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Notes to Accounts of Timken India Ltd.

Mar 31, 2015

1. CORPORATE INFORMATION

Timken India Limited ('the Company') was incorporated on 15th June, 1987. The Company is primarily into manufacture and distribution of tapered roller bearings, components and accessories for the automotive sector and the railway industry. It also provides maintenance contract services and refurbishment services. The Company also has a gear box repairing facility at Raipur where it provides repair and maintenance services of industrial gear boxes.

A Terms/rights attached to equity shares

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

The Company has paid, subject to approval of the shareholders at the next Annual General Meeting, interim dividend of Rs.3 (interim dividend of Rs.6.5/- ) per equity share of Rs.10 each fully paid. This dividend was paid to all the eligible shareholders whose names appeared on the Register of Members of the Company as on November 21, 2014 (being the record date fixed for the purpose) on November 28, 2014.

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

B Details of shareholders holding more than 5% shares in the company (Refer note (i) & (ii) below)

Notes:

(i) Out of the total shares issued, 50,999,988 fully paid-up Equity shares of Rs. 10/- each are held by Timken Singapore PTE Limited. However, the Timken Company,USA happens to be the Ultimate Holding Company.

(ii) As per records of the company, including its register of shareholders/ members, the above shareholding represents legal ownerships of shares.

Note i.

a) The Company had in the previous year issued 4,265,134 equity shares of Rs.10/- each through an Institutional Placement Programme (IPP) to qualified institutional buyers at a premium of Rs.110/- per share to generate funds for long term capital requirements, working capital requirements and general corporate purposes. The total sum received aggregated Rs.511,816,080 including Rs.469,164,740 towards securities premium.

b) As at March 31,2015, the Company has fully utilised the funds towards the purchase of fixed assets.

Note : The above are interest bearing deposits accepted from dealers / distributors which are repayable only upon termination of the dealership / distributor agreement.

a) Provision for Indirect Taxes includes a liability of Rs.221,693,462 (Rs.181,558,334) towards custom duty on imports for various years.The Company has provided these liabilities based on the most recent assessments. Further, the management is of the view that this liability shall be payable only at the time of final assessment, pending which, the Company has also deposited Rs.152,882,698 (Rs.125,096,839) with customs authorities. The net provision is included in Provision for Indirect Taxes above.

b) The Company has reviewed the various liabilities/claims relating to indirect taxes and estimated the provision for contingencies based on assessment of its probability.

c) There are also provisions against Income Tax claims amounting to Rs.12,333,741 (Rs.12,333,741) which is included in Note 13 and netted off with Advance Income Tax.

* These are bills discounted with banks with recourse to the Company with various maturity dates. Interest payable ranges between 11.25% to 12.75% p.a for overdue payables.

Note :

Balance with scheduled banks on unpaid dividend account represents monies that can be utilised only to pay dividend to equity shareholders against dividend warrants issued to them.

Commission expense includes payments made for logistics and warehouse management services rendered by a third party service provider. Contribution made to Prime Minister Relief Fund as part of CSR Expenditure.

Other Expenses include:

NOTE 2 : LEASES Asset taken on lease

Office premises are obtained on operating leases which are generally cancellable in nature except two premises for which disclosures are given below.

The lease term is for various number of years and renewable for further periods as per the lease agreements at the option of the company. In few lease agreements, escalation clauses are present consequent to which straight lining of lease rental is done and accounted for accordingly. There are no restrictions imposed by the lease arrangements. There are no subleases.

Leases which are non-cancellable in nature

The details of non-cancellable lease rentals payable are given below :

The Company has paid Rs.40,751,895 (Rs.29,803,693) towards lease rent.

Other Leases

Lease of Land and Building

The Company has taken on lease, land and building thereon, for the purposes of its facility in Raipur relating to servicing of gears/related accessories. The significant lease terms are as follows:

a. The land lease is for a period of 30 years cancellable with six months prior notice and total lease payments during the lease term amounts to Rs.239,179,851. The lease does not involve upfront payment and has terms of renewal and escalation clauses.

b. The building lease is for a period of 7 years cancellable with six months prior notice and total lease payments during the lease term amounts to Rs.95,261,499. The lease does not involve upfront payment and has terms of renewal and escalation clauses.

NOTE 3 : SEGMENT INFORMATION Business Segment:

The Company has reviewed the disclosure of business segment wise information and is of the view that it manufactures and trades in bearings and related components, and provides services in connection with or incidental to such sales ('Bearings and components').This segment operates out of Jamshedpur, Chennai, Mysore, Gurgaon and Pune. The Company also provides repair and maintenance services of industrial gear boxes at its gear box repairing facility at Raipur.

'Bearings and Components' is the only reportable segment in terms of AS-17 : Segment Reporting and Related disclosures are as follows:

Geographical segments:

Revenue and receivables are specified by location of customers while the other geographic information is specified by location of the assets.

The following table presents revenue and certain asset information regarding the company's geographical segments:

Note: Since the Company has all fixed assets in India only, separate figures for additions to fixed assets for domestic and overseas segments are not furnished.

NOTE 4 - DISCLOSURES AS PER REVISED ACCOUNTING STANDARD -15 Gratuity and other post-employment benefit plans:

The Company has a defined benefit gratuity plan (funded). Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service.

The Company also has a Death Benefit Scheme (unfunded) for its employees where the immediate beneficiaries are entitled to a monthly fixed sum till the date of superannuation, for death in harness.

The Company has a separate Provident Fund Trust (funded) whereby, all the employees are entitled to benefits as per Provident Fund Act / Trust Deed. Any shortfall for the Trust is borne by the Company, hence the same is treated as a defined benefit scheme. The actuary has provided a valuation and determined the fund assets and obligations as at March 31, 2015. The corresponding disclosures mentioned below are to the extent of the shortfall in the interest guaranteed on the provident fund vis-a-vis the interest rate notified by the Government.

The following tables summarise the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the respective plans.

Statement of profit and loss :

Net employee benefit expense (recognised in Employee Cost)

The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled. Gratuity fund and Provident fund are 100% invested with approved funds as per the relevant Act/ trust deed. The Company expects to contribute Rs.24,550,000 (Rs.2,200,000) to the Gratuity Fund in the next year.

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

As at As at March 31, 2015 March 31,2014 Rupees Rupees

i) Sales tax matters under dispute / appeal 18,764,268 15,575,963

ii) Income tax demands under appeal 86,070,124 75,274,238

iii) Excise and customs demand under dispute / appeal 33,795,277 33,795,277

iv) Other Claims against the Company not acknowledged as debts 8,309,615 8,309,615

Based on the discussions with the solicitors/favourable decisions in similar cases/legal opinions taken by the Company on above matters, no provision there against is considered necessary.

NOTE 5 : CAPITAL & OTHER COMMITMENTS :

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 127,556,829 (Rs. 106,653,878) [Net of advances paid Rs. 44,769,464 (Rs. 15,000)].

(b) In terms of the Memorandum of Agreement dated 9th May, 2011 entered between the Company and Timken Engineering and Research India Pvt. Ltd. (TERI), TERI manufactures goods using the assets owned by the Company and leased out to TERI (as disclosed in Note 9) and the Company in consideration of purchase of such goods from TERI would give an agreed mark up on the cost incurred by TERI for manufacturing such goods. This agreement is valid for a period of 5 years with renewal option.

(c) For commitments relating to lease arrangements, please refer note 26.

NOTE 6 : CONSUMPTION OF IMPORTED AND INDIGENOUS RAW MATERIALS & COMPONENTS AND STORES & SPARE PARTS

Value of consumption of imported and indigenously obtained raw materials, components, stores and spare parts and percentage of each to the total consumption :

NOTE 7 : RELATED PARTY DISCLOSURE:

Name of the Holding Company - Timken Singapore PTE. Limited (with effect from March 26, 2012)

Name of the Ultimate Parent Company - The Timken Company, USA

List of related parties where control exists and transactions with such related parties and other related parties with whom transaction have taken place during the year/period, along with related balances as at March 31,2015 and for the year then ended are presented in the following table:

Excise duty and cess on stock represent differential excise duty and cess thereon paid/provided on opening and closing stock of finished goods.

NOTE 8

Subsequent to the balance sheet date, on May 10, 2015 the Pune warehouse of the Company caught fire damaging all the inventories and fixed assets at the warehouse.The Company is in the process of quantifying the losses suffered for necessary action and insurance claims.The financial statements have not been adjusted to give effect of the event.

NOTE 9

Previous year figures have been regrouped / reclassified, where necessary, to conform to this year's classification.

Notes : (i) EBIT/BIC i,e Beginning invested capital, a type of return on asset ratio, used internally to measure the company's performance. In broad terms, invested capital is total assets minus non interest-bearing current liabilities.

(ii) Return on Net Worth is profit after tax divided by net worth as at the end of the year.

(iii) Equity includes preference share capital net off accumulated losses and miscellaneous expenditure to the extent not written off.

(iv) Fixed Asset Turnover is net sales divided by net fixed assets as at the end of the year.

(v) Working Capital Turnover is net sales divided by net cuurent asset as at the end of the year.

(vi) Current ratio is current assets divided by current liabilities including current portion of long term loans, if any, repayable within one year.

(vii) Interest Cover is profit before interest and taxation divided by net interest expenses.


Mar 31, 2014

NOTE 1 : LEASES

Asset taken on lease

Office premises are obtained on operating leases which are generally cancellable in nature except one premise for which disclosures are given below.

The lease term is for various number of years and renewable for further periods as per the lease agreements at the option of the company. In few lease agreements, escalation clauses are present consequent to which straight lining of lease rental is done and accounted for accordingly. There are no restrictions imposed by the lease arrangements. There are no subleases.

Leases which are non-cancellable in nature

Other Leases

Lease of Land and Building

The Company has also taken on lease, land and building thereon, for the purposes of its new facility in Raipur relating to servicing of gears/related accessories which has begun operations in this year. The significant lease terms are as follows:

a. The land lease is for a period of 30 years cancellable with six months prior notice and total lease payments during the lease term amounts to Rs.239,179,851. The lease does not involve upfront payment and has terms of renewal and escalation clauses.

b. The building lease is for a period of 7 years cancellable with six months prior notice and total lease payments during the lease term amounts to Rs.95,261,499. The lease does not involve upfront payment and has terms of renewal and escalation clauses.

NOTE 2 : SEGMENT INFORMATION

Business Segment:

The Company has reviewed the disclosure of business segment wise information and is of the view that it manufactures and trades in bearings and related components, and provides services in connection with or incidental to such sales (''Bearings and components'').This segment operates out of Jamshedpur, Chennai, Mysore, Gurgaon and Pune.

In addition, during the year, the Company has also commissioned a new gear box repairing facility at Raipur where it provides repair and maintenance services of industrial gear boxes.

NOTE 3 - DISCLOSURES AS PER REVISED ACCOUNTING STANDARD -15

Gratuity and other post-employment benefit plans:

The Company has a defined benefit gratuity plan (funded). Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service.

The Company also has a Death Benefit Scheme (unfunded) for its employees where the immediate beneficiaries are entitled to a monthly fixed sum till the date of superannuation, for death in harness.

The Company has a separate Provident Fund Trust (funded) whereby, all the employees are entitled to benefits as per Provident Fund Act / Trust Deed. Any shortfall for the Trust is borne by the Company, hence the same is treated as a defined benefit scheme. The actuary has provided a valuation and determined the fund assets and obligations as at March 31, 2014. The corresponding disclosures mentioned below are to the extent of the shortfall in the interest guaranteed on the provident fund vis-a-vis the interest rate notified by the Government.

The following tables summarise the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the respective plans.

NOTE 4 : CONTINGENT LIABILITIES

As at As at March 31, 2014 March 31, 2013 Rupees Rupees

i) Sales tax matters under dispute / appeal 15,575,963 16,545,755

ii) Income tax demands under appeal 75,274,238 75,173,399

iii) Excise and customs demand under dispute / appeal 33,795,277 27,787,040

iv) Other Claims against the Company not acknowledged as debts 8,309,615 8,309,615

Based on the discussions with the solicitors/favourable decisions in similar cases/legal opinions taken by the Company on above matters, no provision there against is considered necessary.

NOTE 5 : CAPITAL & OTHER COMMITMENTS :

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for - Rs.106,653,878 (Rs.96,838,177) [Net of advances paid Rs.15,000 (Rs.30,249,177)]

(b) In terms of the Memorandum of Agreement dated 9th May, 2011 entered between the Company and Timken India Manufacturing (P) Ltd, (TIMPL), TIMPL will manufacture goods using the assets owned by the Company and leased out to TIMPL (as disclosed in Note 9) and the Company in consideration of purchase of such goods from TIMPL would give an agreed mark up on the cost incurred by TIMPL for manufacturing such goods. This agreement is valid for a period of 5 years with renewal option.

(c) For commitments relating to lease arrangements, please refer note 26.

NOTE 6 : RELATED PARTY DISCLOSURE:

Name of the Holding Company – Timken Singapore PTE. Limited (with effect from March 26, 2012)

Name of the Ultimate Parent Company – The Timken Company, USA

List of related parties where control exists and transactions with such related parties and other related parties with whom transaction have taken place during the year/period, along with related balances as at March 31, 2014 and for the year then ended are presented in the following table:

NOTE 7

Excise duty and cess on stock represent differential excise duty and cess thereon paid/provided on opening and closing stock of finished goods.

NOTE 8

Previous year figures have been regrouped / reclassified, where necessary, to conform to this year''s classification.


Mar 31, 2013

1: CORPORATE INFORMATION

Timken India Limited (''the Company'') was incorporated on 15th June 1987. The Company is primarily into manufacture and distribution of tapered roller bearings, components and accessories for the automotive sector and the railway industry. It also provides maintenance contract services and refurbishment services.

NOTE 2 : LEASES

Asset taken on lease

Office premises are obtained on operating leases which are generally cancellable in nature except two premises for which disclosures are given below. The lease term is for various number of years and renewable for further periods as per the lease agreements at the option of the company. In few lease agreements, escalation clauses are present consequent to which straight lining of lease rental is done and accounted for accordingly. There are no restrictions imposed by the lease arrangements. There are no subleases.

Lease of Land

The Company has taken land on lease during the year for the purposes of its new project in Raipur relating to servicing of gears/related accessories which is under implementation. The lease is for a period of 30 years cancellable with six months prior notice and total lease payments during the lease term amounts to Rs. 239,179,851. The lease does not involve upfront payment and has terms of renewal and escalation clauses.

NOTE 3 : SEGMENT INFORMATION

Business Segment :

The Company has reviewed the disclosure of business segment wise information and is of the view that it manufactures and trades in bearings and related components which is a single business segment in accordance with AS-17, Segment Reporting. Accordingly, no separate business segment information is furnished herewith.

Geographical Segments :

Revenue and receivables are specified by location of customers while the other geographic information is specified by location of the assets.

NOTE 4 : DISCLOSURES AS PER REVISED ACCOUNTING STANDARD 15

Gratuity and other post-employment benefit plans:

The Company has a defined benefit gratuity plan (funded). Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service.

The Company also has a Death Benefit Scheme (unfunded) for its employees where the immediate beneficiaries are entitled to a monthly fixed sum till the date of superannuation, for death in harness.

The Company has a separate Provident Fund Trust (funded) whereby, all the employees are entitled to benefits as per Provident Fund Act / Trust Deed. Any shortfall for the Trust is borne by the Company, hence the same is treated as a defined benefit scheme.

The following tables summarise the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the respective plans.

NOTE 5 : CONTINGENT LIABILITIES

As at March 31, 2013 As at March 31, 2012 Rupees Rupees

i) Sales tax matters under dispute / appeal 16,545,755 242,091,776

ii) Income tax demands under appeal 75,173,399 74,778,129

iii) Excise and customs demand under dispute / appeal 27,787,040 19,468,903

iv) Other Claims against the Company not acknowledged as debts 8,309,615 8,309,615

Based on the discussions with the solicitors/favourable decisions in similar cases/legal opinions taken by the Company on above matters, no provision there against is considered necessary.

NOTE 6 : CAPITAL & OTHER COMMITMENTS

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for - Rs. 96,838,177 (Rs. 10,090,944) [Net of advances paid Rs.30,249,177 (Rs.2,311,019)]

(b) In terms of the Memorandum of Agreement dated 9th May, 2011 entered between the Company and Timken India Manufacturing (P) Ltd, (TIMPL), TIMPL will manufacture goods using the assets owned by the Company and leased out to TIMPL (as disclosed in Note 9) and the Company in consideration of purchase of such goods from TIMPL would give an agreed mark up on the cost incurred by TIMPL for manufacturing such goods. This agreement is valid for a period of 5 years with renewal option.

(c) For commitments relating to lease arrangements, please refer note 26.

NOTE 7: RELATED PARTY DISCLOSURES

Name of the Holding Company - Timken Singapore PTE. Limited (with effect from March 26, 2012) - Timken (Mauritius) Limited (with effect from October 5, 2010 till March 25, 2012) Name of the Ultimate Parent Company - The Timken Company, USA

NOTE 8

Excise duty and cess on stock represent differential excise duty and cess thereon paid/provided on opening and closing stock of finished goods.

NOTE 9

The Company has applied to the Central Government for approval of the appointment of the Managing Director with effect from 26th October 2012 in terms of Part I of Schedule XIII to the Companies Act, 1956. Such appointment is also subject to the approval of the Company''s shareholders.

NOTE 10

Capital work-in-progress includes direct costs consisting of Salaries, Wages and Bonus Rs. 1,636,844 (Rs. Nil), Insurance Rs. 66,670 (Rs. Nil), Legal & Professional Fees Rs. 178,000 (Rs. Nil.) and Rent Rs. 162,800 (Rs. Nil) relating to the Company''s project at Raipur. Consequently, expenses disclosed under the respective notes are net of amounts capitalized by the company.

NOTE 11

Till the fifteen months period ended 31 March 2012, 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 2013, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the company. The company has reclassified previous year figures to conform to this year''s classification. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it significantly impacts presentation and disclosures made in the financial statements, particularly presentation of balance sheet.

Further, current year''s figures are not comparable with previous period''s figures which were for 15 months due to change of the accounting year by the company in the previous period.


Mar 31, 2012

1) Licensed Capacity is not furnished as it is not applicable in terms of Government of India's Notification No.S.O.477(E) dated 25th July, 1991.

2) The above installed capacity represents existing manufacturing facilities for respective products and are certified by the Management.

3) The above installed capacity is fixed with reference to the specific bearing size. Actual production may vary depending on the sizes that are produced in specific year.

Notes:

* Excludes free samples to customers.

** Sale of Products is stated net of excise duty and trade discount.

# Purchases are for resale and inclusive of stock in transit.

@ Quantitative information not furnished due to nature and large volume of such items with small values. None of the individual items included therein are 10% or more of the total value.

Note : In view of the fact that the company also manufactures and purchases number of similar components that are used in the manufacture of the final products, and the fact that individual identification of which is not possible, raw materials and components include both the class of materials.

As at As at

March 31, 2012 December 31, 2010

i) CONTINGENT LIABILITIES NOT PROVIDED FOR Rupees Rupees

A. Demands raised by Sales Tax/Income Tax/Excise authorities

i) Demand of sales tax for non-availability/non-consideration 238,852,264 225,219,371 by Assessing Officer of various sales tax declaration forms.

ii) Demand of sales tax on account of non-deduction of various 2,017,843 2,017,843 allowances and consequent enhancement of Gross turnover.

iii) Demand of sales tax on method of valuation of Goods. 1,221,669 1,221,669

iv) Demand for Denial of Input Credit Nil 2,425,800

v) Demand of income Tax due to disallowance of certain business 74,778,129 73,714,229 expenses & incentives by the Assessing Officer.

vi) Demand of excise duty on CVD credit for imported components of Nil 5,245,045 railway bearings.

vii) Denial of Cenvat credit of service tax on outward transportation of 1,441,114 1,441,114 goods beyond the place of removal

viii) Demand of Service tax consequent to change in service classification 18,027,789 Nil A. Other Claims against the Company not acknowledged as debts

i) Demand towards ESI contribution on employees at Kolkata office of 2,001,562 613,737 the Company. The Company has contested on the applicability of ESI for such employees and the issue is pending before the Assistant Regional Director, ESI Corporation, Kolkata.

ii) Demands arising out of suits filed by Shareholders on account of 508,351 508,351 short / non refund of Application Money for which shares have not been allotted and / or non-receipt of Share Certificates etc. Company's appeals against these issues are pending before relevant District Forums / State Commission / Civil Courts.

iii) Claims for recovery arising out of suit filed by a Contractor before the Calcutta High Court. 5,799,702 5,799,702

Based on discussions with the solicitors / favorable decisions in similar cases / legal opinions taken by the Company, the management believes that the Company has a good chance of success in above-mentioned cases (both under (A) & (B) categories) and hence, no provision there against is considered necessary.

B) ESTIMATED AMOUNT OF CONTRACTS REMAINING TO BE EXECUTED 12,401,963 35,684,755 ON CAPITAL ACCOUNT AND NOT PROVIDED FOR (NET OF ADVANCES PAID)

Note: As the liabilities for gratuity and leave encashment are provided on an actuarial basis for company as a whole, the amounts pertaining to the directors are not included above.

C) The company carries a liability of Rs.136,394,921 (Rs.84,359,586) being provision towards custom duty on imports for various years. The company has made these provisions based on most recent assessments. Further, the management is of the view that this liability shall be payable only at the time of final assessment. Pending such final assessment, the company has also deposited Rs.90,646,461 (Rs. 54,342,319) with customs authorities. The net liability is included in other liabilities in Schedule 10.

D) i) No Equity shares have been allotted during 15 months ended 31st March, 2012 out of 15,150 shares of Rs. 10/- each kept in abeyance as at 31st March, 1998.

ii) Out of the total shares issued, 50,999,988 fully paid-up Equity shares of Rs. 10/- each were held by Timken (Mauritius) Limited till 25th March 2012. On 26th March 2012, such shares were transferred to Timken Singapore PTE Limited. Consequent thereto, Timken Singapore PTE Limited is the Holding Company as at 31st March 2012.

iii) Calls in arrears of Rs.122,500 (Rs.139,500) have been computed on the basis of information certified by the Registrar & Share Transfer Agent of the Company.

E) Excise Duty and Cess on Stock represents differential excise duty and cess thereon paid/provided on opening and closing stock of Finished goods.

F) Disclosures as per Revised Accounting Standard -15 Gratuity and other post-employment benefit plans:

The Company has a defined benefit gratuity plan (funded). Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service.

The Company also has a Death Benefit Scheme (unfunded) for its employees where the immediate beneficiaries are entitled to a monthly fixed sum till the date of superannuation, for death in harness.

The Company has a separate Provident Fund Trust (funded) whereby, all the employees are entitled to benefits as per Provident Fund Act / Trust Deed. Any shortfall for the T rust is borne by the Company, hence the same is treated as a defined benefit scheme. The following tables summarise the components of net benefit expense recognised in the profit and loss account and the funded status and amounts recognised in the balance sheet for the respective plans.

G) Segment Information Business Segment:

The Company has reviewed the disclosure of business segment wise information and is of the view that it manufactures bearings and related components which is a single business segment in accordance with AS-17, Segment Reporting. Accordingly, no separate business segment information is furnished herewith.

Geographical Segments:

The Geographical segments have been identified on the basis of the location of the major customers of the Company.

H) Excise duty expense (net of recovery) represents duty paid/provided for stocks written off, burnt stock, free samples etc.

aa) Prior period expenses include Rs.Nil (Rs.16,029,050) towards gratuity on account of change in the estimate of one of the actuarial assumptions used in past actuarial valuations.

ad) Previous year's figures (including those in brackets) have been regrouped / rearranged, wherever necessary to correspond to current period's classifications. Further, due to change of the accounting year by the Company, current period's figures being for 15 months are not comparable with the previous year's figures of 12 months.


Dec 31, 2010

As at As at December 31, 2010 December 31, 2009

i) CONTINGENT LIABILITIES NOT PROVIDED FOR Rupees Rupees

A. Demands raised by Sales Tax/Income Tax/Excise authorities

i) Demand of sales tax for non- availability/non-consideration 225,219,371 224,268,896 by Assessing Officer of various sales tax declaration forms.

ii) Demand of sales tax on account of non-deduction of various allowances 2,017,843 5,856,165 and consequent enhancement of Gross turnover.

iii) Demand of sales tax on method of valuation of Goods. 1,221,668 1,221,668

iv) Demand for Denial of Input Credit 2,425,800 Nil

v) Demand of Additional Income Tax due to non-consideration of TDS Nil 1,476,649 Certificates by the Assessing Officer.

vi) Demand of Income Tax due to disallowance of certain business 73,714,229 85,254,317 expenses & incentives by the Assessing Officer.

vii) Demand of excise duty on CVD credit for imported components of 5,245,045 5,245,045 railway bearings.

viii) Denial of Cenvat credit of service tax on outward transportation of 1,441,114 Nil goods beyond the place of removal

p) i) No Equity shares have been allotted during the year ended 31st December, 2010 out of 15,150 shares of Rs. 10/- each kept in abeyance as at 31st March, 1998.

ii) Out of the total shares issued, 50,999,988 fully paid-up Equity shares of Rs. 10/- each were held by The Timken Company, USA till 4th October 2010. On 5th October 2010, such shares were transferred to Timken (Mauritius) Limited. Consequent thereto, Timken (Mauritius) Limited is the Holding Company as at 31st December 2010.

iii) Calls in arrears of Rs.139,500 (Rs.141,000) have been computed on the basis of information certified by the Registrar & Share Transfer Agent of the Company.

q) Excise Duty and Cess on Stock represents differential excise duty and cess paid/provided on opening and closing stock of Finished goods.

v) Disclosures as per Revised Accounting Standard -15 Gratuity and other post-employment benefit plans:

The Company has a defined benefit gratuity plan (funded). Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service.

The Company also has a Death Benefit Scheme (unfunded) for its employees where the immediate beneficiaries are entitled to a monthly fixed sum till the date of superannuation, for death in harness.

The Company has a separate Provident Fund Trust (funded) whereby, all the employees are entitled to benefits as per Provident Fund Act / Trust Deed. Any shortfall for the Trust is borne by the Company, hence the same is treated as a defined benefit scheme.

The following tables summarise the components of net benefit expense recognised in the profit and loss account and the funded status and amounts recognised in the balance sheet for the respective plans.

w) Segment Information

Business Segment:

The Company has reviewed the disclosure of business segmentwise information and is of the view that it manufactures bearings and related components which is a single business segment in accordance with AS-17, segment reporting. Accordingly, no separate business segment information is furnished herewith.

z) Excise duty expense (net of recovery) represents duty paid/provided for stocks written off, burnt stock, free samples etc.

aa) Prior period expenses include Rs. 16,029,050 (Rs. Nil) towards gratuity on account of change in the estimate of one of the actuarial assumptions used in past actuarial valuations and Rs. Nil (Rs. 219,840) towards service tax charge for earlier year.

ac) Previous years figures (including those in brackets) have been regrouped / rearranged, wherever necessary.



 
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