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Notes to Accounts of Shriram Transport Finance Company Ltd.

Mar 31, 2014

1. Gratuity and other postemployment Benefit plans

The Company has an defined benefit gratuity plan. Every employee who has completed five years or more of service is eligible for a gratuity on separation at 15 days basic salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance company in the form of qualifying insurance policy.

During the year the company has funded Rs. 1,849.88 lacs for gratuity being defined benefit obligation outstanding as on September 30, 2013.

Consequent to the adoption of revised AS 15 ''Employee Benefits'' issued under Companies Accounting Standard Rules, 2006, as amended, the following disclosures have been made as required by the standard:

Statement of Profit and Loss

Net employee benefit expense (recognized in employee cost)

2. employee Stock option plan (Contd.)

Since the enterprise used the intrinsic value method the impact on the reported net proft and earnings per share by applying the fair value based method is as follows:

In March 2005, ICAI has issued a guidance note on "Accounting for Employees Share Based Payments" applicable to employee based share plan the grant date in respect of which falls on or after April 1, 2005. The said guidance note requires that the preformed disclosures of the impact of the fair value method of accounting of employee stock compensation accounting in the financial statements. Applying the fair value based method defined in the said guidance note, the impact on the reported net profit and earnings per share would be as follows:

3. In accordance with the Reserve Bank of India circular no.RBI/2006-07/ 225 DNBS (PD) C.C No. 87/03.02.004/2006- 07 dated January 4, 2007, the Company has created a footing charge on the statutory liquid assets comprising of investment in Government Securities to the extent of Rs. 34,076.00 lacs (March 31, 2013: Rs. 24,161.00 lacs) in favor of trustees representing the public deposit holders of the Company.

4. related parties disclosure

Related party where control exists

Subsidiary : Shriram Equipment Finance Company Limited (SEFCL)

Shriram Automall India Limited (SAMIL)

Shriram Insurance Broking Company Limited (SIBCL)

(upto December 13, 2013)

other related parties

Enterprises having significant : Shriram Holdings (Madras) Private Limited

influence over the Company (up to November 05, 2012)

Shriram Capital Limited

Newbridge India Investments II Limited (up to May 10, 2013)

Shriram Ownership Trust

Shriram Financial Ventures (Chennai) Private Limited

( w.e.f. August 31, 2012)

Associates : Shriram Asset Management Company Limited

(up to June 18, 2013)

Key Management Personnel : Mr. Umesh Revankar, Managing Director

Relatives of Key Management Personnel : Mrs. Suchita U. Revankar (spouse)

Master Shirish U. Revankar (son)

Master Shreyas U. Revankar (son)

Mrs. Geeta G. Revankar (mother)

5. Contingent Liabilities not provided For



(Rs. in lacs)

as at march 31, 2014 as at march 31, 2013

a. In respect of Income tax demands where the company has 52,678.52 46,689.12 fled appeal before CIT (Appeals)

b. VAT demand where the company has fled appeal before 2,532.82 1,843.09 Tribunal

c. Service tax liability pertaining to HP/Lease 12,824.07 -

d. Guarantees and counter guarantees 237,503.49 226,750.85

e. Guarantees given for subsidiaries 300.00 500.00



Future cash outflows in respect of (a), (b) and (c) above are determinable only on receipt of judgments /decisions pending with various forums/authorities. The Company is of the opinion that above demands are not sustainable and expects to succeed in its appeals.

The Company has received Show Cause Notice demanding service tax on services rendered towards provision of collection of receivables and liquidity facilities in respect of Securitisation / Direct Assignments for the period 2008-09 to 2011-12 and the same is contested by the Company.

6. merger of Shriram holdings (madras) private Limited [''ShmpL''] with The Company during The year ended march 31, 2013, :

(a) On December 21, 2011, the Board of Directors of the Company have approved the merger SHMPL with the Company. In terms of the Scheme of Amalgamation & Arrangement (Scheme) approved by Hon''ble High Court of Madras vide order dated September 13, 2012 and subsequent fling thereof with the Registrar of Companies (''ROC''), Tamil Nadu dated November 05, 2012, Shriram Holdings (Madras) Private Limited ("SHMPL"), an Investment company has been amalgamated with the Company with effect from April 01, 2012. The scheme was effective only after the fling thereof with ROC, Tamil Nadu and had an appointed date of April 01, 2012.

(b) Prior to the merger, SHMPL held 93,371,512 shares of the Company.

(c) The amalgamation has been accounted for under the "Purchase method" as prescribed by "Accounting Standard 14 (AS-14) Accounting for Amalgamation" notified under Companies (Accounting Standards) Rules, 2006 (as amended).

(d) In accordance with the said Scheme:

i) All the assets (other than shares of the Company held by "SHMPL" of the Company), debts, liabilities, duties and obligations of SHMPL have been vested in the Company with effect from April 01, 2012 and have been recorded at their respective Fair values under the purchase method of accounting for amalgamation. There were no difference in the accounting policies of "SHMPL" and the Company.

ii) Exchange ratio determined at 313:124 (i.e. 313 equity shares of Rs. 10/- each of the Company for every 124 equity shares of Rs. 10/- each of "SHMPL" and these equity shares ranking pari-passu with the existing equity shares of the Company.

iii) Additional issue of 500,868 equity shares to the shareholders of SHMPL, pursuant to Net Assets taken of SHMPL over by the Company.

iv) In accordance with the said scheme, excess of the Net Assets Value taken over by the Company vis-a-vis additional equity shares issued has been transferred to capital reserves.

7. previous year Comparatives

Previous year figures have been regrouped / rearranged, wherever considered necessary, to conform with current year''s presentation.


Mar 31, 2013

1. CORPORATE INFORMATION

Shriram Transport Finance Company Limited (the Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange and National Stock Exchange. The company provides finance for commercial vehicles, construction equipments and other loans.

2. BASIS OF PREPARATION

The fi nancial statements have been prepared in conformity with generally accepted accounting principles to comply in all material respects with the notifi ed Accounting Standards (''AS'') under Companies Accounting Standard Rules, 2006, as amended, the relevant provisions of the Companies Act, 1956 (''the Act'') and the guidelines issued by the Reserve Bank of India (''RBI'') as applicable to a Non Banking Finance Company (''NBFC''). The financial statements have been prepared under the historical cost convention on an accrual basis. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year except for the change in accounting policy explained bellow.

a. Terms/rights attached to equity shares

The company has only one class of equity shares having a par value of Rs. 10/- per share. Each holder of equity shares is entitled to one vote per share. The dividend is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended March 31, 2013, the amount of per equity share dividend recognized as distributions to equity shareholders was Rs. 7.00 ( March 31, 2012 : Rs. 6.50). Out of the total dividend declared during the year ended March 31, 2013, amount of interim dividend paid was Rs. 3.00 per equity share (March 31, 2012 : Rs. 2.50) and amount of final dividend proposed was Rs. 4.00 per equity share (March 31, 2012 : Rs. 4.00).

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. The distribution will be in proportion to the number of equity shares held by the shareholders.

b. Shares reserved for issue under options

The Company has reserved 18,800 (March 31, 2012, 195,750) equity shares for issue under the employee stock option scheme 2005. Except for 14,800 (March 31, 2012, 61,300) equity shares which are unvested as of March 31, 2013, the remaining equity shares reserved for issue are vested and are exercisable as at March 31, 2013. The vesting date for unvested 14,800 equity shares is May 12, 2013.

c. Aggregate number of equity shares issued for consideration other than cash during the period of five years immediately preceeding the reporting date:

The company has issued total 4,069,968 equity shares (March 31 2012 : 3,583,300) during the period of five years immediately preceding the reporting date on exercise of options granted under the employee stock option plan (ESOP) wherein part consideration was received in form of employee service, and includes 500,868 equity shares issued on account of merger of Shriram Holdings (Madras) Private Limited as per note (f) given below.

d. The Hon''ble Madras High Court sanctioned the Scheme of Arrangement for merger of Shriram Holdings (Madras) Private Limited (SHMPL) with the Company (''the Scheme'') and the Scheme came into effect from November 05,2012 when the Company fi led the Scheme with the Registrar of Companies, Tamil Nadu, Chennai. Pursuant to the Scheme, the investment of SHMPL in the share capital of the Company viz. 93,371,512 fully paid-up Equity shares of Rs.10/- each stood cancelled and the Company issued and allotted 93,872,380 new Equity shares of Rs. 10/- each fully paid-up to the shareholders of SHMPL. This resulted into increase of Rs.50.09 lacs in the paid-up capital of the Company with effect from November 05, 2012. The merger is effective from April 01, 2012 and the effect of the same is considered in the above financial statements.

Nature of Security

Secured by equitable mortgage of immovable property. Further secured by charge on plant and machinery, furniture and other fixed assets of the Company, charge on Company''s hypothecation loans, other loans, advances and investments of the Company subject to prior charges created or to be created in favour of the Company''s bankers, financial institutions and others.

Debentures may be bought back subject to applicable statutory and/or regulatory requirements, upon the terms and conditions as may be decided by the Company. The Company may grant loan against the security of NCDs upon the terms and conditions as may be decided by the Company and subject to applicable statutory and/or regulatory requirements.

Nature of Security

Secured by specific assets covered under hypothecation loan and by way of exclusive charge and equitable mortgage of immovable property.

The funds raised from the Public issue of 9,999,996 Secured Non-Convertible Debenture aggregating to Rs. 99,999.96 lacs have been utilised, after meeting the expenditure of and related to the Public issue, for various financing activities of the Company including lending, investments and repayment of borrowings.

Debentures may be bought back subject to applicable statutory and/or regulatory requirements, upon the terms and conditions as may be decided by the Company. The Company may grant loan against the security of NCDs upon the terms and conditions as may be decided by the Company and subject to statutory and/or regulatory requirements.

Subject to the provisions of The Companies Act, 1956, where the company has fully redeemed or repurchased any Secured NCD(s), the company shall have the right to keep such Secured NCDs in effect without extinguishment thereof, for the purpose of resale or reissue.

The Company has bought back Non- convertible Debentures of Rs. 4,215.23 lacs on 12-Mar-2010 and Rs. 3,000.00 lacs on 27-March-2012 , Rs. 23,505.26 lacs on 28-March-2012 and as per the terms of the issue Rs. 46,923.16 lacs were redeemed on 26-August-2012.

Nature of Security

Secured by specific assets covered under hypothecation loan and by way of exclusive charge and equitable mortgage of immovable property.

The Company has utilised the entire sum of Rs. 41,689.68 lacs raised from public issue (net off expenses) towards asset financing activities as per the objects stated in the prospectus for the issue.

Debentures may be bought back subject to applicable statutory and/or regulatory requirements, upon the terms and conditions as may be decided by the Company. The Company may grant loan against the security of NCDs upon the terms and conditions as may be decided by the Company and subject to statutory and/or regulatory requirements.

Subject to the provisions of The Companies Act, 1956, where the company has fully redeemed or repurchased any Secured NCD(s), the company shall have the right to keep such Secured NCDs in effect without extinguishment thereof, for the purpose of resale or reissue.

The Company has bought back Non- convertible Debentures of Rs. 1,000.00 lacs on 14-July-2011.

Nature of Security

Secured by specific assets covered under hypothecation loan agreements and by way of exclusive charge and equitable mortgage of immovable property.

The Company has utilised the entire sum of Rs. 99,999.93 lacs raised from public issue (net off expenses) towards asset financing activities as per the objects stated in the prospectus for the issue.

Debentures may be bought back subject to applicable statutory and/or regulatory requirements, upon the terms and conditions as may be decided by the Company. The Company may grant loan against the security of NCDs upon the terms and conditions as may be decided by the Company and subject to statutory and/or regulatory requirements.

Subject to the provisions of The Companies Act, 1956, where the company has fully redeemed or repurchased any Secured NCD(s), the company shall have the right to keep such Secured NCDs in effect without extinguishment thereof, for the purpose of resale or reissue.

Nature of Security

Secured by specific assets covered under hypothecation loan agreements and by way of exclusive charge and equitable mortgage of immovable property.

The Company has utilised the entire sum of Rs. 60,000/- lacs raised from public issue (net off expenses) towards asset financing activities as per the objects stated in the prospectus for the issue.

Debentures may be bought back subject to applicable statutory and/or regulatory requirements, upon the terms and conditions as may be decided by the Company. The Company may grant loan against the security of NCDs upon the terms and conditions as may be decided by the Company and subject to statutory and/or regulatory requirements.

3. GRATUITY AND OTHER POST-EMPLOYMENT BENEFIT PLANS

The Company has an unfunded defined benefit gratuity plan. Every employee who has completed five years or more of service is eligible for a gratuity on separation at 15 days basic salary (last drawn salary) for each completed year of service.

Consequent to the adoption of revised AS 15 ''Employee Benefits'' issued under Companies Accounting Standard Rules, 2006, as amended, the following disclosures have been made as required by the standard:

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

*5% in case of employees with service period of more than 5 years and 10% for all other employees.

4. The Company is engaged in financing activities. It operates in a single business and geographical segment.

5. EMPLOYEE STOCK OPTION PLAN

The expected volatility was determined based on historical volatility data equal to the NSE volatility rate of Bank Nifty which is considered as a comparable peer group of the Company. To allow for the effects of early exercise, it was assumed that the employees will exercise the options within six months from the date of vesting in view of the exercise price being significantly lower than the market price.

Effect of the employee share-based payment plans on the profit and loss account and on its financial position:

Since the enterprise used the intrinsic value method the impact on the reported net profit and earnings per share by applying the fair value based method is as follows:

In March 2005, ICAI has issued a guidance note on "Accounting for Employees Share Based Payments" applicable to employee based share plan the grant date in respect of which falls on or after April 1, 2005. The said guidance note requires that the proforma disclosures of the impact of the fair value method of accounting of employee stock compensation accounting in the financial statements. Applying the fair value based method defined in the said guidance note, the impact on the reported net profit and earnings per share would be as follows:

6. LEASES

In case of assets taken on lease

The Company has taken various office premises, furniture and fixtures, computers and plant and machinery under operating lease. The lease payments recognized in the statement of profit & loss are Rs. 6,430.43 lacs (March 31, 2012: Rs. 5,836.21 lacs). Certain agreements provide for cancellation by either party or certain agreements contains clause for escalation and renewal of agreements. The non-cancellable operating lease agreements are ranging for a period 11 to 144 months. There are no restrictions imposed by lease arrangements. There are no sub leases.

In accordance with the Reserve Bank of India circular no.RBI/2006-07/ 225 DNBS (PD) C.C No. 87/03.02.004/2006- 27 07 dated January 4, 2007, the Company has created a floating charge on the statutory liquid assets comprising of investment in Government Securities to the extent of Rs. 24,161.00 lacs (March 31, 2012: Rs. 21,674.50 lacs) in favour of trustees representing the public deposit holders of the Company.

Future cash outflows in respect of (a) and (b) above are determinable only on receipt of judgements /decisions pending with various forums/authorities. The Company is of the opinion that above demands are not sustainable and expects to succeed in its appeals.

7. SECURITISATION/ DIRECT ASSIGNMENT

The Company sells loans through securitisation and direct assignment.

The information on securitisation of the Company as an originator in respect of securitisation transaction done during the year is given below:

8 In addition to the auditors remuneration shown in operating and other expenses, the Company has also incurred auditors remuneration in connection with audit and related statutory services to be performed by auditors in connection with public issue of non convertible debentures of Rs. 53.38 lacs (March 31, 2012: Rs. 44.24 lacs) [including out of pocket expenses of Rs. 0.46 lacs (March 31, 2012: Rs. 0.12 lacs)] have been amortised as per note 13 and shown under other assets.

MERGER OF SHRIRAM HOLDINGS (MADRAS) PRIVATE LIMITED [''SHMPL''] WITH THE COMPANY

(a) On December 21, 2011, the Board of Directors of the Company have approved the merger SHMPL with the Company. In terms of the Scheme of Amalgamation & Arrangement (Scheme) approved by Hon''ble High Court of Madras vide order dated September 13, 2012 and subsequent filing thereof with the Registrar of Companies (''ROC''), Tamil Nadu dated November 05, 2012, Shriram Holdings (Madras) Private Limited ("SHMPL"), an Investment company has been amalgamated with the Company with effect from April 01, 2012. The scheme was effective only after the filing thereof with ROC, Tamil Nadu and had an appointed date of April 01, 2012.

(b) Prior to the merger, SHMPL held 93,371,512 shares of the Company.

(c) The amalgamation has been accounted for under the "Purchase method" as prescribed by "Accounting Standard 14 (AS-14) Accounting for Amalgamation" notified under Companies (Accounting Standards) Rules, 2006 (as amended).

(d) In accordance with the said Scheme:

i. All the assets (other than shares of the Company held by "SHMPL" of the Company), debts, liabilities, duties and obligations of SHMPL have been vested in the Company with effect from April 01, 2012 and have been recorded at their respective Fair values under the purchase method of accounting for amalgamation. There were no difference in the accounting policies of "SHMPL" and the Company except in case of valuation of quoted mutual fund investments, where SHMPL values the investment at cost or market whichever is less and the company values them at fair value as required Non-Banking Financial ( Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007.

ii. Exchange ratio determined at 313:124 (i.e. 313 equity shares of Rs. 10/- each of the Company for every 124 equity shares of Rs. 10/- each of "SHMPL"and these equity shares ranking pari-passu with the existing equity shares of the Company.

iii. Additional issue of 500,868 equity shares to the shareholders of SHMPL, pursuant to Net Assets taken of SHMPL over by the Company.

iv. In accordance with the said scheme, excess of the Net Assets Value taken over by the Company vis-a-vis additional equity shares issued has been transferred to capital reserves.

9. PREVIOUS YEAR COMPARATIVES

Previous year figures have been regrouped / rearranged, wherever considered necessary, to conform with current years presentation.


Mar 31, 2012

NOTE 1 CORPORATE INFORMATION

Shriram Transport Finance Company Limited (the Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange and National Stock Exchange. The company provides finance for commercial vehicles, construction equipments and other loans.

NOTE 2 BASIS OF PREPARATION

The financial statements have been prepared in conformity with generally accepted accounting principles to comply in all material respects with the notified Accounting Standards ('AS') under Companies Accounting Standard Rules, 2006, as amended, the relevant provisions of the Companies Act, 1956 ('the Act') and the guidelines issued by the Reserve Bank of India ('RBI') as applicable to a Non Banking Finance Company ('NBFC'). The financial statements have been prepared under the historical cost convention on an accrual basis. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year, except for the change in accounting policy explained below.

a. Terms/rights attached to equity shares

The company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share.The dividend is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended March 31, 2012, the amount of per equity share dividend recongnized as distributions to equity shareholders was Rs. 6.50 (March 31, 2011 : Rs. 6.50).

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. The distribution will be in proportion to the number of equity shares held by the shareholders.

b. Shares reserved for issue under options

The Company has reserved 195,750 equity shares for issue under the employee stock option scheme 2005. Except for 61,300 equity shares which are unvested as of March 31, 2012, the remaining equity shares reserved for issue are vested and are exercisable as at March 31, 2012. The vesting date for unvested 14,100 equity shares is May 12, 2012, for 28,400 unvested equity shares is July 14, 2012 and for 18,800 unvested equity shares is May 12, 2013.

c. Aggregate number of equity shares issued for consideration other than cash during the period of five years immediately preceeding the reporting date:

The company has issued total 3,583,300 equity shares (March 31 2011 : 3,600,650) during the period of five years immediately preceding the reporting date on exercise of options granted under the employee stock option plan(ESOP) wherein part consideration was received in form of employee service.

d. The Board of Directors at its meeting held on December 21, 2011, has approved the Scheme of Arrangement for merger of Shriram Holdings (Madras) Private Limited into the Company, subject to the approval of shareholders, the Hon'ble High court and other necessary regulatory approvals. The Scheme has been filed with Hon'ble High Court of Judicature at Madras on March 28, 2012. The Appointed Date of merger is fixed at April 01, 2012.

Nature of Security

Secured by equitable mortgage of immovable property. Further secured by charge on plant and machinery, furniture and other fixed assets of the Company, charge on Company's hypothecation loans, other loans, advances and investments of the Company subject to prior charges created or to be created in favour of the Company's bankers, financial institutions and others.

Debentures may be bought back subject to applicable statutory and/or regulatory requirements, upon the terms and conditions as may be decided by the Company. The Company may grant loan against the security of NCDs upon the terms and conditions as may be decided by the Company and subject to applicable statutory and/or regulatory requirements.

Nature of Security

Secured by specific assets covered under hypothecation loan and by way of exclusive charge and equitable mortgage of immovable property.

Debentures may be bought back subject to applicable statutory and/or regulatory requirements, upon the terms and conditions as may be decided by the Company.

Nature of Security

Secured by specific assets covered under hypothecation loan and by way of exclusive charge and equitable mortgage of immovable property.

The funds raised from the Public issue of 9,999,996 secured Non-Convertible Debenture aggregating to Rs. 99,999.96 lacs have been utilised, after meeting the expenditure of and related to the Public issue, for various financing activities of the Company including lending, investments and repayment of borrowings

Debentures may be bought back subject to applicable statutory and/or regulatory requirements, upon the terms and conditions as may be decided by the Company. The Company may grant loan against the security of NCDs upon the terms and conditions as may be decided by the Company and subject to statutory and/or regulatory requirements.

Subject to the provisions of The Companies Act, 1956, where the company has fully redeemed or repurchased any Secured NCD(s), the company shall have the right to keep such Secured NCDs in effect without extinguishment thereof, for the purpose of resale or reissue.

The Company has bought back Non- convertible Debentures of Rs. 4,215.23 lacs on 12-Mar-2010 and Rs. 3,000.00 lacs on 27-March-2012 and Rs. 23,505.26 lacs on 28-March-2012.

Nature of Security

Secured by specific assets covered under hypothecation loan and by way of exclusive charge and equitable mortgage of immovable property.

The Company has utilised the entire sum of Rs. 41,689.68 lacs raised from public issue (net off expenses) towards asset financing activities as per the objects stated in the prospectus for the issue.

Debentures may be bought back subject to applicable statutory and/or regulatory requirements, upon the terms and conditions as may be decided by the Company. The Company may grant loan against the security of NCDs upon the terms and conditions as may be decided by the Company and subject to statutory and/or regulatory requirments.

Subject to the provisions of The Companies Act, 1956, where the company has fully redeemed or repurchased any Secured NCD(s), the company shall have the right to keep such Secured NCDs in effect without extinguishment thereof, for the purpose of resale or reissue.

The Company has bought back Non- convertible Debentures of Rs. 1,000.00 lacs on 14-July-2011.

Nature of Security

Secured by specific assets covered under hypothecation loan agreements and by way of exclusive charge and equitable mortgage of immovable property.

The Company has utilised the entire sum of Rs. 99,999.93 lacs raised from public issue (net off expenses) towards asset financing activities as per the objects stated in the prospectus for the issue.

Debentures may be bought back subject to applicable statutory and/or regulatory requirements, upon the terms and conditions as may be decided by the Company. The Company may grant loan against the security of NCDs upon the terms and conditions as may be decided by the Company and subject to statutory and/or regulatory requirments.

Subject to the provisions of The Companies Act, 1956, where the company has fully redeemed or repurchased any Secured NCD(s), the company shall have the right to keep such Secured NCDs in effect without extinguishment thereof, for the purpose of resale or reissue._

# Includes current maturities of long term loans and advances

A Advance given to the Company in which a director is interested Rs. 186.76 lacs (March 31, 2011: Rs. 112.00 lacs)

* Advance given to subsidiary M/s. Shriram Equipment Finance Company Limited Rs. 41,023.88 lacs (March 31, 2011: Rs. 11,167.86 lacs)

$ Advance given to subsidiary M/s. Shriram Automall India Limited Rs. 521.88 lacs (March 31, 2011: Rs. 2,755.86 lacs)

# Includes deposits of Rs. 120,293.42 lacs (March 31, 2011 : Rs. 170,794.31 lacs) pledged with Banks as margin for credit enchancement, Rs. 22,750.21 lacs (March 31, 2011: Rs. 11,112.38 lacs) as margin for guarantees for credit enhancement and Rs. 1,957.31 lacs (March 31, 2011: Rs. 345.44 lacs) pledged as lien against loans taken.

NOTE 3 GRATUITY AND OTHER POST-EMPLOYMENT BENEFIT PLANS:

The Company has an unfunded defined benefit gratuity plan. Every employee who has completed five years or more of service is eligible for a gratuity on separation at 15 days basic salary (last drawn salary) for each completed year of service.

Consequent to the adoption of revised AS 15 'Employee Benefits' issued under Companies Accounting Standard Rules, 2006, as amended, the following disclosures have been made as required by the standard:

Since the enterprise used the intrinsic value method the impact on the reported net profit and earnings per share by applying the fair value based method is as follows:

In March 2005, ICAI has issued a guidance note on "Accounting for Employees Share Based Payments" applicable to employee based share plan the grant date in respect of which falls on or after April 1, 2005. The said guidance note requires that the proforma disclosures of the impact of the fair value method of accounting of employee stock compensation accounting in the financial statements. Applying the fair value based method defined in the said guidance note, the impact on the reported net profit and earnings per share would be as follows:_

NOTE 4 LEASES

In case of assets taken on lease

The Company has taken various office premises, furniture and fixtures, computers and plant and machinery under operating lease. The lease payments recognized in the statement of profit & loss are Rs. 5,836.21 lacs (March 31, 2011: Rs. 4,870.72 lacs). Certain agreements provide for cancellation by either party or certain agreements contains clause for escalation and renewal of agreements. The non-cancellable operating lease agreements are ranging for a period 11 to 180 months. There are no restrictions imposed by lease arrangements. There are no sub leases.

NOTE 5 In accordance with the Reserve Bank of India circular no.RBI/2006-07/ 225 DNBS (PD) C.C No. 87/03.02.004/2006- 07 dated January 4, 2007, the Company has created a floating charge on the statutory liquid assets comprising of investment in Government Securities to the extent of Rs. 21,674.50 lacs (March 31, 2011: Rs. 16,677.50 lacs) in favour of trustees representing the public deposit holders of the Company.

NOTE 6 CONTINGENT LIABILITIES NOT PROVIDED FOR

(Rs. in lacs) As at As at March 31, 2012 March 31, 2011

a. Demands in respect of Service tax Nil 330.00 [Amount of Rs. 15.00 lacs (March 31, 2011: Rs. 15.00 lacs) has been paid under protest ]

b. Disputed sales tax demand Nil 412.33 [Amount of Rs. 63.92 lacs (March 31, 2011: Rs. 63.92 lacs) has been paid by the Company]

c. In respect of Income tax demands/ESOP disallowance 5,691.53 7,794.91

d. Guarantees and Counter Guarantees 233,498.60 194,058.28

Future cash outflows in respect of (a), (b) and (c) above are determinable only on receipt of judgements /decisions pending with various forums/authorities.

NOTE 7 In addition to the auditors remuneration shown in operating and other expenses, the Company has also incurred auditors remuneration in connection with audit and related statutory services to be performed by auditors in connection with public issue of non convertible debentures of Rs. 44.24 lacs (March 31, 2011: Rs. 39.85 lacs) [including out of pocket expenses of Rs. 0.12 lacs (March 31, 2011: Rs. 0.14 lacs)] have been amortised as per note _13 and shown under other assets.

NOTE 8 Consequent to the re-assessment and reduction in the estimated useful life of the certain items of fixed assets falling in the category of Plant & Equipment, Office equipments, Furniture & Fixtures and Vehicles, the net depreciation charge for the year is higher by Rs. 254.31 lacs with a corresponding decrease in the net block of fixed assets.

NOTE 9 PREVIOUS YEARS FIGURES

Till the year ended March 31, 2011, the company was using pre-revised Schedule VI to the Companies Act 1956, for preparation and presentation of its financial statements. During the year ended March 31, 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 conform to this year's classification. Except accounting for dividend on investments in subsidiaries, 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 presentation of balance sheet. The following is a summary of the effects that revised Schedule VI had on presentation of balance sheet of the company for the year ended March 31, 2011:

Notes :

1. As defined in Paragraph 2(1)(xii) of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998.

2. Provisioning norms shall be applicable as prescribed in the Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998.

3. All Accounting Standards and Guidance Notes issued by ICAI are applicable including for calculation of investments and other assets as also assets acquired in satisfaction of debt. However, market value in respect of quoted investments and break up/fair value/NAV in respect of unquoted investments should be disclosed irrespective of whether they are classified as long term or current in cloumn (5) above.


Mar 31, 2011

1. Related Party Disclosure

Related party where control exists Subsidiaries

Shriram Asset & Equipment Finance Private Limited (formerly Shriram Equipment Finance Private Ltd.(SAEFPL)) (from June 04, 2009 upto December 14, 2009)

Shriram Equipment Finance Company Ltd. (SEFCL) (from December 15, 2009)

Shriram Automall India Limited (SAIL) (from February 11, 2010)

Other Related Parties

Enterprises having significant influence

over the Company

Shriram Holdings (Madras) Private Limited Shriram Capital Limited Newbridge India Investments II Limited Shriram Ownership Trust

Associates : Shriram Asset Management Company Limited

Key Managerial Personnel : R Sridhar, Managing Director

Relatives of Key Managerial Personnel : Mrs. Padmapriya Sridhar (spouse)

2. Leases

In case of assets given on lease

The Company has given land and building on operating lease for period of 11 months. During the year ended 31st March, 2010 the company had also given its biomass plant on operating lease for the period 1st April, 2009 to 30th September, 2009. The same was sold on October 1, 2009, hence gross carrying cost of and accumulated depreciation of the asset as on the date of balance sheet is nil.

In case of assets taken on lease

The Company has taken various office premises, furniture and fi -xtures, computers and plant and machinery under operating lease. The lease payments recognized in the Profit & loss account are Rs. 4,870.72 lacs (March 31, 2010: Rs. 3,557.92 lacs). Certain agreements provide for cancellation by either party or certain agreements contains clause for escalation and renewal of agreements. The non-cancellable operating lease agreements are ranging for a period 12 to 120 months. There are no restrictions imposed by lease arrangements. There are no sub leases.

3. In accordance with the Reserve Bank of India circular no.RBI/2006-07/ 225 DNBS (PD) C.C No. 87/03.02.004/2006-07 dated January 4, 2007, the Company has created a fl oating charge on the statutory liquid assets comprising of investment in Government Securities to the extent of Rs. 16,677.50 lacs (March 31, 2010: Rs. 3,497. 64 lacs) in favour of trustees representing the public deposit holders of the Company.

4. As regards the recovery of Service Tax on Lease and hire purchase transactions, the Honble Supreme Court vide its order dated October 26, 2010 has directed the competent authority under the Finance Act, 1994 to decide the matter in accordance with the law laid down.

In its replies to the demands of Rs. 7,775 lacs (interest & penalty not quantifi ed) for the years 2003-04 to 2009-10 from the Commissioner of Service Tax, the management has contended that no service tax is leviable on the interest earned by the company on financing transactions because of the specific exemption granted for the same under the Finance Act 1994. However, the company shall continue to hold the provision of Rs. 8,406.10 lacs in this respect and contest the demands with the Appellate Authorities.

5. In addition to the auditors remuneration shown in operating and other expenses, the Company has also incurred auditors remuneration in connection with other services provided by auditors in connection with public issue of non convertible debentures of Rs. 39.85 lacs (including out of pocket expenses of Rs. 0.14 lacs) have been amortised as per note 1(p) and shown under miscellaneous expenditure.

6. Previous year Comparatives

The figures for the previous year have been regrouped and reclassifi -ed, wherever necessary to conform to current years classification.

 
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