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Notes to Accounts of Suprajit Engineering Ltd.

Mar 31, 2015

1 CORPORATE INFORMATION

Suprajit Engineering Limited ('the Company') is a public limited company and is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The Company is engaged interalia in the business of manufacturing of auto components consisting mainly control cables, speedo cables and other components for automobiles.

2 There are no shares that have been issued, subscribed and not fully paid up.

3 There are no forfeited shares.

4 There are no shares reserved for issue under options and contracts/ commitments for the sale of shares/ disinvestment.

5 The Company has not issued any securities convertible into equity/ preference shares.

6 Each holder of equity shares is entitled to one vote per share and there are no preferences or restrictions attaching to shares mentioned above.

The Company declares and pays dividend in Indian Rupees. The dividend proposed/declared by the Board of Directors is subject to approval/regularisation of the shareholders in the ensuing Annual General Meeting.

7 In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company after payment of all liabilities. The distribution will be in proportion to the number of equity shares held by the shareholders.

8 During the last five years ending on 31st March, 2015:

(i) No shares were allotted as fully paid up pursuant to contract(s) without payment being received in cash.

(ii) No bonus shares were alloted.

(iii) No shares were bought back.

9 Notes on Fixed Assets

1. All the fixed assets except the land on lease are owned by the Company.

2. Additions to land Nil (PY - RS. 20,693,190/-) represents additional consideration paid to Haryana State Industrial Development Corporation Limited (HSIDC) in respect of Company's land at Manesar, Haryana. The unpaid balance consideration of RS. 4,660,390/- (PY - RS. 12,415,914/-) has been disclosed under Note 5.3.6.

3. Additions to land on lease, Nil (PY - RS. 26,773,471/-) represents land allotted at Narasapura, Kolar Dist., Karnataka by the Karnataka Industrial Area Development Board (KIADB) under a lease cum sale arrangement with a right to purchase on fulfilment of certain conditions after the period of 10 years and the consideration towards such land and hence has not been amortised over the lease period. The Company has obtained possession of the land in May 2013. The lease deed is pending execution and the unpaid balance consideration of Nil (PY - RS. 9,731,351/-) has been disclosed under Note 5.3.6.

4. Additions to land on lease, RS. 91,360,180/- (PY - RS. Nil) represents:

a) Land allotted at Sanand, Charal Industrial Area, Ahmedabad, Gujarat by the Gujarat Industrial Development Corporation (GIDC) for a period of 99 years and registered in the name of the Company. Total consideration (including stamp duty and other charges) of RS. 53,358,560/- has been paid during the year.

b) Land allotted at Chennai, SIPCOT Industrial Area, Tamilnadu by the State Industries Promotion Corporation of Tamilnadu (SIPCOT) for a period of 99 years and registered in the name of the Company. Total consideration (including stamp duty and other charges) of RS. 38,001,620/- has been paid during the year.

5. Land on lease at various locations except as mentioned in Note No. 3 above are held on long term lease without right to acquire at the end of the lease period and the cost of such land is amortised over the period of the lease.

6. Borrowing costs capitalised during the year as per Note no. 20 is RS. 5,041,938/- (PY: Nil).

7. Consequent to introduction of the Companies Act, 2013 ('Act) w.e.f. 1st April, 2014, the Company has computed depreciation for the period 1st April, 2014, to 31st March, 2015, as required under the Schedule II of the Act and the depreciation of RS. 4,028,033/- relating to assets where the remaining useful life of the assets as on 1st April, 2014, is Nil has been recognised in the opening balance of Surplus in Note 3.2.1 net of deferred tax asset of RS. 1,369,128/-.

8. Depreciation computed for the period 1st April, 2014, to 31st March, 2015, in respect of fixed assets existing on 1st April, 2014 and debited to the Profit & Loss Statement in accordance with Schedule II of the Act is RS. 67,073,900/-. In case the Company had continued the depreciation as per the Companies Act 1956, the amount of depreciation debited to the Profit & Loss Statement would have been RS. 67,967,260/-. Hence the amount of depreciation debited to the Profit & Loss Statement for the current year is lower by RS. 893,360/- and the Net Written Down Value of fixed assets as at 31st March, 2015 and the profits for the year is higher by the same amount.

10 The investment in National Highway Authority of India bonds is maturing on 30th September, 2015 and is expected to be realized on maturity date and hence classified under current investments.

11 OTHER NOTES ON FINANCIAL STATEMENTS

1 In the opinion of the Board, none of the assets other than fixed assets and non-current investments have a value lower on realisation in the ordinary course of business than the amount at which they are stated in the Balance Sheet.

2 Some of the trade receivables, trade payables, loans and advances are subject to confirmation/ reconciliation.

3 Suprajit Europe Limited, a Wholly Owned Subsidiary (WOS) was established in 2006 and has accumulated losses of RS. 177,615,198/- (PY: RS. 191,982,094/-) as at the year ended March 31st, 2015. During the year, the WOS has earned net profits and the management expects to have a sustained growth in revenue and profits in the forseeable future. Hence in the opinion of the management there is no permanent diminution in the value of the investment. The Company has provided a Corporate guarantee of GBP. 500,000 (PY: GBP.500,000) to the bankers of the WOS to fund its operations if required.

4 Full quantitative particulars giving item wise and location wise details of fixed assets are maintained in the ERP system in respect of additions made after 1.4.2008. The particulars of fixed assets acquired prior to this date have been updated in the ERP system in a summarised format. However, item wise particulars are maintained for major assets in manual form.

5 During the year, the Company has acquired the assets and liabiliities of the automotive speedo cable division of M/s. Pricol Limited pursuant to a business transfer agreement on a slump sale basis for a total consideration of RS. 51,532,822/- (PY - Nil).

12 Contingent Liabilities and Commitments

Contingent Liabilities

Corporate Guarantees issued on 31.03.2015 31.03.2014 behalf of a subsidiary to their bankers 46,745,000 50,425,000 [GBP 500,000 (PY: GBP 500,000)]

Letter of credit outstanding - 105,598

Bond Executed in favour of customs 15,000,000 15,000,000

Bank Guarantee furnished to Tax Authorities for availing concessions 750,000 750,000

Other Bank Guarantees - 7,181,137 Statutory on account of - -Excise/Service Tax matters 432,920 432,920

Disputed Sales Tax/VAT matters in respect of the following years pending in appeal against which amounts mentioned in Note No 8.3 as 'Value Added Tax paid under protest' is paid under protest, disclosed under the head Long term advances - Others and stay has been granted by the authorities in respect of payment of balance demand*

* In respect of FY 2006-07, the amount paid under protest against the demand 33,750,469 - is RS. 800,000/-

* In respect of FY 2008-09, the amount paid under protest against the demand is RS. 2,000,000/- 31,085,990 -

* In respect of FY 2009-10, the amount paid under protest 28,667,182 - against the demand 28,667,182 - is RS. 800,000/-

STATEMANTS FOR THE YEAR ENDED 31 MARCH 2015

Contingent Liabilities 31.03.2015 31.03.2014 Disputed Income tax matters pending before Commissioner of Income Tax (Appeals) in respect of which amounts mentioned in Note no 8.3 as 'Income tax paid under protest' is paid under protest, disclosed under the head Long term advances-others*

* In respect of AY 2009-10 (FY 2008-09), the amount paid under protest against 903,430 - the demand is RS. 903,430/-

* In respect of AY 2010-11 (FY 2009-10) 4,515,160 -

8 In respect of AY 2013-14 (FY 2012-13) 421,460 -

Other sums for which the Company is contingently liable - 1,200,000

Total 161,850,151 74,989,057

* No provision has been made in these accounts for the above disputed duty, tax demands as the management is confident that the matter will be ultimately decided in favour of the Company.

Commitments

Estimated amount of contracts remaining to be executed on capital account 2,646,44,150 14,902,726 and not provided for (net of advances)

Total Contingent Liabilities and Commitments 426,494,301 89,891,783

The expenses such as Salaries, Wages (included in Note no. 19), Materials Consumables & Stores are included in the respective head of accounts and direct expenditure (Note no. 21) is disclosed under Research & Development Expenditure in the Profit and Loss Statement.

There are no amounts remitted in foreign currency during the current year and the previous year on account of dividend to non-resident shareholders. Amount of dividends to non-resident shareholders have been deposited into their designated Indian rupee accounts maintained with the banks in India.

13 Previous period figures have been rearranged/ reclassified where required to confirm to current year's classification.


Mar 31, 2014

CORPORATE INFORMATION

Suprajit Engineering Limited (''the Company'') is a public limited Company and is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The Company is engaged interalia in the business of manufacturing of auto components consisting mainly control cables, speedo cables and other components for automobiles.

1 In the opinion of the Board, none of the assets other than fixed assets and non-current investments have a value lower on realisation in the ordinary course of business than the amount at which they are stated in the Balance Sheet.

2 Some of the trade receivables, trade payables, loans and advances are subject to confirmation/ reconciliation.

3 Suprajit Europe Limited (formerly Gills Cables Limited), a Wholly Owned Subsidiary (WOS) was established in 2006 and has accumulated losses of Rs.191,982,094/- (PY: Rs. 157,903,679/-) as at the year ended March 31st, 2014. The WOS has earned Profits before tax during the year and the management expects to have a sustained growth in revenue and Profits in the foreseeable future. Hence in the opinion of the management there is no permanent diminution in the value of the investment. The Company has provided a Corporate guarantee of GBP. 500,000 (PY: GBP.500,000) to the bankers of the WOS to fund its operations if required.

4 Full quantitative particulars giving item wise and location wise details of fixed assets are maintained in the ERP system in respect of additions made after 1.4.2008. The particulars of fixed assets acquired prior to this date have been updated in the ERP system in a summarised format. However, item wise particulars are maintained for major assets in manual form.

5 Exceptional item in the Profit & Loss Statement of the previous year represents Profit on sale of land and building situated at Doddaballapur, Karnataka.

(Amounts in Rs.)

31.03.2014 31.03.2013

6 Contingent Liabilities and Commitments

7 Contingent Liabilities

Corporate Guarantees issued on behalf of a subsidiary to their bankers [GBP 500,000 50,425,000 41,160,000 (PY: GBP 500,000)]

B-17 Bond Executed in favour of customs 15,000,000 15,000,000

Bank Guarantee furnished to Tax Authorities for availing concessions. 750,000 750,000

Other Bank Guarantees 7,181,137 -

Disputed Excise/ service tax dues pending in appeal * 432,920 544,160

Demand raised by VAT authorities disputed with Joint Commissioner of - 28,817,668 Commercial Taxes - Appeals (JCCT - Appeals) *

[Against this demand, a bank guarantee of amount of Nil (PY- Rs. 13,158,834/-) is furnished].

Other sums the Company is contingently liable * 1,200,000 -

Total 74,989,057 86,271,828

8 Segment reporting

The Company has classified its products as Auto Components and hence operates in only one primary segment (business). Secondary segmental reporting is based on the geographical location of customers. The following is the distribution of the Company''s sale by geographical markets and segment assets which can be attributed to customers in such markets.

9 Previous period figures have been rearranged/ reclassified where required to confirm to current year''s classification.


Mar 31, 2013

1.1 In the opinion of the Board, none of the assets have a value lower on realization in the ordinary course of business than the amount at which they are stated in the Balance Sheet.

1.2 Some of the trade receivables, trade payables, loans and advances are subject to confirmation/ reconciliation.

1.3 Suprajit Europe Limited (formerly Gills Cables Limited), a wholly owned Subsidiary (WOS) was established in 2006 and has accumulated losses of Rs. 157,903,679/- (PY: Rs. 135,775,985/-) as at the year ended March 31st, 2013. The WOS is near the cash break even level if exceptional items are excluded and the management expects the operations to be cash positive in the foreseeable future. Hence in the opinion of the management there is no permanent diminution in the value of the investment. The Company has provided a Corporate guarantee to the bankers of the WOS to fund its operations if required.

1.4 Full quantitative particulars giving item wise and location wise details of fixed assets are maintained in the ERP system in respect of additions made after 1.4.2008. The particulars of fixed assets acquired prior to this date have been updated in the ERP system in a summarized format. However, item wise particulars are maintained for major assets in manual form.

1.5 Exceptional item in the Profit & Loss Statement represents profit on sale of land and building situated at Doddaballapur.

(Amounts in Rs.)

31.03.2013 31.03.2012

1.6 Contingent Liabilities and Commitments

1.6.1 Contingent Liabilities

Corporate Guarantees issued on behalf of a subsidiary to their bankers [GBP 41,160,000 41,290,000 500,000 (PY: GBP 500,000)].

B-17 Bond Executed in favour of customs 15,000,000 15,000,000

Bank Guarantee furnished to Tax Authorities for availing concessions. 750,000 750,000

Disputed Excise/ service tax dues Pending in appeal * 544,160 1,434,040

Demand raised by VAT authorities disputed with Joint Commissioner of 28,817,668 - Commercial Taxes - Appeals (JCCT - Appeals).*

[Against this a bank guarantee amount of Rs.13,158,834/- (PY- Nil) is furnished Other sums for which the Company is contingently liable NIL 3,921,851

Total 86,271,828 62,395,891

* No provision has been made in these accounts for these disputed duty, tax demands as the management is confident that the matter will be ultimately decided in favour of the company.

1.6.2 Commitments

Estimated amount of contracts remaining to be executed on capital account and 16,558,382 95,051,147 not provided for (net of advances)

1.7 Employee Benefits:

Details of the employee benefits are given below.

a. Defined Contribution Plans:

During the year the following amounts have been recognised in the Profit and Loss Statement on account of defined contribution plans.

b. Defined Benefit Plans:

Gratuity - Funded

Compensated absences - Unfunded

Gratuity is a funded obligation and leave encashment is an unfunded obligation of the Company. The Company has provided for liability of gratuity and leave encashment based on an actuarial valuation under the projected unit credit method. Actuarial assumptions in determining such liability are given below:

1.8 Segment Reporting:

The Company has classified its products as Auto Components and hence operates in only one primary segment (business). Secondary segmental reporting is based on the geographical location of customers. The following is the distribution of the Company''s sale by geographical markets and segment assets which can be attributed to customers in such markets.

1.9 Previous period figures have been re-arranged / re-classified where required to confirm to current years'' classification.


Mar 31, 2012

1.1 In the opinion of the Board, none of the assets have a value lower on realization in the ordinary course of business than the amount at which they are stated in the Balance Sheet.

1.2 Some of the trade receivables, trade payables, loans and advances are subject to confirmation/ reconciliation.

1.3 Suprajit Europe Limited (formerly Gills Cables Limited), a wholly owned Subsidiary (WOS) was established in 2006 and has accumulated losses ofRs. 135,775,985/- (PY: Rs. 94,239,432/-) as at the year ended 31st March, 2012. The WOS is near the cash break even level if exceptional items are excluded and the management expects the operations to be cash positive in the foreseeable future. Hence, in the opinion of the management there is no permanent diminution in the value of the investment. The Company has provided a Corporate guarantee to the bankers of the WOS to fund its operations, if required.

1.4 Full quantitative particulars giving item wise and location wise details of fixed assets are maintained in the ERP system in respect of additions made after 1.4.2008. The particulars of fixed assets acquired prior to this date have been updated in the ERP system in a summarized format. However, item wise particulars are maintained for major assets in manual form.

(Amounts in Rs.)

31.03.2012 31.03.2011

1.5 Contingent Liabilities and Commitments

1.5.1 Contingent Liabilities

Disputed Excise/ Entry tax dues pending in appeal 1,434,040 1,434,040

Corporate Guarantees issued on behalf of a subsidiary to their bankers 41,290,000 36,450,000 [GBP 500,000 (PY: GBP 500,000)].

B-17 Bond Executed in favour of customs 15,000,000 10,000,000

Bank Guarantee furnished to Tax Authorities for availing concessions 750,000 2,276,168

Other sums for which the Company is contingently liable 3,921,851 3,921,851

Total 62,395,891 54,082,059

1.5.2 Commitments

Estimated amount of contracts remaining to be executed on capital account and 95,051,147 102,014,428 not provided for (net of advances)

Total Contingent Liabilities and Commitments 157,447,038 156,096,487

1.6 Employee Benefits:

Details of the employee benefits are given below.

b. defined Benefit Plans:

Gratuity - Funded

Compensated absences - Unfunded

1.7 Segment Reporting:

The Company has classified its products as Auto Components and hence operates in only one primary segment (business). Secondary segmental reporting is based on the geographical location of customers. The following is the distribution of the Company's sale by geographical markets and segment assets which can be attributed to customers in such markets.

1.8 Previous period figures have been rearranged/ reclassified where required to confirm to current year's classification and changes mandated by revised Schedule VI.


Mar 31, 2011

1. Contingent Liabilities

(Amounts in INR)

Amount as on Amount as on Sl. No. Particulars March 31,2011 March 31,2010

Estimated amount of contracts remaining to be 1 executed on capital account and not provided for(net 102,014,428 24,543,796 of advances)

Corporate Guarantees issued on behalf 2 of subsidiaries 36,450,000 34,470,000 to their bankers

Bank Guarantee furnished to Tax Authorities for 3 2,276,168 4,264,893 availing concessions.

4 Disputed Excise/Entry tax dues pending in appeal 1,434,040 1,434,040

5 B-17 Bond Executed in favour of customs 10,000,000 10,000,000

Other sums for which the Company is contingently 3,921,851 3,921,851 liable

2. Some of the sundry debtors, loans and advances and creditors are subject to confirmation.

3. In the opinion of the management, current assets, loans and advances have a value not less than what is stated in the accounts if realised in the ordinary course of business.

4. Gills Cables Limited, a wholly owned Subsidiary (WOS) was established in 2006 and has accumulated losses of Rs. 95,417,789/- (PY Rs.78,308,040/-) as at the year ended March 31 st, 2011. However the WOS has been making cash profits till the previous year and hence in the opinion of the management there is no permanent diminution in the value of the investment. The Company has provided a letter of support to the WOS to fund its operations if required.

5. The Company was in the process of updating the fixed asset records/register in its ERP system which has been since completed. Full quantitative particulars giving item wise/location wise details of fixed assets are maintained in the ERP system in respect of additions made after 1.4.2008. The particulars of fixed assets acquired prior to this date have been updated in the ERP system in a summarized format. However, item wise particulars are maintained for major assets in manual form.

6. Segment Reporting

The Company has classified its products as Auto Components and hence operates in only one primary segment (business). Secondary segmental reporting is based on the geographical location of customers. The following is the distribution of the Companys sale by geographical markets and segment assets which can be attributed to customers in such markets.

7. Some of the previous years figures have been re-grouped to suit current years grouping.


Mar 31, 2010

1. Contingent Liabilities:

Sl No. Particulars Amount as on Amount as on March 31st, 2010 March 31st, 2009

1. Estimated amount of contracts 24,543,796 11,066,359 remaining to be executed on capital account and not provided for (net of advances)

2. Corporate Guarantees issued 34,470,000 60,890,000 on behalfof subsidiaries to their bankers

3. Letter of Credit Nil 1,094,430

4. Bank Guarantee furnished to Tax 4,264,893 4,164,893 Authorities

5. Disputed Excise / Entry Tax 1.434,040 1,510,202 dues pending in appeal

6. B - 17 Bond executed in favour of 10,000,000 10,000,000 Customs

7. Others sums for which the 3,921,851 3,921,851 Company is contingently liable

2. Some of the sundry debtors, loans and advances and creditors are subject to confirmation.

3. In the opinion of the management, current assets, loans and advances have a value not less than what is stated in the accounts if realised in the ordinary course of business.

4. During the year, part of the facilities being set up at Haridwar was completed and put to use, commercial production started during March, 2010. Direct administrative costs and borrowing costs as per AS-16 relatable to this facility have been capitalised.

5. Gills Cables Limited, a wholly owned Subsidiary (WOS) was established in 2006 and has accumulated losses of Rs. 78,308,040/- (PY Rs.70,960,866/-) as at the year ended March 31 st, 2010. However the WOS has been making cash profits during the current year as well as previous year and hence in the opinion of the management there is no permanent diminution in the value of the investment. The Company has provided a letter of support to theWOS to fund its operations if required.

6. As the proposed unit at Singur, West Bengal for manufacture & supply of companys products to a specific customer has been inordinately delayed due to reasons beyond control of the Company, certain expenses aggregating to Rs.6,418,789/- has been written off in the books of accounts.The management is confident of realising an amount not less than that at which rest of the assets relating to this unit are carried in the Balance Sheet.

7. The Company was in the process of updating the fixed asset records/register in its ERP system which has been since completed. It is found that full quantitative particulars giving item wise/location wise details of fixed assets are maintained in the ERP system in respect of additions made after 1.4.2008.The fixed assets particulars prior to this period have been updated in the ERP system in a summarised format. However additional particulars are available for major assets in manual form.

8. Foreign Currency Exposure:

9. Employee benefits:

i) Defined Contribution Plan:

During the year the following amounts have been recognised in the Profit and Loss Account on account of defined contribution plans.

ii) Defined Benefit Plans:

a. Gratuity- Funded

b. Compensated absences-Unfunded

*The assumption of future salary increases takes into account of inflation, seniority, promotions and other relevant factors such as supply and demand in the employment market.

II. Segment Reporting:

The Company has classified its products as Auto Components and hence operates in only one primary segment (business). Secondary segmental reporting is based on the geographical location of customers. The following is the distribution of the Companys sale by geographical markets and segment assets which can be attributed to customers in such markets.

Loans given to Suprajit Automotive Private Limited does not have fixed repayment schedule and interest charged is not below the rate prescribed U/s 372A of the Companies Act, 1956

The expenses such as Salaries, Wages, Materials and Consumables are included in the respective head of accounts and direct expenditure is disclosed under Research & Development Expenditure in the Profit and Loss Account.

10. Managerial Remuneration U/S 309 & 198(4) of the Companies Act

Computation of net profit in accordance with Section 349 of the Companies Act, 1956 for calculation of Commission payable to the Vice Chairman & Managing Director.

Vice-Chairman & Managing Directors Remuneration includes salary, perquisites and commission on Pre-tax profit under Section 198 of the Companies Act, 1956.

The overall remuneration of the Vice-Chairman & Managing Director is computed at 5% of the Net Profit of the Company under Section 198,309 and Schedule XIII to the Companies Act, 1956.


Mar 31, 2000

A) CONTINGENT LIABILITIES:

Demand of Income Tax for Rs. 29,36,497.00 in respect of the year 1995- 96 against the Company, not acknowledged as debt and not provided for, in respect of which the Company is in appeal.

b) The deferred sales tax and turnover tax liabilities are treated as secured and shown under secured loans.

c) The loans from Karnataka State Financial Corporation are secured by Mortgage of land and buildings and hypothecation of plant and machinery and also by the personal guarantee of Managing Director.

d) The Overdraft facility from Syndicate Bank is secured by hypothecation of stock of raw materials, semi-finished goods, stores, consumables, book- debts and by the personal guarantee of Managing Director.

e) The Company has made provision for Income Tax for the year 1999-2000 and paid the advance Income Tax.

f) Sundry creditors include Rs. 139.82 lakhs due to Small Scale and ancillary undertakings. There was no outstanding more than six months to Small Scale Industrial undertakings based on available information.

 
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