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Notes to Accounts of Bharat Gears Ltd.

Mar 31, 2018

Note 1 : Corporate information

Bharat Gears Limited is a public limited company domiciled in India and is incorporated on 23 December, 1971. The registered office of the Company is located at 20 K.M. Mathura Road, P.O. Amar Nagar, Faridabad, Haryana -121003. The Company has three manufacturing locations; two in the state Maharashtra at Mumbra, Thane and Lonand, Satara and one in the state of Haryana at Faridabad. Its shares are listed on two recognized stock exchanges in India. The Company is primarily engaged in the Automotive Gears business and all other activities revolving around the same.

The financial statements were approved by the Board of Directors and authorised for issue on 30 May, 2018.

Note 2 : First-time adoption of Ind AS - mandatory exceptions and optional exemptions:

A. Overall principle:

The Company has prepared the opening Balance Sheet as per Ind AS as of 01 April, 2016 (the transition date) by recognizing all assets and liabilities whose recognition is required by Ind AS, not recognizing items of assets and liabilities which are not permitted by Ind AS, by reclassifying items from previous GAAP to Ind AS as required under Ind AS, and applying Ind AS in measurement of recognized assets and liabilities. However, this principle is subject to certain exceptions and certain optional exemptions availed by the Company as detailed below:

(a) Mandatory exceptions:

(i) Accounting estimates:

The Companyâs estimates in accordance with Ind AS at the date of transition are consistent with previous GAAP (after adjustments to reflect any difference in accounting policies) or are required under Ind AS but not under previous GAAP.

(ii) De-recognition of financial assets and financial liabilities:

The Company has applied the de-recognition requirements of financial assets and financial liabilities prospectively for transactions occurring on or after 01 April, 2016 (the transition date).

(iii) Classification and measurement of financial assets:

The Company has determined the classification and measurement of financial assets in terms of whether they meet the amortised cost criteria or the fair value criteria based on the facts and circumstances that existed as on the transition date.

(iv) Impairment of financial assets:

The Company has applied the impairment requirements of Ind AS 109 retrospectively; however, as permitted by Ind AS 101, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognised in order to compare it with the credit risk at the transition date. Further, the Company has not undertaken an exhaustive search for information when determining, at the date of transition to Ind AS, whether there have been significant increases in credit risk since initial recognition, as permitted by Ind AS 101.

(b) Optional Exemptions:

(i) Deemed cost for property, plant and equipment and intangible assets:

Since there is no change in the functional currency, the Company has elected the exemption of previous GAAP carrying value of all its Property, plant and equipment and Intangible assets recognised as of 01 April, 2016 (transition date) as deemed cost.

(ii) Determining whether an arrangement contains a lease:

The Company has applied Appendix C of Ind AS 17 to determine whether an arrangement existing at the transition date contains a lease on the basis of facts and circumstances existing at that date.

B. Standards issued but not effective:

On 28 March 2018, Ministry of Corporate Affairs (âMCAâ) has notified the Ind AS 115- Revenue from Contract with Customers and certain amendment to existing Ind AS. These amendments shall be applicable to the Company from 01 April, 2018.

(a) Issue of Ind AS 115 - Revenue from Contracts with Customers:

Ind AS 115 will supersede the current revenue recognition guidance including Ind AS 18 Revenue, Ind AS 11 Construction Contracts and the related interpretations. Ind AS 115 provides a single model of accounting for revenue arising from contracts with customers based on the identification and satisfaction of performance obligations. The Company principally satisfies its performance obligation at a point in time and the amounts of revenue recognized relating to performance obligation satisfied over time are not significant. The accounting for revenue under Ind AS 115 does not, therefore, represent a substantive change from the Companyâs current practice of recognising revenue from sale to customers.

(b) Amendment to existing issued Ind AS:

The MCA has also carried out amendments to the following accounting standards. These are:

(i) Ind AS 12 - Income Taxes

(ii) Ind AS 21 - The Effects of Changes in Foreign Exchange Rates

Application of the above standards is not expected to have any significant impact on the Companyâs Financial Statements.

Footnotes:

(i) The cost of inventories recognised as an expense during the year Rs. 23603.88 lacs (Year ended 31 March, 2017: Rs. 18587.05 lacs).

(ii) The cost of inventories recognized as an expense includes Rs. 62.72 lacs (Year ended 31 March, 2017: Rs. 87.68 lacs) in respect of provision for slow and non moving inventory and write-down (net) of inventory to net realisable value.

(iii) The mode of valuation of inventories has been stated in Note 2.7

(iv) For details of inventories provided as security for borrowings Refer Note 19.

Footnotes:

(i) The Company has only one class of Equity shares having a face value of Rs. 10 each. Every member shall be entitled to be present, and to speak and vote and upon a poll the voting right of every member present in person or by proxy shall be in proportion to his share of the paid-up equity share capital of the Company. The Company in General Meeting may declare dividends to be paid to members according to their respective rights. While no dividends shall exceed the amount recommended by the Board, the Company in General Meeting may declare a smaller dividend.

(ii) 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.

(iii) In terms of shareholders approval obtained by way of a postal ballot on 21 October, 2017, the Company has, on 03 November, 2017 allotted 3,25,000 equity shares of face value of Rs. 10/- each to a promoter at a price of Rs. 157.32 per share (including a premium of â147.32 per share), aggregating to Rs. 511.29 lacs on Preferential Allotment basis. Pursuant to this allotment, the share premium account stands increased by Rs. 469.30 lacs net of share issue expenses of Rs. 9.49 lacs.

(iv) Details of shares held by each shareholder holding more than 5% shares:

Footnotes:

(i) Description of nature and purpose of reserve

(a) Capital redemption reserve:

Capital redemption reserve was created pursuant to the redemption of preference shares issued in earlier years.

The capital redemption reserve account may be applied by the Company, in paying up unissued shares of the Company to be issued to shareholders of the Company as fully paid bonus shares.

(b) Securities premium account:

Where the Company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount of the premium received on those shares shall be transferred to âSecurities Premium accountâ. The Company may issue fully paid-up bonus shares to its members out of balance lying in securities premium account and the Company can also use this reserve for buy-back of shares.

General Reserve is created out of the profits earned by the Company by way of transfer from surplus in the Statement of Profit and Loss. The Company can use this reserve for payment of dividend and issue of fully paid-up shares.

(ii) The disaggregation of changes in each type of reserve, retained earnings and other comprehensive income are disclosed in Statement of Changes in Equity.

Footnotes:

(i) Term loans from banks:

(A) Rupee loan from state Bank of India:

Rs. Nil (As at 31 March, 2017: Rs. 357.27 lacs, As at 31 March, 2016: Rs. 594.53 lacs): fully repaid during the year.

(B) Rupee loan from IDBI Bank Limited:

Rs. Nil (As at 31 March, 2017: Rs. 622.31 lacs, As at 31 March, 2016: Rs. 871.15 lacs): fully repaid during the year.

Rs. 497.72 lacs (As at 31 March, 2017: Rs. 685.10 lacs; As at 01 April, 2016: Rs. Nil): Secured by exclusive charge on office premises situated at Nariman Point, Mumbai. Repayable in forty eight monthly installments by 20 March, 2021 and carries an interest rate of 12.00% p.a.

(ii) Term loans from others:

(A) Rupee loan from Export-Import Bank of India:

(a) Rs. Nil (As at 31 March, 2017: Rs. 200.00 lacs, As at 31 March, 2016: Rs. 600.00 lacs): fully repaid during the year.

(b) Rs. Nil (As at 31 March, 2017: Rs. 525.00 lacs, As at 31 March, 2016: Rs. 825.00 lacs): fully repaid during the year.

(c) Rs. Nil (As at 31 March, 2017: Rs. 1800.00 lacs, As at 31 March, 2016: Rs. 2400.00 lacs): fully repaid during the year.

(B) Rupee loan from Hero FinCorp Limited:

Rs. Nil (As at 31 March, 2017: Rs. Nil, As at 31 March, 2016: Rs. 448.45 lacs) was fully repaid as at 31 March, 2017

Rs. Nil (As at 31 March, 2017: Rs. 1269.32 lacs, As at 31 March, 2016: Rs. 1489.38 lacs): fully repaid during the year.

(D) Rupee loan from KKR India Financial services Private Limited:

Rs. 7905.00 lacs (As at 31 March, 2017: Rs. Nil; As at 01 April, 2016: Rs. Nil): Secured by first pari passu charge created on Fixed Assets of the Company located at Mumbra plant, Faridabad plant and Satara plant. Repayable in quarterly installments commencing from 31 March, 2019 and carries an interest rate of 13% p.a.p.m.

(iii) Finance leases:

Rs. Nil (As at 31 March, 2017: Rs. Nil, As at 31 March, 2016: Rs. 12.43 lacs): fully repaid as at 31 March, 2017.

(iv) Loan from Director - Unsecured

Rs. Nil (As at 31 March, 2017: Rs. 500 lacs, As at 31 March, 2016: Rs. Nil): fully repaid during the year.

Footnote:

Loans repayable on demand from banks are secured by hypothecation of stocks of raw materials, stock in process, semi finished and finished goods, loose tools, general stores and book debts and all other moveables, both present and future, and by joint mortgage created for all immoveable properties of the Company located at Mumbra, Faridabad and Satara plants together with all buildings, plant and machinery thereon which rank second subject and subservient to charges created in favour of loans referred to in footnote (ii)(D) of Note 15.

(B) Defined Benefit Plans

A general description of the Employees Benefit Plans:

(i) Gratuity (Funded)

The Company operates a defined benefit final salary gratuity plan which covers qualifying employees. The benefit payable is the amount calculated as per the Payment of Gratuity Act, 1972 or maximum gratuity payable under the said Act, which ever is lower. The benefit vests upon completion of five years of continuous service and once vested it is payable to employees on retirement or on termination of employment. In case of death while in sevice, the gratuity is payable irrespective of vesting. The gratuity benefits payable to the employees are based on the employeeâs service and last drawn salary at the time of leaving. The employees do not contribute towards this plan and the full cost of providing these benefits are met by the Company.

The Company has set up an income tax approved irrevocable trust fund to finance the plan liability. The trustees of the trust fund are responsible for the overall governance of the plan. The plan is funded under Group Gratuity Scheme which is administered by LIC. The Company makes annual contribution to the plan. There are no minimum funding requirements. The trustees of the gratuity fund have a fiduciary responsibility to act according to the provisions of the trust deed and rules. Since the fund is income tax approved, the Company and the trustees have to ensure that they are at all times fully compliant with the relevant provisions of the Income Tax Act and Rules.

The plan is of a final salary defined benefit in nature which is sponsored by the Company and hence it underwrites all the risks pertaining to the plan. In particular, there is a risk for the Company that any adverse salary growth or demographic experience or inadequate returns on underlying plan assets can result in an increase in cost of providing these benefits to employees in future. Since the benefits are lump sum in nature, the plan is not subject to any longevity risks.

(ii) Terminal Ex-gratia (Unfunded)

The Company has an obligation towards Terminal Ex-gratia, an unfunded defined benefit retirement plan covering eligible employees. The plan provides for lump sum payment which varies depending upon the number of completed years of service to vested employees on completion of employment. Vesting occurs upon the completion of 15 years of service. Since the benefits are lump sum in nature, the plan is not subject to any longevity risks.

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 :

The discount rate is based on the prevailing market yields of Government of India securities as at the Balance Sheet date for the estimated term of the obligations.

The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments and other relevant factors.

(h) sensitivity analysis:

Gratuity is a lump sum plan and the cost of providing these benefits is typically less sensitive to small changes in demographic assumptions. The key actuarial assumptions to which the benefit obligation results are particularly sensitive to are discount rate and future salary escalation rate. The following table summarizes the impact in percentage terms on the reported defined benefit obligation at the end of the reporting period arising on account of an increase or decrease in the reported assumption by 50 basis points.

(i) Funding Arragements & Policy:

The money contributed by the Company to the fund to finance the liabilities of the plan has to be invested. The trustees of the plan have outsourced the investment management of the fund to an insurance company. The insurance company in turn manages these funds as per the mandate provided to them by the trustees and the asset allocation which is within the permissible limits prescribed in the insurance regulations. Due to the restrictions in the type of investments that can be held by the fund, it is not possible to explicitly follow an asset-liability matching strategy to manage risk actively.

There is no compulsion on the part of the Company to fully pre fund the liability of the Plan. The Companyâs philosophy is to fund the benefits based on its own liquidity and tax position as well as level of under funding of the plan.

The expected contribution payable to the plan next year is Rs. 87,57,534/-.

(D) Notes:

(i) Key Management Personnel compensation does not include provision for gratuity and leave encashment, which is determined for the Company as a whole.

(ii) All transactions with related parties are made on terms equivalent to those that prevail in armâs length transactions. Outstanding balances for receivables, payables are unsecured, interest free and settlement occurs in cash. The Company has not recorded any impairment of balances relating to amounts owed by related parties during the year ended 31 March, 2018 (31 March, 2017: Rs. Nil; 1 April, 2016: Rs. Nil). The assessment is undertaken each financial year through evaluating the financial position of the related party and the market in which the related party operates.

(a) The Company is primarily engaged in the Automotive Gears business and all other activities revolving around the same. Information reported to and evaluated regularly by the Chief Operational Decision Maker (CODM) i.e. Chairman and Managing Director for the purpose of resource allocation and assessing performance focuses on the business as a whole. Accordingly, there is no other separate reportable segment as defined by Ind AS 108 âOperating Segmentsâ.

(b) Information about Geographical area:

The revenue of the Company from the external customers are attributed to (i) the Companyâs country of domicile i.e. India and (ii) all foreign countries in total from which the Company derives revenue. Details are as follows:

I Capital management

The Company manages its capital to ensure that the Company will be able to continue as going concern while maximising the return to shareholders through the optimisation of the debt and equity.

The Company manages its capital structure and makes adjustments in the light of changes in economic conditions and the requirements of the financials covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payments to shareholders, return capital to shareholders or issue new shares. The capital structure is monitored on the basis of net debt to equity and maturity profile of the overall debt portfolio of the Company.

In order to achieve the overall objective, the Companyâs capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the banks/lenders to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest bearing loans and borrowings in the current year.

No changes were made in the objectives, policies and processes for managing capital during the years ended 31 March, 2018 and 31 March, 2017.

II Financial Risk Management Framework

The Companyâs activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk. In order to manage the aforementioned risks, the Company operates a risk management policy and a program that performs close monitoring of and responding to each risk factors.

(A) Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.

(i) Trade receivables

Customer credit risk is managed by the Company subject to the Companyâs established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on payment performance over the period of time and wherever required a detailed financial analysis. Outstanding customer receivables are regularly monitored. At 31 March, 2018, the Company had 5 customers (31 March 2017: 4 customers; 01 April, 2016: 4 customers) that owed the Company more than Rs. 500 lacs each and accounted for approximately 56.93% of all the receivables outstanding (31 March, 2017: 46.03%; 01 April, 2016: 45.66%).

An impairment analysis is performed at each reporting date on an individual basis for each customers. The Company does not hold collateral as security.

(ii) Financial instruments and cash deposits:

Credit risk from balances with banks and financial institutions is managed by the Company in accordance with the Companyâs policy. The credit risk is limited because counter parties are banks/institutions with high credit ratings.

(B) Liquidity risk

(i) Liquidity risk management

The Company manages liquidity risk by maintaining adequate reserves, banking facilities/borrowings and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

(ii) Maturities of financial liabilities

The following table details the Companyâs remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The amount disclosed in the tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The table include both interest and principal cash flows.

Interest rate sensitivity:

The sensitivity analysis below have been determined based on the exposure to interest rates for non-derivative instruments at the end of the reporting period. For floating variable rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 100 basis point increase or decrease is used for the purpose of sensitivity analysis.

If interest rates had been 100 basis points higher/lower and all other variables held constant, the Companyâs profit for the year ended 31 March, 2018 would decrease/increase by Rs. 135.52 lacs (loss for the year ended 31 March, 2017 decrease/increase by Rs. 112.33 lacs). This is mainly attributable to the Companyâs exposure to interest rate on its variable rate borrowings.

The amounts included above for variable interest rate instruments for both non-derivative financial liabilities is subject to change if changes in variable interest rates differ to those estimates of interest rates determined at the end of the reporting period.

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

(i) Currency Risk

The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The Companyâs exposure to currency risk relates primarily to the Companyâs operating activities and borrowings when transactions are denominated in a different currency from the Companyâs functional currency.

The Company manages its foreign currency risk by effective monitoring movement in foreign currency rates and seeks to minimize the effect of currency risk by using non derivative financing instrument to hedge risk exposures.

The carrying amounts of the Companyâs unhedged foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:

(ii) Foreign currency sensitivity

The following table demonstrates the sensitivity in the USD, Euro and other currencies to the functional currency of the Company, with all other variables held constant. The impact on the Companyâs profit before tax is due to changes in the fair value of the monetary assets and liabilities including currency derivatives.

(ii) Interest rate risk

Refer comment given above in maturities of financial liabilities under liquidity risk.

(iii) Raw material price risk

The Company does not have significant risk in raw material price variations. In case of any variation in price, the same is passed on to customers through appropriate adjustment to selling prices.

Note 3 : Fair value

Note Particulars

A Fair value measurement:

All the financial assets and financial liabilities of the Company are carried at amortised cost.

The management assessed that financial instruments such as trade receivables, cash and cash equivalents, other bank balances, other financial assets (except security deposits), trade payables, other financial liabilities (except current maturities of long term debts) approximate their carrying value largely due to the short-term maturities of these instruments.

B Fair value hierarcy:

Quantative disclosure fair value measurement hierarchy:

Note 4 : First-time adoption of Ind AS

The Company has prepared financial statements which comply with Ind AS applicable for periods ending on 31 March 2018, together with the comparative period data as at and for the year ended 31 March 2017, as described in the summary of significant accounting policies. In preparing these financial statements, the Companyâs opening balance sheet was prepared as at 01 April 2016, the Companyâs date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at 01 April 2016 and the financial statements as at and for the year ended 31 March 2017.

Note: Under previous GAAP, total comprehensive income was not reported. Therefore, the above reconcilitaion starts with loss under the previous GAAP.

(v) Under Ind AS, bank overdrafts which are repayable on demand and form an integral part of an entityâs cash management system are included in cash and cash equivalents for the purpose of presentation of the Statement of Cash Flows. Whereas under previous GAAP, there was no similar guidance and hence bank overdrafts were considered similar to other borrowings and the movements therein were reflected in cash flows from financing activities. The effect of this is that the bank overdrafts of Rs. 2853.31 lacs as at 31 March, 2017 and Rs. 2578.49 lacs at 01 April, 2016 have been considered as part of cash and cash equivalents under Ind AS for the purpose of presentation of the Statement of Cash Flows. Consequently, the cash outflow from financing activities as per the Statement of Cash Flows for the year ended 31 March, 2017 prepared as per Ind AS is lower to the extent of this net movement of Rs. 274.82 lacs.

Footnotes to reconciliations:

1. Under the previous GAAP, leasehold land was considered as part of property, plant and equipment and was amortised over the period of the lease. Under Ind AS, interest in leasehold land is considered as lease as per the definition and classification criteria in Ind AS 17. The Company has a leasehold land at Faridabad, which was revalued. This leasehold land has a carrying value of Rs. 280.62 lacs and revaluation reserve of Rs. 291.27 lacs as at 01 April, 2016. Accordingly, the carrying value of the leasehold land has been adjusted against the revaluation reserve as at 01 April, 2016, resulting in an excess revaluation reserve of Rs. 10.65 lacs which has been transferred to retained earnings.

The net effect of this change is Rs. Nil as at 31 March, 2017 (as at 01 April, 2016 decrease in total equity by Rs. 280.62 lacs) and there is no change in loss for the year ended 31 March, 2017.

Further, Accounting Standard (AS) 10 âProperty, plant and equipmentâ amended by the Central Government, became applicable to the Company from 01 April, 2016. In accordance with the transitional provisions prescribed in the said AS, the Company has adopted the cost model as its accounting policy. Accordingly, Revaluation reserve of Rs. 156.76 lacs pertaining to freehold land and buildings was adjusted against the carrying value of the respective items (Gross block of Rs. 409.06 lacs and accumulated depreciation of Rs. 255.91 lacs) and excess Revaluation reserve of Rs. 2.41 lacs was transferred to General reserve as at 01 April, 2016. The Company has elected to continue with the carrying values under previous GAAP for all the items of property, plant and equipment and intangible assets as deemed cost at the date of the transition. Accordingly, the same has been reinstated.

The net effect of these changes is increase in loss by Rs. 0.81 lac (net of deferred tax of Rs. 0.39 lac) for the year ended 31 March, 2017.

2. Under previous GAAP, interest free loans to employees were carried at the undiscounted amount. Under Ind AS, such loans are to be measured initially at discounted amounts, if the effect of time value of money is material. Accordingly, the Company has identified loans to employees which qualify as financial assets and has discounted such loans to their present value at the reporting dates. After initial recognition, the loans are being measured at amortised cost i.e. interest based on the market rate has been recognised under the effective rate method as part of interest income. The prepayments are charged to the Statement of Profit and Loss on the straight line basis over the period of loans given.

The net effect of these changes are:

Reduction in loan balances is of Rs. 38.90 lacs (Rs. 30.15 lacs from non-current and Rs. 8.75 lacs from current assets) and corresponding increase in prepayments under other non-current assets and other currents assets by Rs. 36.19 lacs and Rs. 6.45 lacs respectively as at 31 March, 2017 [Rs. 36.34 lacs (Rs. 27.77 lacs from non current and Rs. 8.57 lacs from current assets) and corresponding increase in prepayments under other non-current assets and other currents assets by Rs. 30.91 lacs and Rs. 5.43 lacs respectively as at 01 April, 2016].

Increase in employee benefits expense of Rs. 6.27 lacs and increase in other income of Rs. 10.01 lacs which resulted in net decrease in loss before tax of Rs. 3.74 lacs for the year ended 31 March, 2017.

3. Under previous GAAP, interest free security deposits given were at the undiscounted amount. Under Ind AS, such deposits are to be measured initially at discounted amounts, if the effect of time value of money is material. Accordingly, the Company has identified deposits which qualify as financial assets and has discounted such deposits to their present value at the reporting date. After initial recognition, the deposits are subsequently measured at amortised cost i.e. interest based on the market rate has been recognised under the effective rate method as part of interest income. The prepayments are charged to the Statement of Profit and Loss on the straight line basis over the period of security deposit.

Decrease of deposit balances by â11.83 lacs (Rs. 10.76 lacs from non-current and Rs. 1.07 lacs from current assets) and corresponding increase in prepayments under other non-current assets and other currents assets by Rs. 1.74 lacs and Rs. 7.66 lacs respectively as at 31 March, 2017 (Rs. 20.16 lacs (Rs. 10.76 lacs from non-current and Rs. Nil from current assets) and corresponding increase in prepayments under other non-current assets and other currents assets by Rs. 9.40 lacs and Rs. 7.66 lacs respectively and corresponding impact of Rs. 3.10 lacs has been adjusted in retained earnings as at 01 April, 2016).

Increase in rent expenses of Rs. 7.66 lacs and increase in other income of Rs. 8.33 lacs which resulted in net decrease in loss before tax of Rs. 0.67 lac for the year ended 31 March, 2017.

4. Under the previous GAAP, long-term borrowings were carried at at the undiscounted amount and upfront fee and processing/other charges paid were charged off to the Statement of Profit and Loss. Under Ind AS, such borrowings are to be recorded net of the aforesaid charges. Accordingly, existing borrowings as at reporting dates have been re-stated by computing the revised interest charge using the effective interest rate method.

The net effect of these changes are:

Decrease in borrowings by Rs. 20.42 lacs as at 31 March, 2017 [Rs. 21.87 lacs and corresponding increase in retained earnings of Rs. 14.64 lacs (net of deferred tax of Rs. 7.23 lacs) as at 01 April, 2016].

Increase in loss before tax of Rs. 1.45 lacs for the year ended 31 March, 2017.

5. Under previous GAAP, sale of goods was presented as net of excise duty. However, under Ind AS, sale of goods includes excise duty. Excise duty on sale of goods is separately presented on the face of the Statement of Profit and Loss. Thus, sale of goods under Ind AS has increased by Rs. 2759.28 lacs with a corresponding increase in other expenses.

6. Under previous GAAP, there is no concept of Other Comprehensive Income (OCI). Under Ind AS specified items of income, expenses, gains and losses are required to be presented in OCI.

Both under previous GAAP and Ind AS, the Company recognized costs related to its post-employment defined benefit plan on an actuarial basis. Under Indian GAAP, the entire cost, including actuarial gains and losses, were charged to profit or loss. Under Ind AS, remeasurements comprising of actuarial gains and losses are recognized immediately in the Balance Sheet with a corresponding debit or credit to retained earnings through Other Comprehensive Income. Consequently, the tax effect of the same has also been recognized in other comprehensive income under Ind AS instead of the Statement of Profit and Loss. The actuarial gain for the year ended 31 March, 2017 was Rs. 33.84 lacs and the tax effect thereon Rs. 11.19 lacs. This change does not affect total equity, but there is an increase in loss before tax of Rs. 33.84 lacs and loss for the year ended 31 March, 2017 of Rs. 22.65 lacs.

7. Under previous GAAP, the Company de-recognized invoices discounted/factored of trade receivables with lenders and disclosed the same as contingent liablities. However, under Ind AS, based on evaluation of risks and rewards and control, the same does not meet the criteria for de-recognition. Accordingly, the same has been recognized as borrowings as at 31 March, 2017 (Rs. 2396.92 lacs) and 01 April, 2016 (Rs. 1693.18 lacs).

8. Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires accounting for deferred taxes using the balance sheet approach, which focuses on temporary difference between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP. In addition, the various transitional adjustments lead to temporary differences and the Company has accounted for such differences. Deferred tax adjustment are recognized in correlation to the underlying transaction either in retained earnings or a separate component in equity.

MAT credit entitlement is to be presented under loans and advance in accordance with Guidance Note on âAccounting for Credit available in respect of MAT under the Income tax Act, 1961â issued by the Institute of Chartered Accountants of India. However, as per Ind AS, MAT credit entitlement is recognized as a deferred tax asset with a corresponding deferred tax benefit in the statement of profit and loss. Accordingly, the Company has reclassified the MAT credit entitlement from loans and advances to deferred tax assets.

Due to transition to Ind AS from previous GAAP, following adjustments were made to deferred tax asset (net) as at 31 March, 2017 and 01 April, 2016.

Note 5 : Previous yearâs figures

The comparative financial information of the Company for the year ended 31 March, 2017 prepared in accordance with Ind AS included in this Financial Statements is based on Financial Statements audited under Indian GAAP by predecessor auditor M/s. Deloitte Haskins & Sells, Chartered Accountants vide their report dated 23 May, 2017.

Previous GAAP figures have been reclassified/regrouped wherever necessary to confirm with Financial Statements prepared under Ind AS.

Mar 31, 2017

The Company has only one class of Equity shares having a face value of '' 10 each. Every member shall be entitled to be present, and to speak and vote and upon a poll the voting right of every member present in person or by proxy shall be in proportion to his share of the paid-up equity share capital of the Company. The Company in General Meeting may declare dividends to be paid to members according to their respective rights. While no dividends shall exceed the amount recommended by the Board, the Company in General Meeting may declare a smaller dividend.

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.

Footnotes:

(i) Term loans from banks:

(A) Rupee loan from State Bank of India:

Rs. 360.00 lacs (As at 31 March, 2016: Rs.600.00 lacs): Secured by first pari passu charge on Current assets with loans referred to in footnote of Note 7 and footnote [(i) (B)] and also by way of first charge on Fixed Assets of the Company located at Mumbra plant, Faridabad plant and Satara plant on pari passu basis with loans referred to in footnotes [(i) (B) and (ii) (A) and (ii) (C)]. Repayable in twelve monthly installments by 31 March, 2018 and carries an interest rate of 11.05% p.a.

(B) Rupee loan from IDBI Bank Limited:

Rs.625.00 lacs (As at 31 March, 2016: Rs.875.00 lacs): Secured by first pari passu charge on Current assets with loans referred to in footnote of Note 7 and footnote [(i) (A)] and also by way of first charge on Fixed Assets of the Company located at Mumbra plant, Faridabad plant and Satara plant on pari passu basis with loans referred to in footnotes [(i) (A) and (ii) (A) and (ii) (C)]. Repayable in equal quarterly installments by 1 August, 2019 and carries an interest rate of 12.50% p.a.

(C) Rupee loan from HDFC Bank Limited:

Rs.691.64 lacs (As at 31 March, 2016: Rs. Nil): Secured by exclusive charge on office premises situated at Nariman Point, Mumbai. Repayable in forty eight monthly installments by 20 March, 2021 and carries an interest rate of 12.00% p.a.

(ii) Term loans from others:

(A) Rupee loan from Export-Import Bank of India:

(a) Rs.200.00 lacs (As at 31 March, 2016: Rs.600.00 lacs): Secured by first pari passu charge created by way of hypothecation over the movable fixed assets and mortgage of immovable properties located at Mumbra plant and Faridabad plant, both present and future, with loans referred to in footnotes [(i) (A) and (B)] and [(ii) (A) (b) & (c) and (ii) (C)]. Further, secured by first pari passu charge created by way of hypothecation over the movable fixed assets and mortgage (to be created) of immovable properties located at Satara plant, both present and future, with loans referred to in footnotes [(i) (A) and (B)] and [(ii) (A) (b) & (c) and (ii) (C)]. Repayable in equal quarterly installments by 1 September, 2017 and carries an interest rate of 11.65% p.a.

(b) Rs.525.00 lacs (As at 31 March, 2016: Rs.825.00 lacs): Secured by first pari passu charge created by way of hypothecation over the movable fixed assets and mortgage of immovable properties located at Mumbra plant and Faridabad plant, both present and future, with loans referred to in footnotes [(i) (A) and (B)] and [(ii) (A) (a) & (c) and (ii) (C)]. Further, secured by first pari passu charge created by way of hypothecation over the movable fixed assets and mortgage (to be created) of immovable properties located at Satara plant, both present and future, with loans referred to in footnotes [(i) (A) and (B)] and [(ii) (A) (a) & (c) and (ii) (C)]. Repayable in equal quarterly installments by 1 November, 2018 and carries an average interest rate of 11.46% p.a.

(c) Rs.1800.00 lacs (As at 31 March, 2016: Rs.2400.00 lacs): Secured by first charge on Fixed Assets of the Company located at Mumbra plant, Faridabad plant and Satara plant on pari passu basis with loans referred to in footnotes [(i) (A) and (B)] and [(ii) (A) (a) & (b) and (ii) (C)]. Repayable in equal quarterly installments by 1 February, 2020 and carries an average interest rate of 11.48% p.a.

(B) Rupee loan from Hero FinCorp Limited:

Rs. Nil (As at 31 March, 2016: Rs.450.38 lacs): Secured by exclusive charge on office premises situated at Nariman Point, Mumbai.

(C) Rupee loan from Tata Capital Financial Services Limited:

Rs.1277.78 lacs (As at 31 March, 2016: Rs.1500.00 lacs): Secured by first pari passu charge created on Fixed Assets of the Company located at Mumbra plant, Faridabad plant and Satara plant on pari passu basis with loans referred to in footnotes [(i) (A) and (B) & (ii) (A)]. Repayable in 46 equal monthly installments by 25 January, 2021 and carries an interest rate of 12.75% p.a.

(iii) Finance leases are secured on the asset to which they relate and repayable in equated quarterly installments.

(iv) Interest free unsecured loan received from director does not have fixed repayment term. However, the same can be repaid only after compliance of the applicable terms and conditions stated in the Loan agreement(s) pertaining to the existing lenders.

Loans repayable on demand from banks are secured by hypothecation of stocks of raw materials, stock in process, semi finished and finished goods, loose tools, general stores and book debts and all other moveables both present and future ranking pari passu with loans referred to in footnote [(i) (A) and (B)] of Note 4 and by joint mortgage created for all immoveable properties of the Company located at Mumbra, Faridabad and Satara plants together with all buildings, plant and machinery thereon which rank second subject and subservient to charges created in favour of loans referred to in footnotes [(i) (A) and (B)] and [(ii) (A) and (C)] of Note 4.

The figures reflect the position as at the year end. The actual amount to be transferred to the Investor Education and Protection Fund in this respect shall be determined on the due date.

Note: Figures in brackets are for the previous year.

(@) Includes certain area of freehold land at Mumbra where the name mentioned in the records of the Government do not match with the indenture of conveyance available with the Company in respect of such land. The Company has initiated necessary action for correction.

($) Includes Computers and Miscellaneous equipment.

($$) Includes items of Plant and equipment having Gross Block of Rs.356.71 lacs (as at 31 March, 2016 : Rs.271.55 lacs) and Net Block of Rs.135.71 lacs (as at 31 March, 2016 : Rs.132.26 lacs) in respect of which lease periods have expired, the transfer in the name of Company is under process.

(*) Includes amounts added on revaluation carried out by an approved valuer (see table below and note 11(D)).

(#) Relating to the erstwhite Universal Steel and Alloys Limited.

** Building include 10 shares of Rs.50/- each in Venkatesh Premises Co-operative Society Ltd. - Total '' 500/- (as at 31 March, 2016: Rs.500/-).

(D) The Accounting Standard (AS) 10 ''Property, Plant and Equipment'' amended by the Central Government, has become applicable to the Company from 1 April, 2016. In accordance with the transitional provisions prescribed in the said AS, the Company has adopted the cost model as its accounting policy. Accordingly, Revaluation reserve of Rs.434.96 lacs has been adjusted against the carrying value of the respective items (Gross block of Rs.785.26 lacs and accumulated depreciation of Rs.350.30 lacs) and excess Revaluation reserve of Rs.13.07 lacs has been transferred to General reserve as at 1 April, 2016. Consequently, the Depreciation and amortization expense for the year is lower by Rs.6.51 lacs.

Footnote:

Security deposits include Rs.60.00 lacs (As at 31 March, 2016: Rs.70.00 lacs) due from directors and Rs.5.00 lacs (As at 31 March, 2016: Rs.5.00 lacs) due from a private limited company, in which directors of the Company are directors (Refer Note 26.4.b).

Represent deposit, the receipts for which are held by Tata Capital Financial Services Limited towards security deposit for availing operating lease facility.

Footnote:

Balances with banks which have restrictions on utilization.

Footnote:

Security deposits include Rs.10.00 lacs (As at 31 March, 2016: Rs. Nil) due from director (Refer Note 26.4.b).

Footnotes:

(i) Excise duty represents (a) the difference between the excise duty included in the closing stock and that in the opening stock of manufactured finished goods Rs.44.41 lacs (Year ended 31 March, 2016: Rs.6.76 lacs) and (b) the excise duty on free supplies under sales promotion schemes, free replacement, shortages, etc. Rs.15.14 lacs (Year ended 31 March, 2016: Rs.14.41 lacs)

Specified Bank Notes (SBNs) and other denominations held and transacted during the period from 8 November, 2016 to 30 December, 2016, is given below as per MCA notification G.S.R 308(E) dated 30 March, 2017:

* For the purpose of this clause, the term "Specified Bank Notesâ shall have the same meaning as provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E) dated 8 November, 2016.

Other receipt represents cash received on 8 November, 2016 after business hours which was recorded in the books subsequently.

A general description of the Employees Benefit Plans:

(i) Gratuity (Funded)

The Company has an obligation towards gratuity, a funded defined benefits retirement plan covering eligible employees. The plan provides for lump sum payment to vested employees at retirement, death while in employment or on termination of the employment, of an amount calculated in accordance with the provisions of the Payment of Gratuity Act, 1972. Vesting occurs upon completion of 5 years of service.

(ii) Terminal Ex-gratia (Unfunded)

The Company has an obligation towards Terminal Ex-gratia, an unfunded defined benefit retirement plan covering eligible employees. The plan provides for lump sum payment which varies depending upon the number of completed years of service to vested employees on completion of employment. Vesting occurs upon the completion of 15 years of service. The following table sets out the funded status of the defined benefit schemes and the amount recognized in the financial statements.

The Company is primarily engaged in the Automotive Gears business and all other activities revolving around the same. Risks and rewards involved in sales to overseas customers are not significantly different from those attributable to domestic market. As such there is no other separate reportable segment as defined by Accounting Standard - 17 â Segment Reportingâ.

Note 1 : Previous year''s figures

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

Mar 31, 2016

(i) Term loans from banks:

(A) Rupee loan from State Bank of India:

Rs, 600 lacs (As at 31 March, 2015: Rs, 840 lacs): Secured by first pari passu charge on Current assets with loans referred to in footnote of Note 7 and footnote [(i) (B)] and also by way of first charge created on Fixed Assets of the Company located at Mumbra plant and Faridabad plant on pari passu basis with loans referred to in footnotes [(i) (B) and (ii) (A) and (ii) (C)]. Further secured by way of first charge created on Fixed Assets of the company located at Satara plant on pari passu basis with loans referred to in footnotes [(i) (B), (ii) (A) (c) and (ii)(C)]. Repayable in twenty four monthly installments by 31 March, 2018 and carries an interest rate of 11.60 % p.a.

(B) Rupee loan from IDBI Bank Limited:

Rs, 875 lacs (As at 31 March, 2015: Rs, Nil): Secured by first pari passu charge on entire Current assets with loans referred to in footnote of Note 7 and footnote [ (i) (A) ] and also by way of first charge created on Fixed Assets of the Company located at Mumbra plant and Faridabad plant on pari passu basis with loans referred to in footnotes [(i) (A) and (ii) (A) and (ii) (C)]. Further secured by way of first pari passu charge created on Fixed Assets of the company located at Satara plant with loans referred to in footnotes [(i) (A), (ii) (A) (c) and

(ii)(C)]. Repayable in equal quarterly installments by 1 August, 2019 and carries an interest rate of 12.75 % p.a.

(ii) Term loans from others:

(A) Rupee loan from Export-Import Bank of India:

(a) Rs, 600 lacs (As at 31 March, 2015: Rs, 1000 lacs): Secured by first pari passu charge created by way of hypothecation over the movable fixed assets and mortgage of immovable properties located at Mumbra plant and Faridabad plant, both present and future, with loans referred to in footnotes (i) and [(ii) (A) (b) & (c) and (ii) (C)]. Repayable in equal quarterly installments by 1 September 2017 and carries an interest rate of 11.90% p.a.

(b) Rs, 825 lacs (As at 31 March, 2015: Rs, 1125 lacs): Secured by first pari passu charge created by way of hypothecation over the movable fixed assets and mortgage of immovable properties located at Mumbra plant and Faridabad plant, both present and future, with loans referred to in footnotes (i) and [(ii) (A) (a) & (c) and (ii) (C)]. Repayable in equal quarterly installments by 1 November; 2018 and carries an average interest rate of 11.71% p.a.

(c) Rs, 2400 lacs (As at 31 March, 2015: Rs, 3000 lacs): Secured by first pari passu charge created by way of hypothecation over the movable fixed assets and mortgage of immovable properties located at Satara plant, both present and future, with loans referred to in footnotes (i) and [(ii) (C)]. Further secured by way of first charge created on Fixed Assets of the company located at Mumbra and Faridabad plant on pari passu basis with loans referred to in footnotes (i) and [(ii) (A) (a) & (b) and (ii) (C)] Repayable in equal quarterly installments by 1 February, 2020 and carries an average interest rate of 11.72% p.a.

(B) Rupee loan from Hero FinCorp Limited:

Rs, 450.38 lacs (As at 31 March, 2015: Rs, 500 lacs): Secured by exclusive charge on office premises situated at Nariman Point, Mumbai. Repayable in forty seven monthly installments by 8 February, 2020 and carries an interest rate of 12.70 % p.a.

Rs, I500 lacs (As at 31 March, 2015: Rs, Nil): Secured by first pari passu charge created on Fixed Assets of the Company located at Mumbra plant and Faridabad plant on pari passu basis with loans referred to in footnotes [(i) and (ii) (A)]. Further secured by way of first charge created on Fixed Assets of the company located at Satara plant on pari passu basis with loans referred to in footnotes [(i), (ii) (A) (c)]. Repayable in 54 equal monthly installments commencing from 25 August, 2016 and carries an interest rate of 12.75 % p.a.

(iii) Finance leases are secured on the asset to which they relate and repayable in equated quarterly installments.

Loans repayable on demand from banks are secured by hypothecation of stocks of raw materials, stock in process, semi finished and finished goods, loose tools, general stores and book debts and all other moveableRs,s both present and future ranking pari passu with loans referred to in footnote (i) of Note 4 and by joint mortgage created for all immoveable properties of the Company located at Mumbra, Faridabad and Satara plants together with all buildings, plant and machinery thereon which rank second subject and subservient to charges created in favour of loans referred to in footnotes (i) and [(ii) (A) & (C)] of Note 4.

(D) Following is with respect to financial year ended 3I March, 20I5:

1. The Company had revisited and changed the method of depreciation for certain categories of fixed assets from written down value (WDV) method to straight line method (SLM) as on 1 April, 2014, because the Management believes following uniform method of depreciation for all categories of fixed assets would result in a more appropriate presentation of the financial statements. Accordingly, all assets are depreciated under SLM. As a result of this change, the surplus depreciation of Rs, 250.00 lacs on 1 April, 2014 had been netted off against the depreciation and amortization expense for the previous year

2. Pursuant to the notification of Schedule II to the Act, the Company had also revised the estimated useful life of some of its assets to align the useful life with those specified in Schedule II. Further, assets individually costing Rs, 0.05 lac or less that were depreciated fully in the year of purchase are depreciated based on the useful life considered by the Company for the respective category of assets.

3. Pursuant to the transition provisions prescribed in Schedule II to the Act, the Company had fully depreciated the carrying value of assets (determined after considering the change in the method of depreciation from WDV to SLM), net of residual value, where the remaining useful life of the asset was determined to be nil as on 1 April, 2014 and had an adjusted amount of Rs, 96.38 lacs (net of deferred tax of Rs, 46.29 lacs) against the opening Surplus balance in the Statement of Profit and Loss under Reserves and surplus.

The depreciation and amortization expense in the Statement of Profit and Loss for the previous year was lower by Rs, 189.33 lacs consequent to the above change in the method of depreciation.

The depreciation and amortization expense in the Statement of Profit and Loss for the previous year was higher by Rs, 72.58 lacs consequent to the change in the useful life of the assets.

Security deposits include Rs, 70.00 lacs (As at 31 March, 2015: Rs, 70.00 lacs) due from directors and Rs, 5.00 lacs (As at 31 March, 2015: Rs, 5.00 lacs) due from a private limited company in which directors of the company are directors (Refer Note 26.4.b).

Footnote:

Represents deposits the receipts for which, are held by Tata Capital Financial Services Limited towards security deposit for availing operating lease facility

(i) Excise duty represents (a) the difference between the excise duty included in the closing stock and that in the opening stock of manufactured finished goods Rs, 6.76 lacs (debit) (Year ended 31 March, 2015: Rs, 33.36 lacs (credit)) and (b) the excise duty on free supplies under sales promotion schemes, free replacement, shortages, etc. Rs, 14.41 lacs (Year ended 31 March, 2015: Rs, 10.96 lacs)

(iii) Includes Rs, Nil (Year ended 31 March, 2015: Rs, 175 lacs) being compensation towards full and final settlement of all claims in respect of manse profit for the premises under leave and license agreement.

The information disclosed above in respect of principal and/or interest due to Micro and Small Enterprises has been determined on the basis of information available with the Company and confirmations received from the suppliers for registration under the Micro, Small and Medium Enterprises Development Act, 2006 and for interest outstanding/due. This has been relied upon by the auditors.

4. The Ministry of Corporate Affairs has notified Section 135 of the Act, on Corporate Social Responsibility with effect from 1 April, 2014. As per the provisions of the said Section, the amount of Rs, Nil (Year ended 31 March, 2015: Rs, 21.76 lacs) was required to be spent on CSR activities by the Company during the year The Company has not spent any amount in this regard.

5.b Defined Benefit Plans

A general description of the Employees Benefit Plans:

(i) Gratuity (Funded)

The Company has an obligation towards gratuity a funded defined benefits retirement plan covering eligible employees. The plan provides for lump sum payment to vested employees at retirement, death while in employment or on termination of the employment, of an amount calculated in accordance with the provisions of the Payment of Gratuity Act, 1972. Vesting occurs upon completion of 5 years of service.

(ii) Terminal Ex-gratia (Unfunded)

The following table sets out the funded status of the defined benefit schemes and the amount recognized in the financial statements:

(* Included in Contributions to provident and other funds under Employee benefits expense in Note 22). (** Included in ''Salaries and wages'' under Employee benefits expense in Note 22).

6. Segment information

7 Related party transactions

8.a Details of related parties with whom the Company had transactions during the year.

Description of relationship Names of related parties

Key Management Personnel (KMP) (i) Mr Surinder P Kanwar (SPK) - Chairman and Managing

Director (who also has ability to exercise ''significant influence'' over the Company)

(ii) Mr Sameer Kanwar (SK) - Joint Managing Director (Son of Chairman and Managing Director of the Company)

Enterprises over which KMP is able to exercise significant (i) Cliplok Simpak (India) Pvt. Ltd. (CSIPL)

^influence (ii) Raunaq EPC International Ltd. (REIL)

(iii) Vibrant Finance & Investments Pvt. Ltd. (VFIPL)

(iv) Xlerate Driveline India Limited (XDIL)

Note: Related parties have been identified by the Management.

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

Mar 31, 2015

1.1 Details of shares held by each shareholder holding more than 5% shares:

(i) Term loans from bank: Rupee loan from State Bank of India

Secured by first pari passu charge on Current assets with loans referred to in footnote of Note 7 and also by way of first charge on Fixed Assets of the Company located at Mumbra plant and Faridabad plant on pari passu basis with loans referred to in footnotes [(ii) (A) (a) & (b)] below.

Repayable in thirty six monthly installments by 31 March, 2018 and carries an interest rate of 12.30 % p.a.

(ii) Term loans from others:

(A) Rupee loan from Export-Import Bank of India (EXIM):

(a) Rs.1000 lacs (As at 31 March, 2014: Rs. 1400 lacs): Secured by first pari passu charge by way of hypothecation over the movable fixed assets and mortgage of immovable properties located at Mumbra plant and Faridabad plant, both present and future, with loans referred to in footnote (i) and [(ii) (A) (b)]. Repayable in equal quarterly installments by 1 September, 2017 and carries an interest rate of 12.45% p.a.

(b) Rs. 1125 lacs (As at 31 March, 2014: Rs. 1425 lacs): Secured by first pari passu charge by way of hypothecation over the movable fixed assets and mortgage of immovable properties located at Mumbra plant and Faridabad plant, both present and future, with loans referred to in footnotes (i) and [(ii) (A) (a)]. Repayable in equal quarterly installments by 1 November, 2018 and carries an average interest rate of 12.26% p.a.

(c) Rs. 3000 lacs (As at 31 March, 2014: Rs. 3000 lacs): Secured by hypothecation of movable fixed assets and mortgage of immovable properties, located at Satara plant. Repayable in equal quarterly installments by 1 February, 2020 and carries an average interest rate of 12.27% p.a.

(B) Rupee loan from Hero FinCorp Limited:

Rs. 500 lacs (As at 31 March, 2014: Rs. Nil): Secured by exclusive charge on office premises situated at Nariman Point, Mumbai. Repayable in Fifty Four monthly installments commencing from 8 September, 2015 and carries an interest rate of 13.00 % p.a.

(iii) Finance leases are secured on the asset to which they relate and repayable in equated monthly/quarterly installments.

Loans repayable on demand from banks are secured by hypothecation of stocks of raw materials, stock in process, semi finished and finished goods, loose tools, general stores and book debts and all other moveables both present and future ranking pari passu with loans referred to in footnote (i) of Note 4 and by joint mortgage created/to be created for all immoveable properties of the Company located at Mumbra, Faridabad and Satara plants together with all buildings, plant and machinery thereon which rank second subject and subservient to charges created in favour of loans referred to in footnotes (i) and [(ii) (A)] of Note 4.

(D) 1. The Company has revisited and changed the method of depreciation for certain categories of fixed assets from written down value (WDV) method to straight line method (SLM) as on 1 April, 2014, because the Management believes following uniform method of depreciation for all categories of fixed assets would result in a more appropriate presentation of the financial statements. Accordingly, all assets are now being depreciated under SLM. As a result of this change, the surplus depreciation of Rs. 250.00 lacs as on 1 April, 2014 has been netted off against the depreciation and amortization expense for the year.

2. Pursuant to the notification of Schedule II to the Act, the Company also revised the estimated useful life of some of its assets to align the useful life with those specified in Schedule II. Further, assets individually costing Rs. 0.05 lac or less that were depreciated fully in the year of purchase are now depreciated based on the useful life considered by the Company for the respective category of assets.

3. Pursuant to the transition provisions prescribed in Schedule II to the Act, the Company has fully depreciated the carrying value of assets (determined after considering the change in the method of depreciation from WDV to SLM), net of residual value, where the remaining useful life of the asset was determined to be nil as on 1 April, 2014, and has adjusted an amount of Rs. 96.38 lacs (net of deferred tax of Rs. 46.29 lacs) against the opening Surplus balance in the Statement of Profit and Loss under Reserves and surplus.

The depreciation and amortisation expense in the Statement of Profit and Loss for the year is lower by Rs. 189.33 lacs consequent to the above change in the method of depreciation.

The depreciation and amortisation expense in the Statement of Profit and Loss for the year is higher by Rs. 72.58 lacs consequent to the change in the useful life of the assets.

Defined Benefit Plans

A general description of the Employees Benefit Plans:

(i) Gratuity (Funded)

The Company has an obligation towards gratuity, a funded defined benefits retirement plan covering eligible employees. The plan provides for lump sum payment to vested employees at retirement, death while in employment or on termination of the employment, of an amount calculated in accordance with the provisions of the Payment of Gratuity Act, 1972. Vesting occurs upon completion of 5 years of service.

(ii) Terminal Ex-gratia (Unfunded)

The Company has an obligation towards Terminal Ex-gratia, an unfunded defined benefit retirement plan covering eligible employees. The plan provides for lump sum payment which varies depending upon the number of completed years of service to vested employees on completion of employment. Vesting occurs upon the completion of 15 years of service.

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

Mar 31, 2013

1.1.a Defined Contribution Plans

During the year ended 31 March the Company has recognized the following amounts in the Statement of Profit and Loss :

The above amounts are included in Contributions to provident and other funds under Note 21 Employee benefits expense. Defined Benefit Plans

A general description of the Employees Benefit Plans:

1.1.b (i) Gratuity (Funded)

The Company has an obligation towards gratuity'' a funded defined benefits retirement plan covering eligible employees. The plan provides for lump sum payment to vested employees at retirement'' death while in employment or on termination of the employment'' of an amount calculated in accordance with the provisions of the Payment of Gratuity Act'' 1972. Vesting occurs upon completion of 5 years of services.

(ii) Terminal Ex-gratia (Unfunded)

Company has an obligation towards terminal ex-gratia'' an unfunded defined benefit retirement plan covering eligible employees. The plan provides for lump sum payment which varies depending upon the number of completed years of services to vested employees on completion of employment. Vesting occurs upon the completion of 15 years of service.

1.2 Segment information

The Company is primarily engaged in the Automotive Gears business. Risks and rewards involved in sales to overseas customers are not significantly different from those attributable to domestic market. As such there is no other separate reportable segment as defined by Accounting Standard - 17 " Segment Reporting.Â

1.3 Related party transactions

1.3.a Details of related parties with whom the Company had transactions during the year.

Key Management Personnel (KMP) (i) Mr. Surinder P. Kanwar (SPK) - Chairman and Managing Director (who also has ability to exercise''significant influence'' over the Company)

(ii) Mr. Sameer Kanwar (SK) - Joint Managing Director (Son of Chairman and Managing Director of the Company)

Enterprises over which KMP is able to exercise significant influence

(i) Cliplok Simpak (India) Pvt. Ltd. (CSIPL)

(ii) Raunaq International Ltd. (RIL)

(iii) Vibrant Finance & Investments Pvt. Ltd. (VFIPL)

(iv) Xlerate Driveline India Limited (XDIL)

1.4 Details of Leasing arrangements

(A) Finance Lease:

(i) For net carrying amount as at 31 March'' 2013 for assets acquired under finance lease. (Refer Note 11 A Fixed assets)

(ii) The maturity profile of finance lease obligations is as follows:

Figures in brackets are for the Previous Year.

(iii) General description of these agreements:

- Some of these agreements contains renewal clause.

- There are no restrictions such as those concerning dividends'' additional debt and further leasing imposed by the lease agreements entered into by the Company.

(B) Operating Lease: (Not non-cancellable)

(i) Lease payments recognised in the Statement of Profit and Loss for the year are as follows:

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

Mar 31, 2012

Series VI, VII & VIII, aggregating Rs 208.50 Lacs were allotted on 29th September, 2003 in respect of the present value of 50% of the differential interest on account of reduction in interest rate on the term loans as per the Corporate Debt Restructuring scheme. 50% of Series VI, VII & VIII amounting to Rs 104.25 Lacs were redeemed at par on 31 March, 2011 and balance of Rs 104.25 Lacs were redeemed at par on 31 March, 2012.

(ii) Rupee loan from IDBI Bank Limited is secured by an exclusive first charge by way of hypothecation of specific Plant and Machinery, Spares, Tools and Accessories and all other specific movables, both present and future, purchased and / or to be purchased out of the loan and Hypothecation of Movable (save & except Book Debts) including Movable Plant and Machinery, Spares, Tools and Accessories, both present and future subject to prior charges created in respect of loans referred to in footnote of Note 7 and footnote (iii) of Note 9. Also by mortgage of Company's immovable properties located at Mumbra plant and Faridabad plant together with all buildings and structures and Plant and Machinery thereon on pari passu basis with loans referred to in footnote (iii) below and current maturities of long term debt referred to in footnotes (ii), (iv) and (v) of Note 9.

The term loan is repayable in four quarterly installments and carries an interest rate of 14.75% p.a.

(iii) Rupee loan from Export-Import Bank of India (EXIM) is secured by first pari passu charge by way of hypothecation over the Company's entire Movable Fixed Assets and Mortgage over immovable properties located at Mumbra plant and Faridabad plant, both present and future with loans referred to in footnote (ii) above and current maturities of long term debt referred to in footnotes (ii),(iv) and (v) of Note 9.

The term loan is repayable in eighteen equal quarterly installments and carries an interest rate of 12.40%.

(iv) Finance leases are secured on the asset to which they relate and repayable in equated monthly installments.

(v) For current maturities of long-term borrowings, refer items (a) and (b) of Note 9 - Other Current Liabilities.

Footnote:

Loans payable on demand from banks are secured by hypothecation of stocks of raw materials, stock in process, semi finished and finished goods, loose tools, general stores and book debts and all other movables both present and future and by joint mortgage created for all immovable properties of the Company located at Mumbra plant and Faridabad plant together with all buildings, plant and machinery thereon which rank second subject and subservient to charges created in favour of loans referred to in footnotes (ii) and (iii) of Note 4 and footnotes (ii), (iv) and (v) of Note 9.

(ii) Rupee loans from The Federal Bank Limited, IDBI Bank Limited and Foreign currency loan from Export Import Bank of India are secured by first mortgage and charge created on the immovable and movable assets at Mumbra plant, on pari passu basis with loans referred to in footnote (v) below and footnotes (ii) and (iii) of Note 4.

(iii) Rupee loan from State Bank of India is secured by a first charge by way of hypothecation of specific plant and machinery purchased out of the loan.

(iv) Rupee loans from The Federal Bank Limited, IDBI Bank Limited and Foreign currency loan from Export Import Bank of India are secured by way of joint mortgage of land at Faridabad plant together with all buildings and structures thereon and all Plant and Machinery attached to the earth and by way of hypothecation of all movable fixed assets at Faridabad plant ranking pari passu with each other and with loan referred to in footnotes (ii) and (iii) of Note 4.

(v) Rupee loan from IDBI Bank Limited is secured by mortgage of immovable properties and hypothecation of movable fixed assets located at Mumbra plant, both present and future, which ranks pari passu with charges created in respect of loans referred to in footnote (ii) above and footnotes (ii) and (iii) of Note 4.

(vi) Rupee loans referred to in footnote (ii) is also guaranteed by a Director of the Company aggregating Rs. Nil (previous year: Rs 165.43 Lacs) {from Banks: Rs Nil; (previous year: Rs 128.08 Lacs) from others: Rs Nil; (previous year: Rs 37.35 Lacs)}.

(vii) Rupee loan from The Federal Bank Limited was also secured by mortgage of Company's office premises at Nariman Point, Mumbai.

(viii) The figures reflect the position as at the year end. The actual amount to be transferred to the Investor Education and Protection Fund in this respect shall be determined on the due date.

Footnote :

Security deposits includes Rs 10.00 Lacs; (As at 31 March, 2011: Rs 10.00 Lacs) due from a Director and Rs 5.00 Lacs; (As at 31 March, 2011: Rs 5.00 Lacs) due from a Private Limited Company, in which Directors of the Company are Directors.

1.1.a (i) Gratuity (Funded)

The Company has an obligation towards gratuity, a funded defined benefits retirement plan covering eligible employees. The plan provides for lump sum payment to vested employees at retirement, death while in employment or on termination of the employment, of an amount calculated in accordance with the provisions of the Payment of Gratuity Act, 1972. Vesting occurs upon completion of 5 years of services.

(ii) Terminal Ex-gratia (Unfunded)

Company has an obligation towards terminal ex-gratia, an unfunded defined benefit retirement plan covering eligible employees. The plan provides for lump sum payment which varies depending upon the number of completed years of services to vested employees on completion of employment. Vesting occurs upon the completion of 15 years of service.

1.2 Segment Information

The Company is primarily engaged in the Automotive Gears business. Risks and rewards involved in sales to overseas customers are not significantly different from those attributable to domestic market. As such there is no other separate reportable segment as defined by Accounting Standard - 17 "Segment Reporting."

1.3.a No amounts have been written off / provided for or written back during the year in respect of amounts receivable from or payable to related parties.

(iii) General description of these agreements:

Some of these agreements contains renewal clause.

There are no restrictions such as those concerning dividends, additional debt and further leasing imposed by the lease agreements entered into by the Company.

(B) Operating Lease : (Not Non-cancellable)

NOTE 2 : PREVIOUS YEAR'S FIGURES

The Revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure.

Mar 31, 2011

1. Contingent liabilities:

A. *In respect of claims against the Company not acknowledged as debt (Sales tax, ESIC) - Rs. 1.59 lacs; (Previous Year: Rs. 7.52 lacs) against which the Companys appeals are pending with the relevant appellate authorities.

B. In respect of Sales Invoice Finance facility - Rs. 720.37 lacs; (Previous Year: Rs. Nil)

C. *In respect of Income Tax -

a. On account of disallowance of expenditure on reconditioning of plant and machinery for the assessment year 1994-95 Ã Rs. 50.41 lacs; (Previous Year: Rs. 50.41 lacs) for which the Companys appeal against ITAT order is pending with the High Court.

b. On account of disallowance of provision of leave encashment (including interest) for assessment years 2007-08, 2008- 09 and 2009-10 - Rs. 44.00 lacs; (Previous Year: Rs. Nil) for which the Company has preferred appeal against appropriate authority.

D. *In respect of Employees - Rs. 49.87 lacs; (Previous Year: Rs. Nil). The Company has filed an appeal in the Bombay High Court against the order passed by Third Labour Court on issue of back wages and reinstatement of 11 employees.

E. In respect of penal interest for late renewal of Employee Deposit Linked Insurance Policy for financial year 2008-09 Ã Rs. 4.43 lacs (Previous Year: Nil).

*Future ultimate outflow of resources embodying economic benefits in respect of these matters is uncertain as it depends on financial outcome of judgments / decisions on the matters involved.

2. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) - Rs. 1249.24 lacs; (Previous Year: Rs. 684.22 lacs)

# includes processing charges - Rs. 1073.66 lacs; 253487 nos. (Previous Year: Rs. 1412.24 lacs; 276283 nos.)

$ Quantity represents furnaces built during the year. Revenue from contracts is recognised as stated in note 1 (vi) above.

*Excludes 79 nos. (Previous Year: 1341 nos.) scrapped during the year.

@ As per notification no. 477(E) dated July 25, 1991 issued by the Ministry of Industry, the Companys industrial undertakings are exempt from the licensing provisions of the Industries (Development and Regulation) Act, 1951. Accordingly, the requirement concerning disclosure of licensed capacity is not applicable.

Footnote to 5 (i) and 5 (ii) above :

a) As the raw materials used in the manufacture of automotive gears either purchased by the company or supplied by the customers are identical and as the opening and closing stocks of finished goods and production cannot be accordingly identified, the respective quantitative details of consumption of raw materials, production, opening and closing stocks cannot be separately disclosed and have, therefore, been included in the respective figures above.

b) The quantities of actual production and sales include free replacements and insurance claims and are net of quantities received back at factory for re-work.

c) The figures of actual production, sales, consumption of forgings, opening and closing stocks of finished goods are given in numbers which include numbers of finished goods/ forgings of different sizes.

d) Automotive components consumed and produced are dissimilar in nature. Accordingly, quantitative information in respect of consumption, production, sales and stocks thereof has not been disclosed.

e) The installed capacity is as certified by the management but not verified by the auditors, as this is a technical matter.

3. Income from service rendered - Rs. 98.11 lacs; ( Previous Year: Rs. 44.12 lacs) is included in sales including processing charges.

4. The information disclosed below in respect of principal and/or interest due to Micro, Small and Medium Enterprises has been determined on the basis of information available with the Company and confirmations received from the suppliers for registration under the Micro, Small and Medium Enterprises Development Act, 2006 and for interest outstanding /due.

5. Security deposits in Schedule 9 Ã Loans and advances includes - Rs. 10.00 lacs; (Previous Year : Rs. 10.00 lacs) due from a director {maximum amount due at any time during the year - Rs.10.00 lacs; (Previous Year: Rs. 10.00 lacs)}and Rs. 5.00 lacs; (Previous Year : Rs. 5.00 lacs) due from private limited companies, in which directors of the company are directors.

6. Miscellaneous expenditure to the extent not written off of Rs. Nil; (Previous Year: Rs. 5.66 lacs) shown in the balance sheet is arrived as under:

7. The Company is primarily engaged in the Automotive Gears business. As such there is no other separate reportable segment as defined by Accounting Standard Ã 17 " Segment Reporting."

8. Related Party Disclosures

i) Related parties with whom the Company had transactions during the year:

(a) Enterprises over which key management personnel is able to exercise significant influence: Bharat Gears Officers Provident Fund (BGOPF)

Cliplok Simpak (India) Pvt. Ltd. (CSIPL)

Raunaq International Ltd. (RIL)

Vibrant Finance & Investments Pvt. Ltd. (VFIPL)

(b) Key Management Personnel:

Mr. Surinder P. Kanwar (SPK) - Chairman and Managing Director (who also has ability to exercisesignificant influence over the company)

Mr. Sameer Kanwar (SK) Ã Joint Managing Director (Son of Chairman and Managing Director of the company)

iv) No amounts have been written off / provided for or written back during the year in respect of amounts receivable from or payable to the related parties.

9. Disclosures as per Accounting Standard - 19 on "Leases", in respect of formal agreements entered into for assets taken on lease during accounting periods commencing on or after 1st April, 2001:

(A) Finance Lease:

(i) The net carrying amount as at 31 March, 2011 for assets 1 Refer Schedule 4- acquired under finance lease Fixed Assets

(ii) The maturity profile of finance lease obligations is as follows:

2) Defined Benefit Plans

(a) A general description of the Employees Benefit Plans:

i) Gratuity (Funded)

The Company has an obligation towards gratuity, a funded defined benefits retirement plan covering eligible employees. The plan provides for lump sum payment to vested employees at retirement, death while in employment or on termination of the employment, of an amount calculated in accordance with the provisions of the Payment of Gratuity Act, 1972. Vesting occurs upon completion of 5 years of services.

ii) Terminal Ex-gratia (Unfunded)

The Company has an obligation towards terminal ex-gratia, an unfunded defined benefit retirement plan covering eligible employees. The plan provides for lump sum payment which varies depending upon the number of completed years of services to vested employees on completion of employment. Vesting occurs upon the completion of 15 years of service.

(b) Details of defined benefit plans - As per Actuarial Valuation

10 (a) Excise duty paid and collected from customers is shown separately and deducted from the Gross Sales including processing charges in the Profit and Loss Account. (b) Excise duty appearing under Other expenses (Schedule 15) represents (i) the difference between the excise duty included in the closing stock and that in the opening stock of manufactured finished goods - Rs. 10.55 lacs (debit) {Previous Year: Rs. 12.35 lacs (credit)} and (ii) the excise duty on free supplies under sales promotion schemes, free replacement, shortages, etc. - Rs. 8.58 lacs (Previous Year: Rs. 6.59 lacs)

Note : Figures in brackets represent Previous Years figures.

11. Salaries, wages and bonus in Schedule 14 Ã Payments to and provision for Employees includes Rs. 95.28 lacs; (Previous Year: Rs. 137.45 lacs ) on account of payments made under the Voluntary Retirement Schemes.

12. The amount of interest capitalised during the year Rs. 17.33 lacs; (Previous Year: Rs. Nil) is included in Fixed assets/capital work in progress, for the pre-installation period.

13. Previous Years figures have been regrouped wherever necessary.

Mar 31, 2010

1. In accordance with the Companys proposal for exit from Corporate Debt Restructuring (CDR) scheme, which was approved subject to finalisation and payment of recompense amount to the six participating lenders, recompense amount of Rs. 2.02 lacs was paid to two participating lenders in the previous year. In respect of other participating lenders, recompense amount of Rs. 149.68 lacs has been paid /determined by the Company during the year which is included in Bank and other financing charges in Schedule 16 - Interest and Other Financing Charges.

2. Contingent liabilities:

A. *ln respect of claims against the Company not acknowledged as debt (Sales tax, ESIC) Rs.7.52 lacs; (previous year; Rs.8.58 lacs) against which the Companys appeals are pending with the relevant appellate authorities.

B. *ln respect of Income tax for assessment years 1994-95 mainly on account of disallowance of expenditure on reconditioning of machinery - Rs.50.41 lacs; (previous year: Rs.50.41 lacs) for which the Companys appeal against ITAT order is pending with the High Court.

C In respect of guarantee given to Housing Development Finance Corporation Limited for loans availed, by employees Rs. Nil; (previous year: Rs. 0.31 lac)

* Future ultimate outflow of resources embodying economic benefits in respect of these matters is uncertain as it depends on financial outcome of judgments / decisions on the matters involved.

3. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 684.22 lacs (previous year: Rs 1009.75 lacs)

4. Income from service rendered Rs. 44.12 lacs; (previous year: Rs. 248.55 lacs) is included in sales including processing charges.

5. The information disclosed below in respect of principal and/or interest due to Micro, Small and Medium Enterprises has been determined on the basis of information available with the Company and confirmations received from the suppliers for registration under the Micro, Small and Medium Enterprises Development Act, 2006 and for interest outstanding /due.

6. Security deposits in Schedule 9 -Loans and advancesincludes Rs. 10.00 lacs ( previous year: Rs. Nil) due from a director {maximum amount due at any time during the year Rs.10.00 lacs (previous year: Rs. Nil)} and Rs. 5.00 lacs; (previous year: Rs.5.00 lacs) due from a private limited company, in which a director of the company is a director.

7. The Company is primarily engaged in the Automotive Gears business. As such there is no other separate reportable segment as defined by Accounting Standard - 17 " Segment Reporting."

8. Related Party Disclosures

(i) Related parties with whom the Company had transactions during the year:

(a) Enterprises over which key management personnel is able to exercise significant influence: Bharat Gears Officers Provident Fund (BGOPF)

Cliplok Simpak (India) Pvt. Ltd. (CSIPL)

Raunaq International Ltd. (RIL)

Vibrant Finance & Investments Pvt. Ltd. (VFIPL)

(b) Key Management Personnel:

Mr. Surinder P. Kanwar (SPK) - Chairman and Managing Director (who also has ability to exercise significant influence over the company)

Mr. Sameer Kanwar (SK) - Joint Managing Director with effect from 1st June,2008 (Executive Director up to 31st May, 2008 - son of Chairman and Managing Director of the company)

9. Details of Employees Benefits as required by the Accounting Standard-15 Employee Benefits are as follows:-

2. Defined Benefit Plans

a) A general description of the Employees Benefit Plans: i) Gratuity (Funded)

The Company has an obligation towards gratuity, a funded defined benefits retirement plan covering eligible employees. The plan provides for lump sum payment to vested employees at retirement, death while in employment or on termination of the employment, of an amount calculated in accordance with the provisions of the Payment of Gratuity Act, 1972. Vesting occurs upon completion of 5 years of services.

ii) Terminal Ex-gratia (Unfunded)

The company has an obligation towards terminal ex-gratia, an unfunded defined benefit retirement plan covering eligible employees. The plan provides for lump sum payment which varies depending upon the number of completed years of services to vested employees on completion of employment. Vesting occurs upon the completion of 15 years of service.

10. (a) Excise duty paid and collected from customers is shown separately and deducted from the Gross Sales including processing charges in the Profit and Loss Account.

(b Excise duty appearing under Other expenses (Schedule 15) represents (i) the difference between the excise duty included in the closing stock and that in the opening stock of manufactured finished goods Rs.12.35 lacs (credit) {Previous Year :Rs. 28.26 lacs (debit)} and (ii) the excise duty on free supplies under sales promotion schemes, free replacement, shortages, etc. Rs. 6.59 lacs (Previous Year: Rs.19.43 lacs)

11. Salaries, wages and bonus in Schedule 14 -Payments to and provision for Employees includes Rs. 137.45 lacs (Previous Year: Rs. 262.84 lacs) on account of payments made under the Voluntary Retirement Schemes.

12. Previous years figures have been regrouped wherever necessary.

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