad ) Private Limited and as partner in the firm of Western Engineering Works.

Mrs. Urja Harshal Shah (President - Corporate office) & Mr. Harshal J. Shah (Director) are relatives of Mr. Harish K. Sheth and Mr. Udit H. Sheth the Managing & Executive Director respectively.

List of Subsidiaries :

- Setco Automotive (UK) Limited, UK

- Setco Automotive (NA) Inc., USA

- WEW Holdings Limited, Mauritius

List of Associate Concerns :

SE Transstadia Private Limited Transstadia (Ahmedabad) Private Limited Setco Engineering Private Limited

In terms of approval by the Central Government u/s 297 of the Companies Act, 1956 commission is payable to a firm (in which the directors are interested) on OE and SPD sales achieved @2% (1.5%) based on the sales figures reported in the audited accounts. Commission payable in respect of sales during the period 2008-2009 has been accounted during the year under review. Advance of Rs.368.07 lacs (Rs.200.99 Lacs) due from the firm represents amount paid towards expenses during the year to be adjusted against commission to be determined on approval of accounts for the year ended 31st March, 2010 as per consistent policy followed from year to year.

16. Segment Information:The Company is operating only in one business segment viz. Auto Components.

 
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