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Notes to Accounts of The Hi-Tech Gears Ltd.

Mar 31, 2016

1 Basis of Preparation of Financial Statements

The Financial Statements are prepared under the historical cost convention on accrual basis and in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013.

Accounting Policies not specifically referred to otherwise are consistent and in accordance with generally accepted accounting principles.

2 Use of Estimates

In preparing Company''s financial statements in conformity with accounting principles generally accepted in India, the Management is required to make estimates & assumptions that affect the reported amount of Assets & Liabilities and the disclosure of Contingent Liabilities at the date of the Financial Statements and the reported amount of revenues & expenses during the reporting period. Actual results could differ from those estimates. Any revision to accounting estimates is recognized in the period the same is determined.

3 Inventories

The basis of valuation for various categories of inventories is as follows:-

Stores, Spares and : At cost or Net realizable

Toose Toofs and value, whichever is tower

Raw Materials (FIFO)

Work in progress : At material cost plus conversion cost on the basis of absorption costing or Net realizable value, whichever is tower

Finished Goods : At material cost plus conversion cost on the basis of absorption costing or Net realizable value, whichever is tower (Inclusive of excise duty payable)

Scrap : At realizable value.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated cost necessary to make the sale.

4 Provisions, Contingent Liabilities and Contingent Assets

The Company makes a provision when there is a present obligation as a result of a past event where the outflow of economic resources is probable & a reliable estimate of the amount of obligation can be made.

The disclosure is made for possible or present obligation that may require outflow of resources as contingent liability in the financial statements. Depending on the facts of each case and after due evaluation of relevant legal aspects, claims against the Company not acknowledged as debts are disclosed as contingent liabilities. In respect of the statutory matters, contingent liabilities are disclosed only for those demand(s) that are contested by the Company.

Contingent assets are neither recognized nor disclosed in the financial statements.

5 Revenue Recognition

The revenue from Sale of Goods is recognized on transfer of all significant risk & rewards of ownership to the buyer. Sale value is inclusive of excise duty. Price revisions of goods sold are accounted for at the time of billing except in the case where reasonable certainty has been measured up to the date of Balance Sheet.

Export Sale is accounted for at exchange rate notified by Central Govt. under Custom Law. Bills outstanding on the Balance Sheet date are reinstated with the exchange rate on that date and the difference on this account is booked in the Profit & Toss Account.

Interest income is recognized on time proportion basis taking into account the amount outstanding and rate applicable. Dividend income is recognized, when right to receive is established.

Export incentives are accounted for on export of goods if the entitlements can be estimated with reasonable accuracy and conditions precedent to claim is fulfilled.

Revenue from services is recognized in accordance with specific terms of contract on performance.

6 Fixed Assets and Depreciation

All Tangible & Intangible Assets are stated at cost(net of taxes/duties which are eligible for credit) less accumulated depreciation and impairment of Toss, if any. Depreciation on Buildings and Plant and Equipment is charged on pro-rata basis on Straight Line Method based on the life assigned to each asset in accordance with Schedule II of Companies Act, 2013. Intangible assets are amortized over their respective individual estimated useful life on written down value basis commencing from the date, the asset is available to the company for its use. Depreciation on rest of the fixed assets has been provided on Written Down Value basis based on the life assigned to each asset in accordance with Schedule II of Companies Act, 2013.

7 Employee Benefits

(i) Short term employee benefits

Employee benefits payable wholly within twelve months of receiving employee services are classified as short-term employee benefits. These benefits include salaries and wages, bonus and ex-gratia. The undiscounted amount of short term employee benefits to be paid in exchange for employee services are recognized as an expense as the related service is rendered by employees’.

(ii) Defined Contribution Plan

Payments to defined contribution retirement benefit schemes (such as Provident Fund, Employee’s State Insurance Corporation) are charged to the statement of profit and toss of the year in which contribution to such schemes becomes due.

(iii) Defined Benefit Plan

For defined benefit schemes, the cost of providing benefits is determined using Projected Unit Credit Method, with actuarial valuation being carried out at each balance sheet date. Actuarial gain & tosses are recognized in full in the statement of profit and toss for the period in which they occur.

The retirement benefit obligation recognized in the Balance Sheet represents the present value of the defined benefit obligations as adjusted for unrecognized past service cost, and as reduced by the fair value of scheme assets.

The Company makes annual contribution to the Employee’s Group Gratuity-cum-Life Assurance scheme of the Life Insurance Corporation of India, a funded defined benefit plan for qualifying employees’. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of 6 months. Vesting occurs upon completion of 5 years of continued service.

The Company provides the liability for the leave encashment benefit of the employees at each balance sheet date on the basis of actuarial valuation, the amount of provision & paid during the year is charged to the statement of profit and toss.

8 Foreign Currency Transactions

(i) Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction.

(ii) Foreign currency monetary assets and liabilities such as cash, receivables, payables, etc. are translated at year end exchange rates.

(iii) Exchange differences arising on settlement of transactions are recognized as income or expense in the year in which they arise, but pursuant to the notification of the Companies (Accounting Standards) Amended Rules 2009 issued on 31st March 2009, exchange differences relating to tong term monetary items, arising during the year, in so far as they relate to the acquisition of a depreciable capital asset are added to / deducted from the cost of the asset w.e.f.1st April 2007 and depreciated over the balance life of the asset.

(iv) Derivative Instruments and Hedge accounting:

The Company uses foreign exchange forward contracts and options to hedge its exposure to movements in foreign exchange rates. These foreign exchange forward contracts and options are not used for trading or speculation purposes.

For unexpired forward contracts or options that are designated as effective cash flow hedges the gain or loss from the effective portion of the hedge is recorded and reported directly in the shareholders'' fund ( under the head “Hedging Reserve) and will be transferred to Profit and Loss account upon the occurrence of the events when the contracts get transacted.

The Company recognizes gains or losses from forward contracts and options that are not designated as effective cash flow hedges for accounting purposes in the profit and loss account in the period in which they occur.

9 Investments

Tong term investments are carried at cost. However provision for diminution, if any, is made to recognize a decline, other than temporary, in the value of investments.

Cost of an investment includes acquisition charges such as brokerage, fees and duties.

10 Borrowing Cost

Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged as expense to the statement of profit and toss in the period for which they relate to.

11 Earnings Per Share

Basic earnings per share are calculated by dividing the net profit or toss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

For the purpose of calculating diluted earnings per share, the net profit or toss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

12 Provision for Current & Deferred Taxes

Tax expenses comprise current and deferred taxes. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws. Deferred income taxes reflects the impact of current period timing difference between taxable and accounting income for the period and reversal of timing differences of earlier years. Deferred taxes is measured based on the tax rates and the tax laws enacted or substantively enacted as at the balance sheet date. Deferred tax assets are recognized only to the extent that there is reasonable certainty and sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred tax assets are recognized on carry forward of unabsorbed depreciation and tax tosses only if there is virtual certainty that such deferred tax assets can be realized against future taxable profit. Excess/short provisions and interest thereon are recognized only on completion of assessment or where adjustments made by the Assessing Officer are disputed, on receiving the ‘Order Giving Effect ‘to the tax determined by the CIT (Appeals) and thereafter on final settlement of further disputes.

13 Research and Development Costs

Revenue expenditure incurred on research and development has been charged to the statement of profit and toss for the year in which it is incurred. Capital expenditure is included in respective heads under fixed assets.

14 Impairment of Assets

At each Balance Sheet date, the Company reviews whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount. If the carrying amount of the asset exceeds its recoverable amount, an impairment toss is recognized in the Profit & Toss Account to the extent the carrying amount exceeds the recoverable amount.

15 Leases

Leases where the lesser effectively retains substantially all the risk and benefits of ownership of the leased term, are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and toss on a straight line basis over the lease term.

16 Cash and Cash Equivalents

Cash and Cash Equivalents for the purpose of cash ftow statement comprise cash at bank and in hand and short term investments with an original maturity of three months or less.

17 Cash Flow Statement

Cash flow statements are reported using the indirect method, whereby profit/ (loss) before extra-ordinary items/exceptional items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipt or payments. The cash flows from operating, investing and financing activities of the Group are segregated based on available information including taxes paid relating to these activities.

18 Prior period and extra ordinary items and changes in accounting policies having material impact on the financial affairs of the Company are disclosed appropriately.

19 Material events occurring after the Balance Sheet date are taken into cognizance and disclosed appropriately.

Company opted for the option to follow principles of notification of the Companies (Accounting Standards) Amendment Rules 2009 issued on 31st March 2009. Thereby exchange differences relating to tong-term monetary items, arising during the year, in so far as they relate to the acquisition of a depreciable capital asset are added to/ deducted from the cost of the asset under the head “Addition / Deletion” of Note 11 and depreciated over the balance life of the asset.

Accordingly, Rs.6,771,412/-(Previous Year Rs.4,531,803/-) on account of foreign exchange fluctuation, have been included to the cost of fixed assets and profit for the year is higher by Rs.6,771,412/-(Previous Year profit for the year was higher by Rs.4,531,803/-)

NOTE ‘20'' - DISCTOSURE PURSUANT TO ACCOUNTING STANDARD-15 ON “EMPTOYEE BENEFITS”

The following tables set out the funded and unfunded status of the gratuity plan and leave encashment amounts recognized in the Company''s financial statements as at 31stMarch, 2016:

The estimates of future salary increases, considered in the actuarial valuation, takes into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

NOTE ‘21’ - SEGMENT INFORMATION (AS-17)

The Company is primarily engaged in the business of Gears and transmission components. Inherent nature of both the activities is governed by the same set of risk and returns; these have been grouped as a single segment in the above disclosures. Hi-Tech (E-Soft) is a division of the Company engaged in the business of engineering software solutions. But, its total revenue does not exceed 10% of total revenue. Hence, Hi-Tech (E-Soft) cannot be a primary segment for disclosure under AS-17 and therefore, Geographical segment can be considered as the primary segment. Geographical revenues are allocated based on the location of the customers. Geographic segments of the Company are America, India and Others.

Since all the manufacturing activity is done at India, therefore segregation of expenses/result/assets/liabilities to each of the geographic location is not practicable. The geographic segments individually contributing 10 percent or more of the Company''s revenues are given below:

NOTE ‘22’ - RELATED PARTY DISCTOSURES AS REQUIRED BY ACCOUNTING STANDARD -18

(a) Related parties where control exists -NIL

(b) Name of the related parties and their relationship

Description of relationship Names of related parties

(i) Individuals controlling voting power/exercising significant Mr. Deep Kapuria influence and their relatives: Mr. Pranav Kapuria

Mr. Anuj Kapuria

(ii) Key management personnel and their relatives: Included in ‘(i)'' above

(iii) Enterprises over which anyone in (i) and (ii) exercises M/s Aquarian Fibrecement Pvt. Ltd. significant influence: M/s. Vulcan Electro Controls Ltd.

The Hi-Tech Robotic Systemz Ltd.

The Hi-Tech Engineering System Pvt. Ltd.

Note: Related parties have been identified by the Management.

Note:- Figures in brackets relates to the previous year

(4) There are five legal cases filed by past employees against the Company for re-instatement/settlement of their dues/ remuneration related matters. Out of the aforesaid five cases, four cases are pending at various stages at Camp Court, Bhiwadi, Rajasthan and one case is pending at District Court, Gurgaon, Haryana. The financial impact of these cases, if any, is not identifiable and hence the same has not been provided in the financial statements of the Company.

NOTE ‘23’ - CORPORATE SOCIAL RESPONSIBILITY (CSR) EXPENDITURE

The Company was required to spend Rs. 47,86,711/- for the current financial year on CSR activities, i.e. 2% of its average net profits of the last three previous financial years, according to the provision of Section 135 of Companies Act, 2013 and rules made there under.

(a) Gross amount required to be spent during the Year Rs. 47,86,711/-

NOTE ‘24’

Enactment of the payment of Bonus (amendment) Act 2015 having come into force effective 1st day of April 2014, the company has made additional provision for Bonus as follows:

(i) A sum of Rs 18,163,746/- pertaining to the period from 1st April, 2015 to 31st March, 2016 is included in Employee benefit expenses.

(ii) (ii) A sum of Rs 6,655,287/- pertaining to the period from 1st April, 2014 to 31st March, 2015 is disclosed as an Exceptional item.

NOTE ‘25’

In the opinion of the Board of Directors, the Current Assets, Toans and Advances are having the value at which they are stated in the Balance Sheet, if realized in the ordinary course of business.

NOTE ‘26’

Claims received against shortage / damage of materials which are not of significant values are not being shown separately. The same are accounted for on receipt basis.

NOTE ‘27’

The figures have been rounded off to the nearest rupee.

NOTE ‘28’ - PREVIOUS YEAR FIGURES

Previous year figures have been regrouped/ reclassified wherever necessary to correspond with the current year classifications/ disclosures.


Mar 31, 2015

NOTE 1 – FUNDED STATUS OF GRATUITY PLAN & LEAVE ENCASHMENT

The following tables set out the funded and unfunded status of the gratuity plan and leave encashment amounts recognized in the Company's financial statements as at 31st March, 2015:

NOTE 2. – CONTINGENT LIABILITIES & COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR)

A. Commitments:

Estimated amount of contracts remaining to be executed on capital accounts Rs.62,206,931/- after adjusting advances (Previous year Rs. 924,080/-)

B. Contingent Liabilities:

1) Haryana State Industrial & Infrastructure Development Corporation Ltd ('HSIIDC') had demanded an enhanced amount from the industrial plot owners in Manesar, Haryana, based on the Hon'ble Supreme Court's order. The Company, being a plot owner, received a demand notice of Rs. 3,552/- per sq mtr on it total plot of 12150 mtrs., totaling to Rs.4,31,56,800/-, including interest. Out of above, Rs.1,20,76,614/- was paid in previous years, at the time of registration of conveyance deed. The calculation method of demand raised by HSIIDC was contested by the Company through the Manesar Industries Welfare Association at the Hon'ble High Court at Chandigarh. The Court, while staying the calculation made by HSIIDC, has asked the plot owners to deposit five installments, as per new schedule, till further orders. The company paid Rs.3,20,70,471/- up to 2013-14 (including payments at the time of registration, as aforesaid) and Rs. 67,50,000/- in 2014-15. The Hon'ble court has pleased to reduce the demand to Rs. 3,313/- per sq mtrs.in its order dt. Nov 11, 2014, totaling to Rs. 4,02,52,950/- together with interest. The Company has not received the final demand notice from HSIIDC after adjustment for the balance enhanced amount payable. Any additional compensation, if payable, will have the effect of enhancing the asset value of the land.

(5) There are four separate legal cases filed by past employees against the Company for re-instatement/settlement of their remuneration matters, which are currently running in the Camp Court, Bhiwadi, Rajasthan. The financial impact of these cases, if any, is not identifiable and hence the same has not been provided in the financial statements.

(6) The Company has disputed entry tax liability being levied by the Rajasthan Government from the financial year 2007-08 onwards. The Hon'ble Supreme Court of India vide order dated 13.03.2015, has granted stay to the Company on this matter and has given direction to deposit 50% of the entry tax arrears, remaining 50% balance in the form of bank guarantee and full payment of future payments, subject to the outcome of the case, which is still pending before the Hon'ble Supreme Court of India. Accordingly, the company has deposited a sum of Rs. 64,36,111/- to the credit of the Rajasthan State Government up to the current year ended 31.03.2015. The Company has made provision in its books of accounts for the balance also.

NOTE '3 – LEASEHOLD PROPERTY

The company owns 9 flats on leasehold basis allotted by Ashiana Group in Bhiwadi. Flats are not registered in name of company in view of applicability of local laws.

NOTE 4 – CORPORATE SOCIAL RESPONSIBILITY (CSR) EXPENDITURE

The Company was required to spend Rs.7,214,067/- for the current financial year on CSR activities, i.e. 2% of its average net profits of the last three previous financial years, according to the provision of Section 135 of Companies Act, 2013 and rules made hereunder.

NOTE 5

In the opinion of the Board of Directors, the Current Assets, Loans and Advances are having the value at which they are stated in the Balance Sheet, if realized in the ordinary course of business.

NOTE 6

Claims received against shortage / damage of materials which are not of significant values are not being shown separately. The same are accounted for on receipt basis.

NOTE 7

The figures have been rounded off to the nearest rupee.

NOTE 8 – PREVIOUS YEAR FIGURES

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


Mar 31, 2014

NOTE ''1'' - SEGMENT INFORMATION (AS-17)

The Company is primarily engaged in the business of Gears and transmission components. Inherent nature of both the activities is governed by the same set of risk and returns; these have been grouped as a single segment in the above disclosures. Hi-Tech (E- Soft) is a division of the Company engaged in the business of engineering software solutions. But, its total revenue does not exceed 10% of total revenue. Hence, Hi-Tech (E-Soft) cannot be a primarily segment for disclosure under AS-17 and Geographical segment can be considered as the primary segment. Geographical revenues are allocated based on the location of the customer. Geographic segments of the Company are America, India and Others.

NOTE ''2'' - CONTINGENT LIABILITIES & PROVISIONS

A. Contingent Liabilities not provided for:

1) Estimated amount of contracts remaining to be executed on capital accounts Rs.924,080/- after adjusting advances (Previous year Rs. 30,334,709)

2) Haryana State Industrial & Infrastructure Development Corporation Ltd (''HSIIDC'') had demanded an enhanced amount from the industrial plot owners in Manesar, Haryana, based on the Hon''ble Supreme Court''s order. The Company, being a plot owner, received a demand notice of Rs.4,31,56,800/-, including interest. Out of above, Rs.1,20,76,614/- was paid in previous years, at the time of registration of conveyance deed. The calculation method of demand raised by HSIIDC is being contested by the Company through the Manesar Industries Welfare Association at the Hon''ble High Court at Chandigarh. The Court, while staying the calculation made by HSIIDC, has asked the plot owners to deposit three installments, as per new schedule, till further orders. Accordingly, the company deposited the first installment of Rs.62,50,000/- in 2012-13. The second and third installments of Rs.70,32,537/- & Rs.67,11,320/- were paid as per court schedule in 2013-14. In view of above, till March 31, 2014, the company has paid Rs.3,20,70,471/- and balance demand of Rs. 1,10,86,329/- is considered as contingent liability, which is subjudice. Any additional compensation, if payable, will have the effect of enhancing the asset value of the land.

NOTE ''3'' - FINANCIAL INSTRUMENTS: RECOGNITION & MEASUREMENT

Company is following the principles of Accounting Standard (''AS'') 30 "Financial Instruments: Recognition and Measurement" in respect of its derivative financial instruments.

Derivative financial instruments, which qualify for cash flow hedge accounting and where the Company has met all the conditions of effective Cash Flow hedge accounting, are fair valued at March 31, 2014. Consequently Hedging Reserve/Fair Valuation Loss on Derivative balances is decreased to Rs NIL as on 31.03.2014 (Previous Year Rs NIL).

Details on derivatives instruments and un-hedged foreign currency exposures

I. The following derivative positions are open as at 31 March, 2014. These transactions have been undertaken to act as economic hedges for the Company''s exposures to various risks in foreign exchange markets and may / may not qualify or be designated as hedging instruments.

(a) Forward exchange contracts and options [being derivative instruments], which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

(i) Outstanding forward exchange contracts entered into by the Company as on 31 March, 2014: NIL (Previous Year Nil)

(ii) Outstanding option contracts entered into by the Company as on 31 March, 2014: NIL

NOTE ''4''

In the opinion of the Board of Directors, the Current Assets, Loans and Advances are having the value at which they are stated in the Balance Sheet, if realized in the ordinary course of business.

NOTE ''5''

Claims received against shortage / damage of materials which are not of significant values are not being shown separately. The same are accounted for on receipt basis.

NOTE ''6''

The figures have been rounded off to the nearest rupee.

NOTE ''7'' - PREVIOUS YEAR FIGURES

Previous year figures have been regrouped and rearranged wherever found necessary.


Mar 31, 2013

NOTE ''1'' – SEGMENT INFORMATION (AS-17)

The Company is primarily engaged in the business of Gears and transmission components. Inherent nature of both the activities is governed by the same set of risk and returns; these have been grouped as a single segment in the above disclosures. Hi-Tech (E-Soft) is a division of the Company engaged in the business of engineering software solutions. But, its total revenue does not exceed 10% of total revenue. Hence Hi-Tech (E-Soft) cannot be a primarily segment for discloser under AS-17 and Geographical segment can be considered as the primary segment. Geographical revenues are allocated based on the location of the customer. Geographic segments of the Company are Americas, Europe, India and Others.

Since all the manufacturing activity is done at India, therefore segregation of expenses/result/assets/liabilities to each of the geographic location is not practicable. The geographic segments individually contributing 10 percent or more of the Company''s revenues are given below:

NOTE ''2'' – RELATED PARTY DISCLOSURES (AS-18)

(a) Enterprise in which company has control -NIL

(b) Key Management Personnel

1 Sh. Deep Kapuria Executive Chairman

2 Sh. Pranav Kapuria Managing Director

3 Sh. Anuj Kapuria Whole Time Director

(c) Details of related parties:

NOTE ''3'' – CONTINGENT LIABILITIES & PROVISIONS

A. Contingent Liabilities not provided for:

1) Estimated amount of contracts remaining to be executed on capital accounts Rs.30,334,709 after adjusting advances (Previous year Rs. 23,232,458)

2) Haryana State Industrial & Infrastructure Development Corporation Ltd (''HSIIDC'') has demanded an enhanced amount from the industrial plot owners in Manesar, Haryana, based on the Hon''ble Supreme Court''s order. The Company received a demand notice of Rs. 4,31,56,800/-, including interest. Out of above, Rs. 1,20,76,614/- was paid in previous year. The calculation method of demand raised by HSIIDC is being contested by the Company through the Manesar Industries Welfare Association in the Hon''ble High Court at Chandigarh. The Court, while staying the calculation made by HSIIDC, has asked the plot owners to deposit two installments, one in March, 2013 and second in June 2013, till further orders. Accordingly, the company has deposited the first installment of Rs. 62,50,000/- during the year after due adjustments. The second installment will be paid separately in financial year 2013 - 14. Any additional compensation, if payable, will have the effect of enhancing the asset value of the land. In view of above, till March 31, 2013, the company has paid Rs. 1,83,26,614/- and balance demand of Rs. 2,48,30,186/- is considered as contingent liability, which is subjudice, as explained above.

NOTE ''4'' – FINANCIAL INSTRUMENTS: RECOGNITION & MEASUREMENT:

Company is following the principles of Accounting Standard (''AS'') 30 "Financial Instruments: Recognition and Measurement" in respect of its derivative financial instruments.

Derivative financial instruments, which qualify for cash flow hedge accounting and where the Company has met all the conditions of effective Cash Flow hedge accounting, are fair valued at March 31, 2013. Consequently Hedging Reserve/Fair Valuation Loss on Derivative balances is decreased to Rs NIL as on 31.03.2013(Previous Year Rs 1,837,837).

Details on derivatives instruments and un-hedged foreign currency exposures

I. The following derivative positions are open as at 31 March, 2013. These transactions have been undertaken to act as economic hedges for the Company''s exposures to various risks in foreign exchange markets and may / may not qualify or be designated as hedging instruments.

(a) Forward exchange contracts and options [being derivative instruments], which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

(i) Outstanding forward exchange contracts entered into by the Company as on 31 March, 2013 : NIL (Previous Year Nil)

NOTE ''5''

In the opinion of the Board of Directors, the Current Assets, Loans and Advances are having the value at which they are stated in the Balance Sheet, if realized in the ordinary course of business.

NOTE ''6''

Claims received against shortage / damage of materials which are not of significant values are not being shown separately. The same are accounted for on receipt basis.

NOTE ''7''

The figures have been rounded off to the nearest rupee.

NOTE ''8'' – PREVIOUS YEAR FIGURES:

Previous year figures have been regrouped and rearranged wherever found necessary.

NOTE ''9'' – PRIOR PERIOD EXPENSES:

Other Expenses includes Prior Period Expenses of Rs. 255,841 (Refer Note:- 24), details of which are as under:-


Mar 31, 2012

NOTE '1' - CONTINGENT LIABILITIES & PROVISIONS

A. Contingent Liabilities not provided for:

1) Estimated amount of contracts remaining to be executed on capital accounts Rs. 23,232,458 after adjusting advances (Previous year Rs. 106,830,418)

2) Bank Guarantees issued in favour of Asst./Dy. Commissioners of Customs for Export Obligation isRs. 5,654,224 (Previous year Rs. 5,554,000)

NOTE '2'- FINANCIAL INSTRUMENTS: RECOGNITION & MEASUREMENT:

Company is following the principles of Accounting Standard ('AS') 30 "Financial Instruments: Recognition and Measurement" in respect of its derivative financial instruments.

Derivative financial instruments, which qualify for cash flow hedge accounting and where the Company has met all the conditions of effective Cash Flow hedge accounting, are fairvalued at March 31,2012 Consequently Hedging Reserve/ Fair Valuation Loss on Derivative balances is increased to Rs 1,837,837.(Previous Year Rs 1,444,208)

Details on derivatives instruments and un-hedged foreign currency exposures

I. The following derivative positions are open as at 31 March, 2012. These transactions have been undertaken to act as economic hedges for the Company's exposures to various risks in foreign exchange markets and may / may not qualify or be designated as hedging instruments.

(a) Forward exchange contracts and options [being derivative instruments], which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

(i) Outstanding forward exchange contracts entered into bythe Company as on 31 March, 2012 : NIL

NOTE '3'- LEASEHOLD PROPERTY:

The company owns 9 flats on leasehold basis allotted by Ashiana Group in Bhiwadi. Flats are not registered in name of company in view of applicability of local laws.

NOTE '4'

In the opinion of the Board of Directors, the Current Assets, Loans and Advances are having the value at which they are stated in the Balance Sheet, if realized in the ordinary course of business.

NOTE '5'

Claims received against shortage/damage of materials which are not of significant values are not being shown separately. The same are accounted for on receipt basis.

NOTE '6'

The figures have been rounded off to the nearest rupee.

NOTE '7' - PREVIOUS YEAR FIGURES:

During the year 31 March 2012 the revised Schedule VI notified under the Company Act 1956, has become applicable to the Company. The Company has reclassified previous year figures to conform to this year's classification. The Revised Schedule VI does not require presentation of a reconciliation explaining the impact of the reclassification of the previous year figures in the financial statements.


Mar 31, 2011

1. Contingent Liabilities

Depending on the facts of each case and after due evaluation of relevant legal aspects, claims against the Company not acknowledged as debts are disclosed as contingent liabilities. In respect of the statutory matters, contingent liabilities are disclosed only for those demand(s) that are contested by the Company.

Contingent Liabilities not provided for :

A. Estimated amount of contracts remaining to be executed on capital accounts Rs. 106,830,418 after adjusting advances (Previous year Rs. 117,700,000)

B. Bank Guarantees issued in favour of Asst./ Dy. Commissioners of Customs, Mumbai & New Delhi for Export Obligation is Rs. 5,554,000 (Previous year Rs. 12,132,980)

Opening Released during Year Fresh Guarantees Closing during the Year

Rs. 12,131,980 Rs. 6,578,980 Nil Rs.5,554,000

C. Disputed statutory demands in appeals before Rajasthan High Court:

Rajasthan Tax on Entry of Goods into Local Area Act 1999 , Rs1,716,840/- & Rs1,351,717/- for FY 2007-08 & 2008-09 respectively.

3. In the opinion of the Board of Directors, the Current Assets, Loans and Advances are having the value at which they are stated in the Balance Sheet, if realized in the ordinary course of business.

4. Claims received against shortage / damage of materials which are not of significant value are not being shown separately. The same are accounted for on receipt basis.

5. In pursuance of Micro, Small & Medium Enterprises Development Act, 2006, the names of the Enterprises to whom the Company owes any sum which is outstanding at the year end are as follows:-

b) We have make payment to MSME within permissible time limit under Micro, Small & Medium Enterprises Development Act, 2006 during FY 2010-2011 so there is no interest due on MSME.

c) There is no interest due & payable to MSME as on 31.03.2011.

6. Title of HSIDC plot no. 24, 25, 26, sector 7 IMT Manesar Gurgaon has not been registered in the name of the Company. HSIDC had allotted the land in the name of the Company vide its letter of allotment no. HSIIDC 1441 dated 10.07.2003.

7. Company opted for the option to follow principles of notification of the Companies (Accounting Standards) Amendment Rules 2006 on 31st March 2009. Thereby exchange differences relating to long-term monetary items, arising during the year, in so far as they relate to the acquisition of a depreciable capital asset are added to/ deducted from the cost of the asset under the head “Addition” of Schedule 4 and depreciated over the balance life of the asset.

Accordingly, Rs. 197,661 have been deducted from the cost of fixed assets and the profit for the year is lower by Rs. 197,661.

8. The Company is primarily engaged in the business of gears and transmission components. Inherent nature of both the activities is governed by the same set of risk and returns, these have been grouped as a single segment in the above disclosures. Hi-Tech (E-Soft) is a division of the Company engaged in the business of engineering software solutions. Since this business is not required to be reported as per AS-17 on Segment Reporting, separate figures of the software division are not reported.

9. During the year the company has allotted 9,384,000 Bonus equity shares of Rs.10/- each fully paid up in the ratio of 1:1, out of General Reserve.

10. A part of Land owned by Company situated at Village Sihi, Gurgaon was acquired during the year by the Government of Haryana and amount of Rs. 35,20,396 was received as compensation against 3 Kanal and 8 Marla land. Revaluation Reserve amounting to Rs. 1,56,57,846 pertaining to the acquired part of the land has been reversed.

11. Company is following the principles of Accounting Standard ('AS') 30 “Financial Instruments: Recognition and Measurement” in respect of its derivative financial instruments.

Derivative financial instruments, which qualify for cash flow hedge accounting and where the Company has met all the conditions of effective Cash Flow hedge accounting, are fair valued at March 31, 2011 Consequently Hedging Reserve/Fair Valuation Loss on Derivative balances is reduced to Rs 1,444,208.(Previous Year Rs 6,715,728 )

12. Related Party Disclosures (AS-18)

(a) Enterprise in which company has control-Nil

(b) Key Management Personnel

1 Sh. Deep Kapuria Chairman&Whole Time Director

2 Sh. Pranav Kapuria Managing Director

3 Sh. Anuj Kapuria Whole Time Director

(c) Transactions with the related parties during the year are as per Annexure attached.

13. Funded status of Gratuity Plan & Leave Encashment

The following tables set out the funded and unfunded status of the gratuity plan and leave encashment amounts recognized in the Company's financial statements as at 31March, 2011:


Mar 31, 2010

1. Contingent Liabilities

Depending on the facts of each case and after due evaluation of relevant legal aspects, claims against the Company not acknowledged as debts are disclosed as contingent liabilities. In respect of the statutory matters, contin gent liabilities are disclosed only for those demand(s) that are contested by the Company.

Contingent Liabilities not provided for:

(Amount Rs. in Lacs)

A As on 31sMarch 2009 As on 31sMarch 2010

Rs 623.46 Rs 1,173.00

(Amount Rs. in Lacs)

Opening Released during the Year Fresh Guarantees During the Year Closing

B. Rs 68.87 Rs4.58 Rs 57.04 Rs. 121.32

2. In the opinion of the Board of Directors, the Current Assets, Loans and Advances are having the value at which they are stated in the Balance Sheet, if realized in the ordinary course of business.

3. Claims received against shortage/ damage of materials which are not of significant value are not being shown separately. The same are accounted for on receipt basis.

4. Title of HSIDC plot no. 24,25,26, sector 7 IMTManesarGurgaon has not been registered in the name of the Company. HSIDC had allotted the land in the name of the Company vide its letter of allotment no. HSIIDC 1441 dated 10.07.2003.

5. Last year Company opted for the option to follow principles of notification of the Companies (Accounting Standards) Amendment Rules 2006 on 31st March 2009. Thereby exchange differences relating to long-term monetary items, arising during the year, in so far as they relate to the acquisition of a depreciable capital asset are added to/ deducted from the cost of the asset under the head "Addition"of Schedule 4 and depreciated over the balance life of the asset.

Accordingly, Rs.106.56 Lacs have been deducted from the cost of fixed assets and the profit for the year is lower by Rs.106.56 Lacs.

6. The Company is primarily engaged in the business of gears and transmissioncomponents. Inherent nature of both the activities is governed by the same set of risk and returns, these have been grouped as a single segment in the above disclosures. Hi-Tech (E-Soft) is a division of the Company engaged in the business of engineering software solutions. Since this business is not required to be reported as per AS-17 on Segment Reporting, separate figures of the software division are not reported.

7. Company is following the principles of Accounting Standard (AS) 30 "Financial Instruments: Recognition and Measure- ment" in respect of its derivative financial instruments.

Derivative financial instruments, which qualify for cash flow hedge accounting and where the Company has met all the condi- tions of effective Cash Flow hedge accounting, are fair valued at March 31, 2010 .Consequently Hedging Reserve/Fair Valua- tion Loss on Derivative balances is reduced to Rs67.15 lacs.(PreviousYear Rs920.71 lacs)

8 The figures have been rounded off to the nearest rupee.

9 Previous year figures have been regrouped and rearranged wherever found necessary.

10 Schedule 1 to 17 form an integral part of Balance Sheet and Profit and Loss Account.

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