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Notes to Accounts of Walchandnagar Industries Ltd.

Mar 31, 2016

(b) TERMS AND RIGHTS ATTACHED TO EQUITY SHARES:

The Company has only one class of equity shares having par value of Rs. 2 per share. Each shareholder of equity share is entitled to one vote per share. The company declares and pays dividends in Indian Rupees.

Your directors do not recommend any Dividend for Financial Year / period ended March 31, 2016.

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.

1 (ii) Corporate Loan of Rs. 7500 Lakhs (Rs. 4000 Lakhs from State Bank of India and Rs. 3500 Lakhs from Bank of India) at an interest rate of 12.50 % is secured by:

(a) First pari passu charge on specified demarcated fixed assets of the company''s Heavy Engineering Division.

(b) Mortgage of two specified immovable properties at Pune city.

(c) 2nd pari passu charge on current assets of the Company.

2 (iii) Corporate Loan of Rs. 3482 Lakhs (from IFCI Ltd.) at an interest rate of 13.85 % is secured by:

(a) Exclusive charge on Flat No. 3 and 40 of Walchand Terraces, Tardeo Road, Mumbai and Unit 2B of Industry Manor, Prabhadevi Mumbai.

(b) Exclusive pledge of 40 lakhs equity shares of Walchandnagar Industries Ltd.

The said loan is repayable in 12 equal quarterly instalments starting from December 2017 onwards.

(1) The Company has made a provision for claims related to liquidated damages imposed by the customers upto the financial year ended 31st March, 2014 as per the policy adopted by the Company on liquidated damages. However in the opinion of the Management the delay are not completely attributable to it and has submitted waiver applications and shall continue to pursue the same for waiver.

(2) The Company has made a provision for certain old balances outstanding in respect of sundry Debtors. However Management shall continue to pursue to recover the same.

(3) The Company has made a provision for certain old balances outstanding in respect of advances to suppliers. However Management shall continue to pursue to recover the same.

(4) The Company has made a provision on account of stock lying with the Sub contractors. However Management shall continue to pursue to get back the stock lying with the sub contractors.

3. The Income Tax liability provided during the current period denotes additional estimated income tax liability in respect of earlier years as a result of order under section 245 D(4) of the Income Tax Act.

4. RELATED PARTY DISCLOSURES

Related party disclosures as required under Accounting Standard 18 (Related Party Disclosures), specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 are given below:

(i) Individuals owning, directly or indirectly, an interest in the voting power of the reporting enterprise that gives them control or significant influence over the enterprise and relatives of any such individual:

Name of the individual : Designation / Relation

Mr. Chakor L. Doshi : Chairman

Mrs. Champa C. Doshi : Wife

Mr. Chirag C. Doshi : Son

Mrs. Kanika G. Sanger : Daughter

Mrs. Tanaz Chirag Doshi : Daughter-in-law

(ii) Key Management personnel and relatives:

Name of the individual : Designation / Relation

Mr. G. K. Pillai : Managing Director & CEO

Mr. Chirag C. Doshi : Managing Director

Mr. G. S. Agrawal : Vice President (Legal & Taxation) & Company Secretary

Mr. Hiren Buch : Chief Financial Officer (upto 5th March, 2016)

(iii) Enterprises over which any person described in (i) or (ii) above are able to exercise significant influence:

Bombay Cycle & Motor Agency Ltd. (BCMA) Olsson Holdings Inc.

Walchand Great Achievers Pvt. Ltd. Vinod Shashank Chakor Pvt. Ltd.

Walchand Kamdhenu Commercials Pvt. Ltd. Chirag Enterprises

Walchand Chiranika Trading Pvt. Ltd. Walchand Engineers Pvt. Ltd.

Chakor Doshi HUF Walchand Projects Pvt. Ltd.

Chirag Doshi HUF Walchand Power Systems Pvt. Ltd.

Chiranika Enterprises Walchand Oil & Gas Pvt. Ltd.

Chiranika Corporation Walchand Leisure Realty Pvt. Ltd.

Chiranika Properties Walchand BMH Pvt. Ltd.

Walchand Botanicals Pvt. Ltd. Walchand Solar Pvt. Ltd.

Rodin Holdings Inc. Trust Finlease Pvt. Ltd.

Walchand Ventures LLP

5. REVALUATION RESERVE AND FIXED ASSETS

The Company has a practice of revaluing its certain assets at certain intervals. On the basis of valuation reports submitted by approved valuers, M/s. D. K. Nagarseth & Associates, certain fixed assets comprising of Land, Building and Plant and Machineries were further revalued at Market Value/ Current Replacement Costs as at September 30, 2013 as follows:

6. EMPLOYEE BENEFITS (REFER NOTE NO. 7)

The Disclosure in terms of Accounting Standard 15 (Revised) - Employee Benefits, notified under the Companies (Accounting Standards) Rules, read with rule 7 to the Companies (Accounts) Rules, 2014 in respect of Section 133 to the Companies Act, 2013, has been given on the basis of Actuarial Valuation Certificate for the period ended March 31, 2016 as below:

7. CONTINGENT LIABILITIES AND COMMITMENTS Rs. in Lakhs

(a) Claims against the company not acknowledged as debt

(a) Demand of Non Agricultural (NA) Tax of Rs. 161.37 lakhs is raised by Tahshildar, Indapur (Previous year Rs. 161.37 lakhs) out of which Rs. 20 lakhs is paid under protest by the company. No provision has been made in the accounts as the company has not accepted the liability and the matter is sub-judice.

(b) Demand on account of fixation of Annual Rateable Value of Property at Pune, amounting to Rs. 325.07 lakhs (for the period 1.4.2008 to 31.3.2012) was raised by the local authorities (Previous year Rs. 325.07 lakhs). No provision has been made in the books of accounts. The Company has not accepted the liability and the same is sub-judice.

(c) The Central Excise Authorities have raised a demand of Rs. 266.19 lakhs (Previous Year Rs. 266.19 lakhs) (Net of CENVAT Reversal and Payment) denying the exemption from the excise duty on non-conventional energy devices/ systems supplied by the Company. The Company has disputed the demand and has preferred an appeal which is pending before CESTAT, Mumbai. On the basis of legal opinion, the Company does not accept any liability.

(d) The Central Excise Authorities have raised a demand of Rs. 82.73 lakhs (Previous Year Rs. 82.73 lakhs) on bought out items supplied for Centrifugals, which has already suffered duty at manufacturers'' end. The Company has disputed the demand and has preferred an appeal which is pending before the Supreme court. Company has discharged a liability of Rs. 29.45 lakhs by reversal of CENVAT availed and paid Rs. 10 lakhs under protest (included under the head loans and advances). On the basis of legal opinion, the Company does not expect any liability.

(e) The sales Tax Authority, Maharashtra has raised demand of Rs. 159.83 lakhs (Previous Year Rs. 159.83 lakhs) as per section 6(2) of the Central Sales Tax Act,1956. The Company has disputed the demand and has preferred an appeal before The Sales Tax Appellate Commissioner. Company has paid Rs. 30.00 lakhs under protests (included under the head loans and advances). On the basis of legal opinion the Company does not expect any liability.

(f) Service Tax demand of Rs. 362.65 lakhs on sale of bought out items has been raised by the concerned authorities. The company has discharged liability of Rs. 28.76 lakhs by way of CENVAT reversal under protest and has preferred an appeal which is pending before the CESTAT.

(g) Company has received a demand of Rs. 50.68 lakhs from Employee''s Provident Fund office (previous year Rs. 50.68 lakhs). The company has contested the demand raised, and filled a writ petition with Mumbai High Court. No provision is being made against the same based on the legal advice.

(h) Certain cases filed against the company by the Ex-employees of Heavy Engineering Division and Foundry Division for compensation are pending before the labour courts - Amounts unascertained.

(i) The Central Excise Authorities have raised demand of Rs. 2.47 lakhs (Previous Year Rs. 2.47 Lakhs) on bought out items supplier for centrifugals, which has already suffered duty at manufacturers end. The company had disputed demand of Rs. 2.47 lakhs before CESTAT against order passed by Commissioner (Appeals). The Stay order has been granted and Rs. 0.50 lakhs paid as ordered by CESTAT.

(j) Certain customers of the Company have deducted Liquidated Damages amounting to Rs. 620.09 lakhs during the current period from 1/4/2014 to 31/3/2016 due to delays in supplies/ services. The Company contends that the delays are not attributable to it and has submitted the waiver applications to these parties. Based on past experience, the Company is confident of getting these Liquidated Damages waived. (Refer note 14.1).

8. After the Companies Act 2013 coming in to force, the company has changed the accounting year ending from September to March. As a result the current accounting year comprises of a period of eighteen months ending 31st March, 2016, therefore the figures for the current accounting period are not comparable with the previous accounting year which is comprising of 12 months.

9. Previous year''s figures have been regrouped/ reclassified / rearranged wherever necessary, to conform to current year''s presentation.


Sep 30, 2014

1 REVENUE FROM OPERATIONS

Change in Accounting Policy: With effect from October 01, 2013, in case of certain long term contracts involving design, supply, erection and commissioning of complex machinery, the company has changed to Accounting Standard 7 (Construction Contracts) from Accounting Standard 9 (Revenue Recognition) notified under the Companies (Accounting Standards) Rules, 2006 (as amended), for recognizing revenue, being a more appropriate method of accounting, considering the nature of the activity. As a result of this change, revenue from operations for the year is higher by Rs. 1,770.38 Lakhs and loss for the year is lower by an equivalent amount.

2 Consequent to the proceedings under section 132 of the Income Tax Act, 1961 initiated by the Department in the month of December, 2012, the Company has filed an application before the settlement commission, which has been admitted for further hearings and the proceedings are in progress. The income tax liability arising thereof, relating to the earlier years, has been provided for in the books of accounts and included under tax for earlier years in the previous year.

3 RELATED PARTY DISCLOSURES

Related party disclosures as required under Accounting Standard 18 (Related Party Disclosures), notified under the Companies (Accounting Standards) Rules, 2006 (as amended) are given below:

(i) Individuals owning, directly or indirectly, an interest in the voting power of the reporting enterprise that gives them control or significant influence over the enterprise and relatives of any such individual:

Name of the individual : Designation / Relation

Mr. Chakor L. Doshi : Chairman

Mrs. Champa C. Doshi : Wife

Mr. Chirag C. Doshi : Son

Mrs. Kanika G. Sanger : Daughter

Mrs. Tanaz Chirag Doshi : Daughter-in-law

(ii) Key Management personnel and relatives:

Name of the individual : Designation / Relation

Mr. G. K. Pillai : Managing Director & CEO

Mr. Chirag C. Doshi : Managing Director

Mr. Hiren Buch : Chief Financial Officer

Mr. G. S. Agrawal : Vice President (Legal & Taxation) & Company Secretary

(iii) Enterprises over which any person described in (i) or (ii) above are able to exercise significant influence:

Bombay Cycle & Motor Agency Ltd. (BCMA) Olsson Holdings Inc.

Walchand Great Achievers Pvt. Ltd. Vinod Shashank Chakor Pvt. Ltd.

Walchand Kamdhenu Commercials Pvt. Ltd. Chirag Enterprises

Walchand Chiranika Trading Pvt. Ltd. Walchand Engineers Pvt. Ltd.

Chakor Doshi HUF Walchand Projects Pvt. Ltd.

Chirag Doshi HUF Walchand Power Systems Pvt.Ltd.

Chiranika Enterprises Walchand Oil & Gas Pvt.ltd.

Chiranika Corporation Walchand Leisure Realty Pvt. Ltd.

Chiranika Properties Walchand BMH Pvt. Ltd.

Walchand Botanicals Pvt. Ltd. Walchand Solar Pvt. Ltd.

Rodin Holdings Inc. Trust Finlease Pvt. Ltd.

Details of transactions relating to the individuals / enterprises referred to in item (i), (ii) and (iii) above are as follows. The same are in the ordinary course of business.

The Company has a practice of revaluing its certain assets at certain intervals. On the basis of valuation reports submitted by approved valuers, M/s. D. K. Nagarseth & Associates, certain fixed assets comprising of Land, Building and Plant and Machineries were further revalued at Market Value/ Current Replacement Costs as at September 30, 2013 as follows:

4 EMPLOYEE BENEFITS (REFER NOTE NO. 7)

The Disclosure in terms of Accounting Standard 15 (Revised) - Employee Benefits, notified under the Companies (Accounting Standards) Rules, 2006 (as amended), has been given on the basis of Actuarial Valuation Certificate for the year ended September 30, 2014 as below:

(a) Claims against the company not acknowledged as debt

(a) Demand of Non Agricultural (NA) Tax of Rs. 161.37 Lakhs is raised by Tahshildar, Indapur (Previous year Rs. 161.37 Lakhs) out of which Rs. 20 Lakhs is paid under protest by the Company. No provision has been made in the accounts as the company has not accepted the liability and the matter is sub-judice.

(b) Demand on account of fixation of Annual Rateable Value of Property at Pune, amounting to Rs. 325.07 Lakhs (for the period 1.4.2008 to 31.3.2012) was raised by the local authorities (Previous Year Rs. 325.07 Lakhs). No provision has been made in the books of accounts. The Company has not accepted the liability and the same is sub-judice.

(c) The Central Excise Authorities have raised a demand of Rs. 266.19 Lakhs (Previous Year Rs. 266.19 Lakhs) (Net of Cenvat Reversal and Payment) denying the exemption from the excise duty on non-conventional energy devices/ systems supplied by the Company. The Company has disputed the demand and has preferred an appeal which is pending before CESTAT, Mumbai. On the basis of legal opinion, the Company does not accept any liability.

(d) The Central Excise Authorities have raised a demand of Rs. 82.73 Lakhs (Previous Year Rs. 82.73 Lakhs) on bought out items supplied for Centrifugals, which has already suffered duty at manufacturers'' end. The Company has disputed the demand and has preferred an appeal which is pending before the Supreme court. Company has dicharged a liability of Rs. 29.45 Lakhs by reversal of CENVAT availed and paid Rs. 10 Lakhs under protest (included under the head loans and advances). On the basis of legal opinion, the Company does not expect any liability.

(e) The sales Tax Authority, Maharashtra has raised demand of Rs. 159.83 Lakhs (Previous Year Rs. 159.83 Lakhs) as per section 6(2) of the Central Sales Tax Act,1956. The Company has disputed the demand and has preferred an appeal before The Sales Tax Appellate Commissioner. Company has paid Rs. 30.00 Lakhs under protest (included under the head loans and advances). On the basis of legal opinion the Company does not expect any liability.

(f) Service Tax demand of Rs. 362.65 Lakhs on sale of bought out items has been raised by the concerned authorities. The company has discharged liability of Rs. 28.76 Lakhs by way of CENVAT reversal under protest and has preferred an appeal which is pending before the CESTAT.

(g) Company has received a demand of Rs. 50.68 Lakhs from Employee''s Provident Fund office. The company has contested the demand raised, and filled a writ petition with Mumbai High Court. No provision is being made against the same based on the legal advise.

(h) Certain cases filed against the company by the Ex-employees of Heavy Engineering Division and Foundry Division for compensation are pending before the labour courts - Amounts unascertained.

(i) The Central Excise Authorities have raised demand of Rs. 2.47 Lakhs (Previous Year Nil) on bought out items supplier for centrifugals, which has already suffered duty at manufacturers end. The company had disputed demand of Rs. 2.47 Lakhs before CESTAT against order passed by Commissioner (Appeals). The Stay order has been granted and Rs. 0.50 Lakhs paid as ordered by CESTAT.

(j) Certain customers of the Company have deducted Liquidated Damages amounting to Rs. 1,311.29 Lakhs due to delays in supplies/ services. The Company contends that the delays are not attributable to it and has submitted the waiver applications to these parties. Based on past experience, the Company is confident of getting these Liquidated Damages waived.

5 Previous year''s figures have been regrouped/ reclassified / rearranged wherever necessary, to conform to current year''s presentation. As per our report attached


Sep 30, 2013

1. CONTINGENT Liabilities AND Commitments

Rs. in Lakhs

As at As at September 30, September 30, 2013 2012

(i) Counter Guarantees by the Company in respect of guarantees given by banks (including guarantee on account of erstwhile Machine Tool Division of Rs. 3.55 Lakhs) 31,004.83 27,092.62

(ii) Estimated amount of Contracts remaining to be executed on Capital accounts not provided for (Net of advance) 75.36 429.27

(iii) (a) Demand of Non agricultural (NA) Tax of Rs. 161.37 Lakhs is raised by Tahshildar, Indapur (Previous year Rs. 161.37 Lakhs) out of which Rs. 20 Lakhs is paid under protest by the company. No provision has been made in the accounts as the company has not accepted the liability and the matter is sub-judice.

(b) Demand on account of fixation of annual Rateable Value of property at Pune amounting to Rs. 325.07 Lakhs (for the period from 1-4-2008 to 31-3-2012) raised by the local authorities (Previous Year Rs. 325.07 Lakhs). No provision has been made in the account as the company has not accepted the liability and the same is sub-judice.

(c) The Central Excise authorities have raised a demand of Rs. 266.19 Lakhs (Net) (Previous year Rs. 266.19 Lakhs) (Net) denying the exemption from the excise duty on non-conventional energy devices/systems supplied by the Company. The Company has disputed the demand and has preferred an appeal which is pending before ''CESTAT, Mumbai'' on the basis of a legal opinion, the Company does not expect any liability.

(d) The Central Excise authorities have raised a demand of Rs. 82.73 Lakhs (Previous Year Rs. 82.73 Lakhs) on bought out items supplied for Centrifugals, which has already suffered duty at manufactures end. The Company has disputed the demand and has preferred an appeal which is pending before Supreme court. Company has discharged Liability of Rs. 29.45 Lakhs by reversal of CENVAT availed and paid Rs.10.00 Lakhs under protests (included under the head loans and advances). On the basis of legal opinion, the Company does not expect any liability.

(e) The Sales Tax authority, Maharashtra has raised demand of Rs.159.83 Lacs (Previous Year Rs. 159.83 Lakhs) as per Section 6(2) of the Central Sales Tax Act,1956. The Company has disputed the demand and has preferred an appeal before The Sales Tax appellate Commissioner. Company paid Rs. 30.00 Lakhs under protests (included under the head loans and advances). On the basis of legal opinion the Company does not expect any liability.

(f) The Sales Tax authority, Andhra Pradesh, has raised a demand of Rs. 475.53 Lakhs (Previous Year NIL) under Rule 60 of the Andhra Pradesh Value added Tax act. The Company has disputed the demand and has preferred an appeal before appellate Deputy Commissioner (C.T.), Secunderabad, Hyderabad. Based on the legal opinion, the company does not accept any liability. However, company has paid Rs. 60.28 Lakhs "Under Protest".

(g) Service Tax demand of Rs. 362.65 Lakhs on sale of bought out items has been raised by the concerned authorities. The company has discharged liability of Rs. 28.76 Lakhs by way of CENVAT reversal under protest and has preferred an appeal which is pending before the CESTAT.

(h) Bond issued to customs department for export obligations amounting to Rs. 1,363.45 Lakhs (previous year Rs. 1,363.45 Lakhs).

(i) Company has received a demand of Rs. 50.68 Lakhs from Employee''s Provident Fund office. The company has contested the demand raised, and filed a writ petition with Mumbai High Court. No provision is being made against the same based on the legal advice.

(j) Certain cases filed against the Company by the Ex-employees of Heavy Engineering Division and Foundry Division for compensation are pending before the labour courts — Amounts unascertained.

2. Consequent to the proceedings u/s 132 of the Income Tax Act initiated by the Department in the month of December, 2012, the Company has filed an application before the settlement commission which has been admitted for further hearings. The Income Tax Liability arising thereof relating to the previous years has been provided for in the accounts and included under tax expense for earlier years.

3. Following adjustments have been made arising out of proceedings u/s 132 of Income Tax Act, 1961:

(a) Scrap Sale of Rs. 51.95 Lakhs is included in Note No. 20: Other income at Sr. No. (k) Prior period income.

(b) Excise Duty of Rs. 41.66 Lakhs is included in Note No. 27: Other Expenses at Sr. No. (v) Prior period expenses.

4. The Previous Year''s figures have been regrouped/reclassified to conform to Current Year''s presentation.


Sep 30, 2010

1. State Government has acquired some of the lands at Walchandnagar. The District Court has given an award of Rs. 285 Lakhs including interest in favour of the Company and has allowed the Company to withdraw the amount on furnishing of Bank Guarantee and Security Bond. However, as the matter is in appeal, the award is not accounted for as sale.

2. CONTINGENT LIABILITIES NOT PROVIDED FOR IN RESPECT OF:

As at 30.09.2010 As at 30.09.2009 Rs. in Lakhs Rs. in Lakhs

(i) Counter Guarantees by the Company in respect of guarantees given by the banks (including guarantee on account of erstwhile Machine Tool Division of Rs. 3.55 Lakhs). 29,644.15 24,617.75

(ii) Estimated amount of Contracts remaining to be executed on Capital Accounts & not provided for (Net of Advance). 95.20 1,020.20

(iii) During the year, a customer has invoked Bank Guarantee of Rs. 700 Lakhs (shown under Loans & Advances) on the grounds of alleged non performance of the Contract. The Company has disputed this claim since the subject Bank Guarantee was conditional and in the opinion of the Company, the condition precedent for it to become operative was not fulfilled. The Company has invoked Arbitration Proceedings as per the provision of the Contract, which has already commenced, for recovery of this amount together with the contractual dues of Rs. 744 lakhs owed by the customer, shown under the head Sundry Debtors in the Financial Statements. Based on the facts of the case the Company is of the opinion that it has a good case on merits.

The matter is sub-judice and the Company has been legally advised that it has a case worth pursuing. In view of the forgoing, no provision is considered necessary at this stage.

(iv) (a) Demand of NA Tax of Rs. 86.61 lakhs is raised by Tahshildar, Indapur (Previous year Rs. 86.61 Lakhs) out of which Rs. 20 lakhs is paid under protest by the Company. No provision has been made in the accounts as the Company has not accepted the liability and the matter is sub-judice.

(b) The Central Excise Authorities have raised a demand of Rs. 266.19 Lakhs (Net of CENVAT reversal and payment) denying the exemption from the excise duty on non-conventional energy devices/ systems supplied by the Company. The Company has disputed the demand and has preferred an appeal which is pending before ‘CESTAT, Mumbai. On the basis of legal opinion, the Company does not expect any liability.

(c) The Central Excise Authorities have raised a demand of Rs. 79.98 Lakhs (Previous year Rs. 61.36 Lakhs) on bought out items supplied for Centrifugals, which has already suffered duty at manufacturers end. The Company has disputed the demand and has preferred an appeal which is pending before ‘CESTAT, Mumbai. On the basis of legal opinion, the Company does not expect any liability.

3. During the year, the Company reached an out of Court Settlement with Projects & Equipment Corporation of India Ltd. (PEC) on all their disputes pertaining to the Cement Project at Padang Indonesia, which were long pending before the Honble High Courts of Bombay (Suit filed by Company) and Delhi (Suit filed by PEC). Consequent to the said settlement, both the suits stand withdrawn. Accordingly, the Company has after adjusting the contingency reserve created specifically against the same charged off the net amount of settlement to the Profit & Loss Account. Consequently, the deferred tax liability of Rs. 545 Lakhs, provided earlier has been reversed.

4. Pursuant to the approval of the shareholders at the Extra Ordinary General Meeting held on 23.11.2006 and in accordance with SEBI (DIP) Guidelines, the Company had issued 80,00,000 fully paid up Equity shares to the promoters on preferential Basis, post conversion of 8,00,000 convertible warrants and received the total amount of Rs. 5,072 lakhs. Out of these Rs. 1,272 lakhs (Previous year Rs. 1,184 lakhs) has been utilized for capital expenditure, Rs. 2,780 lakhs (Previous Year Rs. 2,780 lakhs) for working capital and the balance amount of Rs. 1,020 lakhs (Previous year Rs. 1,108 lakhs) is invested in Mutual Funds.

5. The figures for the Previous year are regrouped wherever necessary.


Sep 30, 2009

1. The Company has a practice of revaluing its certain assets at certain intervals. On the basis of valuation reports submitted by the approved valuers, certain fixed assets comprising Land, Building, Plant & Machinery, Roads, Water Works, etc., were revalued at Market Value/Current Replacement cost as at 01 -10-2007 as follows:

The depreciation for the year ended 30-09-2009 on Revalued Assets has been calculated on Straight Line Method on their residual technical life assessed by the Valuers. However, the amount of Depreciation charged to Profit & Loss Account is as per Schedule XIV to the Companies Act, 1956, on the cost of the assets.

2. State Government has acquired some of the lands at Walchandnagar. The District Court has given an award of Rs. 285 Lakhs including interest in favour of the Company and has allowed the Company to withdraw the amount on furnishing of Bank Guarantee and Security Bond. However, as the matter is in appeal, the award is not accounted for as sale.

3. CONTINGENT LIABILITIES NOT PROVIDED FOR IN RESPECT OF:

As at 30.09.2009 As at 30.09.2008 Rupees Rupees in Lakhs in Lakhs

(i) Counter Guarantees by the Company in respect of guarantees given by the banks (including guarantee on account of erstwhile Machine Tool Division of Rs. 3.55 Lakhs). 24,617.75 16,961.98

(ii) Estimated amount of Contracts remaining to be executed on Capital Accounts & not provided for. 1,020.20 507.60

(iii) (a) Bank Guarantees amounting to Rs. 12.50 Lakhs (Previous year Rs. 12.50 Lakhs) were invoked in 1998, for which no provision has been made in the accounts as the Company has not accepted the liability and the matter is sub-judice.

(b) The Performance and Retention Bank Guarantees (BG) of Rs. 588.64 Lakhs relating to Padang (Indonesia) Project, were invoked during the year 1986 by Project and Equipment Corporation of India Ltd. (PEC). As per the Supreme Court order and Undertaking given by PEC, the Consortium Banks have paid Rs. 400 Lakhs against the invoked BG. The principal amount and interest aggregating to Rs. 2,002.21 Lakhs is already paid to Banks and the same is shown as receivable from PEC under the head Loans and Advances. The matter is sub judice and liability is denied by Company based on legal opinion.

(c) Even though Company has not accepted the liability as stated above, as a measure of abundant prudence, Contingency Reserve of Rs. 2,085.48 Lakhs is created to take care of the contingent liability.

(d) Demand of NA Tax of Rs. 86.61 Lakhs is raised by Tahshildar, Indapur (Previous year Rs. 86.61 Lakhs) out of which Rs. 20 Lakhs is paid under protest by the Company. No provision has been made in the accounts as the Company has not accepted the liability and the matter is sub-judice.

(iv) (a) The Central Excise Authorities have raised a demand of Rs. 266.19 Lakhs (Net of CENVAT reversal and payment) denying the exemption from the excise duty on non-conventional energy devices/systems supplied by the Company. The Company has disputed the demand and has preferred an appeal which is pending before CESTAT, Mumbai. On the basis of legal opinion, the Company does not expect any liability.

(b) The Central Excise Authorities have raised a demand of Rs. 61.36 Lakhs (Previous year Rs. 49.38 Lakhs) on bought out items supplied for centrifugals, which has already suffered duty at manufacturers end. The Company has disputed the demand and has preferred an appeal which is pending before CESTAT, Mumbai. On the basis of legal opinion the Company does not expect any liability.

4. Pursuant to the approval of the shareholders at the Extra Ordinary General Meeting held on 23.11.2006 and in accordance with SEBI (DIP) Guidelines, the Company had issued 80,00,000 fully paid up Equity shares to the promoters on preferential Basis, post conversion of 8,00,000 convertible warrants and received the total amount of Rs. 5,072 Lakhs. Out of these Rs. 1,184 Lakhs (Previous year Rs. 77 Lakhs) has been utilized for capital expenditure, Rs. 2,780 Lakhs (Previous year Rs. 1,004 Lakhs) for working capital and the balance amount of Rs. 1,108 Lakhs (Previous year Rs. 3,991 Lakhs) is invested in Mutual Funds.

5. Pursuant to the Resolution passed at the Annual General Meeting held on 29-01-2009 Company has allotted 25145 equity shares at Rs. 2 per share to the permanent employees under Employees Stock Purchase Scheme, 2008 as per SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines 1999.

(ii) the lease agreements provide for an option to the Company to renew the lease period on mutually agreeable terms. There are no exceptional/restrictive covenants in the lease agreements.

(iii) The nature of products under Heavy Engineering Division is such that it is not possible to evaluate the quantitative data in exact terms.

6. The figures for the Previous year are regrouped wherever necessary.

Additional information pursuant to provision of paragraph 3,4C and 4D of part II of Schedule VI to the Companies Act 1956 as certified by the Management.