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Notes to Accounts of Talbros Automotive Components Ltd.

Mar 31, 2015

1. CORPORATE INFORMATION

Talbros Engineering Limited (the 'Company') is a public company in India and incorporated under the provisions of the Companies Act, 1956. The company is engaged in manufacturing of Rear Axle Shafts. The company caters to both international and domestic market. The company has its manufacturing plants at Plot No 74-75, Sector-6, Faridabad- 121006 and Plot No 35-38 & 57, Industrial Area, Hathin, Palwal.

1.2 TERMS/ RIGHTS AND RESTRICTIONS ATTACHED TO EQUITY SHARES

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

In the event of liquidation of the company, the holders of equity shares will be entitled to receive assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders. During the year ended 31st March 2015, the amount of dividend per share recognised as distribution to equity holders was INR 6.00 (RY. INR 3.00). The total dividend appropriation for the year ended 31st March 2015 amounts to INR 1,52,29,512/- (P.Y. INR 7,614,756/-) excluding Dividend Distribution Tax of INR 31,86,750/-(P.Y. INR 1,294,128/-)

2. SEGMENT REPORTING

The entire operations of the company relates to only one Segment, VIZ. Automobile Components. Hence, as per AS-17 issued bv ICAI, there is no reportable Seament

Defined Benefit Plans

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded. The following tables summarize the components of net benefit expense recognized in the Statement of Profit & Loss, the funded status and amounts recognized in the balance sheet for the respective plans (as per Actuarial Valuation as on 31st March 2015).

3.1 LEAVE ENCASHMENT

Following Basis were adopted for the computation of the said liabilities

a) Mortality Table : LIC 1994-96 Ultimate

b) Suitable adjustment in respect of withdrawals and other Restrictive provisions.

c) Future (expected) payment based on terminals salary.

Determined by assuming salary rise of 6% per annum have been discounted by assuming the imputed rate of interest of 8 % per annum

For the Year Ended For the Year Ended 31st March, 2015 31st March, 2014

4. CONTINGENT LIABILITIES AND COMMITMENTS

CONTINGENT LIABILITIES

a) Guarantees 1,204,500 1,272,500

b) Bills discounted from Kotak Mahindra Bank Ltd with recourse not due for payment 34,201,018 35,472,790

c) Estimated amount of contracts remaining to be executed - - on capital account and not provided Total value of Contracts 148,234,575 56,350,833

Contracts Remaining to be executed 105,652,779 29,668,425

5. In the opinion of the management, the value on realization of current assets, loans & advances in the ordinary course of business would not be less than the amount at which they are stated in the Balance Sheet and provisions for all known liabilities has been made.

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

7. All amounts in the financial statements are rounded off to the nearest of Rupee, except as otherwise stated.

8. Current year figures are shown in bold prints.


Mar 31, 2014

1.Notes:-

* Term Loan from State Bank of India carrying rate of interest @13.65% per annum is secured by first exclusive charge over the fixed assets at the Sitarganj Plant including Land & Building and is further secured by personal guarantee of two directors.

* * Term Loan from IndusInd Bank carrying rate of interest @ base rate plus 1 % per annum is secured by first charge by way of

hypothecation over specific assets created out of the Term Loan both present and future, second pari passu charge over entire current assets of the Company both present and future and personal guarantee of two directors.

*** Term loan from Bajaj Finance Ltd carrying rate of interest @ 11.15 % to 12.15% per annum is secured by first and exclusive charge over existing plant & machinery of the Company''s Gasket division situated at Faridabad and is further secured by personal guarantee of two directors.

# Term loan from Yes Bank carrying rate of interest @ base rate plus 1.65% p.a. is secured by way of exclusive charge on all the assets financed by bank located anywhere and second pari passu charge on all the current assets of the Company both present and future and personal guarantee of three directors.

## Term Loan from Punjab National Bank carrying rate of interest @ 13.75% per annum was secured by way of first charge on the specific fixed assets financed out of this loan and was further secured by second pari passu charge on entire current assets, present & future and personal guarantee of two directors.

2.Notes:-

* Working Capital Loans from State Bank of India, ICICI Bank, State Bank of Patiala,IndusInd Bank and Punjab National Bank are secured by way of first pari-passu charge on the Company''s entire current assets, both present & future. Further, secured by second charge on all the fixed assets of the Company, both present & future, ranking pari passu and personal guarantee of two directors of the Company.

** Working Capital Loan from HDFC Bank is secured by way of first pari passu charge on entire current assets of the Company, second pari passu charge on entire fixed assets of the Company including equitable mortgage of land and building situated at Faridabad and Chennai and personal guarantee of two directors of the Company.

# Working Capital Loan from Yes Bank is secured by first pari passu charge on all the current assets both present and future, second pari passu charge on all the movable fixed assets of the Company excluding those exclusively charged to other banks and personal guarantee of two directors of the Company.

*** Against personal guarantee of two directors of the Company.

3. CONTINGENT LIABILITIES AND COMMITMENTS :

(to the extent not provided for)

4. CONTINGENT LIABILITIES :

(i) Claims against the Company not acknowledged as debts: As at As at Nature of Dues March 31, 2014 March 31, 2013

(a) Central Excise Classification 14,17,866 14,17,866 of paper gasket

(b) Service Tax Cenvat credit 11,52,989 55,47,875 disallowed

(c) Central Sales Central Sales 4,97,936 15,51,616 Tax Tax

(d) Haryana Value Disallowance of 2,73,548 2,73,548 Added Tax input tax

(e) Central Excise Demand on - 60,25,898 Assessable value (Ex.)

(f) Customs Act Demand of Custom 12,09,782 - Duty

(g) E.S.I ESI Demand 41,29,111 41,29,111 (Includes Rs. 4,34,130 paid under protest)

(h) Income Tax Disallowances 4,47,739 4,47,739

(i) District Judge Claim of freight 8,13,484 - bills

(j) High Court, Fees for building 55,000 2,05,000 Mumbai work

(k) Central Sales Tax Non filing of 35,000 35,000 return

(l) Central Excise Objection on 80,00,000 - exemption on some of the products sold from Sitarganj Plant

TOTAL 1,80,32,455 1,96,33,653

(ii) Guarantees executed in favour of various authorities/ Customers/Others amounting to Rs. 3,20,54,736 (Previous Year Rs. 2,79,01,046)

(iii) Bills discounted with Banks Rs. 3,37,03,339 (Previous year Rs. 2,23,62,956).

5. EXCISE DUTY

The finished goods at Sohna Plant ( Material Division ), Gurgaon is considered as raw material for the Company because the same is used for manufacturing gaskets at Faridabad and other plants. Accordingly the excise duty liability on excisable goods manufactured at Sohna, but pending removal / clearance from the factory premises as at 31.03.2014, estimated at Rs. 4,16,918 (Previous year Rs. 6,50,173) is not accounted for. If the said liability would have been accounted, it would have resulted in a higher charge of excise duty with corresponding adjustment of liability and a higher inventory by Rs. 4,16,918 (Previous year Rs. 6,50,173). However, this would have no effect on the net profit of the Company for the accounting year or on the net current assets as at 31.03.2014.

6. Balance with Central Excise & Other Authorities includes Rs. 80 lacs deposited by the company as advance excise duty in view of investigation by the excise department, objecting excise exemption on some of the products sold from Sitarganj Plant. The matter is still to be decided.

7. The Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosure relating to amounts unpaid as at the year end together with interest paid/ payable under this Act and as required by Schedule VI of Companies Act, 1956 have not been given.

8. Small Industries Development Bank of India (SIDBI) has sanctioned a limit of Rs. 1300 lacs for discounting hundies of Micro, Small and Medium Enterprises supplying materials to the Company. This facility is secured by way of second pari - passu charge in favour of SIDBI on all the current assets of the Company including stock, raw material, stock in process, finished & semi finished goods, consumable stores, etc. both present and future and is further secured by personal guarantee of two directors. The hundies accepted by the Company and outstanding balance as at 31st March, 2014 amounted to Rs. 2,69,53,396 (Previous Year Rs. 6,05,22,344). These amounts have already been provided in the books of account.

9. Letters seeking confirmation of outstanding balances at year end have been sent to all the customers / suppliers / recoverables. Confirmations have been received in few cases. Adjustments, if any, will be made in the current year on receipt / reconciliation of remaining confirmations.

10. During the year, the Company disposed off one of its lands including building and immovable fixtures thereon which were not being used currently and earned a profit of Rs. 8,80,67,548/- on sale of these fixed assets.

11. Interest in Joint Ventures

The Company has invested in three joint venture companies namely, Nippon Leakless Talbros Pvt. Limited, Magneti Marelli Talbros Chassis Systems Pvt. Limited and Talbros Marugo Rubber Pvt. Limited wherein Company holds 40%, 50% and 50% ownership interests respectively. The proportionate assets, liabilities, expenses and incomes have been disclosed in the Consolidated Financial Statements.

12. The Company has provided Minimum Alternate Tax (MAT) due to brought forward unabsorbed depreciation and accumulated losses of the amalgamating Companies, and is entitled for MAT Credit amounting to Rs. 8,03,30,447 (Previous Year Rs. 7,63,72,157) as per provisions of Income Tax Act, 1961.

13. Previous year figures have been regrouped/rearranged wherever considered necessary.


Mar 31, 2013

1. EXCISE DUTY

The finished goods at Sohna Plant (Material Division), Gurgaon is considered as raw material for the Company because the same is used for manufacturing gaskets at Faridabad and other plants. Accordingly the excise duty liability on excisable goods manufactured at Sohna, but pending removal / clearance from the factory premises as at 31.03.2013, estimated at Rs. 6,50,173 (Previous year Rs.6,73,291) is not accounted for. If the said liability would have been accounted, it would have resulted in a higher charge of excise duty with corresponding adjustment of liability and a higher inventory by Rs. 6,50,173 (Previous year Rs.6,73,291). However, this would have no effect on the net profit of the Company for the accounting year or on the net current assets as at 31.03.2013.

2. The Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosure relating to amounts unpaid as at the year end together with interest paid/ payable under this Act and as required by Schedule VI of Companies Act, 1956 have not been given.

3. Small Industries Development Bank of India (SIDBI) has sanctioned a limit of Rs. 1300 lacs for discounting hundies of Micro, Small and Medium enterprises supplying materials to the company. This facility is secured by way of second pari - passu charge in favour of SIDBI on all the current assets of the Company including stock, raw material, stock in process, finished & semi finished goods, consumable stores, etc. both present and future and is further secured by personal guarantee of two directors. The hundies accepted by the Company and outstanding balance as at 31st March, 2013 amounted to Rs. 6,05,22,344 (Previous Year Rs. 10,03,50,773 ). These amounts have already been provided in the books of account.

4. SEGMENT REPORTING

a) Primary Segment:

The Company''s operations comprise of two segments viz , "Auto Components & Parts" and " IT Activities". In terms of the disclosure requirements of Accounting Standard (AS-17) "Segment Reporting " , IT Activities segment does not fall within the purview of Reportable Segments.

b) Secondary Segment :

The Company caters to the needs of the Indian as well as foreign market. The risk and returns vary from country to country and export to none of the countries exceeds 10% of the sales turnover of the Company. Hence it is not reportable.

5. Letters seeking confirmation of outstanding balances at year end have been sent to all the customers / suppliers / recoverables. Confirmations have been received in few cases. Adjustments, if any, will be made in the current year on receipt / reconciliation of remaining confirmations.

6. The management, in order to move up the supply chain and acquire designing and developing capabilities for Suspension Systems, decided to sell its Stamping Business currently limited to manufacture of Sheet Metal parts and components of suspension systems by way of slump sale on a going concern basis to a separate 50:50 joint venture with Sistemi Suspensioni, a wholly owned subsidiary of Magneti Marelli, Italy. It was approved by the shareholders on January 6, 2012 and accordingly, all the related movable fixed assets and net current assets amounting to Rs.717.11 Lacs and Rs.332.85 Lacs respectively, were transferred at their book value to the joint venture company, Magneti Marelli Talbros Chassis Systems Private Limited effective April 1, 2012. Stamping business during the previous year contributed Rs. 4,042.62 Lacs to the gross revenue of the company. In view of this, cuurent year figures are not directly comparable with the corresponding figures of previous year.

7. The management in order to acquire new technology to move up in the supply chain and to design and manufacture new Rubber Components, decided to sell its Rubber Components business (other than Rubber Gaskets) by way of slump sale on a going concern basis to a seperate joint venture company, Talbros Marugo Rubber Private Limited, wherein Talbros Automotive Components Limited holds one share less than 50% equity capital. The remaining equity is held by the other JV partner, Marugo Rubber Industries, Japan. It was approved by the shareholders on September 29, 2012 and accordingly, all the related movable fixed assets and net current assets amounting to Rs. 2,51.97 Lacs and Rs.96.93 Lacs respectively, were transferred at their book value to the joint venture company, effective January 15, 2013. Rubber business during the previous year contributed Rs. 6,65.59 Lacs to the gross revenue of the company. In view of this, cuurent year figures are not directly comparable with the corresponding figures of previous year.

8. Interest in Joint Ventures

The Company has invested in three joint venture companies namely, Nippon Leakless Talbros Pvt. Limited, Magneti Marelli Talbros Chassis Systems Pvt. Limited and Talbros Marugo Rubber Pvt. Limited wherein Company holds 40%, 50% and 50% ownership interests respectively. The proportionate assets, liabilities, expenses and incomes have been disclosed in the Consolidated Financial Statements.

9. The Company has provided Minimum Alternate Tax (MAT) due to brought forward unabsorbed depreciation and accumulated losses of the amalgamating Companies, and is entitled for MAT Credit amounting to Rs. 7,63,72,157 (Previous Year Rs. 6,14,84,626) as per provisions of Income Tax Act, 1961.

10. Previous year figures have been regrouped/rearranged wherever considered necessary.


Mar 31, 2012

*It includes :-

a) 5,24,349 Equity Shares allotted as fully paid up on 16.08.2007 to erstwhile shareholders of XO Stampings Ltd., pursuant to the sanction of the Hon'ble High Court of Punjab & Haryana, to a scheme of arrangement of the said Company with the Company under Section 391 read with Section 394 of the Companies Act, 1956 for consideration other than cash.

b) 2,03,315 Equity Shares allotted as fully paid up on 16.08.2007 to shareholders of XO Infotech Ltd., pursuant to the sanction of the Hon'ble High Court of Punjab & Haryana, to a scheme of arrangement of the said Company with the Company under Section 391 read with Section 394 of the Companies Act, 1956 for consideration other than cash.

1.1 The Company has only one class of Equity Shares having a par value of Rs. 10 per share. Each holder of Equity Shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of shareholders.

Notes:-

* Term Loan from State Bank of India is secured by first exclusive charge over the fixed assets at the Sitarganj Plant including Land & Building. Further secured by personal guarantee of two directors and repayable with in 6 1/2 years (including moratorium of 1 3/4 years) in 20 quarterly instalments beginning from 01.04.2010.

** ECB Loan from ICICI Bank was secured by way of first charge on the specific fixed assets including movable fixed assets and movable properties financed out of this loan. Further, secured by second pari-passu charge over all the existing fixed assets of the Company situated at Faridabad, Chennai, Pune, Sohna & Bawal plants and personal guarantee of two directors. Fully repaid in October 2011.

# Term loan from Yes Bank is secured by way of subservient charge on current assets and movable fixed assets and personal guarantee of three directors and repayable in 21 equal monthly instalments after a moratorium period of three months.

## Term Loan from Punjab National Bank is secured by way of first charge on the specific fixed assets financed out of this loan. Further, secured by second pari-passu charge on entire current assets, present & future and personal guarantee of two directors and repayable with in 5.5 years in 20 quarterly instalments beginning from 31.03.2012.

### Non current portion of Fixed deposits from public repayable during financial year 2013-14 and 2014-15 amounting to Rs. 5,05,24,220 and Rs. 2,98,42,000 respectively.

Notes:-

* Working Capital Loans from State Bank of India, ICICI Bank, State Bank of Patiala and Punjab National Bank are secured by way of first pari-passu charge of hypothecation on the Company's entire current assets, both present & future. Further, secured by second charge on all the fixed assets of the Company, both present & future, ranking pari-passu and personal guarantee of two directors of the Company.

** Working Capital Loan from Yes Bank is secured by way of sub servient charge on current assets and movable fixed assets and is further secured by personal guarantee of three directors of the Company.

*** Working Capital Loan from Bajaj Finance Ltd. is secured by personal guarantee of two directors of the Company.

(ii) Guarantees executed in favour of various authorities/ Customers/Others amounting to Rs. 2,82,44,065 (Previous Year Rs. 36,47,945)

(iii) Corporate Guarantee executed in favour of ICICI Bank Ltd. amounting to Rs. 9.86 Crore (USD 1.91 Millions) {Previous Year Rs. 8.64 Crores (USD 1.91 Millions)} against term borrowing of QH Talbros Ltd., an Associate Company, the outstanding as on March 31, 2012 is Rs. 4.93 Crore (USD 9,55,000.12).

(iv) Bills discounted with Banks Rs. 1,80,77,110 (Previous year Rs. 2,65,96,629).

2. EXCISE DUTY

The finished goods at Sohna Plant (Material Division), Gurgaon is considered as raw material for the Company because the same is used for manufacturing gaskets at Faridabad and other plants. Accordingly, the excise duty liability on excisable goods manufactured at Sohna, but pending removal / clearance from the factory premises as at 31.03.2012, estimated at Rs. 6,73,291 (Previous year Rs. 2,33,666) is not accounted for. If the said liability would have been accounted, it would have resulted in a higher charge of excise duty with corresponding adjustment of liability and a higher inventory by Rs. 6,73,291 (Previous year Rs. 2,33,666). However, this would have no effect on the net profit of the Company for the accounting year or on the net current assets as at 31.03.2012.

3 Small Industries Development Bank of India (SIDBI) has sanctioned a limit of Rs. 1,300 lacs for discounting hundies of Micro, Small and Medium enterprises supplying materials to the company. This facility is secured by way of second pari-passu charge in favour of SIDBI on all the current assets of the Company including stock, raw material, stock in process, finished & semi finished goods, consumable stores, etc. both present and future and is further secured by personal guarantee of two directors. The hundies accepted by the Company and outstanding balance as at March 31,2012 amounted to Rs. 10,03,50,773 (Previous Year Rs. 8,20,49,976). These amounts have already been provided in the books of accounts.

4 Pursuant to the notification dated March 31, 2009 issued by the Ministry of Corporate Affairs, the Company has exercised the option available under the newly inserted paragraph 46 to the Accounting Standard AS -11 " The Effect of Changes in Foreign Exchanges Rates" to add or deduct the foreign Exchange fluctuation to capital cost of the Assets. As a result, the exchange gain of Rs. Nil (Previous Year Rs. 0.23 lacs) during the year has been deducted from the cost of fixed assets.

5. SEGMENT REPORTING a) Primary Segment :

The Company's operations comprise of two segments viz , "Auto Components & Parts" and "IT Activities". In terms of the disclosure requirements of Accounting Standard (AS-17) "Segment Reporting", IT Activities segment does not fall within the purview of Reportable Segments .

b) Secondary Segment :

The Company caters to the needs of the Indian as well as foreign market. The risk and returns vary from country to country and export to none of the countries exceeds 10% of the sales turnover of the Company. Hence it is not reportable.

6. RELATED PARTY DISCLOSURE

As per the Accounting Standard (AS-18) Related Party Disclosure issued by the Institute of Chartered Accountants of India, the Company's related parties are as follows : a) Name of the Party and Relationship

i) Joint Ventures

Nippon Leakless Talbros Pvt. Ltd.

Magneti Marelli Talbros Chassis Systems Pvt. Ltd.

ii) Associates

QH Talbros Ltd.,

Talbros International Ltd.

iii) Key Management Personnel (Whole time Directors)

Mr. Umesh Talwar

Mr. Varun Talwar

iv) Relatives of Key Management Personnel

Mr. Anuj Talwar, Son of Mr. Umesh Talwar

7. Letters seeking confirmation of outstanding balances at year end have been sent to all the customers / suppliers / recoverables. Confirmations have been received in few cases. Adjustments, if any, will be made in the current year on receipt / reconciliation of remaining confirmations.

8. The management, in order to move up the supply chain and acquire designing and developing technologies/capabilities for Suspension Systems and Modules, has decided to sell and to transfer the Stamping Business, currently engaged in the manufacture of parts and components of suspension systems including but not limited to sheet metal automotive components for vehicle suspension and steering linkage by way of slump sale and on a going concern basis to a separate 50:50 joint venture with Sistemi Suspensioni S.p.A, Italy, a wholly owned subsidiary of Magneti Marelli, Italy. It was duly approved by the shareholders on January 6, 2012 and the joint venture started its operations from 1st April, 2012 under the name Magneti Marelli Talbros Chassis Systems Private Limited.

9. Interest in Joint Venture

The Company has a joint venture in M/s. Nippon Leakless Talbros Private Limited, a Company incorporated in India engaged in manufacturing Gaskets, wherein Company holds 40% ownership interest. The proportionate assets, liabilities, expenses and incomes have been disclosed in the Consolidated Financial Statements.

10 The Company has provided Minimum Alternate Tax (MAT) due to carrying forward of unabsorbed accumulated losses and unabsorbed depreciation of the amalgamating Companies, and further, the Company is entitled for MAT Credit amounting to Rs. 6,14,84,626 (Previous Year Rs. 4,47,34,626) as per provisions of Income Tax Act, 1961.

11 Till the year ended 31 March 2011, the Company was using pre-revised Schedule VI to the Companies Act 1956, for preparation and presentation of its financial statements. During the year ended 31 March 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the Company. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. Consequently, the Company has reclassified previous year figures to conform to this year's classification.


Mar 31, 2010

1 Estimated Amount of Contracts :

Estimated amount of contracts remaining to be executed on capital account not provided for (Net of advances) -Rs. 2,57,73,970 (Previous Year Rs. 84,93,276).

2 Contingent Liabilities:

2.1 Bills discounted with Banks Rs. 2,08,31,448 ( Previous year Rs. 32,58,277 ).

2.2 Demands disputed by the Company and not provided for :

(Amount in Rs.) NATURE OF DUES As at March As at March 31,2010 31,2009 (a) Central Excise Classification of paper gasket 14,17,866 14,17,866

(b) Central Excise Cenvat credit disallowed 1,64,496 3,80,543

(c) Service Tax Cenvat credit disallowed 39,51,811 23,96,100

(d) Central Excise Interest on Cenvat Credit - 6,18,626

(e) Central Excise Interest on Excise duty - 4,02,001

(f) Central Sales Tax Central Sales Tax 1,19,180 11,67,568

(g) Central Excise Demand on Assessable value38,39,495 -

(h) E.S.I ESI Demand (Includes Rs.4,34,130 paid under protest) 12,35,717 8,01,587 (i) Income Tax Income Tax demand 4,47,739 4,47,739 (j) Demand from HSIIDC Demands for enhancement of land cost by 86,88,515 86,88,515 HSIIDC

(k) High Court,Mumbai Fees for building work 2,05,000 - (I) Demand from building contractor Disputed amount for building work 14,08,880 - Total 2,14,78,699 1,63,20,545

2.3 Guarantees executed in favour of Customs / Excise / Sales Tax / Customers amounting to Rs.23,75,445 (Previous year Rs. 19,46,747)

2.4 Corporate Guarantee executed in favour of ICICI Bank Ltd. amounting to Rs. 8.73 Crore (USD 1.91 Millions) {Previous year Rs. 9.65 Crores (USD 1.91 Millions)} against term borowing of QH Talbros Ltd., an Associate Company.

The Managing Director of the Company was paid remuneration (without any commission) in accordance with the provisions of Schedule XIII to the Companies Act,1956. Therefore computation of net profit under section 198 of the Companies Act, 1956 is not applicable. Remuneration paid to Mr. Varun Talwar, Joint Managing Director during previous year was for the period from Sep-08 to Mar-09 only.

3 FIXED ASSETS ACQUIRED UNDER FINANCE LEASES

i) Addition to Gross Block of Fixed Assets include Rs.2,75,65,588 being the assets acquired between 1st April 2009 and 31st March 2010 under finance lease and capitalised in line with the requirement of Accounting Standards-19 "Leases". Depreciation for the year includes an amount of Rs.17,84,501 being depreciation charged on these assets.

ii) The yearwise break-up of outstanding lease obligations as at Balance Sheet date.

4 EXCISE DUTY:

The finished goods at Sohna plant (Material Division), Gurgaon is considered as raw material for the company because the same is used for manufacturing gaskets at Faridabad and other plants. Accordingly the excise duty liability on excisable goods manufactured at Sohna, but pending removal / clearance from the factory premises as at 31.03.2010, estimated at Rs.3,84,600 (Previous year Rs. 1,78,512) is not accounted for. If the said liability would have been accounted, it would have resulted in a higher charge of excise duty with corresponding adjustment of liability and a higher inventory by Rs.3,84,600 (Previous year Rs.1,78,512). However, this would have no effect on the net profit of the Company for the accounting year or on the net current assets as at 31.03.2010.

5 The Micro & Small Enterprises have been indentified by the Company from the available information. According to such identification, the disclosure in respect of Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 is as under:

6 Small Industries Development Bank of India ( SIDBI) has sanctioned a limit of Rs. 500 lacs for discounting hundies of SSI vendors This facility is secured by way of second pari - passu charge in favour of SIDBI on all the current assets of the Company including stock, raw material, stock in process, finished & semifinished goods, consumable stores, etc. both present and future. The hundies accepted by the Company and outstanding balance as at 31st March, 2010 amounted to Rs.4,55,12,851 (Previous Year Rs.3,36,81,463)

7 Pursuant to the notification dated March 31, 2010 issued by the Ministry of Corporate affairs, the Company has exercised the option available under the newly inserted paragraph 46 to the Accounting Standard AS -11 " The Effect of Changes in Foreign Exchanges Rates" to add or deduct the foreign Exchange fluctuation to Capital cost of the Assets. As a result, the exchange gain of Rs.32.73 lacs during the year has been deducted from the cost of fixed assets.

8 SEGMENT REPORTING -AS-17:

a) Primary Segment:

The Companys operations comprise of two sagments viz , "Auto Components & Parts" and " IT Activities ". In terms of the disclosure requirements of Accounting Standard (AS - 17) "Segment Reporting " , IT Activities segment does not fall within the purview of Reportable Segments .

b) Secondary Segment:

The company caters to the needs of the Indian as well as foreign market. The risk and returns vary from country to country and export to none of the countries exceeds 10% of the sales turnover of the Company. Hence it is not reportable

9 RELATED PARTY DISCLOSURE

As per the Accounting Standard (AS-18) Related Party Disclosures issued by the Institute of Chartered Accountants of India, the Companys related parties are as follows:

a) Relationship

i) Joint Ventures

Nippon Leakless Talbros Pvt. Ltd.

ii) Associates

QH Talbros Ltd., Talbros International Ltd.

Hi) Key Management personnel (Whole time Directors)

Mr. Umesh Talwar, Mr. Varun Talwar

iv) Relatives of Key Management Personnel

Mr. Anuj Talwar, Son of Mr. Umesh Talwar

10 Amounts written off (net) include advances of Rs. 37,67,182.00 that are not recoverable and have been written off and Rs. 35,86,802.00 being amounts due to different parties that are no more payable and have been written back.

11 Letters seeking confirmation of outstanding balances at year end have been sent to all the customers/ suppliers/ recoverables. Confirmations have been received in few cases. Adjustments, if any, will be made in the current year on receipt / reconciliation of remaining confirmations.

12 Interest in Joint Venture

The Company has a joint venture in M/s. Nippon Leakless Talbros Private Limited, a Company incorporated in India engaged in manufacturing Gaskets, wherein Company holds 40% ownership interest. The proportionate assets, liabilities, expenses and incomes have been disclosed in the Consolidated Financial Statements.

13 The Company has provided Minimum Alternate Tax (MAT) due to carrying forward of unabsorbed accumulated losses and unabsorbed depreciation, and further, the Company is entitled to MAT Credit amounting to Rs.3,07,65,000 (Previous Year Rs.2,42,65,000) as per provisions of Income Tax Act, 1961.

14 Previous year figures have been regrouped/rearranged wherever necessary.

Schedules 1 to 14 are annexed to and form an integral part of the Balance Sheet as at March 31,2010 and the Profit & Loss Account for the year ended on that date.

 
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