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Notes to Accounts of SML Isuzu Ltd.

Mar 31, 2016

1. Rates and taxes include amount of Rs. 4.99 lakhs (previous year Rs 38.39 lakhs) provided towards expected sales tax liability in respect of certain sales returns which took place in earlier years. Accordingly, these have been provided for in the books of accounts.

2. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 3,948.77 lakhs (previous year Rs. 2,496.77 lakhs).

3. The Company has adopted Accounting Standard 29 ''Provisions, Contingent Liabilities & Contingent Assets'' as notified by the Companies (Accounting Standards) Rules, 2006. Accordingly the following disclosure has been made:

# net of write back of liability in respect of provision for warranty Rs. 230.93 lakhs (previous year Rs. 100.79 lakhs) and in respect of provision for service charges Rs. 622.11 lakhs (previous year Rs. 94.54 lakhs)

* The Company is liable towards warranty claims made by end users of its products. The yearend provision is based on its estimate of the past experience regarding failure trends of products and costs of rectification or replacement. It is estimated that the provision would be fully utilized over the warranty period.

** The Company has provided free service coupons to end users of its products and estimated a provision based on its historical trends of utilization of service coupons.

4. The Company is engaged in the business of manufacture of Commercial vehicles and spares which is a primary segment for the Company which constitutes a single business segment and accordingly disclosure requirements of Accounting Standard 17, "Segment Reporting", specified under section 133 of the Companies Act, 2013 read with Rule 7 of Companies (Accounts) Rules, 2014 in relation to primary segment are not required to be given. All the business activities of the Company are primarily conducted from locations in India. Therefore, all the revenue and net assets are attributed to Indian operations. Accordingly, no additional disclosure for secondary segment reporting on the basis of geographical operations has been made in the financial results.

5. In accordance with Accounting Standard on "Related Party Disclosures" (AS 18), the disclosure in respect of transactions with the company''s related parties are as follows:

i. Entities where control exists Sumitomo Corporation, Japan - Controlling Enterprise

ii. Key management personnel Mr. E. Seto - Managing Director & CEO

Mr. Gopal Bansal - Whole-time Director & CFO

Mr. Y Kosaka - Whole-time Director - R&D (upto 18 June 2014)

Mr. Kei Katayama - Whole-time Director - R&D (w.e.f. 8 August 2014)

6. Based on the information and records presently available with the management, there are no dues outstanding to micro and small enterprises covered under the Micro, Small and Medium Enterprises Development Act, 2006 and no interest has been paid / is payable in respect of transactions with such parties during the financial year 2015-16.

7. The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing regulation under Sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documentation for the international transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by the due date as required under law. The management is of the opinion that its international transactions are at arm’s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of income tax expense and that of provision for taxation.

8. The Company has taken certain premises under operating lease arrangements. The total lease rental recognized as expense aggregate to Rs. 369.89 lakhs (previous year Rs. 329.54 lakhs).

Future minimum lease payments under non-cancellable operating leases:

II Defined Benefit Plan (Gratuity):

General description of defined benefit plan/other long term benefit plan:

The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to 15 days salary (includes dearness allowance) last drawn for each completed year of service. The same is payable on termination of service, or retirement, or death whichever is earlier. The benefits vest after five years of continuous service. Gratuity benefits valued are in accordance with the payment of Gratuity Act, 1972.

Note: The estimates of future salary increase considered in actuarial variation take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

The Company expects to contribute approximately Rs. 300.00 lakhs (previous year Rs. 300.00 lakhs) to the Gratuity Fund during financial year 2016-17.

Short-term employment benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for services rendered by employees is recognized during the period when the employee renders the services. These benefits include compensated absences and performance incentives.

9. Details in respect of dividend remitted during the year in foreign currency :

a) Number of Non-resident shareholders *: 1 (Previous year 1 )

b) Number of shares held as on record date *: 2,170,747 (Previous year 2,170,747)

c) Amount remitted during the year *: Rs. 13,024,482 (Previous year Rs. 6,512,241)

d) Financial Year to which dividend pertains : 2014-15 (Previous year 2013-14) *excludes non-resident shareholders to whom dividend is paid in Indian Rupees

10. a) The cash credit limits sanctioned by the bankers are secured by a first charge by way of hypothecation of the Company''s current assets i.e. stocks of raw materials, semi-finished goods, finished goods, stores and spares, bills receivables including receivables from hire purchase/ leasing, book debts and other movables of the Company (both present and future) and also by way of a collateral pari passu second charge on the Company''s fixed assets.

b) The Company had in an earlier year taken loans from Financial Institutions against first charge on its movable and immovable property. The said loans have since been repaid. However, the charges in respect of these loans are in the process of being vacated.

11. During the previous year ended 31 March, 2015, the Company had revised useful lives of certain fixed assets based on internal technical evaluation with effect from 1 April, 2014. Accordingly, the useful lives of certain assets required a change from the previous estimated useful life.

As a result of this change, the depreciation charge for the year ended 31 March, 2015 was higher by Rs. 580.39 lakhs which has been charged to Statement of Profit and Loss.

12. During the previous year ended 31 March, 2015, the Company had adjusted Provision for tax amounting to Rs. 6,836.69 lakhs with outstanding advance tax/ tax deducted at source for the respective years for which Income-tax assessments have been completed/ closed. Further, during the current year, the Company has adjusted provision for tax by Rs. 287.76 lakhs (disclosed as current tax adjustment related to prior years). This had been done to align the amounts as per the books of accounts with the relevant Income-tax records.


Mar 31, 2015

1. Company overview

SML Isuzu Limited (Formerly Swaraj Mazda Limited) is a public company, incorporated under the Companies Act, 1956 and its shares are listed on the National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) in India. The Company is primarily engaged in the business of manufacture and sale of Commercial Vehicles and its parts. The Company has its operations primarily in India.

2. The financial statements for the year ended 31 March 2015 have been prepared as per the requirements of Schedule III of the Companies Act, 2013.

3. Rights, preferences and restrictions attached to the equity shares

The Company has a single class of equity shares. Accordingly, all equity shares rank equally with regard to dividends and share in the Company's residual assets. The equity shares are entitled to receive dividend as declared from time to time. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to its share of the paid-up equity capital of the Company. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable have not been paid.

Failure to pay any amount called up on shares may lead to forfeiture of the shares.

On winding up of the Company, the holders of equity shares will be entitled to receive the residual assets of the Company, remaining after distribution of all preferential amounts in proportion to the number of equity shares held.

In addition, the Company is subject to legal proceedings and claims, which have arisen in the ordinary course of business. The Company's management does not reasonably expect that these legal actions, when ultimately concluded and determined, will have a material and adverse effect on the Company's results of operations or financial condition.

2. a) Rates and taxes include certain VAT input credits, availed in earlier years, amounting to Rs. Nil (previous year Rs. 147.83 lakhs), which are not likely to be utilized and an amount of Rs. 38.39 lakhs (previous year Rs 134.36 lakhs) provided towards expected sales tax liability in respect of certain sales returns which took place in earlier years. Accordingly, these have been provided for in the books of accounts.

b) Purchases for the year include an amount of Rs. Nil (previous year Rs. 35.21 lakhs) towards purchase tax paid pertaining to earlier years.

3. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 2,496.77 lakhs (previous year Rs. 1,879.26 lakhs).

4. The Company is engaged in the business of manufacture of Commercial vehicles and spares which is a primary segment for the Company which constitutes a single business segment and accordingly disclosure requirements of Accounting Standard 17, "Segment Reporting", prescribed by the Companies (Accounting Standard) Rules 2006 in relation to primary segment are not required to be given. Business activities of the Company are primarily conducted from locations in India. Therefore, revenues and net assets are attributed to Indian operations. Accordingly, no additional disclosure for secondary segment reporting on the basis of geographical operations has been made in the financial statements.

5. In accordance with Accounting Standard on "Related Party Disclosures" (AS 18), the disclosure in respect of transactions with the company's related parties are as follows:

i. Entities where control exists

Sumitomo Corporation, Japan -Controlling Enterprise

ii. Key management personnel

Mr. E. Seto - Managing Director & CEO (w.e.f. 26 December 2013) Mr. Gopal Bansal - Whole-time Director & CFO (w.e.f. 11 February 2014) Mr. Y. Kosaka - Whole-time Director - R&D (upto 18 June 2014) Mr. Kei Katayama - Whole-time Director - R&D (w.e.f. 8 August 2014) Mr. Y. Watanabe - Managing Director & CEO (upto 25 December 2013) Mr. R.P Sehgal - Whole-time Director - Works (up to 31 May 2013)

6. Based on the information and records presently available with the management, there are no dues outstanding to micro and small enterprises covered under the Micro, Small and Medium Enterprises Development Act, 2006.

7. The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing regulation under sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documentation for the international transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by the due date as required under law. The management is of the opinion that its international transactions are at arms length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of income tax expense and that of provision for taxation.

8. The Company has taken certain premises under operating lease arrangements. The total lease rental recognized as expense aggregate to Rs. 329.54 lakhs (previous year Rs. 254.09 lakhs).

II Defined Benefit Plan (Gratuity):

General description of defined benefit plan/other long term benefit plan:

The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to 15 days salary (includes dearness allowance) last drawn for each completed year of service. The same is payable on termination of service, or retirement, or death whichever is earlier. The benefits vest after five years of continuous service. Gratuity benefits valued were in accordance with the payment of Gratuity Act, 1972.

9. a) The cash credit limits sanctioned by the bankers are secured by a first charge by way of hypothecation of the Company's current assets i.e. stocks of raw materials, semi-finished goods, finished goods, stores and spares, bills receivables including receivables from hire purchase/ leasing, book debts and other movables of the Company (both present and future) and also by way of a collateral pari passu second charge on the Company's fixed assets.

b) The Company had in an earlier year taken loans from Financial Institutions against first charge on its movable and immovable property. The said loans have since been repaid. However, the charges in respect of these loans are in the process of being vacated.

10. As per Section 135 of the Companies Act, 2013, a CSR committee has been formed by the Company. The areas for CSR activities are promoting health care, sanitation, safe drinking water, supporting education (including infrastructure) of underprivileged children / girl child. Expenditure was incurred on such activities throughout the year, as specified in Schedule VII of the Companies Act, 2013.

11. During the year ended 31 March 2015, the Company has revised useful lives of certain fixed assets based on internal technical evaluation with effect from 1 April 2014. Accordingly, the useful lives of certain assets required a change from the previous estimated useful life.

12. During the current year, the Company has adjusted Provision for tax amounting to Rs. 6,836.69 lakhs (previous year Rs. Nil) with outstanding advance tax/ tax deducted at source for the respective years for which Income-tax assessments have been completed/ closed. This has been done to align the amounts as per the books of accounts with the relevant Income-tax records.


Mar 31, 2014

1. There are contingent liabilities in respect of claims against the Company not acknowledged as debts:

Particulars 2013-14 2012-13 (Rs. in lakhs) (Rs. in lakhs)

Sales tax matters 554.40 554.40

Excise and service tax matters 379.49 531.13

Income tax matters 1,094.72 1,243.14

Civil matters 207.04 207.65

Total 2,235.65 2,536.32

2. a) Rates & taxes include certain VAT input credits, availed in earlier years, amounting to Rs. 147.83 lacs, which are not likely to be utilized and an amount of Rs. 134.36 lacs provided towards expected sales tax liability in respect of certain sales returns which took place in earlier years and the issue is likely to be litigated / disputed by the Department. Accordingly, these have been provided for in the books of accounts.

b) Purchases for the year include an amount of Rs. 35.21 lacs towards purchase tax paid pertaining to earlier years.

3. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 1,879.26 lakhs (previous year Rs. 228.87 lakhs).

4. The Company has adopted Accounting Standard 29 ''Provisions, Contingent Liabilities & Contingent Assets'' as notified by the Companies (Accounting Standards) Rules, 2006. Accordingly the following disclosure has been made:

* The Company is liable towards warranty claims made by end users of its products. The year end provision is based on its estimate of the average warranty cost per unit of goods sold and on the basis of historical data. It is estimated that the provision would be fully utilized over the warranty period.

** The Company has provided free service coupons to end users of its products and estimated a provision based on its historical trends of utilization of service coupons.

5. As the Company''s business activities fall within a single primary business segment, viz., "Commercial Vehicles and Spares", the disclosure requirement of Accounting Standard (AS) - 17 "Segment Reporting" is not applicable.

6. In accordance with Accounting Standard on "Related Party Disclosures" (AS 18), the disclosure in respect of transactions with the company''s related parties are as follows:

i. Entities where control exists: Sumitomo Corporation, Japan Holding Company (up to 12 April 2012) Controlling Enterprise (w.e.f. 13 April 2012)

ii. Key management personnel: Mr. Y. Watanabe - Managing Director & CEO (upto 25 December 2013) Mr. E. Seto - Managing Director & CEO (w.e.f. 26 December 2013) Mr. R.P Sehgal - Whole-time Director - Works (up to 31 May 2013) Mr. Y. Kosaka- Whole-time Director - R&D (w.e.f. 08 November 2012) Mr. Gopal Bansal- Whole-time Director & CFO (w.e.f. 11 February 2014)

* Excludes contribution to the gratuity fund and provision for compensated absences determined on an actuarial basis, as these are determined for the Company as a whole.

7. Based on the information and records presently available with the management, there are no dues outstanding to micro and small enterprises covered under the Micro, Small and Medium Enterprises Development Act, 2006.

8. The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing regulation under sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documentation for the international transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by the due date as required under law. The management is of the opinion that its international transactions are at arms length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of income tax expense and that of provision for taxation.

9. The Company has taken certain premises under operating lease arrangements. The total lease rental recognized as expense aggregate to Rs. 254.09 lakhs (previous year Rs. 224.00 lakhs).

Note: The estimates of future salary increase considered in actuarial variation take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

The Company expects to contribute approximately Rs. 133.45 lakhs to the Gratuity Fund during financial year 2014-15.

Short term employment benefits

The undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered by employees is recognized during the period when the employee renders the services. These benefits include compensated absences and performance incentives.

10. Details in respect of dividend remitted during the year in foreign currency :

a) Number of Non-resident shareholders: 1 (Previous year 1 )

b) Number of shares held as on record date: 2,170,747 (Previous year 2,170,747)

c) Amount remitted during the year: Rs. 17,365,976 (Previous year Rs. 17,365,976)

d) Financial Year to which dividend pertains : 2012-13 (Previous year 2011-12)

11. The cash credit limits sanctioned by the bankers are secured by a first charge by way of hypothecation of the Company''s current assets i.e. stocks of raw materials, semi-finished goods, finished goods, stores and spares, bills receivables including receivables from hire purchase/ leasing, book debts and other movables of the Company (both present and future) and also by way of a collateral pari passu second charge on the Company''s fixed assets.

The Company had in an earlier year taken loans from Financial Institutions against first charge on its movable and immovable property. The said loans have since been repaid. However, the charges in respect of these loans are in the process of being vacated.

12. Previous year figures have been regrouped / reclassified, wherever necessary, in order to conform to current year''s classifications.


Mar 31, 2013

1. Company overview

SML Isuzu Limited (Formerly Swaraj Mazda Limited) is a public company, incorporated under the Companies Act, 1956 and its shares are listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) in India. The Company is primarily engaged in the business of Commercial Vehicles and its parts. The Company has its operations primarily in India.

2. The financial statements for the year ended 31 March 2013 have been prepared as per the Revised Schedule VI to the Companies Act, 1956

3. Through issue of excise notification no 11/95 dated March 16, 1995 Government had sought to lapse Modvat Credit Receivable aggregating Rs. 488 lakhs out of available credit balance appearing under the head "Short term Loans & Advances". Petition filed by the Company and other affected manufacturers with the Delhi High Court challenging the said notification on grounds of law and equity was allowed by the Supreme Court vide Order dated January 28, 1999. Subsequently, the Finance Act, 1999 brought in a retrospective amendment w.e.f. March 16, 1995 in the Central Excise Act, empowering the Central Government to lapse such Modvat. Based on the legal advice obtained by the Company to seek redressal against the action of the Government, the Company had filed a writ petition and was admitted by the Delhi High Court on the ground that the Government action has violated the doctrine of promissory estoppels / expectation principle besides other grounds.

In the previous years, though adjusted in excise records, no provision was made in the books of accounts in respect of such Modvat credit. On a review, the Company had provided the entire amount of Rs 488 lakhs during the previous year ended 31 March 2012. In view of the significance of the amount involved, the same was shown as an exceptional item and disclosed as a prior period adjustment during the previous year ended 31 March 2012.

4. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 228.87 lakhs (previous year Rs. 586.64 lakhs).

5. The Company has adopted Accounting Standard 29 ''Provisions, Contingent Liabilities & Contingent Assets'' as notified by the Companies (Accounting Standards) Rules, 2006.

6. As the Company''s business activities fall within a single primary business segment, viz., "Commercial Vehicles and Spares", the disclosure requirement of Accounting Standard (AS) - 17 "Segment Reporting" is not applicable.

7. In accordance with Accounting Standard on "Related Party Disclosures" (AS 18), the disclosure in respect of transactions with the company''s related parties are as follows:

i. Entities where control exists Sumitomo Corporation, Japan

Holding Company (up to 12 April 2012) Controlling Enterprise (w.e.f. 13 April 2012)

ii. Key management personnel Mr. Y. Watanabe – Managing Director & CEO (w.e.f. 01 June 2011)

Mr. Y. Watanabe – Whole-time Director (up to 31 May 2011) Mr. R.P Sehgal – Whole-time Director Mr. Y. Kosaka – Whole-time Director (w.e.f. 08 Nov 2012) Mr. Yash Mahajan – Managing Director (up to 31 May 2011)

8. Based on the information and records presently available with the management, there are no dues outstanding to micro and small enterprises covered under the Micro, Small and Medium Enterprises Development Act, 2006.

9. The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing regulation under sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documentation for the international transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by the due date as required under law. The management is of the opinion that its international transactions are at arms length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of income tax expense and that of provision for taxation.

10. The Company has taken certain premises under operating lease arrangements. The total lease rental recognized as expense aggregate to Rs. 224.00 lakhs (previous year Rs. 203.49 lakhs).

11. The Company had issued 3,984,946 equity shares of Rs. 10 each at a premium of Rs. 190 per share on rights basis on 26 March 2010. The net proceeds (Net of issue expenses Rs. 118.52 lakhs) of the rights issue were utilized for repayment of Allahabad Bank Term Loan Rs. 5,000.00 lakhs and for general corporate purposes Rs. 1,051.37 lakhs by 31 March 2010. Out of balance proceeds of Rs. 1,800 lakhs earmarked for financing the expansion project, Rs. 1,299.97 lakhs have been utilized till 31 March 2013 as per terms of the Letter of Offer and subsequent shareholder''s approval. As regards balance amount of Rs. 500.03 lakhs shareholders have given their consent at Extraordinary General Meeting held on 28 March 2013 for its utilization towards general corporate purposes including but not restricted to meeting working capital requirements.

12. In respect of change of company name from SWARAJ MAZDA LIMITED to SML ISUZU LIMITED, the Registrar of Companies, Chandigarh has issued a fresh certificate of incorporation dated 03 January 2011.

13. The cash credit limits sanctioned by the bankers are secured by a first charge by way of hypothecation of the company''s current assets i.e. stocks of raw materials, semi-finished goods, finished goods, stores and spares, bills receivables including receivables from hire purchase/ leasing, book debts and other movables of the Company (both present and future) and also by way of a collateral a pari passu second charge on the Company''s fixed assets.

The Company had in an earlier year taken loans from Financial Institutions against first charge on its movable and immovable property. The said loans have since been repaid. However, the charges in respect of these loans are in the process of being vacated.

14. Previous year figures have been regrouped / reclassified, wherever necessary, in order to conform to current year''s classifications.


Mar 31, 2012

1. Basis of preparation

The financial statements are prepared under the historical cost convention on the accrual basis of accounting, in accordance with the Indian Generally Accepted Accounting Principles (GAAP) and comply with the accounting standards, as prescribed by the Companies (Accounting Standards) Rules, 2006, and the provisions of the Companies Act, 1956, to the extent applicable, as adopted consistently by the Company. The financial statements have been prepared in Indian rupees.

2. 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 31 March, 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year's classification. Such reclassification of previous year figures does not impact recognition and measurement principles followed for preparation of financial statements.

3. Through issue of excise notification no 11/95 dated March 16, 1995 Government sought to lapse Modvat Credit Receivable aggregating Rs. 488 lakhs out of available credit balance appearing under the head Short term Loans & Advances. Petition filed by the Company and other affected manufacturers with the Delhi High Court challenging the said notification on grounds of law and equity was allowed by the Supreme Court vide Order dated January 28, 1999. Subsequently, the Finance Act, 1999 brought in a retrospective amendment w.e.f. March 16, 1995 in the Central Excise Act, empowering the Central Government to lapse such Modvat. Based on the legal advice obtained by the Company to seek redressal against the action of the Government, the Company had filed a writ petition and was admitted by the Delhi High Court on the ground that the Government action has violated the doctrine of promissory estoppels / expectation principle besides other grounds.

In the previous years, though adjusted in excise records, no provision was made in the books of accounts in respect of such Modvat credit. On a review, the Company has decided to provide the entire amount of Rs 488 lakhs during the year. In view of the significance of the amount involved, the same has been shown as an exceptional item and disclosed as a prior period adjustment.

4. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 586.64 lakhs (previous year Rs. 417.22 lakhs).

Figures of previous year are given in brackets

* The Company is liable towards warranty claims made by end users of its products. The year end provision is based on its estimate of the average warranty cost per unit of goods sold and on the basis of historical data it is estimated that the provision would be fully utilized over the warranty period.

5. As the Company's business activities fall within a single primary business segment, viz., "Commercial Vehicles and Spares", the disclosure requirement of Accounting Standard (AS) - 17 "Segment Reporting" is not applicable.

6. Based on the information and records presently available with the management, there are no dues outstanding to micro and small enterprises covered under the Micro, Small and Medium Enterprises Development Act, 2006.

7. The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing regulation under sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documentation for the international transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by the due date as required under law. The management is of the opinion that its international transactions are at arms length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of income tax expense and that of provision for taxation.

8. The Company has taken certain premises under operating lease arrangements. The total lease rental recognized as expense aggregate to Rs. 203.49 lakhs (previous year Rs.162.35 lakhs).

Note: The estimates of future salary increase, considered in actuarial variation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

The Company expects to contribute approximately Rs. 97.48 lakhs to the Gratuity Fund during Financial Year 2012-13.

Short term employment benefits

The undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered by employees is recognized during the period when the employee renders the services. These benefits include leave encashment and performance incentives.

9. Details in respect of dividend remitted during the year in foreign currency :

a) Number of Non-resident shareholders: 1 (Previous year 1 )

b) Number of shares held as on record date: 5,78,866 (Previous year 5,78,866)

c) Amount remitted during the year: Rs. 46,30,928 (Previous year Rs. 23,15,464)

d) Financial Year to which dividend pertains : 2010-11 (Previous year 2009-10)

10. The Company had issued 3,984,946 equity shares of Rs. 10 each at a premium of Rs. 190 per share on rights basis on 26 March 2010. The net proceeds (Net of issue expenses Rs. 118.52 lakhs) of the rights issue were utilized for repayment of Allahabad Bank Term Loan Rs. 5,000.00 lakhs and for general corporate purposes Rs. 1,051.37 lakhs by 31 March 2010. Out of balance proceeds of Rs. 1,800 lakhs earmarked for financing the expansion project, Rs. 838.79 lakhs have been utilized till 31 March 2012 as per terms of the Letter of Offer and subsequent shareholder's approval. The balance amount of Rs. 961.21 lakhs has been placed with a commercial bank as per terms of the Letter of Offer (included in "Cash and Bank balances" under Note 16).

11. In respect of change of company name from SWARAJ MAZDA LIMITED to SML ISUZU LIMITED, the Registrar of Companies, Chandigarh has issued a fresh certificate of incorporation dated 03 January 2011.

12. The cash credit limits sanctioned by the bankers are secured by a first charge by way of hypothecation of the company's current assets i.e. stocks of raw materials, semi-finished goods, finished goods, stores and spares, bills receivables including receivables from hire purchase/ leasing, book debts and other movables of the Company and also by way of a collateral a pari passu second charge on the Company's fixed assets.

The Company had in an earlier year taken loans from Financial Institutions against first charge on its movable and immovable property. The said loans have since been repaid. However, the charges in respect of these loans are in the process of being vacated.


Mar 31, 2011

1. There are Contingent Liabilities in respect of:

a) Claims against the Company not acknowledged as debts:

Particulars 2010-11 2009-10

(Rs. in lacs) (Rs. in lacs)

Sales Tax Cases 261.71 278.95

Excise and Service Tax Cases 116.40 56.54

Income Tax Cases 402.98 265.88

Civil Cases 212.47 31.82

Total 993.56 633.19

b) Bank Guarantees given by the Company and outstanding as on 31.03.2011 amounting to Rs. 1,354.95 lacs (Previous YearRs. 1,814.29 lacs).

c) Letters of Credit issued on behalf of the Company by its bankers and outstanding as on 31.03.2011 amounting to Rs. 2,554.67 lacs (Previous Year Rs. 1,884.82 lacs).

2. Through issue of excise notification no 11/95 dated March 16, 1995 Government sought to lapse Rs. 488 lacs out of Modvat Credit Receivable balance as on March 16,1995. Petition by the Company and others with the Delhi High Court challenging the said notification on grounds of law and equity was allowed by the Supreme Court vide order dated January 28,1999. The Finance Act, 1999 has, however, brought in retrospective amendment w.e.f. March 16,1995 in the Central Excise Act, empowering the Central Government to lapse such modvat. On legal advice obtained by the Company to seek redressal against the action of the Government, the Company has filed writ petition before the Delhi High Court on the ground that the Government action violates the doctrine of promissory estoppel/expectation principle beside other grounds. The Court has already admitted the petition. Accordingly, pending Company's petition and decision thereupon, the amount of Rs. 488 lacs though adjusted in excise records has not been provided in the books of account.

3. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 417.22 lacs (Previous Year Rs. 455.73 lacs).

4. (a) Market promotion expenses (Schedule K) includes Commission on Sales amounting to Rs. 53.40 lacs (Previous Year Rs. 159.16 lacs) & Liquidated damages on execution of sales orders amounting to Rs. 103.64 lacs (PreviousYearRs. Nil).

5. As the Company's business activities fall within a single primary business segment, viz., "Commercial Vehicles and Spares", the disclosure requirement of Accounting Standard (AS) -17 "Segment Reporting" is not applicable.

6. Raw Materials & Components Consumed:

i) In view of varied nature of large number of items, it is not possible to furnish quantitative information on components.

ii) The figure of others is a balancing figure based on total consumption shown in Schedule J and includes adjustments for excess/shortage found on physical verification.

iii) Quantities and values of all items represent issues from stores made during the year.

7. There are no Micro and Small Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at 31st March, 2011. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined on the basis of information available with the Company.

8. The Company has a system for maintenance of information and documents as required by the transfer pricing regulation under Sections 92-92F of the Income Tax Act, 1961, as applicable. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company also updates its information and documentation for international transactions entered into with the associated enterprises during the financial year. The management is of the opinion that its international transactions are at arms length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

9. The Company has taken certain premises under operating lease arrangements. The lease period varies from 1 to 15 years with the option to extend the same with mutual consent. The total lease rental recognized as expense aggregate to Rs. 162.35 lacs (Previous Year Rs.151.73 lacs).

*Notes:

i. Contribution to Provident and other funds does not include contribution towards gratuity & leave encashment, as these are actuarially valued for the Company as a whole.

ii. Other Perquisites does not include premium in respect of personal accident insurance, as the separate figures for the directors are not available.

Note: The estimates of future salary increase, considered in actuarial variation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

Short term employment benefits

The undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered by employees is recognized during the period when the employee renders the services. These benefits include compensated absences and performance incentives.

The Company expects to contribute approximately Rs. 86.94 lacs to the Gratuity Fund during financial year 2011 -12.

10. Current tax expense comprise of Rs. Nil (Previous year Rs. 537.18 lacs), charge for Minimum Alternate Tax under section 115JBof the Income Tax Act, 1961. The Company has recognized MAT Credit Entitlement of Rs. Nil (Previous year Rs. 537.18 lacs) grouped under Loans and Advances (Schedule G), in accordance with Guidance Note issued by the Institute of Chartered Accountants of India. During the year, the Company has utilized Rs. 192.00 lacs by way of setting it off against the tax liability arising under the normal provisions of Income Tax. Consequently, the amount of Rs. 192.00 lacs has been transferred from MAT Credit Entitlement to Advance taxes under head Loans & Advances.

11. Detail in respect of dividend remitted during the year in foreign currency:

a) Number of Non-resident Shareholders: 1 (Previous Year 1 )

b) Number of Shares held as on record date: 578,866 (Previous Year 209,000)

c) Amount remitted during the year: Rs. 2,315,464 (Previous Year Rs. 313,500)

d) Financial Year to which dividend pertains : 2009-10 ( Previous year 2008-09)

12. Miscellaneous expenses include assets written off during the year Rs. 0.30 lacs (Previous year Rs. 2.39 lacs).

13. The Company had issued 3,984,946 Equity shares of Rs. 10 each at a premium of Rs. 190 per share on Rights basis on 26th March, 2010. The net proceeds (Net of issue expenses Rs. 118.52 lacs) of the Rights issue were utilized for repayment of Allahabad Bank Term Loan Rs. 5,000.00 lacs and for general corporate purposes Rs. 1,051.37 lacs by March 31st, 2010. Out of balance proceeds of Rs. 1,800.00 lacs earmarked for financing the expansion project, Rs. 163.96 lacs have been utilized for ongoing Phase I of expansion project during the current year and the balance Rs. 1,636.04 lacs are placed with a scheduled commercial bank as fixed deposits as per terms of Letter of Offer (which is included in Fixed Deposit Balances under Cash and Bank Balances - Schedule G).

14. In respect of change of Company name from SWARAJ MAZDA LIMITED TO SML ISUZU LIMITED, the Registrar of Companies, Chandigarh has issued a fresh certificate of incorporation dated 3rd January, 2011.

15. Previous year figures have been regrouped / reclassified wherever considered necessary to conform to current year's classification.



 
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