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Notes to Accounts of Talbros Automotive Components Ltd.

Mar 31, 2015

(ii) Guarantees executed in favour of various authorities/ Customers/Others amounting to Rs.77,26,944 ( Previous Year Rs.3,20,54,736)

(ii) Bills discounted with Banks Rs.1,26,54,808 (Previous year Rs.3,37,03,339).

1. Estimated amount of Contracts remaining to be executed on Capital Account and not provided for:

Estimated amount of contracts remaining to be executed on capital account not provided for (Net of advances) - Rs.4,03,26,633 (Previous Year Rs.3,99,77,003 )

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 31.03.2015, estimated at Rs.3,35,731 ( Previous year Rs.4,16,918) 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.3,35,731 ( Previous year Rs.4,16,918). 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 31.03.2015.

3. 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.

4. 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 yearend together with interest paid/payable under this Act have not been given.

5. Small Industries Development Bank of India ( SIDBI ) has sanctioned a limit of Rs.600 lacs for discounting handiest 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, 2015 amounted to Rs. NIL ( Previous Year Rs.2,69,53,396).

6. Segment Reporting

a) Primary Segment :

The Company''s operations comprise of only one segments viz , "Auto Components & Parts" .

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.

7. Pursuant to enactment of the Companies Act, 2013, during the year ended March 31, 2015, the company has applied useful lives of tangible fixed assets as prescribed in Schedule II of the Companies Act, 2013 except for certain class of assets where different useful life is taken based on independent technical evaluation, taking into account the nature of the asset, the estimated usage of the asset and the operating conditions surrounding the use of the asset etc. Accordingly the depreciation has been provided by depreciating the carrying value of the asset (Net of residual value of 5%) over the revised/remaining life of individual assets.

Had the company continued with the previously assessed useful lives, charge for depreciation for the year ended 31st March 2015 would have been higher by Rs.94.36 Lacs.

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

9. In accordance with the requirements of Section 135 of the Companies Act, 2013, the company has during the financial year ending 31st March 2015 spent in pursuance of its Corporate Social Responsibility policy as follows:-

10. 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.

11. The Company is entitled for Minimum Alternate Tax (MAT) Credit amounting to Rs.7,40,25,582 (Previous Year Rs.8,03,30,447) to be adjusted against company''s future normal tax liabilities as per provisions of Income Tax Act, 1961. The management of the Company, based on the future projections, is of the opinion that the entire MAT credit will be utilized and therefore, no provisioning has been made.

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


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, 2011

1 Estimated Amount of Contracts:

Estimated amount of contracts remaining to be executed on capital account not provided for (Net of advances) - Rs. 1,07,92,476 (Previous Year Rs. 2,57,73,970).

2 Contingent Liabilities :

2.1 Bills discounted with Banks Rs. 2,65,96,629 ( Previous year Rs. 2,08,31,448 ).

2.2 Demands disputed by the Company and not provided for :-

(Amount in Rs.)

NATURE OF DUES As at March As at March 31, 2011 31, 2010 (a) Central Excise Classification of paper gasket 14,17,866 14,17,866

(b) Central Excise Cenvat credit - 1,64,496

(c) Service Tax Cenvat credit 61,18,185 39,51,811

(d) Central Sales Tax Central Sales Tax 1,19,180 1,19,180

(e) Haryana Value Disallowing input tax 2,73,548 - Added Tax (f) Central Excise Demand on Assessable value (Ex.) 42,95,902 38,39,495

(g) E.S.I ESI Demand (Includes Rs.4,34,130 45,63,241 12,35,717 paid under protest)

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

(i) Demand from HSIIDC Demands for enhance 1,29,47,554 86,88,515 -ment of land cost by HSIIDC

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

(k) Demand from Disputed amount for building contractor building work - 14,08,880

Total 3,03,88,215 2,14,78,699

2.3 Guarantees executed in favour of Customs / Excise / Sales Tax / Customers amounting to Rs. 36,47,945 (Previous Year Rs. 23,75,445)

2.4 Corporate Guarantee executed in favour of ICICI Bank Ltd. amounting to Rs. 8.64 Crore (USD 1.91 Millions) {Previous Year Rs. 8.73 Crores (USD 1.91 Millions)} against term borowing of QH Talbros Ltd., an Associate Company.

8 LICENSED/INSTALLED CAPACITY ETC:*

Auto Components IT Activities & Parts

8.1 Licensed Capacity Not Applicable Not Applicable

8.2 Installed Capacity (As certified by the Not ascertainable Not ascertainable Management and on which Auditors due to the nature & due to the nature & have placed reliance, this being a varities of the end product varities of the end product a technical matter)

8.3 Actual Production (Completed) 14,06,75,503 (11,39,49,280) -

* (Note:Corresponding figures for the previous year, wherever applicable, appear in brackets)

10 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 31.03.2011, estimated at Rs. 2,33,666 (Previous year Rs. 3,84,600) 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. 2,33,666 (Previous year Rs. 3,84,600). 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 31.03.2011.

12 Small Industries Development Bank of India (SIDBI) has sanctioned a limit of Rs. 900 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 and is further secured by personal guarantee of two directors. The hundies accepted by the Company and outstanding balance as at 31st March, 2011 amounted to Rs. 8,20,49,976 (Previous Year Rs. 4,55,12,851). These amounts have already been provided in the books of accounts.

13 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. 0.23 lacs (Previous Year Rs. 32.73 lacs) during the year has been deducted from the cost of fixed assets.

14 SEGMENT REPORTING - AS-17 :

a) Primary Segment :

The Company’s 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

15 RELATED PARTY DISCLOSURE

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

a) Relationship

i) Joint Ventures Nippon Leakless Talbros 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

17 Amounts written off (net) include advances of Rs. 8,58,124 that are not recoverable and have been written off and Rs. 8,82,141 being amounts due to different parties that are no more payable and have been written back.

18 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.

19 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.

21. 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. 4,47,34,626 (Previous Year Rs. 3,07,65,000) as per provisions of Income Tax Act, 1961.

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

Schedules 1 to 13 are annexed to and form an integral part of the Balance Sheet as at March 31, 2011 and the Profit & Loss Account for the year ended on that date.


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.


Mar 31, 2009

1 Contingent Liabilities:

1.1 Bills discounted with Banks Rs.32,58,277 ( Previous year Rs. 2,69,54,036 ).

1.2 Demands disputed by the Company and not provided for :

(Amount in Rs.) NATURE OF DUES As at March As at March 31, 2009 31, 2008 (a) Central Excise Classification of paper gasket 14,17,866 14,17,866 (b) Central Excise Cenvat credit 3,80,543 - (c) Service Tax Cenvat credit 23,96,100 - (d) Central Excise Interest on Cenvat credit 6,18,626 - (e) Central Excise Excise duty refund 2,29,758 4,74,878 (f) Central Excise Interest on Excise duty4,02,001 - (g) Central Sales Tax Central Sales Tax 11,67,568 11,67,568 (h) Service Tax Service Tax on Royalty - 10,19,431 (i) E.S.I. ESI Demand 8,01,587 8,01,587 (j) Income Tax Disallowances 4,47,739 - (k) Demand from HSIIDC Demands for enhancement86,88,515 - of land cost by HSIIDC Total 1,65,50,303 48,81,330

2 Estimated Amount of Contracts :

Estimated amount of contracts remaining to be executed on capital account not provided for (Net of advances) -Rs.84,93,276 (Previous Year Rs.2,10,77,651). 3 Contingent Liabilities:

3.1 Bills discounted with Banks Rs.32,58,277 ( Previous year Rs. 2,69,54,036 ).

3.2 Guarantees executed in favour of Customs / Excise / Sales Tax / Customers amounting to Rs. 19,46,747 ( Previous Year Rs.45,96,955 )

3.3 Corporate Guarantee executed in favour of ICICI Bank Ltd. amounting to Rs. 9.65 Crore (USD 1.91 Millions) {Previous Year Rs. 7.66 Crore (USD 1.91 Millions)} against term borowing of QH Talbros Ltd., an Associate Company.

4 FIXED ASSETS ACQUIRED UNDER FINANCE LEASES

i) Addition to Gross Block of Fixed Assets include Rs. 73,11,135 being the assets acquired between 1st April 2008 and 31st March 2009 under finance lease and capitalised in line with the requirement of Accounting Standards-19 "Leases". Depreciation for the year includes an amount of Rs. 10,79,269 being depreciation charged on these assets.

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 31.03.2009, estimated at Rs.1,78,512 ( Previous year Rs. 3,13,440 ) 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.1,78,512 ( Previous year Rs.3,13,440 ). 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 31.03.2009.

6 Small Industries Development Bank of India ( SIDBI ) has sanctioned a limit of Rs. 350 lacs for discounting hundies of SSI vendors This facility is secured by way of second 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 , 2009 amounted to Rs. 3,36,81,463 (Previous Year Rs. 1,82,23,730)

7 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 loss of Rs. 142.51 lacs has been added to the cost of fixed assets. Further, exchange difference amounting to Rs. 108.30 lacs recognised in the Profit & Loss Account in the earlier year relating to the ECB Loan has been adjusted against General Reserve.

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.

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

10 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.

11 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.2,42,65,000 ( Previous Year Rs. 2,40,50,000 ) as per provisions of Income Tax Act, 1961.

12 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 31,2009 and the Profit & Loss Account for the year ended on that date.


Mar 31, 2008

1 Estimated Amount of Contracts:

Estimated amount of contracts remaining to be executed on capital account not provided for (Net of advances) - Rs.2,10,77,651 (Previous Year Rs.2,01,11,787 ).

2 Contingent Liabilities:

2.1 Bills discounted with Banks Rs.2,69,54,036 ( Previous year Rs. 1,24,64,319 ).

2.2 Excise Duty/Sales-Tax / Service Tax demands disputed by the Company and not provided for - Rs.48,81,330 (Previous year Rs.63,15,170 ).

2.3 Guarantees executed in favour of Customs / Excise / Sales Tax / Customers amounting to Rs.45,96,955 ( Previous Year Rs.48,04,878)

2.4 Corporate Guarantee executed in favour of ICICI Bank Ltd. amounting to USD 3.82 Millions (Previous year Nil) against term borowing of QH Talbros Ltd., an Associate Company.

3 EXCISE DUTY:

The finished goods at Sohna plant ( Material Division ), Gurgaon is considered as raw material for the cdmpany 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 31.03.2008, estimated at Rs.3,13,440 ( Previous year Rs. 3,04,367 ) 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.3,13,440 ( Previous year Rs.3,04,367 ). 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 31.03.2008.

4 (a) The Company has not received information from Vendors/Suppliers regarding their status under the "Micro,Small and Medium Enterprises Develpopment Act,2006" and hence disclosure relating to amount unpaid at the year end together with interest paid or payable under this Act has not been given.

(b) Small Industries Development Bank of India ( SIDBI ) has sanctioned a limit of Rs. 300.00 lacs for discounting hundies of SSI vendors. This facility is secured by way of second 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 , 2008 amounted to Rs.1,82,23,730 ( Previous Year Rs. 96,94,529 )

5 SEGMENT REPORTING - AS-17 :

a) Primary Segment :

The Companys operations comprise of four segments viz , "Auto Components & Parts"," Hardware" , "Software" and "Leasing. In terms of the disclosure requirements of Accounting Standard (AS - 17 ) "Segment Reporting" , none of the segments other than "Auto Components & Parts" 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 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.

7 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. 2,40,50,000 (Previous Year Rs. 1,44,50,000 ) as per provisions of Income Tax Act, 1961.

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


Mar 31, 2007

1. Estimated Amount of Contracts:

Estimated amount of contracts remaining to be executed on capital account not provided for (Net of advances) - Rs. 2,01,11,787 (Previous Year Rs. 10,35,361).

2. Contingent Liabilities :

2.1 Bills discounted with Banks Rs. 1,24,64,319 ( Previous year Rs. 2,56,03,856 .

2.2 Excise Duty/Sales-tax/Service tax demands disputed by the Company and not provided for - Rs.^3,15,170 (Previous year Rs. 48,74,928 ).

NATURE OF DUES AMOUNT AMOUNT (2006-07) Rs. (2005-06) Rs.

(a) Central Excise Classification of paper gasket 14,17,866 14,17,866 (b) Central Excise Modvat credit 8,31,707 9,84,101 (c) Central Sales Tax Central Sales Tax 17,26,166 15,01,166 (d) A. C. Service Tax Service tax on Royalty 10,19,431 9.71,795 (e) Demand from HSIDC Demands for enhancement of 13,20,000 - land cost by HSIDC _ _ Total 63,15,170 48,74,928

In respect of items (a) to (e), above future cashflow are determinable only on outcome of judgements and decisions pending at various forum / authorities.

2.3 Guarantees executed in favour of Customs / Excise / Sales Tax / Customers amounting to Rs. 48,04,878 (Previous Year Rs. 43,33,501)

3. The funds raised during 2005-2006 through FPO have been fully utilised for the purposes it was raised as per details given in the Prospectus.

4. During the year ended 31st March, 2007 the company has issued 12,00,000 Zero Coupon fully Convertible Warrants to the Promoters, as approved by the shareholders in the Extra-ordinary General Meeting held on 15th March 2007. These warrants were issued at a price of Rs. 65/- each and are convertible into equal number of Equity Shares of the face value of Rs. 10 each at a premium of Rs. 55 per share within 18 months from the date of allotment. Equity shares issued upon conversion shall remain under "lock-in" for a period of 3 years with effect from the date of allotment of such warrants.

5. Based on information available with the Company, there are no dues to Micro, Small and Medium Enterprises, as defined in the Micro, Small and Medium Enterprises Development Act, 2006 as at March 31, 2007 .

6. SEGMENT REPORTING - AS-17 :

a) Primary Segment:

After the merger of the Information Technology business of XO Infotech Limited, the Companys operations comprise of four sigments viz, "Auto Components & Parts", "Hardware", "Software" and "Leasing". In terms of the disclosure requirements of Accounting Standard (AS-17) "Segment Reporting", none of the segments other than "Auto Components & Parts" fall within the perview 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.

7. On and from the appointed date, the unabsorbed depreciation and unabsorbed accumulated losses of the amalgamating Companies shall be unabsorbed depreciation and unabsorbed accumulated losses of the amalgamated Company. As per provisions of Sec. 72A of the Income Tax Act, 1961, the amalgamated Company would be entitled to set off and / or carry forward such unabsorbed depreciation and unabsorbed accumulated losses. ...

8. MAT Credit Entitlement includes MAT Credit for the FY 2005-06 Rs. 71,00,000 and for the FY 2006-07 Rs. 73,50,000.

9. Previous year figures have been regrouped/rearranged wherever necessary. Figures of previous year are not comparable with that of the current year figures as financial results for the current year include the financial results of the erstwhile XO Stampings Limited and demerged IT Business undertaking of XO Infotech Limited with effect from 01.04.2006 and 01.03.2006 respectively being the appointed dates.

Schedules 1 to 14 are annexed to and form an integral part of the Balance Sheet as at March 31, 2007 and the Profit & Loss Account for the year ended on that date.


Mar 31, 2006

1. Estimated Amount of Contracts:

Estimated amount of contracts remaining to be executed on capital account not provided for (Net of advances)- Rs. 10,35,361 (Previous Year Rs. 1,10,60,592).

2. Contingent Liabilities :

2.1 Bills discounted with Banks Rs. 2,56,03,856 (Previous year Rs. 1,93,76,188).

2.2 Excise Duty/Sales-tax/Service tax demands disputed by the Company and not provided for - Rs. 48,74,928 (Previous year Rs.39,16,135).

NATURE OF DUES AMOUNT Rs,

(a) Central Excise Classification of paper gasket 14,17,866 (b) Central Excise Modvat credit 9,84,101 (c) Central Sales Tax Central Sales Tax 15,01,166 (d) A. C. Service Tax Service tax on Royalty 9,71,795

Total 48,74,928

In respect of items (a) to (d) above future cashflow are determinable only on outcome of judgements and decisions pending at various forum / authorities.

2.3 As at March 31,2006 the Company has reviewed the future earnings of its cash generating units in accordance with AS-28- Impairment of Assets issued by the Institute of Chartered Accountants of India. The carrying amount of assets do not exceed the future recoverable amounts. Consequently no impairment of assets has been considered.

6. 6.1 During the year the company issued 49,01,963 equity shares of Rs. 10.00 each at a premium of Rs. 92.00 per share and collected Rs. 5000.00 lacs (including promoters contribution of Rs. 250.00 lacs) for setting up a forging project, investing in a joint venture company with Nippon Leakless Corpn., Japan and for capital expenditure at the existing gasket plants.

7. The company has appointed Mr. Varun Talwar son of Mr. Naresh Talwar, Chairman as Executive Director with effect from 1 st. January, 2006 for its Forging Project at a remuneration consisting of; Basic Salary Rs. 1,05,000.00 p.m., House Rent Allowance Rs. 73,500.00 p.m. and other perquisites like Electricity, Water, Medical Reimbursement, Club Fee etc. upto Rs.21,500.00 per month in addition to other bebefits of like RF. Gratuity, Superannuation, LTA, Leave Encashment, Telephone facility as per the rules of the company, subject to approval from the Central Government in pursuance to the provision of Section 314 (1B) of the Companies Act, 1956. The company has made an application to Central Government and approval is awaited.

8. The Board of Directors of the company, in its meeting held on March 22, 2006 have approved a Scheme of Arrangement for;

a) merger of the demerged IT undertaking (comprising Hardware and Software business) of XO Infotech Ltd. with effect from 1 st. March,2006 into the company and

b) merger of XO Stamping Ltd. and Talbros International Ltd. into the company with effect from 1st. April,2006.

Pending receipt of regulatory approvals, these financial statements do not take into account the effect of the afforesaid Scheme of Arrangement.

9. 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 31.3.2006, estimated at Rs.363113 (Previous year Rs. 316825) 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. 363113 (Previous year Rs. 316825). 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 31.03.2006.

10. SEGMENT REPORTING - AS-17 :

a) Primary Segment:

The company operates only in one business segment viz. "Gaskets of all kinds"

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.

11. 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 and Associates Q.H.Talbros Ltd., Talbros Motors Pvt.Ltd. Talbros International Ltd. X. O. Infotech Ltd. X. O. Stampings Ltd. Nippon Leakless Talbros Pvt. Ltd.

ii) Key Management personnel (Whole time Directors) Mr. Umesh Talwar, Mr. Nikhil Talwar

iii) Relatives of Key Management Personnel

Mrs. Bimpi Talwar, Wife Mrs.Shashi Talwar, Mother

Mr. Anuj Talwar, Son Mrs.Shefali Aswani, Sister

Mr. Naresh Talwar, Brother Mr. Nakul Talwar, Brother

Mrs. Asha Burman, Sister

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


Mar 31, 2005

A) 47,37,145 (6,30,000) Equity Shares allotted as fully paid up by way of Bonus Shares by capitalisation of the General Reserve/Share Premium Account and Capital Reserve Account,

b) 75,358 Equity Shares allotted as fully paid up on 22.8.1978 to erstwhile shareholders of AEW Janson Limited, pursuant to the sanction of the Hon'ble High Court of Delhi, to a scheme of amalgamation of the said Company with the Company under Section 391 read with Section 394 of the Companies Act, 1956.

B. NOTES ON ACCOUNTS:

1. Estimated Amount of Contracts:

Estimated amount of contracts remaining to be executed on capital account not provided for (Net of advances)- Rs. 1,10,60,592 (Previous Year 50,05,466).

2. Contingent Liabilities :

2.1 Bills discounted with Banks Rs.1,93,76,188 ( Previous year Rs. 1,72,34,823).

2.2 Excise Duty/Income tax/Sales-tax demands and claims from a local authority disputed by the Company and not provided for - Rs.39,16,135 (Previous year Rs.41,00,110).

The above liabilities at serial nos. 1 to 4 are dependent on outcome of court/arbitration/out of court settlement/disposal of appeals, terms of contractual obligations and raised demands by concerned parties. No reimbursement is expected in such cases.

2.3 The Company had signed a Technical Assistance Agreement with M/s. Federal Mogul Sealing Systems (Slough) Ltd. for a period of 10 years starting from 3rd. November 2003. One time Technical Know-how fee of Euro 3,60,000 (Rs. 1,94,79,600) was payable under the agreement in three equal instalments at six monthly intervals. The second and third instalment of Euro 1,20,000 each plus taxes thereon (Rs.1,72,17,716) were paid during the year. The Company has also signed a new technical agreement for a period of 5 years. The lump-sum fee of Rs. 8,92,060 (JPY 20,00,000) is being amortised over the period of the agreement.The technical know-how fees have been recognised to that extent as an intangible asset during the year.

2.4 As at March 31, 2005 the Company has reviewed the future earnings of its cash generating units in accordance with AS-28-Impairment of Assets issued by the Institute of Chartered Accountants of India. The carrying amount of assets do not exceed the future recoverable amounts Consequently no impairment of assets has been considered.

3. 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 31.3.2005, estimated at Rs.3,16,825 (Previous year Rs. 3,36,727) 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. 3,16,825 (Previous year Rs. 3,36,727). 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 31.03.2005.

4. (a) The names of Small Scale Industrial Undertakings to whom the Company owes any sum for more than thirty days as at the year end - Nil (Previous year - Nil)

(b) Small Industries Development Bank of India (SIDBI) has sanctioned a limit of Rs. 100 lacs for discounting hundies of SSI vendors. This facility is secured against secured charge on Company's current assets. The hundies accepted by the Company and outstanding as on 31st March, 2005 amounted to Rs. 94,47,953.58 (Previous year Rs. 63,40,649)

5. SEGMENT REPORTING-AS-17 :

a) Primary Segment :

The company operates only in one business segment viz. "Gaskets of all kinds"

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

Schedule 1 to 13 are annexed to and form an integral part of the Balance Sheet as at March 31, 2005 and the Profit & Loss account for the year ended on that date.

Bonus shares of Rs. 410.71 lacs were issued on 31st December, 2004. Thereafter equity share capital increased from Rs. 164.29 lacs to Rs.575.00 lacs. No. of equity shares : since the bonus issue is an issue without consideration, the issue is treated as if it had occurred prior to the beginning of the financial year ending as on 31st March, 2004, the earliest audited yearly accounts reported herewith. The total nos. equity shares have been taken as 57,50,003.


Mar 31, 2004

1. Estimated Amount of Contracts:

Estimated amount of contracts remaining to be executed on capital account not provided for (Net of advances)-Rs.50,05,466 (Previous Year Rs. 7,07,198).

2. Contingent Liabilities:

2.1 Bills discounted with Banks Rs. 1,72,34,823 (Previous year Rs. 3,79,130).

2.2 Excise Duty/Income tax/Sales-tax demands and claims from a local authority disputed by the Company and not provided for - Rs.41,00,110 (Previous year Rs.15,01,166).

2.3 During the year the Company has signed a new Technical Assistance Agreement with M/s. Federal Mogul Sealing Systems (Slough) Ltd. for a period of 10 years starting from 3rd November 2003. One time Technical Know-How fee of Euro 3,60,000 ( Rs.1,94,79,600) is payable under the agreement in three equal instalments at six monthly intervals. The first instalment of Euro 1,20,000 (Rs.65,28,000) plus taxes thereon was due prior to 31st March 2004. The technical know-how fee has been recognised to that extent as an intangible asset during the year.

3. 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 31.3.2004, estimated at Rs.3,36,727 (Previous year Rs. 3,94,955) 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. 3,36,727 (Previous year Rs. 3,94,955). 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 31.03.2004.

4. (a) The names of Small Scale Industrial Undertakings to whom the Company owes any sum for more than thirty days as at the year end - Nil (Previous year - Nil)

(b) Small Industries Development Bank of India (SIDBI) has sanctioned a limit of Rs. 100 lacs for discounting hundies of SSI vendors. This facility is secured against secured charge on Company's current assets. The hundies accepted by the Company and outstanding as on 31st March, 2004 amounted to Rs. 63,40,649 (Previous year Rs. 46,05,083)

5. SEGMENT REPORTING :

a) Primary Segment :

The company operates only in one business segment viz. "Gaskets of all kinds"

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


Mar 31, 2003

1. Estimated Amount of Contracts :

Estimated amount of contracts remaining to be executed on capital account not provided for (Net of advances) - Rs. 7,07,198 (Previous Year Rs. 35,97,020).

2. Outstanding Gurantees :

The Company has given a guarantee of Rs. 1,36,29,000 (Previous year Rs. 9,18,59,000) in favour of certain banks for grant of loans to a Company in which some directors are interested.

3. There is a contingent liability of:

3.1 In respect of bills discounted with Banks Rs. 3.79,130 (Previous year-NIL).

3.2 Excise Duty/income tax/Sales tax demands and claims from a local authority disputed by the Company and not provided for Rs. 15,01,166 (Previous year Rs. 10,401).

4. FIXED ASSETS ACQUIRED UNDER FINANCE LEASES

(i) Addition to Gross Block of Fixed Assets include Rs. 2,07,87,830/- Being the assets acquired between 1st April'2002 and 31st March'2003 under finance lease and capitalised in line with the requirement of Accounting Standards-19. Depreciation for the year includes an amount of Rs. 18,32,967/-, being depreciation charged on these assets.

5. Local area development tax paid during the year includes Rs. 10,80,978 relating to previous year. This is considered for calculating the cost of production during the year.

6. EXCISE DUTY:

Excise duty liability on excisable goods manufactured at our Material Division at Sohna, (Gurgaon) Haryana but pending removal/ clearance from the factory premises as at 31.3.2003, is estimated at Rs.3,94,955 (Previous year Rs. 4,55,232). 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.3,94,955 (Previous year Rs. 4,55,232). 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 31.3.2003.

7. (a) Names of small Scale Industrial Units each with outstanding of Rs.one lac or more as at the year end, where the outstandings or a part thereof exceeds a period of 30 days as at the year end - Rs. Nil

(b) Small Industries Development Bank of India (SIDBI) has sanction a limit of Rs. 100 lacs for discounting hundies of SS1 venders. This facility is secured against second charge on company's current assests. The hundies accepted by the company and outstanding as on 31st March, 2003 amounted to Rs. 46,05,083.

8. SEGMENT REPORTING :

(a) Primary Segment:

The company operates only in one business segment viz. "Gaskets of all kinds"

(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.


Mar 31, 2002

1. Estimated Amount of Contracts:

Estimated amount of contracts remaining to be executed on capital account not provided for (Net of advances) - Rs. 35,97,020 (Previous Year 1,245,780).

2. Oustanding Gurantees:

The Company has given a guarantee of Rs. 91,859,000 ( Previous year Rs. 91,859,000) in favour of certain banks for grant of loans to a Company in which some Directors are interested

3. There is a contingent liability of:

3.1 In respect of bills discounted with Banks - NIL - ( Previous year Rs. 1,705,369).

3.2* For Local Area Development Tax Rs. 1,093,311 (Previous year Rs. 325,528)

3.3 Excise Duty/income tax/Sales-tax demands and claims from a local authority disputed by the Company and not provided for - Rs. 10,401 (Previous year - NIL -).

* The judgement of the High Court relating to the validity of the levy has been admitted in the Supreme Court. Pending this verdict the company does not consider the same as payable.

4. Government Grants/Subsidy:

The Director of Industries, Haryana had given a grant by way of capital investment subsidy for setting up a project in backward area. The assets purchased were subject to a second charge in their favour. Though the period of the charge has expired, the charge has not yet been vacated.

5. In accordance with the Accounting Standard AS 22 "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, the provision for deferred tax liability of Rs. 1,294,362 has been made for the year ended 31st March 2002. The deferred tax liability of the earlier years of Rs, 17.518.275/- has been recognised as a deduction in the General Reserve as on 1st April 2001.

6. EXCISE DUTY:

Excise duty liability on excisable goods manufactured at our Material Division at Sohna, (Gurgaon) Haryana but pending removal/clearance from the factory premises as at 31.3.2002, is estimated at Rs. 455.232. 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. 455,232. 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 31.3.2002.

7. Names of small Scale Industrial Units each with outstanding of Rs. one lac or more as at the year end, where the outstandings or a part thereof exceeds a period of 30 days as at the year end. - Rs. Nil

8. SEGMENT REPORTING:

a) Primary Segment:

The company operates only in one business segment viz. "Gaskets of all kinds".

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


Mar 31, 2001

Share Capital

a) 6,30,000 Ordinary Shares allotted as fully paid up by way of Bonus Shares by capitalisation of the General Reserve/Share Premium Account.

b) 75,358 Ordinary Shares allotted as fully paid up on 22.8.1978 to erstwhile shareholders of AEW Janson Limited, pursuant to the sanction of the Hon'ble High Court of Delhi, to a scheme of amalgamation of the said Company with the Company under Section 391 read with Section 394 of the Companies Act, 1956.

Secured Loans

a) Secured by way of first charge of hypothecation on pari-passu basis of the borrower's entire stock, book-debts and receivables and second charge of hypothecation of the entire fixed assets both present and future ranking pari-passu with the ther consoritum members; further secured by the personal guarantees of two directors.

b) Cash Credit and export facilities from Bank of India and Vijaya Bank are also covered by the Corporate Guarantee of Talbros Engineering Ltd.

c) Secured by first charge on the movable and immovable fixed assets of the company, further secured by joint and several guarantees of two directors and corporate guarantee of Talbros Engineering Ltd.

Other Notes :

1. Estimated Amount of Contracts :

Estimated amount of contracts remaining to be executed on capital account not provided for (Net of advances)- Rs. 12,45,780 (Previous Year Rs. 6,24,338).

2. Bank Guarantee Etc.:

Outstanding Bank Guarantees and Letters of Credit - Rs. 54,83,502 (Previous year Rs. 77,17,919).

3. Contingent Liabilities :

3.1 In respect of bills discounted with Banks - Rs. 17,05,369 (Previous year Rs.10,74,088).

3.2 For Local Area Development Tax Rs. 3,25,528 (Previous year Nil)

3.3 Oustanding Gurantees :

Rs. 9,18,59,000 (Previous year Rs. 6,76,29,000) in favour of certain banks for grant of loans to a Company in which some Directors are interested.

3.4 Excise Duty/income tax/Sales-tax demands and claims from a local authority disputed by the Company and not provided for - Rs.Nil (Previous year Rs. 4,58,301).

4. Government Grants/Subsidy :

The Director of Industries, Haryana had made a grant by way of capital investment subsidy for setting up a project in backward area. The assets purchased were subject to a second charged in thetr favour. Though the period of the charge has expired, the charge has not yet been vacated.


Mar 31, 2000

NOTES :

1. * Secured by way of first charge on pari passu basis on the fixed assets of the Company, both present and future.

** Secured by way of first exclusive charge of hypothecation of the specific plant and machinery acquired under the said facility, further covered by corporate guarantee of Talbros Engineering Ltd. and guarantee of one director. (Previous year two directors).

*** Secured by first charge by way of hypothecation and / or pledge on pari passu basis of the borrower's entire stock, book debts and receivables and by mortgage and charge in favour of the Bank of all the borrower's immovable and movable properties both present and future, including movable machinery, machinery spares, tools and accessories, present / future ranking second and subservient to the mortgage and charges created/to be created in favour of Bank of India and Exim Bank.

**** Secured by way of first charge of hypothecation of the borrower's stock and book-debts and second charge of hypothecation of entire fixed assets, both present and future ranking pari passu with the other consortium members.

$ Cash Credit and Export facilities are covered by the personal guarantee(s) of one (previous year two) director(s); and facilities from Bank of India and Vijaya Bank are also covered by the corporate guarantee of Talbros Engineering Ltd.

2. Term Loan payable within one year as at the date of the Balance Sheet amounted to :

- Rs. 1,00,04,330 (Previous year Nil) against working capital loan from Exim Bank.

- Rs. 71,89,996 (Previous year Rs. 91,88,442) against loan from Bank of India and

- Rs. 27,09,057 (Previous year Rs. 19,57,120) against Hire Purchase Liability.

B. NOTES ON ACCOUNTS :

1. ESTIMATED AMOUNT OF CONTRACTS :

Estimated amount of contracts remaining to be executed on capital account not provided for (Net of advances)- Rs.6,24,338 (Previous year Rs.25,68,281).

2. BANK GUARANTEES ETC. :

Outstanding Bank Guarantees and Letters of Credit - Rs.77,17,919 (Previous year Rs.35,59,077).

3. CONTINGENT LIABILITIES :

3.1 In respect of bills discounted with Banks - Rs.10,74,088 (Previous year Rs. 7,52,422).

3.2 OUTSTANDING GUARANTEES :

Rs.6,76,29,000 (Previous year Rs.5,59,85,000) in favour of certain banks for grant of loans to a Company in which some Directors are interested.

US$ 1 million but not exceeding Rs.350 lacs (Previous year US$ 1 million but not exceeding Rs.350 lacs) in favour of Exim Bank for grant of term loan to a Company in which some directors are interested.

3.3 Excise Duty/Income-tax/Sales-tax demands and claims from a local authority disputed by the Company and not provided for - Rs.4,58,301 (Previous year Rs.12,15,157).

4. LIABILITY FOR LEAVE ENCASHMENT :

Due to a change in the Accounting Policy during the year (refer Policy No. 9.2 above) provision of Rs. 28,76,822 has been made towards liability for leave encashment including the incremental liability of Rs. 84,262 for the year ended 31st March, 2000. But for the change in Accounting Policy, the profit for the year an the Reserves and Surplus would have been higher by Rs.27,92,560.

5. LIABILITY FOR GRATUITY :

To cover the Company against shortfall in gratuity on pre-mature retirement of employees as well as for past service liabilities the terms of the Group Gratuity-cum-life Policy taken by the Employees Gratuity Fund Trust from Life Insurance Corporation of India were changed from Endowment Plan to Cash Accumulation Plan resulting in an additional liability of Rs. 9,15,588 payable to the Life Insurance Corporation. But for this change, the profits of the Company and Reserves and Surplus would have been higher by Rs. 9,15,588 (which includes the incremental amount for the year ended 31st March, 2000, not separately ascertained).

6. GOVERNMENT GRANTS/SUBSIDY :

The Director of Industries, Haryana, has made a grant by way of capital investment subsidy for setting up a project in a backward area in terms of the applicable scheme and based on certain terms and conditions, default in compliance of which may entitle the State Govt. to claim back the subsidy along with interest @ 10% per annum. As per the terms of the grant, fixed assets of the aggregate cost of Rs. 1,25,19,070 comprising Land (Rs.2,81,000), Building (Rs.31,84,043), Plant and Machinery (Rs.81,04,183) and Electric Installation (Rs.9,49,844) in respect of the project at Sohna, Gurgaon (Haryana), are subject to a second charge.

7. CONSIDERATION FOR ASSIGNMENT OF KEY-MAN INSURANCE POLICY

The Keyman insurance policy taken from L.I.C. on the life of Mr. Pran Talwar, the Vice Chairman and Managing Director of the Company was assigned to him against payment of Rs. 19,26,755 being surrender value as at 1.1.2000 as certified by the Life Insurance Corporation of India. The company has been advised that such surrender value is adequate consideration for assignment and on receipt thereof, there is no benefit accruing as remuneration under the Companies Act, 1956 to the assignee and that the company has no liability under the Income Tax Act, 1961 except in respect of the consideration received.


Mar 31, 1999

A) NOTES ON SECURED LOANS:

1. Secured by way of first exclusive charge of hypothecation of the specific moveable assets acquired under Production Equipment Finance Programme of Exim Bank together with pari-passu charge on assets located at Gasket Plant at Faridabad. The term loan is net of the liability not considered attributable to the Company. Out of the total term loan facility granted by EXIM Bank, an amount of Rs. 100 lakhs has been demarcated to TEL, to which the Company has transferred the loan liability to give effect to the Scheme of Arrangement and pending completion of documentation formalities, which includes inter-alia, the furnishing of a corporate guarantee by the Company to EXIM Bank, the Company continues to assume responsibility for the undischarged liability of TEL, which, as at the year end, amounted to Rs. 12.50 lakhs (Previous Year Rs. 37.50 lacs).

Secured by way of first charge on pari passu basis on the fixed assets of the Company, both present and future.

Secured by way of first exclusive charge of hypothecation of the specific plant and machinery acquired under the said facility.

Secured by first charge by way of hypothecation and/or pledge on pari passu basis of the borrowers entire stock, book- debts and receivables and by mortgage and charge in favour of the Bank of all the borrowers' immoveable and moveable properties both present and future, including moveable machinery, machinery spares, tools and accessories, present and future ranking second and subservient to the mortgages and charges created/to be created in favour of Bank of India and Exim Bank.

2. Term loan instalments payable within one year as at the date of the Balance Sheet amounted to; Rs. 31,25,000 (Previous Year Rs. 62,50,000) against loan from Exim Bank;

Rs. 87,60,000 (Previous year Rs. 87,60,000) against loan from Bank of India and

Rs. 19,57,120 (Previous Year Rs. 21,63,116) against Hire Purchase Liability.

B) OTHER NOTES ON ACCOUNTS :

1. ESTIMATED AMOUNT OF CONTRACTS :

Estimated amount of contracts remaining to be executed on capital account not provided for (Net of advances) Rs. 25,68,281.00 (Previous year Rs. 26,18,000.00).

2. BANK GUARANTEES ETC. :

Outstanding Bank Guarantees and Letters of Credit - Rs. 35,59,077 (Previous year Rs. 31,40,815).

3. CONTINGENT LIABILITIES :

3.1 In respect of bills discounted with Banks - Rs. 7,52,422 (Previous year Rs. 42,06,457).

3.2 OUTSTANDING GUARANTEES :

- Rs. 5,59,85,000 (Previous Year Rs. 4,69,85,000) in favour of certain banks for grant of working capital facilities to a Company in which three Directors are interested.

- US$ 1 million but not exceeding Rs. 350 lacs (Previous year US$ 1 million but not exceeding Rs. 350 lacs) in favour of Exim Bank for grant of term loan to a Company in which three directors are interested.

3.3 Excise Duty/Income-tax/Sales-tax demands and claims from a local authority disputed by the Company and not provided for - Rs. 12,15,157 (Previous year Rs. 11,25,157)

4. LIABILITY FOR LEAVE ENCASHMENT :

Liability for leave encashment to employees has not been provided in accordance with Accounting Standard-15 `Accounting for retirement benefits in the financial statements of the employers'- for the reason that the same is accounted and paid in cash on "pay as you go" basis. Total of accrued liability computed on acturial basis upto the year end amounted to Rs. 27,92,560 (previous year Rs. 25,92,319), which includes the incremental liability of Rs. 2,00,241 for the year.

5. LIABILITY FOR GRATUITY :

Total liability as at 31.3.1999 on account of gratuity for past services prior to coverage by the Group Gratuity-Cum Life Policy has been computed as at 31.3.1999 on acturial basis by the Life Insurance Corporation of India at Rs. 26,52,610. The said amount has neither been funded to the Gratuity Fund Trust nor provided upto 31.3.1999 and of this, the amount attributable for the year ended 31.3.1999 has not been ascertained and the effect thereof on the net profit for the year has not been determined.

6. GOVERNMENT GRANTS/SUBSIDY :

The Director of Industries, Haryana, has made a grant by way of capital investment subsidy for setting up a project in a backward area in terms of the applicable scheme and based on certain terms and conditions, default in compliance of which may entitle the State Govt. to claim back the subsidy along with interest @ 10% per annum. As per the terms of the grant, fixed assets of the aggregate cost of Rs. 1,24,92,800 comprising Land (Rs. 2,81,000), Building (Rs. 31,84,043), Plant and Machinery (Rs. 80,91,745) and Electric Installation (Rs. 9,36,012) in respect of the project at Sohna, Gurgaon (Haryana), are subject to a second charge.

Year ended Year ended March 31, 1999 March 31, 1998 Rs. Rs. Rs. Rs.

7. REMUNERATION TO DIRECTORS :

The total remuneration of the directors included in the Profit and Loss Account is as under : a) Salaries 13,20,000 13,20,000 b) House Rent Allowance 8,88,000 8,88,000 Contribution to : c) Provident Fund 1,58,400 1,45,860 d) Employees Group Gratuity-cum-Life Assurance Fund 87,340 2,45,740 85,129 2,30,989

e) Medical Expenses 54,361 49,821 f) Other Perquisites 64,302 56,387

TOTAL 25,72,403 25,45,197 g) Directors' Fee 1,500 1,000

h) Besides the Company has taken Keyman insurance Policy on the life of its keyman i.e. Mr. Pran Talwar (Vice Chairman cum Managing Director) for a sum of Rs. 80 Lakhs, for which premium amounting to Rs. 5,49,304 has been paid.


Mar 31, 1998

Notes on Secured Loans:

1. * Secured by way of first exclusive charge of hypothecation of the specific movable assets acquired under Production Equipment Finance Programme of Exim Bank together with pari-passu charge on assets located at Gasket Plant at Faridabad. The term loan is net of the liability not considered attributable to the Company. Out of the total term loan facility granted by EXIM Bank, an amount of Rs.100 lakhs has been demarcated to TEL, to which the Company has transferred the loan liability to give effect to the Scheme of Arrangement and pending completion of documentation formalities, which includes inter-alia, the furnishing of a corporate guarantee by the Company to EXIM Bank, the Company continues to assume responsibility for the undischarged liability of TEL, which, as at the year end, amounted to Rs.37.50 lakhs.

2. ** Secured by way of first exclusive charge of hypothecation of the specific plant and machinery acquired under the said facility.

General Notes:

1. LIABILITY FOR LEAVE ENCASHMENT :

Total accrued liability for Leave Encashment as per actuarial valuation upto 31.3.1998 is Rs.25,92,319 (including for the year Rs.5,06,941), Previous year Rs.20,85,378 has not been provided for in the accounts and the same is accounted on Cash Basis.

2. GOVERNMENT GRANTS/SUBSIDY :

The Director of Industries, Haryana, has made a grant by way of capital investment subsidy for setting up a project in a backward area in terms of the applicable scheme and based on certain terms and conditions, default in compliance of which may entitle the State Govt. to claim back the subsidy along with interest @ 10% per annum. As per the terms of the grant, fixed assets of the aggregate cost of Rs.1,24,03,412 comprising Land (Rs.2,81,000), Building (Rs.31,84,043), Plant and Machinery (Rs.80,02,357) and Electric Installation (Rs.9,36,012) in respect of the project at Sohna, Gurgaon (Haryana), are subject to a second charge.

3. EXCISE DUTY :

Excise duty liability for goods pending removal/clearance from the factory premises of excisable manufactured goods as at 31.3.1998, is estimated at Rs.43,58,451. If the said liability would have been accounted, it would have resulted in a higher charge of excise duty with a corresponding adjustment of liability and a higher inventory by Rs.43,58,451. 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 31.3.1998.


Mar 31, 1997

1.a. Term loan from ICICI is secured on pari passu basis by hypothecation of movables (except book debts), both present and future, and subject to prior charge in favour of Company's bankers on inventories and other movables as may be agreed/permitted by lenders for securing borrowings for working capital requirements. In addition, the term loans from financial institutions are secured by a first mortgage and charge on the Company's immovable properties, both present and future, except as stated in respect of Exim Bank/Bank of India term loan at (b & c) hereunder.

b. Term loan from Exim Bank is secured by way of first exclusive charge of hypothecation of the specific movable assets acquired under Production Equipment Finance Programme together with pari-passu charge on assets located at Gasket Plant at Faridabad. The term loan is net of the liability not considered attributable to the company. Out of the total term loan facility granted by EXIM Bank, an amount of Rs.100 lakhs has been demarcated to TEL, to which the Company has transferred the loan liability to give effect to the Scheme of Arrangement and pending completion of documentation formalities, which includes inter-alia, the furnishing of a corporate guarantee by the Company to EXIM Bank, the Company continues to assume responsibility for the undischarged liability of TEL, which, as at the year end, amounted to Rs.62.50 lakhs.

c) The Bank of India term loan is secured by way of first exclusive charge of hypothecation of the specific plant and machinery acquired under the said facility.

2. Of the term loans, amounts repayable within one year as at the date of the Balance Sheet -Rs.1,72,06,150: Previous year Rs.1,39,78,000.

3. Future obligations, for the rentals under the finance lease arrangements for vehicles and plant and machinery amount to Rs. NIL. (Previous year Rs.23,393).

4. LIABILITY FOR LEAVE ENCASHMENT

Total accrued liability for leave encashment as per actuarial valuation upto 31.3.1997 is Rs.20,85,378 (including for the year Rs.7,72,868), Previous year Rs.17,42,091 has not been provided for in the accounts and the same is accounted on cash basis.

5. GOVERNMENT GRANTS/SUBSIDY

The Director of Industries, Haryana, has made a grant by way of capital investment subsidy for setting up a project in a backward area in terms of the applicable scheme and based on certain terms and conditions, default in compliance of which may entitle the State Govt. to claim back the subsidy along with interest @ 10% per annum. As per the terms of the grant, fixed assets of the aggregate cost of Rs.1,18,27,564 comprising Land (Rs.2,81,000), Building (Rs.31,84,043), Plant and Machinery (Rs.7426,509) and Electric Installation (Rs.9,36,012) in respect of the project at Sohna, Gurgaon(Haryana), are subject to a second charge.

6. EXCISE DUTY:

Excise duty liability for goods pending removal/clearance from the factory premises of exercisable manufactured goods as at 31.3.1997, is estimated at Rs. 43,90,488. If the said liability would have been accounted, it would have resulted in a higher charge of excise duty with a corresponding adjustment of liability and a higher inventory by Rs. 43,90,488. However, this would have no effect on the net operating profit of the Company for the accounting year or on the 'net current assets' as at 31.3.1997

7. Schedules 1 to 14 are annexed to and form an integral part of the Balance Sheet as at March 31,1997 and the Profit & Loss Account for the year ended on that date.


Mar 31, 1996

1. In terms of its order dated 28th July, 1995, the Hon'ble High Court of Delhi has approved a Scheme of Arrangement in terms of which, with effect from 1.4.95 (the date of arrangement), all the property, rights and powers of the erstwhile Engineering Division of the Company shall, pursuant to Section 394(2) of the Companies Act, 1956, be transferred to and vest in Talbros Engineering Ltd. (TEL) for all the estate and interest of the Company therein, subject nevertheless to all charges affecting the same; and that all the liabilities and duties of the said Division shall similarly be transferred to and become the liabilities and duties of TEL.

2. PENDING LEASE OBLIGATIONS:

Future obligations, for the rentals under the finance lease arrangements for vehicles and plant and machinery amount to Rs.23,393 (Previous year Rs.11,19,468).

3. LIABILITY FOR LEAVE ENCASHMENT:

Total accrued liability for Leave Encashment as per actuarial valuation upto 31.3.1996 is Rs.17,42,091 which has not been provided for in the accounts as the same is accounted on cash basis.

4. GOVERNMENT GRANTS/SUBSIDY:

The Director of Industries, Haryana, has made a grant by way of capital investment subsidy for setting up a project in a backward area in terms of the applicable scheme and based on certain terms and conditions, default in compliance of which may entitle the State Govt. to claim back the subsidy along with interest @ 10% per annum. As per the terms of the grant, fixed assets of the aggregate cost of Rs.1,02,40,865 comprising Land (Rs.2.81,000), Building (Rs.20,51,112), Plant and Machinery (Rs.70,70,181) and Electric Installation (Rs.8,38,572) in respect of the project at Sohna, Gurgaon (Haryana), are subject to a second charge.

5. EXCISE DUTY:

Excise duty liability for goods pending removal/clearance from the factory premises of excisable manufactured goods as at 31.3.1996, is estimated at Rs.35,01,872. If the said liability would have been accounted, it would have resulted in a higher charge of excise duty with a corresponding adjustment of liability and a higher inventory by Rs.25,01,872. 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 31.3.1996.


Mar 31, 1995

GOVERNMENT GRANTS/SUBSIDY:

The Director of Industries, Haryana has made a grant by way of capital investment subsidy for setting up a project in a backward area in terms of the applicable scheme and based on certain terms and conditions, default in compliance of which may entitle the State Government to claim back the subsidy along with interest @ 10% per annum. As per terms of the grant, fixed assets of the aggregate cost of Rs.91,82,930 comprising Land (Rs.2,81,000), Building (Rs. 20,51,112), Plant and Machinery (Rs.60,62,790) and Electric Installation (Rs.7,88,028) in respect of the project at Sohna, Gurgaon (Haryana), are subject to a second charge.

8. TECHNICAL KNOW-HOW FEE:

As per Technical Assistance agreement entered into with Payen International Ltd., U.K. which became effective from 1st May, 1992, the company acquired new technology on a continuing basis for manufacture of gaskets for the international market for a lump sum fee of U.K. Pounds 1,20,000 payable over a period of three year have been paid and charged on pro-rata basis to the Profit & Loss Account.

DEPRECIATION

Depreciation has been recomputed with effect from 1.1.1986 in respect of Plant, Machinery, Equipments & Computers of the Engineering Division on the basis of accounting policy 6.2 and the difference upto 31.3.1994 to the extent of Rs.39,27,135 has been reversed and separately disclosed in Profit & Loss Account. Had the company follow the same method of depreciation as in the past, the net profit for the accounting year and the Fixed Assets would have been higher by Rs.4,58,984 and Rs.43,86,119 respectively.

13. EXCISE DUTY

Excise duty liability for goods pending removal/clearance from the factory premises of excisable manufactured goods as at 31.3.95, is estimated at Rs.34,79,221. If the said liability would have been accounted, it would have resulted in a higher charge of excise duty with a corresponding adjustment of liability and a higher inventory by Rs.34,79,221. 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 31.3.1995.


Mar 31, 1994

BANK GUARANTEES ETC.: Outstanding Bank Guarantees and Letters of Credit - Rs.53,22,612 (Previous year Rs.47,21,438).

GOVERNMENT GRANTS/SUBSIDY: The Director of Industries, Haryana, has made a grant by way of capital investment subsidy for setting up a project in a backward area in terms of the applicable scheme and based on certain terms and conditions, default in compliance of which may entitle the State Govt. to claim back the subsidy along with interest @ 10% per annum. As per the terms of the grant, fixed assets of the aggregate cost of Rs.91,82,930 comprising Land (Rs.2,81,000), Building (Rs.20,51,112), Plant and Machinery (Rs.60,62,790) and Electric Installation (Rs.7,88,028) in respect of the project at Sohna, Gurgaon (Haryana), are subject to a second charge.

TECHNICAL KNOW-HOW As per technical assistance agreement entered into with Payen International Ltd, UK, which became effective for 1st May, 1992 the company acquired new technology on a continuing basis for manufacture of gaskets for the international market for a lump sum fee of U.K. Pound 1,20,000 payable over a period of 3 years in six half yearly instalments of pound 20,000 each. The instalment due during the year have been paid and charged on pro-rata basis to the Profit and Loss Account.

While the technical assistance continues to be provided in terms of the said agreement, there is a basic change in the terms of payment of renegotiation, to the effect that the balance lump-sum liability ceases and would be substituted by a direct yearly charge to revenue. Accordingly, and pending formal documentation, no provision/adjustment has been considered necessary in respect of the deferred payment liability and corresponding `Technical Know-how'.

EXCISE DUTY: Excise duty liability for goods pending removal/clearance from the factory premises of excisable manufactured goods as at 31.3.1994, is estimated at Rs.27,22,323. If the said liability would have been accounted, it would have resulted in a higher charge of excise duty with a corresponding adjustment of liability and a higher inventory by Rs.27,22,323. 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 31.3.1994.


Mar 31, 1993

BANK GUARANTEES ETC.: Outstanding Bank Guarantees and Letters of Credit - Rs.47,21,438 (Previous year Rs.52,27,162).

GOVERNMENT GRANTS/SUBSIDY: The Director of Industries, Haryana, has made a grant by way of capital investment subsidy for setting up a project in a backward area in terms of the applicable scheme and based on certain terms and conditions, default in compliance of which may entitle the State Govt. to claim back the subsidy along with interest @ 10% per annum. As per the terms of the grant, fixed assets of the aggregate cost of Rs.88,69,679 comprising Land (Rs.2,81,000), Building (Rs.20,51,112), Plant and Machinery (Rs.57,49,539) and Electric Installation (Rs.7,88,028) in respect of the project at Sohna, Gurgaon (Haryana), are subject to a second charge.

EXCISE DUTY: Excise duty liability for goods pending removal/clearance from the factory premises of excisable manufactured goods as at 31.3.1993, is estimated at Rs.35,07,790. If the said liability would have been accounted, it would have resulted in a higher charge of excise duty with a corresponding adjustment of liability and a higher inventory by Rs.35,07,790. 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 31.3.1993.

GRATUITY: The Company contributes annually to the Employees Gratuity Fund Trusr, amounts equivalent of the group gratuity-cum-life policy premium demanded by Life Insurance Corporation of India to meet the liability for gratuity on death/retirement of employees. Liability, If any, for shortfall in gratuity on premature retirement of employees, is not provided and is met by the Company, in the year when such liability arises.

TECHNICAL KNOW-HOW As per technical assistance agreement entered into with Payen International Ltd, UK, which became effective for 1st May, 1992 the company acquired new technology on a continuing basis for manufacture of gaskets for the international market for a lump sum fee of U.K. Pound 1,20,000 payable over a period of 3 years in six half yearly instalments of pound 20,000 each. The instalment due during the year have been paid and charged on pro-rata basis to the Profit and Loss Account.

No provision/adjustment has been considered necessary in respect of the Deferred Payment Liability and Corresponding "Technica Know-how".

Exercise duty claims/Income Tax/ Sales-tax demands and claims from a local authority disputed by the company and not provided for Rs. 12,22,453 (Rs.5,97,068) .

Term loans, amounts repayable within one year as at the date of the Balance Sheet - Rs. 46,22,848 (Rs. 52,09,626) .


Mar 31, 1992

Bank Guarantees etc: Outstanding Bank Guarantees and Letters of Credit Rs.52,27,162 (Previous year Rs. 51,66,233)

Outstanding Guarantees Rs. 120 lakhs(previous year Rs. 120 lakhs) in favour of certain financial institutions for grant of term loans to a Company in which three directors are interested.

Excise Duty Claims/Income-Tax/ Sales-tax demands and claims from a local authority disputed by the Company and not provided for Rs. 5,97,068 (Previous year Rs. 5,95,244)

EXCISE DUTY: Excise duty liability for goods pending removal/clearance from the factory premises of excisable manufactured goods as at 31.3.1923, is estimated at Rs.34,41,652. If the said liability would have been accounted, it would have resulted in a higher charge of excise duty with a corresponding adjustment of liability and a higher inventory by Rs.34,41,652. 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 31.3.1992.

GRATUITY: The Company contributes annually to the Employees Gratuity Fund Trusr, amounts equivalent of the group gratuity-cum-life policy premium demanded by Life Insurance Corporation of India to meet the liability for gratuity on death/retirement of employees. Liability, If any, for shortfall in gratuity on premature retirement of employees, is not provided and is met by the Company, in the year when such liability arises.

TECHNICAL KNOW-HOW Payment towards know-how technical information are charged to revenue onver the period for which the benefits accure to the company, in terms of the relavent agreement/arrangement.

Term loans, amounts repayable within one year as at the date of the Balance Sheet - Rs. 52,09,626 (Rs. 42,96,104).


Mar 31, 1991

EXCISE DUTY : Excise Duty in respect of goods manufactured by the Company, according to the method of accounting consistently followed by the Company and also considering the accepted practice of the Excise Authority, that excise duty is generally payable on removal of goods, is accounted at the time of removal of goods from the factory. Such excise duty liability for goods pending clearance from the factory premises of excisable manufactured goods as at 31.3.1991, is estimated at Rs 26,73,018. If the said liability would have been acccounted, it would have resulted in a higher charge of excise duty with a corresponding adjustment of liability and a higher inventory by Rs 26,73,018. 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 31.3.91.

Bank Guarantees etc. - outstanding bank guarantees and letter s of credit - Rs. 51,66,233 (Rs.33,61,710).

Exercise duty claims/Income Tax/ Sales-tax demands and claims from a local authority disputed by the company and not provided for Rs. 5,94,244 (Rs.22,65,860).

Term loans, amounts repayable within one year as at the date of the Balance Sheet - Rs. 42,96,104 (Rs. 29,92,000).


Mar 31, 1990

EXCISE DUTY : Excise Duty in respect of goods manufactured by the Company, according to the method of accounting consistently followed by the Company and also considering the accepted practice of the Excise Authority, that excise duty is generally payable on removal of goods, is accounted at the time of removal of goods from the factory. Such excise duty liability for goods pending clearance from the factory premises of excisable manufactured goods as at 31.3.1990, is estimated at Rs 21,85,511. If the said liability would have been acccounted, it would have resulted in a higher charge of excise duty with a corresponding adjustment of liability and a higher inventory by Rs 21,85,511. 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 31.3.90.

Bank Guarantees etc. - outstanding bank guarantees and letters of credit - Rs. 33,61,710 (Rs.73,69,200).

Exercise duty claims/Income Tax/ Sales-tax demands and claims from a local authority disputed by the company and not provided for Rs. 22,65,860.(Rs.11,39,758).

Term loans, amounts repayable within one year as at the date of the Balance Sheet - Rs. 29,92,000 (Rs. 19,00,000).


Mar 31, 1989

EXCISE DUTY : Excise Duty in respect of goods manufactured by the Company, according to the method of accounting consistently followed by the Company and also considering the accepted practice of the Excise Authority, that excise duty is generally payable on removal of goods, is accounted at the time of removal of goods from the factory. Such excise duty liability for goods pending clearance from the factory premises of excisable manufactured goods as at 31.3.1989, is estimated at Rs 19,50,962. If the said liability would have been acccounted, it would have resulted in a higher charge of excise duty with a corresponding adjustment of liability and a higher inventory by Rs 19,50,962. 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 31.3.89.

Bank Guarantees etc. - outstanding bank guarantees and letters of credit - Rs. 73,69,200 (Rs.16,53,904).

Exercise duty claims/Income Tax/ Sales-tax demands and claims from a local authority disputed by the company and not provided for Rs. Rs.11,39,758 (Rs.3,92,424).

Term loans, amounts repayable within one year as at the date of the Balance Sheet - Rs. 19,00,000 (Rs.24,22,029).