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Notes to Accounts of Swaraj Engines Ltd.

Mar 31, 2017

1. Financial Instruments

(Refer Note 1.11)

Capital management

Company''s capital management objectives are to:

- ensure the company''s ability to continue as a going concern

- provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

For the purposes of the Company''s Capital Management, capital includes issued capital and all other equity reserves. Company manages its capital structure and makes adjustments in the light of changes in economic environment and the requirements of the financial covenants.

realization. Company expect all the debtors to be realized in full, accordingly no provision has been made in the books of account.

Credit risk on cash and cash equivalents is limited as Company generally invest in deposits with banks. Further, Investments are primarily in debt based liquid mutual funds only and the same are fairly spread across various schemes.

Liquidity Risk

(i) Liquidity Risk Management

The Company manages liquidity risk by maintaining adequate reserves, banking facilities and by continuously monitoring forecast & actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

(ii) Maturities of Financial Liabilities

The following tables detail the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The amount disclosed in the tables have been drawn up based on the earliest date on which the Company can be required to pay. Financial Liabilities include Trade Payables, Capital Purchases, Unpaid/Unclaimed Dividend etc. which are in the normal course of business having maturity plan of less than 1 year and non-interest bearing.

As at 31st March, 2017, the Company had a working capital of Rs. 196.60 crores including cash and bank balance & bank deposits of Rs. 178.27 crores and investment of Rs. 48.91 crores.

As at 31st March 2016, the Company had a working capital of Rs. 167.32 crores including cash and bank balance & bank deposits of Rs. 173.11 crores and investment of Rs. 10.40 crores.

Accordingly, company do not perceive any liquidity risk.

2. Fair Value Measurement

The fair values of the Financial Assets and Liabilities are included in the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique.

Level 1 - Quoted (unadjusted prices) in active markets for identical assets or liabilities.

Level 2 - Other Techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.

Level 3 - Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

‘Assessment of Income Tax is completed upto Assessment Year 2014-15. There is no demand which is disputed in Appeal and not provided for. For earlier Assessment Years, tax authorities have filed appeals/references which involve an estimated liability of Rs. 148.94 Lacs (31.03.2016 - Rs. 148.94 Lacs)

**Represents demand for enhanced compensation for land allotted to Company in 1988. Company is in appeal with Honble Supreme Court of India. Pending appeal, Rs. 100.00 lacs was deposited with the court during the financial year 2008-09 and the same forms part of Other Non-Current assets under Note 2.4.

3.While letters for confirmation of balance of sundry creditors, sundry debtors and material lying with vendors have been sent, only few responded. Rests are subject to confirmation.

4. Segment Reporting

The Company is primarily engaged in the business of diesel engines, diesel engine components and spare parts. As the basic nature of these activities are governed by the same set of risk, returns and internal business reporting system, accordingly these have been grouped as single segment in above disclosures as per Ind AS-108 dealing with " Operating Segment".

5. Disclosure on Specified Bank Notes (SBNs) :

During the year, the Company had specified bank notes or other denomination note as defined in the MCA notification G.S.R. 308(E) dated March 31, 2017 on the details of Specified Bank Notes (SBNs) held and transacted during the period from November 9, 2016 to December 30, 2016, the denomination-wise SBNs and other notes as per the notification is given below:

* for the purposes of this clause, the term ''Specified Bank Notes'' shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407 (E), dated the 8th November, 2016.

6. First-time adoption of Ind-AS

These financial statements, for the year ended 31st March, 2017, are the Company''s first financial statements prepared in accordance with Ind-AS. For periods up to and including the year ended 31st March, 2016, the Company prepared its financial statements in accordance with statutory reporting requirement in India immediately before adopting Ind-AS (previous GAAP). Accordingly, the Company has prepared financial statements which comply with Ind-AS applicable for periods ending on or after 31st March, 2017, together with the comparative period data as at and for the year ended 31st March, 2016, as described in the summary of significant accounting policies. In preparing these financial statements, the Company''s Opening Balance Sheet was prepared as at 1 st April, 2015, the Company''s date of transition to Ind-AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at 1st April, 2015 and the financial statements as at and for the year ended 31st March, 2016.

Exemptions applied - Company has not opted for any exemptions as given in Ind-AS 101 First Time Ind-AS Adoption reconciliations

The effect of the company’s transition to Ind-AS is summarized in this note as follows:

(i) Reconciliation of Equity and Net Profit as previously reported under Indian GAAP to Ind-AS;

(ii) Adjustments to the statement of cash flows.

Note: No statement of comprehensive income was produced under previous GAAP. Therefore, the reconciliation starts with profit under previous GAAP.


Mar 31, 2016

The Company has issued only one class of shares referred to as Equity Shares having a par value of Rs.10/-. Each Equity Shareholder is entitled to one vote per share.

The Company declares and pays dividend in Indian Rupees. The Board of Directors, in their meeting held on 26th April, 2016 proposed a dividend of Rs. 33 per equity share (including Rs 18 per share as special dividend). Dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. The total dividend appropria- tion for the year ended 31st March, 2016 amounted to Rs. 4932.91 lacs (2015- Rs.4932.91 lacs) including corporate dividend tax of Rs.834.37 lacs (2015 - Rs.834.37 lacs)

* Assessment of Income Tax is complete up to assessment year 2013-14. There is no demand which is disputed in Appeal and not provided for (31.03.2015- Rs.43.07 lacs). For earlier Assessment Years, tax authorities have filed appeals / references which involve an estimated liability of Rs. 148.94 lacs (31.03.2015- Rs.185.32 lacs).

** Represents demand for enhanced compensation for land allotted to Company in 1988. Company is in appeal with Hon''ble Supreme Court of India. Pending appeal, Rs. 100.00 lacs was deposited with the court during the financial year 2008-09 and the same forms part of Long-Term Loans & Advances under Note 2.9.

1. While letters for confirmation of balance of sundry creditors, sundry debtors and material lying with vendors have been sent, only few responded. Rest are subject to confirmation.

2. Related party disclosures as required under Accounting Standard -18 are given below:

a) Names of related parties and description of relationships having transactions during the year: i) Associate Company Mahindra & Mahindra Limited (M&M)

ii) Key Management Personnel Shri M.N. Kaushal (Whole-time Director)

3. Segment Reporting

The Company''s business activities relate to diesel engines, diesel engine components & spare parts and fall within a single primary business segment. As such, no separate segment reporting is required under Accounting Standard 17, issued by the Institute of Chartered Accountants of India.

4. Employee Stock Option

During the year, Company has approved Employee Stock Option Scheme-2015 (ESOS-2015). Under the scheme, 31,000 Equity Shares of the face value of Rs.10/- are available for being granted to eligible employees on the recommendation of the Nomination and Remuneration Committee. Further, Company during the year, has granted 9389 Equity Shares at face value to the eligible employees. As per the ESOS-2015, Options granted vest in four installments on the expiry of 18 months, 30 months, 42 months and 54 months respectively. The options may be exercised on any day over a period of 5 years from the date of vesting. Numbers of vested options are exercisable subject to minimum of 50 or number of options vested whichever is lower.

Employee benefit expenses includes Rs.10.32 lacs (2015-Nil) being the amortization of Deferred Employee Compensation expense.

Had the Company adopted fair value method in respect of options granted during the year, the Employee benefit expenses would have been lower by Rs.0.90 lacs.

Note:

i) The amounts of all the items in Analysis of Raw Materials consumed represent the issues during the year. The figure of others (including components) is a balancing figure based on total consumption shown in Note no. 2.18 and includes adjustments for excess/shortage/damages/obsolete found on physical verification.

5. Research & Development Expenses includes an amount of Rs. Nil (2015- Rs.41.66 lacs) amortized during the year.


Mar 31, 2015

1.1 Contingent Liabilities and Commitments (To the extent not provided for)

Particulars 2015 2014 Rs. in lacs Rs. in lacs

Contingent Liabilities :

Claim against the Company not acknowledged as debt

- Excise matters in dispute 101.59 127.61

- Income Tax matters in dispute 228.39* 243.65

- Others 241.67** 241.67

Commitments :

Estimated amount of unexecuted capital contracts 2562.71 1139.23 (net of advances and deposits)

* Assessment of Income Tax is complete upto assessment year 2012-13.No provision has been made in the Books of Accounts for the disputed demands of Rs. 43.07 lacs (31.03.2014 - Rs 58.33 lacs),where company is in appeal. For earlier Assessment Years, tax authorities have filed appeals / references which involve an estimated liability of Rs. 185.32 lacs (31.03.2014- Rs.185.32 lacs).

** Represents demand for enhanced compensation for land allotted to Company in 1988. Company is in appeal with Hon''ble Supreme Court of India. Pending appeal, Rs. 100.00 lacs was deposited with the court during the financial year 2008-09 and the same forms part of Long-Term Loans & Advances under Note 2.9.

1.2 While letters for confirmation of balance of sundry creditors, sundry debtors and material lying with vendors have been sent, only few responded. Rests are subject to confirmation.

1.3 Segment Reporting

The Company''s business activities relate to diesel engines, diesel engine components & spare parts and fall within a single primary business segment. As such, no separate segment reporting is required under Accounting Standard 17, issued by the Institute of Chartered Accountants of India.

1.4 Earnings per Share (EPS)

Earnings per share are calculated by dividing net profit for the year attributable to equity shareholders by number of equity shares outstanding during the year. The Company has not issued any potential equity shares, and accordingly, the basic earning per share and diluted earning per share are the same.

1.5 Research & Development Expenses includes an amount of Rs. 41.66 lacs (2014- Rs.118.34 lacs) amortized during the year being the expense towards upgradation of engine and improvement in fuel efficiency.

1.6 In compliance with the provisions of the Companies Act 2013, the company has reworked depreciation with reference to estimated economic life of Fixed Assets prescribed by Schedule II of the Act except for Patterns, Block & Dies and Vehicles where lower useful life has been considered in line with the existing practice.

Due revision in estimated economic life, the charge for depreciation is higher by Rs. 321.55 lacs for the year ended March 31,2015. Further, Rs.31.40 lacs (net of tax) has been adjusted to opening Surplus/Retained Earnings being the carrying value of assets having Nil revised remaining useful life as on April 1, 2014.Tax impact on the same, Rs. 16.17 Lacs, has been adjusted in the opening Deferred Tax Liability pertaining to Depreciation.

1.7 Previous year figures have been regrouped, wherever necessary, so as to correspond with those of the current year.


Mar 31, 2013

1.1 Contingent Liabilities and Commitments (To the extent not provided for)

Particulars 2013 2012 Rs. in lacs Rs. in lacs

Contingent Liabilities :

Claim against the Company not acknowledged as debt

- Excise matters in dispute 127.61 126.42

– Income Tax matters in dispute 232.29* 214.94

– Others 241.67** 241.67

Commitments :

Estimated amount of unexecuted capital contracts 1167.86 3283.05 (net of advances and depsits)

* Assessment of Income Tax is complete upto assessment year 2010-11.No provision has been made in the Books of Accounts for the disputed demands of Rs. 46.97 lacs (31.03.2012 - Rs. Nil), where company is in appeal. For earlier Assessment Years, tax authorities have filed appeal / references which involve an estimated liability of Rs. 185.32 lacs (31.03.2012- Rs.214.94 lacs).

** Represents demand for enhanced compensation for land allotted to Company in 1988. Company is in appeal with Hon''ble Supreme Court of India. Pending judgment, Rs. 100.00 lacs was deposited with the court during the financial year 2008-09 and the same forms part of Long-Term Loans & Advances under Note 2.10.

1.2 While letters for confirmation of balance of sundry creditors, sundry debtors and material lying with vendors have been sent, only few responded. Rests are subject to confirmation.

1.3 Related party disclosures as required under Accounting Standard –18 are given below:

a) Names of related parties and description of relationships having transactions during the year:

i) Associate Companies Mahindra & Mahindra Limited (M&M)

Kirloskar Industries Limited (KIL) Swaraj Automotives Limited (SAL)

ii) Key Management Personnel Shri M.N. Kaushal (Whole-time Director)

1.4 Segment Reporting The Company''s business activities relate to diesel engines, diesel engine components & spare parts and fall within a single primary business segment. As such, no separate segment reporting is required under Accounting Standard 17, issued by the Institute of Chartered Accountants of India.

1.5 Earnings per Share (EPS) Earnings per share are calculated by dividing net profit for the year attributable to equity shareholders by number of equity shares outstanding during the year. The Company has not issued any potential equity shares, and accordingly, the basic earning per share and diluted earning per share are the same.

1.6 Research & Development Expenses includes an amount of Rs.170.69 lacs (2012- Rs.119.02 lacs) amortized during the year being the expense towards upgradation of engine and improvement in fuel efficiency.

1.7 Previous year figures have been regrouped, wherever necessary, so as to correspond with those of the current year.


Mar 31, 2012

The Company has issued only one class of shares referred to as Equity Shares having a par value of Rs. 10/-. Each Equity Shareholder is entitled to one vote per share.

The Company declares and pays dividend in Indian Rupees. The Board of Directors, in their meeting held on 25th April, 2012 proposed a dividend of Rs. 13.00 per equity share. Dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. The total dividend appropriation for the year ended 31st March, 2012 amounted to Rs. 1876.50 lacs including corporate dividend tax of Rs. 261.92 lacs (2011 - Rs. 1443.46 lacs including corporate dividend tax of Rs. 201.48 lacs).

1.1 Contingent Liabilities and Commitments (To the extent not provided for)

Particulars 2012 2011 Rs. in lacs Rs. in lacs

Contingent Liabilities :

Claim against the Company not acknowledged as debt

- Excise matters in dispute 126.42 140.83

- Income Tax matters in dispute 214.94* 214.94

- Others 241.67** 241.67

Commitments :

Estimated amount of unexecuted capital contracts 3283.05 1257.70 (net of advances and deposits)

* Assessment of Income Tax is complete upto assessment year 2009-10. There is no demand which is disputed in Appeal and not provided for (2011 - Rs. Nil). For earlier Assessment Years, tax authorities have filed appeal / references which involves an estimated liability of Rs. 214.94 lacs.

** Represents demand for enhanced compensation for land allotted to Company in 1988. Company is in appeal with Hon'ble Supreme Court of India. Pending judgment, Rs. 100.00 lacs was deposited with the court during the financial year 2008-09 and the same forms part of Long-Term Loans & Advances under Note 2.10.

1.2 While letters for confirmation of balance of sundry creditors, sundry debtors and material lying with vendors have been sent, only few responded. Rests are subject to confirmation.

1.3 Segment Reporting

The Company's business activities relate to diesel engines, diesel engine components & spare parts and fall within a single primary business segment. As such, no separate segment reporting is required under Accounting Standard 17, issued by the Institute of Chartered Accountants of India.

1.4 Earnings per Share (EPS)

Earnings per share are calculated by dividing net profit for the year attributable to equity shareholders by number of equity shares outstanding during the year. The Company has not issued any potential equity shares, and accordingly, the basic earning per share and diluted earning per share are the same.

Note:

i) The amounts of all the items in Analysis of Raw Materials consumed represent the issues during the year. The figure of others (including components) is a balancing figure based on total consumption shown in Note no. 2.17 and includes adjustments for excess/shortage/ damages/obsolete found on physical verification.

1.5 Research & Development Expenses includes an amount of Rs.119.02 lacs (2011- Rs.151.98 lacs) amortized during the year being the expense towards upgradation of engine and improvement in fuel efficiency.

1.6 Based on the information available with the company, the balance due to Micro & Small enterprises as defined under the MSMED Act, 2006 are Rs. 410.21 lacs (2011-Rs.186.24 lacs). Further, while no interest is paid during the year, interest amounting to Rs. 0.54 lacs (2011 - Nil) is payable under the terms of the MSMED Act, 2006.

1.7 Previous year figures have been regrouped, wherever necessary, so as to correspond with those of the current year.


Mar 31, 2011

1. There are contingent liabilities in respect of

2011 2010

Rs. in lacs Rs. in lacs

Claim against the Company not

acknowledged as debt

- Excise matters in dispute 140.83 116.60

- Income Tax matters in dispute 214.94* 214.94

- Others 241.67** 241.67

* Assessment of Income Tax is complete upto assessment year 2008-09. There is no demand which is disputed in Appeal and not provided for (2010 - Rs. Nil). For earlier Assessment Years, tax authorities have filed appeal / references which involves an estimated liability of Rs. 214.94 Lacs.

** Represents demand for enhanced compensation for land allotted to Company in 1988. Company is in appeal with Honble Supreme Court of India. Pending judgment, Rs. 100.00 lacs was deposited with the court during the financial year 2008-09 and the same forms part of Loans & Advances under Schedule F.

2. While letters for confirmation of balance of sundry creditors, sundry debtors and material lying with vendors have been sent, only few responded. Rests are subject to confirmation.

3. Related party disclosures as required under Accounting Standard -18 are given below :

a) Names of related parties and description of relationships having transactions during the year:

i) Associate Companies :

Mahindra & Mahindra Limited (M&M)

Kirloskar Industries Limited (KIL)

Swaraj Automotives Limited (SAL)

ii) Key Management Personnel:

Whole time Director

Shri Bishwambhar Mishra (Vice Chairman)

b) Volume of Transactions with related parties

* Due to demerger of Kirloskar Oil Engines Limited (KOEL), KIL became related party w.e.f 01.04.2010 in place of KOEL. ii) Key Management Personnel

Remuneration - 51.20A

Note:A The remuneration was paid to Sh. G.S Rihal, Ex Managing Director.

4. Segment Reporting

The Companys business activities relate to diesel engines, diesel engine components & spare parts and fall within a single primary business segment. As such, no separate segment reporting is required under Accounting Standard 17, issued by the Institute of Chartered Accountants of India.

5. Earnings per Share (EPS)

Earnings per share are calculated by dividing net profit for the year attributable to equity shareholders by number of equity shares outstanding during the year. The Company has not issued any potential equity shares, and accordingly, the basic earning per share and diluted earning per share are the same.

6. Estimated amount of contracts remaining to be executed on capital account and not provided for is Rs. 1257.70 lacs net of advance (2010 -Rs.304.77 lacs).

The tax impact for the above purpose has been arrived at by applying the prevailing tax rate as on Balance Sheet date under the Income Tax Act, 1961.Gross reduction in Net Deferred Tax Liability amounting Rs 75.85 Lacs has been credited to Profit and Loss Account.

Notes:

i) It is not practicable to furnish quantitative information of all the components in view of large number of items varied in size and nature.

ii) The quantities and amounts of all the items in Analysis of Raw Materials consumed represent the issues during the year. The figure of others (including components) is a balancing figure based on total consumption shown in Schedule "H" and includes adjustments for excess/shortage/ damages/obsolete found on physical verification.

7. Research & Development Expenses includes an amount of Rs. 151.98 lacs (2010- Rs. 106.77 lacs) amortized during the year being the expense towards upgradation of engine and improvement in fuel efficiency.

8. Based on the information available with the company, the balance due to Micro & Small enterprises as defined under the MSMED Act, 2006 is Rs 186.24 lacs (2010- Rs. 107.21 lacs). Further, no interest during the year has been paid or payable under the terms of the MSMED Act, 2006.

9. Previous year figures have been regrouped, wherever necessary, so as to correspond with those of the current year.


Mar 31, 2010

1. There are contingent liabilities in respect of

2010 2009

Rs. in lacs Rs. in lacs Claim against the Company not acknowledged as debt

Excise matters in dispute 116.60 116.46

- Income Tax matters in dispute 214.94* 106.90

Others 241.67** 241.67

* Assessment of Income Tax is complete upto assessment year 2007-08. There is no demand which is disputed in Appeal and not provided for (2009 - Rs. Nil). For earlier Assessment Years, tax authorities have filed appeal / references which involves an estimated liability of Rs. 214.94 Lacs.

** Represents demand for enhanced compensation for land allotted to Company in 1988. Company is in appeal with Honble Supreme Court of India. Pending judgment, Rs. 100.00 lacs was deposited with the court during the financial year 2008-09 and the same forms part of Loans & Advances under Schedule F.

2. While letters for confirmation of balance of sundry creditors, sundry debtors and material lying with vendors have been sent, only few responded. Rests are subject to confirmation.

3. Earnings per Share (EPS)

Earnings per share are calculated by dividing net profit for the year attributable to equity shareholders by number of equity shares outstanding during the year. The Company has not issued any potential equity shares, and accordingly, the basic earning per share and diluted earning per share are the same.

4. Estimated amount of contracts remaining to be executed on capital account and not provided for is Rs.304.77 lacs net of advance (2009 -Rs. 7.39 lacs).

5. Research &Development Expenses includes an amount of Rs.106.77 (2009 Rs.105.09 lacs)amortized during the year being the expense towards upgradation of engine and improvement in fuel efficiency.

6.Based on the information available with the company,the balance due to Micro &Small enterprises as defined under the MSMED Act,2006 is Rs.107.21 lacs (2009 Rs.60.80 lacs).Further,no interest during the year has been paid or payable under the terms of the MSMED Act,2006.

7.Previous year figures have been regrouped,wherever necessary,so as to correspond with those of the current year.

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