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Accounting Policies of Premier Ltd. Company

Mar 31, 2016

Notes forming part of the financial statements for the year ended 31st March 2016

Corporate Information

Premier Ltd. is a BSE and NSE listed public company, incorporated under the Companies Act, 1913. It operates in two business segments: Engineering & Automotive. The Engineering segment consists of Manufacture of CNC Machines and large mechanical components for the wind energy and infrastructure sectors and professional and engineering services related thereto. The Automotive Segment consists of Manufacture of Light and Sport Utility Vehicles along with related spare parts as well as auto components for other OEM''s.

The registered office and plant of the company is located at Chinchwad, Pune while the Corporate office is located at Mumbai. The company has also its branch offices at Chennai and Delhi.

1. Significant Accounting Policies

(i) Basis of Preparation of Financial Statements and use of estimates

a. The financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis except for free hold land which are being carried at revalued amounts. The Company has prepared the financial statements to comply in all material aspects with the Accounting Standards specified under section133 of Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014.

The accounting policies have been consistently applied by the Company. The Company has opted to present earnings before interest, tax, depreciation and amortization (EBITDA) as a separate line item on the face of the statement of Profit & Loss.

b. The preparation of financial statements, in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period end. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates.

(ii) Revenue Recognition

a. Revenue from sale of goods is recognized when significant risk and rewards in respect of ownership of product is transferred to the customers, which is generally on dispatch of goods.

b. Domestic sales include excise duty and are net of sales returns, trade discounts and sales tax.

c. Export Sales are accounted on the basis of dates of Bill of Lading.

d. Revenue from services is recognized as and when services are rendered as per terms of contract.

e. Income from investments / other income is recognized on accrual basis.

(iii) Inventories are valued as under

a. Raw materials, Components, Stores & Spares, Loose Tools : At moving weighted average cost or net realizable value whichever is lower.

b. Finished Goods: At lower of cost or net realizable value inclusive of excise duty thereon

c. Work-in-Progress: At lower of estimated cost and net realizable value

d. Goods in Transit and under clearance: At lower of actual cost till date (inclusive of customs duty payable thereon) or net realizable value

e. Stock of Scrap: At estimated net realizable value.

(iv) Investments (Non Current)

Long term investments are valued at cost less provision for diminution in value, other than temporary, if any.

(v) Employee Benefits

a. Short Term Employee Benefits

All employee benefits falling due wholly within twelve months of rendering service are classified as short term benefits. The benefits like salaries, wages etc. and the expected cost of bonus, ex-gratia are recognized in the period in which the employee renders the related service.

b. Employment Benefits

i. Defined Contribution Plan: Defined contribution plan consists of Government Provident Fund Scheme and Employee State Insurance scheme. Company''s contribution paid/payable during the year under these schemes are recognized as expense in the statement of Profit and Loss. There are no other obligations other than the contribution made by the company.

ii. Defined Benefit Plan: The employees'' gratuity schemes and long term compensated absences are the defined benefit plans. Company''s liabilities towards gratuity and leave encashment are determined using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation.

Actuarial gain and losses are recognized immediately in the statement of Profit and Loss as income or expense. Obligation is measured at the present value of estimated future cash flow using a discount rate that is determined by the reference to market yields at the Balance Sheet date on Government bonds.

(vi) Fixed Assets

a. Tangibles: Fixed assets (except free hold land) are stated at cost of acquisition or construction including installation cost, attributable interest and financial cost till such time assets are ready for its intended use and foreign exchange fluctuation on long term borrowings related to fixed assets, less accumulated depreciation, impairment losses and specific grants received if any. Free hold land is stated at revalued amount.

b. Intangibles: Product Development Expenditure and License / Technical know-how fees: Product Development expenditure of capital nature are added to Intangible assets. Expenditure on license and technical know-how fees and other related expenditure towards technological improvement of the products and/or components for captive use are treated as intangible assets. Expenditure of these natures are initially recognized as Intangible Assets under development and eventually transferred to Intangible assets block as appropriate on the commencement of the commercial production after the viability of the product is proven.

(vii) Depreciation and amortization

a. Depreciation on fixed assets except free hold land is provided on pro-rata basis on straight line method over the useful lives of the assets prescribed in the Schedule II of the Companies Act, 2013.

b. Depreciation on fixed assets sold or scrapped during the year is provided up to the month in which such fixed assets are sold or scrapped. Depreciation on additions to fixed assets is calculated on pro-rata basis from the month of addition.

c. Product Development expenditure and License/Technical know-how fees are amortized over a period of 5 years from the accounting year in which the commercial production of such improved product commences.

(viii) Impairment of Assets:

In accordance with Accounting Standard 28 (AS 28) on "Impairment of Assets", where there is an indication of impairment of the Company''s assets, the carrying amounts of the Company''s assets are reviewed at each balance sheet date to determine whether there is any impairment based on internal/external factors. An impairment loss, if any, is recognized in the Statement of Profit & Loss, wherever the carrying amount of an

asset exceeds its estimated recoverable amount. The recoverable amount of the assets is estimated at the higher of its net selling price and its value in use. In assessing the value in use, the estimated future cash flows are discounted to the present value at the weighted average cost of capital. After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life. Previously recognized impairment loss is further provided or reversed depending on changes in circumstances.

(ix) Foreign Currency Transactions

a. Foreign Currency transactions are recorded on the basis of exchange rates prevailing on the date of their occurrence.

b. Foreign currency monetary assets and liabilities as on the Balance Sheet date are revalued in the accounts on the basis of exchange rates prevailing at the close of the year and exchange difference arising there-from is charged / credited to the Statement of Profit & Loss - except for the exchange difference arising on long term borrowings related to fixed assets, which are capitalized.

(x) Leases

Leases are classified as finance or operating leases depending upon the terms of the lease agreements. Assets held under finance leases are recognized as assets of the Company on the date of acquisition and depreciated over their estimated useful lives.

Initial direct costs under the finance lease are included as part of the amount recognized as asset under the finance lease.

Rentals payable under operating leases are treated as expenses as and when they are incurred.

(xi) Customs Duty

Customs duty is accounted for as and when paid/provided.

(xii) Borrowing Cost

As per Accounting Standard 16 (AS 16) on "Borrowing Costs" borrowing costs that are :

a. directly attributable to the acquisition, construction, production of a qualifying asset are capitalized as a part of cost of such asset till the time the asset is ready for its intended use and;

b. not directly attributable to qualifying assets are determined by applying a weighted average rate and are capitalized as a part of the cost of such qualifying asset till the time the asset is ready for its intended use. Remaining borrowing costs are recognized as an expense in the period in which they are incurred.

(xiii) Contingencies and Provisions

A provision is recognized when the Company has a present obligation as a result of past event. It is probable that an outflow of resources embodying economic benefit will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on the best estimate of the expenditure required to settle the obligation at the balance sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimate.

A contingent liability is disclosed, unless the possibility of an outflow of resources embodying the economic benefit is remote.

(xiv) Taxation

Tax expense comprises of current tax and deferred tax charge or credit. Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act, 1961. The deferred tax charge or credit is recognized using prevailing enacted or substantively enacted tax rate. Where there is unabsorbed depreciation or carry forward losses, deferred tax assets are recognized only if there is virtual certainty of realization of such assets. Other deferred tax assets are recognized only to the extent there is reasonable certainty of realization in future. Deferred tax assets/liabilities are reviewed as at each balance sheet date based on developments during the period and available case law to re-assess realization/ liabilities.


Mar 31, 2015

(I) Basis of Preparation of Financial Statements and use of estimates

a. The financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis except for free hold land which are being carried at revalued amounts. The Company has prepared the financial statements to comply in all material aspects with the Accounting Standards specified under section133 of Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014.

The accounting policies have been consistently applied by the company. The Company has opted to present earning before interest, tax, depreciation and amortization (EBITDA) as a separate line item on the face of the statement of Profit & Loss.

b. The preparation of financial statements, in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period end. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates.

(II) Revenue Recognition

a. Revenue from sale of goods is recognized when significant risk and rewards in respect of ownership of product is transferred to the customers, which is generally on dispatch of goods.

b. Domestic sales include excise duty and are net of sales returns, trade discounts and sales tax.

c. Export Sales are accounted on the basis of dates of Bill of Lading.

d. Revenue from services is recognized as and when services are rendered as per terms of contract.

e. Income from investments / other income is recognized on accrual basis.

(iii) Inventories are valued as under

a. Raw materials, Components, Stores & Spares, Loose Tools : At moving weighted average cost or net realizable value which ever is lower.

b. Finished Goods: At lower of cost or net realizable value inclusive of excise duty thereon.

c. Work-in-Progress: At lower of estimated cost and net realizable value.

d. Goods in Transit and under clearance: At lower of actual cost till date (inclusive of customs duty payable thereon) or net realizable value.

e. Stock of Scrap: At estimated net realizable value.

(iv) Investments (Non Current)

Long term investments are valued at cost less provision for diminution in value, other than temporary, if any.

(v) Employee Benefits

a. Short Term Employee Benefits

All employee benefits falling due wholly within twelve months of rendering service are classified as short term benefits. The benefits like salaries, wages etc. and the expected cost of bonus, ex-gratia are recognized in the period in which the employee renders the related service.

b. Post Employment Benefits

I. Defined Contribution Plan: Defined contribution plan consists of Government Provident Fund Scheme and Employee State Insurance scheme. Company's contribution paid/payable during the year under these schemes are recognized as expense in the statement of Profit and Loss. There are no other obligations other than the contribution made by the company.

II. Defined Benefit Plan: The employees' gratuity schemes and long term compensated absences are the defined benefit plans. Company's liabilities towards gratuity and leave encashment are determined using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation.

Actuarial gain and losses are recognized immediately in the statement of Profit and Loss as income or expense. Obligation is measured at the present value of estimated future cash flow using a discount rate that is determined by the reference to market yields at the Balance Sheet date on Government bonds.

(vi) Fixed Assets

a. Tangibles: Fixed assets (except free hold land) are stated at cost of acquisition or construction including installation cost, attributable interest and financial cost till such time assets are ready for its intended use and foreign exchange fluctuation on long term borrowings related to fixed assets, less accumulated depreciation, impairment losses and specific grants received if any. Free hold land is stated at revalued amount.

b. Intangibles: Product Development Expenditure and License / Technical know-how fees : Product Development expenditure of capital nature are added to Intangible assets. Expenditure on license and technical know-how fees and other related expenditure towards technological improvement of the products and/or components for captive use are treated as intangible assets. Expenditure of these nature are initially recognized as Intangible Assets under development and eventually transferred to Intangible assets block as appropriate on the commencement of the commercial production after the viability of the product is proven.

(vii) Depreciation and amortization

a. Depreciation on fixed assets except free hold land is provided on pro-rata basis on straight line method over the useful lives of the assets prescribed in the Schedule II of the Companies Act, 2013.

b. Depreciation on fixed assets sold or scrapped during the year is provided up to the month in which such fixed assets are sold or scrapped. Depreciation on additions to fixed assets is calculated on pro-rata basis from the month of addition.

c. Product Development expenditure and License/Technical know-how fees are amortized over a period of 5 years from the accounting year in which the commercial production of such improved product commences.

(viii) Impairment of Assets

In accordance with Accounting Standard 28 (AS 28) on "Impairment of Assets", where there is an indication of impairment of the Company's assets, the carrying amounts of the Company's assets are reviewed at each balance sheet date to determine whether there is any impairment based on internal/external factors. An impairment loss, if any, is recognized in the Statement of Profit & Loss, wherever the carrying amount of an asset exceeds its estimated recoverable amount. The recoverable amount of the assets is estimated at the higher of its net selling price and its value in use. In assessing the value in use, the estimated future cash flows are discounted to the present value at the weighted average cost of capital. After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life. Previously recognized impairment loss is further provided or reversed depending on changes in circumstances.

(ix) Foreign Currency Transactions

a. Foreign Currency transactions are recorded on the basis of exchange rates prevailing on the date of their occurrence.

b. Foreign currency monetary assets and liabilities as on the Balance Sheet date are revalued in the accounts on the basis of exchange rates prevailing at the close of the year and exchange difference arising there-from is charged / credited to the Statement of Profit & Loss - except for the exchange difference arising on long term borrowings related to fixed assets, which are capitalized

(x) Leases

Leases are classified as finance or operating leases depending upon the terms of the lease agreements. Assets held under finance leases are recognized as assets of the Company on the date of acquisition and depreciated over their estimated useful lives. Initial direct costs under the finance lease are included as part of the amount recognized as asset under the finance lease. Rentals payable under operating leases are treated as expenses as and when they are incurred.

(xi) Customs Duty

Customs duty is accounted for as and when paid/provided.

(xii) Borrowing Cost

As per Accounting Standard 16 on "Borrowing Costs" borrowing costs that are : (a) directly attributable to the acquisition, construction, production of a qualifying asset are capitalized as a part of cost of such asset till the time the asset is ready for its intended use and; (b) not directly attributable to qualifying assets are determined by applying a weighted average rate and are capitalized as a part of the cost of such qualifying asset till the time the asset is ready for its intended use. Remaining borrowing costs are recognized as an expense in the period in which they are incurred.

(xiii) Contingencies and Provisions

A provision is recognized when the Company has a present obligation as a result of past event. It is probable that an outflow of resources embodying economic benefit will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on the best estimate of the expenditure required to settle the obligation at the balance sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimate. A contingent liability is disclosed, unless the possibility of an outflow of resources embodying the economic benefit is remote.

(xiv) Taxation

Tax expense comprises of current tax and deferred tax charge or credit. Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. 1961. The deferred tax charge or credit is recognized using prevailing enacted or substantively enacted tax rate. Where there is unabsorbed depreciation or carry forward losses, deferred tax assets are recognized only if there is virtual certainty of realization of such assets. Other deferred tax assets are recognized only to the extent there is reasonable certainty of realization in future. Deferred tax assets/liabilities are reviewed as at each balance sheet date based on developments during the period and available case law to re-assess realization/ liabilities.


Mar 31, 2014

(I) Basis of Accounting

The financial statements have been prepared and presented under the historical cost convention (except for free hold land) and on accrual basis of accounting in accordance with the accounting principles generally accepted in India and in compliance with provisions of the Companies Act, 1956 and comply with the mandatory Accounting Standards (AS) specified in the Companies (Accounting Standard) Rules, 2006, prescribed by the Central Government.

The accounting policies have been consistently applied by the company.

(II) Revenue Recognition

a. Revenue from sale of goods is recognized when significant risk and rewards in respect of ownership of product is transferred to the customers, which is generally on dispatch of goods.

b. Domestic sales include excise duty and are net of sales returns, trade discounts and sales tax.

c. Export Sales are accounted on the basis of dates of Bill of Lading.

d. Revenue from services is recognized as and when services are rendered as per terms of contract.

e. Income from investments / other income is recognized on accrual basis.

(iii) Inventories are valued as under

a. Raw materials, Components, Stores & Spares, Loose Tools : At moving weighted average cost or net realizable value which ever is lower.

b. Finished Goods: At lower of cost or net realizable value inclusive of excise duty thereon.

c. Work-in-Progress: At lower of estimated cost and net realizable value.

d. Goods in Transit and under clearance: At lower of actual cost till date (inclusive of customs duty payable thereon) or net realizable value.

e. Stock of Scrap: At estimated net realizable value.

(iv) Investments

Long term investments are valued at cost less provision for diminution in value, other than temporary, if any.

(v) Employee Benefits

1. Short Term Employee Benefits

All employee benefits falling due wholly within twelve months of rendering service are classified as short term benefits. The benefits like salaries, wages etc. and the expected cost of bonus, ex-gratia are recognized in the period in which the employee renders the related service.

2. Post Employment Benefits

a. Defined Contribution Plan: Defined contribution plan consists of Government Provident Fund Scheme and Employee State Insurance scheme. Company"s contribution paid/payable during the year under these schemes are recognized as expense in the statement of Profit and Loss. There are no other obligations other than the contribution made by the company.

b. Defined Benefit Plan: The employees" gratuity schemes and long term compensated absences are the defined benefit plans. Company"s liabilities towards gratuity and leave encashment are determined using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation.

Actuarial gain and losses are recognized immediately in the statement of Profit and Loss as income or expense. Obligation is measured at the present value of estimated future cash flow using a discount rate that is determined by the reference to market yields at the Balance Sheet date on Government bonds.

(vi) Fixed Assets

a. Tangibles: Fixed assets (except free hold land) are stated at cost of acquisition or construction including installation cost, attributable interest and financial cost till such time assets are ready for its intended use and foreign exchange fluctuation on long term borrowings related to fixed assets, less accumulated depreciation, impairment losses and specific grants received if any. Free hold land is stated at revalued amount.

b. Intangibles: Product Development Expenditure and License / Technical know-how fees : Product Development expenditure of capital nature are added to Intangible assets. Expenditure on license and technical know-how fees and other related expenditure towards technological improvement of the products and/or components for captive use are treated as intangible assets. Expenditure of these nature are initially recognized as Intangible Assets under development and eventually transferred to Intangible assets block as appropriate on the commencement of the commercial production after the viability of the product is proven.

(vii) Depreciation and amortization

a. Depreciation on fixed assets except free hold land is calculated on straight line basis at the rates specified in accordance with the Schedule XIV of the Companies Act, 1956.

b. Depreciation on fixed assets sold or scrapped during the year is provided up to the month in which such fixed assets are sold or scrapped. Depreciation on additions to fixed assets is calculated on pro-rata basis from the month of addition.

c. Product Development expenditure and License/Technical know-how fees are amortized over a period of 5 years from the accounting year in which the commercial production of such improved product commences.

(viii) Impairment of Assets

In accordance with Accounting Standard 28 (AS 28) on "Impairment of Assets", where there is an indication of impairment of the Company"s assets, the carrying amounts of the Company"s assets are reviewed at each balance sheet date to determine whether there is any impairment based on internal/external factors. An impairment loss, if any, is recognized in the Statement of Profit & Loss, wherever the carrying amount of an asset exceeds its estimated recoverable amount. The recoverable amount of the assets is estimated at the higher of its net selling price and its value in use. In assessing the value in use, the estimated future cash flows are discounted to the present value at the weighted average cost of capital. After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life. Previously recognized impairment loss is further provided or reversed depending on changes in circumstances.

(ix) Foreign Currency Transactions

a. Foreign Currency transactions are recorded on the basis of exchange rates prevailing on the date of their occurrence.

b. Foreign currency monetary assets and liabilities as on the Balance Sheet date are revalued in the accounts on the basis of exchange rates prevailing at the close of the year and exchange difference arising there-from is charged / credited to the Statement of Profit & Loss - except for the exchange difference arising on long term borrowings related to fixed assets, which are capitalized.

(x) Leases

Leases are classified as finance or operating leases depending upon the terms of the lease agreements. Assets held under finance leases are recognized as assets of the Company on the date of acquisition and depreciated over their estimated useful lives. Initial direct costs under the finance lease are included as part of the amount recognized as asset under the finance lease. Rentals payable under operating leases are treated as expenses as and when they are incurred.

(xi) Customs Duty

Customs duty is accounted for as and when paid/provided.

(xii) Borrowing Cost

As per Accounting Standard 16 on "Borrowing Costs" borrowing costs that are : (a) directly attributable to the acquisition, construction, production of a qualifying asset are capitalized as a part of cost of such asset till the time the asset is ready for its intended use and; (b) not directly attributable to qualifying assets are determined by applying a weighted average rate and are capitalized as a part of the cost of such qualifying asset till the time the asset is ready for its intended use. Remaining borrowing costs are recognized as an expense in the period in which they are incurred.

(xiii) Contingencies and Provisions

A provision is recognized when the Company has a present obligation as a result of past event. It is probable that an outflow of resources embodying economic benefit will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on the best estimate of the expenditure required to settle the obligation at the balance sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimate. A contingent liability is disclosed, unless the possibility of an outflow of resources embodying the economic benefit is remote.

(xiv) Taxation

Tax expense comprises of current tax and deferred tax charge or credit. Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. 1961. The deferred tax charge or credit is recognized using prevailing enacted or substantively enacted tax rate. Where there is unabsorbed depreciation or carry forward losses, deferred tax assets are recognized only if there is virtual certainty of realization of such assets. Other deferred tax assets are recognized only to the extent there is reasonable certainty of realization in future. Deferred tax assets/liabilities are reviewed as at each balance sheet date based on developments during the period and available case law to re-assess realization/ liabilities.

(xv) Measurement of EBITDA

The Company has opted to present earning before interest, tax, depreciation and amortization (EBITDA) as a separate line item on the face of the statement of Profit & Loss.

(C) The Rights, Preferences, Restriction including restriction on the distribution of dividend and repayments of capital

1. The Company is having only one class of shares, that is Equity carrying nominal value of Rs.10 per share.

2. Every holder of equity share of the Company is entitled to one vote per share held.

3. In the event of liquidation of the Company, the equity share holder will be entitled to receive remaining assets of the Company after the distribution / repayments of all creditors. The distribution to the share holder will be in proportion of the number of shares held by each share holder.

4. The Company declares and pays dividend on the equity shares in Indian Rupees. Dividend proposed by the Board of Directors is subject to approval of the share holders at the ensuing Annual General Meeting.

5. During the year ended 31st March,2014 an amount of Rs.3.00 per equity share (30%) is proposed as dividend for the equity share holders [(Previous year Rs.3.00 per equity share (30%) and also a one-time special dividend of Rs. 4.00 per equity share (40%) has been proposed, making a total dividend of Rs.7.00 per equity share(70%).]

(D) Shares held by holding/ultimate holding company and/or their subsidiaries / associates The company is not a Subsidiary of any other company.

(a) Term Loan of Rs. 15000 Lakhs (Previous year: Rs. 15000 Lakhs) from SBI is secured by way of first charge on current assets on pari-passu basis with other lenders and first pari-passu charge on fixed assets of the company at Chinchwad along with J & K Bank and Corporation Bank. Also SBI holds an exclusive 1st mortgage charge on the 41.44 acres of Company"s land located at Kalyan/ Dombivli towards their loan.

The above loan of Rs.15000 Lakhs is for a tenure of eight and a half years including a moratorium of 18 months. The repayment installments are spread over 84 months commencing from 31/10/2014 and the last installment falling due on 30/09/2021. The first two installments are of Rs. 5 lakhs each, the next 4 installments are of Rs. 10 lakhs each, next 10 installments are of Rs. 20 lakhs each, next 2 installments are of Rs. 25 lakhs each, next 6 installments are of Rs. 150 lakhs each, next 24 installments are of Rs. 200 lakhs each and the next 36 installments are of Rs. 250 lakhs each. Annual rate of Interest is 2.30% above SBI base rate.

(b) Term Loan of Rs.Nil (Previous year: Rs.737.50 Lakhs) from State Bank of Hyderabad was secured by way of first pari-passu charge on Company"s fixed assets at Chinchwad, Pune (both present and future) and Second pari-passu charge on Company"s current assets located at the plant at Chinchwad or in transit. This loan is fully pre-paid during FY 2013-14 along with interest at the rate of 5 % above SBH base rate.

(c) Term Loan of Rs.Nil (Previous year: Rs.4643 Lakhs) from Corporation Bank, was secured by way of first pari-passu charge on Company"s present and future fixed assets at Chinchwad, Pune and Second pari-passu charge on Company"s current assets located at the plant at Chinchwad or in transit. This loan is fully pre-paid during FY 2013-14 along with interest at the rate 3.25 % over Corporation Bank base rate.

(d) Corporate Loan Rs. 10000 Lakhs (Previous Year Rs. 10000 Lakhs) from The Jammu & Kashmir Bank Ltd. is secured by way of first pari-passu charge on plant and machinery and fixed assets of the company located at Chinchwad, Pune and second pari-passu charge on current assets of the company. This loan is for a total tenure of 36 months, repayable in 18 equal installments after a moratorium period of 18 months. There are 17 monthly installments each of Rs. 550 lakhs with the first installment due on 30/09/2014. The last installment (18th installment) is of Rs. 650 lakhs due on 29/02/2016. Annual rate of Interest is 2% over J&K Bank Base rate

(e) Hire purchase Loan of Rs 497.20 Lakhs for a tenure of 4 years from First leasing Company of India Limited is secured under the specific Fixed Asset procured against the said Loans.

Rs. 497.20 Lakhs is repayable in 31 variable monthly installments till October 2016. Annual rate of Interest is 2% above SBI base rate.

All the above facilities covered under a to e are also secured by the personal guarantee of Mr. Maitreya V. Doshi, Chairman and Managing Director of the company.

(f) Deposits accepted from public and share holders carry varying rate of interest from 11.50% to 12.50% p.a. depending upon the cumulative/non-cumulative option and the period of maturity such as 1 year, 2 year or 3 year.

(a) The Working Capital facilities (Cash Credit Rs. 6000 lakhs, non- funded facilities Rs. 7500 lakhs, totaling to Rs. 13500 lakhs, Previous Year Rs.16500 lakhs) are under a consortium banking arrangement with State Bank of India - as the lead banker having a share of Rs. 10000 lakhs (previous year Rs. 10500 lakhs) along with State Bank of Hyderabad Rs. 2500 lakhs (previous year Rs.4500 lakhs) and Corporation Bank Rs.1000 lakhs (previous year 1500 lakhs). These facilities are secured by way of first pari-passu charge on Company"s current assets located at the plant at Chinchwad or in transit and second pari-passu charge on Company"s present and future fixed assets at Chinchwad, Pune. Annual rate of Interest varies from 0.50% above base rate to 5% above the Base Rates of these banks.

All the above facilities are also secured by the personal guarantee of Mr. Maitreya V. Doshi, Chairman and Managing Director of the company.

(b) Short Term Loan of Rs. 2500 Lakhs (Previous Year Rs. Nil ) from Corporation Bank is secured by way of first pari- passu charge on the plant and machinery and fixed assets of the Company located at Chinchwad, Pune and second pari-passu charge on current assets of the company located at Chinchwad, Pune. This loan is repayable in 5 installments of Rs.500 lakhs each starting from August 14 and 5th installment is falling due on December 14. Annual rate of Interest is 2.35% over Corporation Bank Base rate.

(c) Short Term Loan of Rs. 500 Lakhs availed during the year from Sicom Investments & Finance Ltd. (Previous year Rs. Nil) is repayable within one year and the security creation is pending.

(d) The Inter Corporate Deposits of Rs.3565 Lakhs (previous year Rs. 1430 Lakhs) are unsecured short term Loans repayable within 3 to 6 months with Interest rate varying 14.50% to 17.00% p.a. The above includes Rs.1250 Lakhs (Previous year 215 lakhs) borrowed by the Company for which the promoters have pledged their shares.

(a) Sale of Land

During the last year, the Company had sold and conveyed 150 acres (out of 218 acres) of its land at Dombivli, to Horizon Projects Pvt. Ltd., a part of Runwal Group for a total consideration of Rs.44000 Lakhs.

Consequent to the above, during the last year, the Company had received Rs.22000 Lakhs as a part consideration. The balance consideration of Rs.22000 Lakhs which is to be received on 31.12.2014 is subject to such amount, if any, required to be deducted therefrom on account payments to be made/financed by the purchaser and on account of adjustments, if any, of exact official measurement of land being carried out. The said deduction amount is not crystallized and quantifiable as on date. The Company will account for such adjustments as and when crystallized. Subject to this, the Company had accounted for the sale at a total consideration of Rs.44000 Lakhs and recognized the profits accordingly during the last year. This balance consideration of Rs.22000 Lakhs, receivable on 31.12.2014, is adequately secured through a registered mortgage in favour of the Company for 71 acres of land (out of 150 acres) conveyed to the developer and a post-dated cheque not exceeding Rs.22000 Lakhs given by the developer.

During the current year the said land buyer, Horizon Projects Pvt. Ltd. has paid an amount of Rs. 1840.10 Lakhs to the Government of Maharashtra "under protest" towards "Unearned Income" on Sale of Land on behalf of the Company. The said amount has been adjusted from the Balance consideration amount of Rs. 22000 Lakhs due on 31.12.2014 and is reflected under "Loans and Advances". The company"s Revision Application Challenging the liability on account of Unearned Income is pending for disposal before the Revenue Minister of The Government of Maharashtra.

Profit on Sale of Land of Rs.4735.63 Lakhs during the last year was arrived at after adjusting an amount of Rs.8076.38 Lakhs paid to the Maharashtra Government $$under protest"" for issues pertaining to Urban Land Ceiling (Regulations) Act, 1976 in respect of the Company"s land at Dombivli. During the last year, the Company filed a writ petition before the Hon"ble High Court, Bombay challenging the notification of the Government under which the said payment has been made. The said Writ Petition is pending for disposal.

(b) Compulsory acquisition of Company"s land at Dombivli by the Indian Railways

The Company had received during the last year notices from the Deputy Collector (Land Acquisition) and Competent Authority informing about the compulsory acquisition of land admeasuring about 30 acres for the Dedicated Freight Corridor Project of the Indian Railways.

During the current year, about 17 acres of the Company"s Land has been acquired by Indian Railways for a Compensation of Rs. 6413.16 Lakhs and the profit arising there from has been reflected under Other Income. An amount of Rs. 468.12 Lakhs has been deducted by the Railways towards "Unearned Income" while disbursing the Compensation amount and the same has been reflected under "Loans and Advances". The company"s Revision Application Challenging the liability on account of Unearned Income is pending for disposal before the Revenue Minister of The Government of Maharashtra.

The balance of the said land acquisition would be accounted in the books upon receipt of the compensation amount and handing over of possession of the land under acquisition.

After the acquisition process is completed, the Company would be left with about 42 acres of land at Dombivli in its possession

(c) Revaluation of Land

The Company had revalued its land in July 2010 through an external valuer at fair market value and the increase of Rs. 50100 Lakhs due to revaluation has been added to the book value of land and to the revaluation reserve.

During the last year, in view of sale of 150 acres of land at Dombivli, revaluation reserve amounting to Rs.26013.09 Lakhs, on a pro-rata basis, has been released to the statement of Profit & Loss since the profits are realized and shown under $Other Income".

During the current year, in view of Compulsory Acquisition of 17 acres of Company"s Land at Dombivli by the Indian Railways, revaluation reserve amounting to Rs.2911.93 Lakhs, on a pro-rata basis, has been released to the statement of Profit & Loss since the profits are realized and shown under $Other Income".

On the grounds of prudence and as per the legal opinion obtained, the surplus of Rs.1417.07 lakhs (Previous year Rs. 1889.44 lakhs) arose upon re-conversion of stock-in trade into land in the financial year 2008-09 continues to be included in the General Reserve of the company and will not be considered for distribution till it is realized.

(a) Company"s long term investment in PAL Credit and Capital Limited, an RBI registered and listed NBFC promoted by the company, is Rs.362.22 Lakhs (after making provision for diminution in the value of investment of Rs.289.48 Lakhs in the financial year 2007-08) represented by 58,99,169 equity shares of Re. 1/- (Previous year Rs. 10/-) each fully paid. Considering the intrinsic business value of PAL Credit & Capital Limited and its business synergies for the Company, as well as the holding being in the nature of controlling interest with long term strategies and business revival plan, no further diminution in value is considered necessary. Further in order to continue with its revival plan, the company has further advanced during the year an amount of Rs.32.15 Lakhs (Previous year Rs. 52.43 Lakhs) making the total advance paid up to the end of March"14 of Rs. 186.15 Lakhs(Previous year 154 Lakhs). The said advance is included under Loans and Advances (Refer note. No. 13).

(b) The Company has in its possession the share certificates and the blank transfer forms executed by Automobiles Peugeot in respect of 8,40,25,000 equity shares of Pal-Peugeot Ltd (under liquidation) gifted by them in the year 1999.These shares could not be transferred in company"s name as Pal-Peugeot Ltd was not functioning. The Company has filed a petition before the Hon"ble Bombay High Court for permission to transfer the said shares in the name of the Company and the petition is pending for disposal by the Court. Meantime, the Company is holding these shares as $holder in due course".

(a) Tax provision under Minimum Alternate Tax (MAT) as per provisions of section 115 JB of the Income Tax Act, 1961 is Rs. NIL in the absence of any taxable income for the current year (Previous year Rs.2840.57 lakhs).

(b) The benefit of credit against the payments made towards MAT for the earlier years is available in accordance with the provisions of section 115JAA over a period of subsequent ten assessment years and the same will be accounted for when they actually arise.

(c) Estimated Net Deferred tax asset of Rs.1649.67 Lakhs has been recognized as at the year end (previous year – Net Deferred Tax Liability of Rs.1399.70 Lakhs). The management is confident of virtual certainty of realizing the same in view of the Long term capital gain that will arise on the Compulsory Acquisition of Land by Railways, the joint measurement of Land in respect of the same is completed and award is expected in near future. The company also has a sound order book as on date to be executed.

1. The Supreme Court of India vide its order dated 29.8.2012 allowed the appeal of the excise department confirming excise duty demand of Rs.4928.80 Lakhs on the Company regarding a dispute which was won by the Company before the Customs Excise And Service Tax Appellate Tribunal (CESTAT) pertaining to a 15 year old dispute on valuation of Uno cars then manufactured by the Company.

The Review and Curative Petition filed by the Company were also dismissed by the court. The Company has paid the said duty demand in full to the department during the last year and the same has been shown under $Non Recurring Items".

Despite above, the Company has been now been legally advised to file a Writ Petition before the Hon"ble High Court, Bombay challenging the computation errors by the department which were not taken up and heard by the Supreme Court. Accordingly, the Company has filed a writ petition and the same is pending disposal.

2. During the last year, as part of the Company"s product rationalization strategy, a comprehensive review was carried out by management in respect of its various business segments and various Product Development Projects and expenses related thereto. As an outcome of the review (a) to concentrate and focus on core competency and (b) to rationalize the products of various business segments of the Company, management has taken the following decisions:

(a) CNC Machines Business : During the last year, Entire product portfolio of CNC Machines was reassessed. Certain machine products were found to be not commercially viable in future. Therefore, management has decided not to pursue such products developments anymore and not to put further resources for their developments. Therefore, it was felt prudent to write off such product development expenses of Rs.2272 Lakhs related to such machines.

(b) Heavy Engineering Business : During the last year, Contracts from various customers for heavy engineering business were reassessed for the commercial viability consequent to the design changes made by customers and possibility of repeat orders. Despite protracted negotiations with the customers, certain contracts were found commercially unviable by the management on such reassessment. Also, some customers changed their product design, making related investments till date redundant. Therefore, it was felt prudent to write off product development expenses of Rs.1084 Lakhs related to such contracts.

(c) Automobile Business : During the last year, despite the continued product development in relation to Company"s Sigma Vans and Roadstar pick up trucks and having adequate dealer network, the business could not reach the projected volumes. Therefore, it was felt prudent to write off such product development expenses of Rs.5777 Lakhs related to these products.

The Company"s Peugeot TUD 5 Engine had to be localized involving investment in vendor toolings. Further, the said engine had to be upgraded for meeting Bharat stage II standard requirements. It was further upgraded to Bharat Stage III with turbo charger. However, the future sale of this engine is uncertain as it is not CRDi and also not Bharat IV stage emission norms compliant. Considering the fact that the Company has already started using Fiat CRDi Euro-IV engine, further development on TUD 5 is not envisaged now. Therefore, it is prudent to write off product development expenses of Rs.531 lakhs relating to TUD 5 Engine.

In case of company"s compact SUV RiO, there are two facelifts, changes in interiors, initially using TUD 5 engine and now using FIAT CRDi engine. Though the product continues to show the market acceptance, certain product versions are discontinued and will no longer been manufactured. Therefore, it was felt prudent to write off product development expenses of Rs.2937 Lakhs related to such discontinued versions.

In view of the above, all these product development expenses amounting to Rs.12601 Lakhs have been written off in the Statement of Profit & Loss and have been shown as $Non recurring item".

During the year, the Company continued its activity on developing, upgrading and improving its Auto Products in order to achieve technologically advanced and competitive products which will ultimately result in acceptability for the Company"s products. This process is expected to be continued and completed soon and is expected to result in growth in revenue, profits and cash generation of the company in future. A sum of Rs.2827.98 Lakhs has been incurred on this account during the current year and the same has been reflected as $Intangible Assets Under Development".

The Company would give appropriate effects in the accounts as and when the said product development/ improvement is completed.

28. Contingent Liabilities Not Provided For in Respect of

(a) Disputed indeterminate claims made by the employees regarding reinstatement, wages for the period of suspension etc. relating to the past years pending before Industrial Tribunals/High Court.

(b) There are certain disputed excise demands of Rs. 64.05 Lakhs (Previous year Rs. 64.05 Lakhs) and FEMA demands of Rs. 65.49 Lakhs (Previous Year 65.49 Lakhs). The same are being contested by company in appeals at various levels. The company foresees no liability in the above case as the management believes that it has strong case in the appeal.

(c) The Company had paid Rs. 4928 Lakhs Excise dues as per supreme court order during the last year. The Company has received a letter from the Excise department demanding Rs. 389.61 Lakhs as Interest on the said excise duty paid by the Company. The Company has filed writ petition before the Hon"ble Bombay High Court challenging the same. The Company has been legally advised that it has a good case and the said amount is considered as a contingent liability.

(d) The Company has paid an amount of Rs. 2308.22 Lakhs, to the Government of Maharashtra "under protest" towards "Unearned Income" on sale of land and compulsory acquisition of land. The Company"s appeal in this regard is pending before the Government of Maharashtra. This forms part of "Loans & Advances" and is considered as a contingent liability.

(e) Additional compensation, if any, in relation to certain demands in Consumer Forum cases, amount unascertained but considered to be insignificant.

(f) Guarantees issued by bank amounting to Rs.694.81 Lakhs (Previous year: Rs.1456.52 Lakhs).

(g) Encashment of bank guarantee Liability of Rs. Nil (Previous Year Rs. 18 Lakhs pertaining to the guarantee already encashed by one of the CNC Machine customer).


Mar 31, 2013

(i) Basis of Accounting

The financial statements have been prepared and presented under the historical cost (except for free hold land) convention on accrual basis of accounting in accordance with the accounting principles generally accepted in India and in compliance with provisions of the Companies Act, 1956 and comply with the mandatory Accounting Standards (AS) specified in the Companies (Accounting Standard) Rules, 2006, prescribed by the Central Government.

The accounting policies have been consistently applied by the company.

(ii) Revenue Recognition

a. Revenue from sale of goods is recognized when significant risk and rewards in respect of ownership of product is transferred to the customers, which is generally on dispatch of goods.

b. Domestic sales include excise duty and are net of sales returns, trade discounts and sales tax.

c. Export Sales are accounted on the basis of dates of Bill of Lading.

d. Revenue from services is recognized as and when services are rendered as per terms of contract.

e. Income from investments / other income is recognized on accrual basis.

(iii) Inventories are valued as under

a. Raw materials, Components, Stores & Spares, Loose Tools : At moving weighted average cost or net realizable value which ever is lower.

b. Finished Goods: At lower of cost or net realizable value inclusive of excise duty thereon.

c. Work-in-Progress: At lower of estimated cost and net realizable value.

d. Goods in Transit and under clearance: At lower of actual cost till date (inclusive of customs duty payable thereon) or net realizable value.

e. Stock of Scrap: At estimated net realizable value.

(iv) Investments

Long term investments are valued at cost less provision for diminution in value, other than temporary, if any.

(v) Employee Benefits

1. Short Term Employee Benefits

All employee benefits falling due wholly within twelve months of rendering service are classified as short term benefits. The benefits like salaries, wages etc. and the expected cost of bonus, ex-gratia, are recognized in the period in which the employee renders the related service.

2. Post Employment Benefits

a. Defined Contribution Plan: Defined contribution plan consists of Government Provident Fund Scheme and Employee State Insurance scheme. Company''s contribution paid/payable during the year under these schemes are recognized as expense in the statement of Profit and Loss. There are no other obligations other than the contribution made by the company.

b. Defined Benefit Plan: The employees'' gratuity schemes and long term compensated absences are the defined benefit plans. Company''s liabilities towards gratuity and leave encashment are determined using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation.

Actuarial gain and losses are recognized immediately in the statement of Profit and Loss as income or expense. Obligation is measured at the present value of estimated future cash flow using a discount rate that is determined by the reference to market yields at the Balance Sheet date on Government bonds.

(vi) Fixed Assets

a. Tangibles: Fixed assets (except free hold land) are stated at cost of acquisition or construction including installation cost, attributable interest and financial cost till such time assets are ready for its intended use, and foreign exchange fluctuation on long term borrowings related to fixed assets, less accumulated depreciation, impairment losses and specific grants received if any. Free hold land is stated at revalued amount.

b. Intangibles: Product Development Expenditure and License / Technical know-how fees :

Product Development expenditure of capital nature are added to Intangible assets. Expenditure on license and technical know-how fees and other related expenditure towards technological improvement of the products and/ or components for captive use are treated as intangible assets. Expenditure of these nature are initially recognized as Intangible Assets under development and eventually transferred to Intangible assets block as appropriate on the commencement of the commercial production after the viability of the product is proven.

(vii) Depreciation and amortization

a. Depreciation on fixed assets except free hold land is calculated on straight line basis at the rates specified in accordance with the Schedule XIV of the Companies Act, 1956.

b. Depreciation on fixed assets sold or scrapped during the year is provided up to the month in which such fixed assets are sold or scrapped. Depreciation on additions to fixed assets is calculated on pro-rata basis from the month of addition.

c. Product Development expenditure and License/Technical know-how fees are amortized over a period of 5 years from the accounting year in which the commercial production of such improved product commences.

(viii) Impairment of Assets

In accordance with Accounting Standard 28 (AS 28) on "Impairment of Assets, where there is an indication of impairment of the Company''s assets, the carrying amounts of the Company''s assets are reviewed at each balance sheet date to determine whether there is any impairment based on internal/external factors. An impairment loss, if any, is recognized in the Statement of Profit & Loss, wherever the carrying amount of an asset exceeds its estimated recoverable amount. The recoverable amount of the assets is estimated at the higher of its net selling price and its value in use. In assessing the value in use, the estimated future cash flows are discounted to the present value at the weighted average cost of capital. After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life. Previously recognized impairment loss is further provided or reversed depending on changes in circumstances.

(ix) Foreign Currency Transactions

a. Foreign Currency transactions are recorded on the basis of exchange rates prevailing on the date of their occurrence.

b. Foreign currency monetary assets and liabilities as on the Balance Sheet date are revalued in the accounts on the basis of exchange rates prevailing at the close of the year and exchange difference arising there-from is charged / credited to the Statement of Profit & Loss -except for the exchange difference arising on long term borrowings related to fixed assets, which are capitalized.

(x) Leases

Leases are classified as finance or operating leases depending upon the terms of the lease agreements. Assets held under finance leases are recognized as assets of the Company on the date of acquisition and depreciated over their estimated useful lives.

Initial direct costs under the finance lease are included as part of the amount recognized as asset under the finance lease.

Rentals payable under operating leases are treated as expenses as and when they are incurred.

(xi) Customs Duty

Customs duty is accounted for as and when paid/provided.

(xii) Borrowing Cost

As per Accounting Standard 16 on "Borrowing Costs" borrowing costs that are :

(a) directly attributable to the acquisition, construction, production of a qualifying asset are capitalized as a part of cost of such asset till the time the asset is ready for its intended use and (b) not directly attributable to qualifying assets are determined by applying a weighted average rate and are capitalized as a part of the cost of such qualifying asset till the time the asset is ready for its intended use. Remaining borrowing costs are recognized as an expense in the period in which they are incurred.

(xiii) Contingencies and Provisions

A provision is recognized when the Company has a present obligation as a result of past event. It is probable that an outflow of resources embodying economic benefit will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on the best estimate of the expenditure required to settle the obligation at the balance sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimate.

A contingent liability is disclosed, unless the possibility of an outflow of resources embodying the economic benefit is remote.

(xiv) Taxation

Tax expense comprises of current tax and deferred tax charge or credit. Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. The deferred tax charge or credit is recognized using prevailing enacted or substantively enacted tax rate. Where there is unabsorbed depreciation or carry forward losses, deferred tax assets are recognized only if there is virtual certainty of realization of such assets. Other deferred tax assets are recognized only to the extent there is reasonable certainty of realization in future. Deferred tax assets/liabilities are reviewed as at each balance sheet date based on developments during the period and available case law to re-assess realization/ liabilities.

(xv) Measurement of EBITDA

The Company has opted to present earning before interest, tax, depreciation and amortization (EBITDA) as a separate line item on the face of the statement of Profit & Loss.


Mar 31, 2012

(i) Basis of Accounting

The financial statements have been prepared and presented under the historical cost (except for free hold land) convention on accrual basis of accounting in accordance with the accounting principles generally accepted in India and in compliance with provisions of the Companies Act, 1956 and comply with the mandatory Accounting Standards (AS) specified in the Companies (Accounting Standard) Rules, 2006, prescribed by the Central Government.

The accounting policies have been consistently applied by the company.

(ii) Revenue Recognition

a. Revenue from sale of goods is recognized when significant risk and rewards in respect of ownership of product is transferred to the customers, which is generally on dispatch of goods.

b. Domestic sales include excise duty and are net of sales returns, trade discounts and sales tax.

c. Export Sales are accounted on the basis of dates of Bill of Lading.

d. Revenue from services is recognized as and when services are rendered as per terms of contract.

e. Income from investments / other income is recognized on accrual basis.

(iii) Inventories are valued as under

a. Raw materials, Components, Stores & Spares, Loose Tools. At moving weighted average cost or net realizable value which ever is lower.

b. Finished Goods: At lower of cost or net realizable value inclusive of excise duty thereon.

c. Work-in-Progress: At lower of estimated cost and net realizable value.

d. Goods in Transit and under clearance: At lower of actual cost till date (inclusive of customs duty payable thereon) or net realizable value.

e. Stock of Scrap: At estimated net realizable value.

(iv) Investments

Long term investments are valued at cost less provision for diminution in value, other than temporary, if any.

(v) Employee Benefits

1. Short Term Employee Benefits

All employee benefits falling due wholly within twelve months of rendering service are classified as short term benefits. The benefits like salaries, wages etc. and the expected cost of bonus, ex-gratia, are recognized in the period in which the employee renders the related service.

2. Post Employment Benefits

a. Defined Contribution Plan: Defined contribution plan consists of Government Provident Fund Scheme and Employee State Insurance scheme. Company's contribution paid/payable during the year under these schemes are charged to Profit and Loss Account. There are no other obligations other than the contribution made by the company.

b. Defined Benefit Plan: The employees' gratuity schemes and long term compensated absences are the defined benefit plans. Company's liabilities towards gratuity and leave encashment are determined using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation.

Actuarial gain and losses are recognized immediately in the statement of Profit and Loss account as income or expense. Obligation is measured at the present value of estimated future cash flow using a discount rate that is determined by the reference to market yields at the Balance Sheet date on Government bonds.

(vi) Fixed Assets

a. Tangibles: Fixed assets (except free hold land) are stated at cost of acquisition or construction including installation cost, attributable interest and financial cost till such time assets are ready for its intended use, and foreign exchange fluctuation on long term borrowings related to fixed assets, less accumulated depreciation, impairment losses and specific grants received if any. Free hold land is stated at revalued amount.

b. Intangibles: Product Development Expenditure and License / Technical know-how fees :

Product Development expenditure of capital nature are added to fixed assets. Expenditure on license and technical know-how fees and other related expenditure towards technological improvement of the products and/or components for captive use are treated as intangible assets. Expenditure of these nature are initially recognized as tangible assets under development and eventually transferred to fixed assets block as appropriate on the commencement of the commercial production after the viability of the product is proven.

(vii) Depreciation and amortization

a. Depreciation on fixed assets except free hold land is calculated on straight line basis at the rates specified in accordance with the Schedule XIV of the Companies Act, 1956.

b. Depreciation on fixed assets sold or scrapped during the year is provided up to the month in which such fixed assets are sold or scrapped. Depreciation on additions to fixed assets is calculated on pro-rata basis from the month of addition.

c. Product Development expenditure and License/Technical know-how fees are amortized over a period of 10 years from the accounting year in which the commercial production of such improved product commences.

(viii) Impairment of Assets

In accordance with Accounting Standard 28 (AS 28) on "Impairment of Assets, where there is an indication of impairment of the Company's assets, the carrying amounts of the Company's assets are reviewed at each balance sheet date to determine whether there is any impairment based on internal/external factors. An impairment loss, if any, is recognized in the Profit & Loss account, wherever the carrying amount of an asset exceeds its estimated recoverable amount. The recoverable amount of the assets is estimated at the higher of its net selling price and its value in use. In assessing the value in use, the estimated future cash flows are discounted to the present value at the weighted average cost of capital. After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life. Previously recognized impairment loss is further provided or reversed depending on changes in circumstances.

(ix) Foreign Currency Transactions

a. Foreign Currency transactions are recorded on the basis of exchange rates prevailing on the date of their occurrence.

b. Foreign currency monetary assets and liabilities as on the Balance Sheet date are revalued in the accounts on the basis of exchange rates prevailing at the close of the year and exchange difference arising there-from is charged / credited to the Profit & Loss Account except for the exchange difference arising on long term borrowings related to fixed assets, which are capitalized.

(x) Leases

Leases are classified as finance or operating leases depending upon the terms of the lease agreements. Assets held under finance leases are recognized as assets of the Company on the date of acquisition and depreciated over their estimated useful lives.

Initial direct costs under the finance lease are included as part of the amount recognized as asset under the finance lease.

Rentals payable under operating leases are treated as expenses as and when they are incurred.

(xi) Customs Duty

Customs duty is accounted for as and when paid/provided.

(xii) Borrowing Cost

As per Accounting Standard 16 on "Borrowing Costs" borrowing costs that are :

(a) directly attributable to the acquisition, construction, production of a qualifying asset are capitalized as a part of cost of such asset till the time the asset is ready for its intended use and (b) not directly attributable to qualifying assets are determined by applying a weighted average rate and are capitalized as a part of the cost of such qualifying asset till the time the asset is ready for its intended use. Remaining borrowing costs are recognized as an expense in the period in which they are incurred.

(xiii) Contingencies and Provisions

A provision is recognized when the Company has a present obligation as a result of past event. It is probable that an outflow of resources embodying economic benefit will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on the best estimate of the expenditure required to settle the obligation at the balance sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimate.

A contingent liability is disclosed, unless the possibility of an outflow of resources embodying the economic benefit is remote.

(xiv) Taxation

Tax expense comprises of current tax and deferred tax charge or credit. Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. The deferred tax charge or credit is recognized using prevailing enacted or substantively enacted tax rate. Where there is unabsorbed depreciation or carry forward losses, deferred tax assets are recognized only if there is virtual certainty of realization of such assets. Other deferred tax assets are recognized only to the extent there is reasonable certainty of realization in future. Deferred tax assets/liabilities are reviewed as at each balance sheet date based on developments during the period and available case law to re-assess realization/ liabilities.

(xv) Measurement of EBITDA

The Company has opted to present earning before interest, tax, depreciation and amortization (EBITDA) as a separate line item on the face of the statement of Profit & Loss.


Mar 31, 2011

(i) Basis of Accounting:

The financial statements have been prepared and presented under the historical cost convention on accrual basis of accounting in accordance with the accounting principles generally accepted in India and in compliance with provisions of the Companies Act, 1956 and comply with the mandatory Accounting Standards (AS) specified in the Companies (Accounting Standard) Rules, 2006, prescribed by the Central Government.

The accounting policies have been consistently applied by the company.

(ii) Revenue Recognition:

a. Revenue from sale of goods is recognized when significant risk and rewards in respect of ownership of product is transferred to the customers, which is generally on dispatch of goods.

b. Domestic sales include excise duty and are net of sales returns, trade discounts and sales tax.

c. Export Sales are accounted on the basis of dates of Bill of Lading.

d. Revenue from services is recognized as and when services are rendered as per terms of contract.

e. Income from investments / other income is recognized on accrual basis.

(iii) Inventories are valued as under :

a. Raw materials, Components, Stores & Spares, Loose Tools & Finished Components: At moving weighted average cost or net realizable value which ever is lower.

b. Finished Goods: At lower of cost or net realizable value inclusive of excise duty thereon.

c. Work-in-Progress: At lower of estimated cost and net realizable value.

d. Goods in Transit and under clearance: At lower of actual cost till date (inclusive of customs duty payable thereon) or net realizable value.

e. Stock of Scrap: At estimated net realizable value.

(iv) Investments:

Long term investments are valued at cost less provision for diminution in value, other than temporary, if any.

(v) Employee Benefits:

1. Short Term Employee Benefits:

All employee benefits falling due wholly within twelve months of rendering service are classified as short term benefits. The benefits like salaries, wages etc. and the expected cost of bonus, ex-gratia, are recognized in the period in which the employee renders the related service.

2. Post Employment Benefits

a. Defined Contribution Plan: Defined contribution plan consists of Government Provident Fund Scheme and Employee State Insurance scheme. Companys contribution paid/payable during the year under these schemes are charged to Profit and Loss Account. There are no other obligations other than the contribution made by the company.

b. Defined Benefit Plan: The employees gratuity schemes and long term compensated absences are the defined benefit plans. Companys liabilities towards gratuity and leave encashment are determined using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation.

Actuarial gain and losses are recognized immediately in the statement of Profit and Loss account as income or expense. Obligation is measured at the present value of estimated future cash flow using a discount rate that is determined by the reference to market yields at the Balance Sheet date on Government bonds.

(vi) Fixed Assets:

1. Tangibles: Fixed assets (except free hold land) are stated at cost of acquisition or construction including installation cost, attributable interest and financial cost till such time assets are ready for its intended use, less accumulated depreciation, impairment losses and specific grants received if any. Free hold land is stated at revalued amount.

2. Intangibles: Product Development Expenditure and Licence / Technical know-how fees :

Product Development expenditure of capital nature are added to fixed assets. Expenditure on licence and technical know-how fees and other related expenditure towards technological improvement of the products and/or components for captive use are treated as intangible assets. Expenditure of these nature are initially recognized as capital work in progress and eventually transferred to fixed assets block as appropriate on the

commencement of the commercial production after the viability of the product is proven.

(vii) Depreciation and amortization:

a. Depreciation on fixed assets except free hold land is calculated on straight line basis at the rates specified in accordance with the Schedule XIV of the Companies Act, 1956.

b. Depreciation on fixed assets sold or scrapped during the year is provided up to the month in which such fixed assets are sold or scrapped. Depreciation on additions to fixed assets is calculated on pro-rata basis from the month of addition.

c Product Development expenditure and Licence/Technical know-how fees are amortized over a period of 10 years from the accounting year in which the commercial production of such improved product commences.

(viii) Impairment of Assets:

In accordance with Accounting Standard 28 (AS 28) on "Impairment of Assets", where there is an indication of impairment of the Companys assets, the carrying amounts of the Companys assets are reviewed at each balance sheet date to determine whether there is any impairment based on internal/external factors. An impairment loss, if any, is recognized in the Profit & Loss account, wherever the carrying amount of an asset exceeds its estimated recoverable amount. The recoverable amount of the assets is estimated at the higher of its net selling price and its value in use. In assessing the value in use, the estimated future cash flows are discounted to the present value at the weighted average cost of capital. After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life. Previously recognized impairment loss is further provided or reversed depending on changes in circumstances.

(ix) Foreign Currency Transactions:

a. Foreign Currency transactions are recorded on the basis of exchange rates prevailing on the date of their occurrence.

b. Foreign currency monetary assets and liabilities as on the Balance Sheet date are revalued in the accounts on the basis of exchange rates prevailing at the close of the year and exchange difference arising there-from is charged / credited to the Profit & Loss Account.

c. Exchange fluctuation gain is accounted as "Other Income" and loss is accounted as "Miscellaneous Expenses".

(x) Leases

Leases are classified as finance or operating leases depending upon the terms of the lease agreements. Assets held under finance leases are recognized as assets of the Company on the date of acquisition and depreciated over their estimated useful lives.

Initial direct costs under the finance lease are included as part of the amount recognized as asset under the finance lease.

Rentals payable under operating leases are treated as expenses as and when they are incurred.

(xi) Customs Duty:

Customs duty is accounted as and when paid/provided.

(xii) Borrowing Cost:

As per Accounting Standard 16 on "Borrowing Costs" borrowing costs that are : (a) directly attributable to the acquisition, construction, production of a qualifying asset are capitalized as a part of cost of such asset till the time the asset is ready for its intended use and (b) not directly attributable to qualifying assets are determined by applying a weighted average rate and are capitalized as a part of the cost of such qualifying asset till the time the asset is ready for its intended use. Remaining borrowing costs are recognized as an expense in the period in which they are incurred.

(xiii) Contingencies and Provisions:

A provision is recognized when the Company has a present obligation as a result of past event. It is probable that an outflow of resources embodying economic benefit will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on the best estimate of the expenditure required to settle the obligation at the balance sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimate.

A contingent liability is disclosed, unless the possibility of an outflow of resources embodying the economic benefit is remote.

(xiv) Taxation:

Tax expense comprises of current tax and deferred tax charge or credit. Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. The deferred tax charge or credit is recognized using prevailing enacted or substantively enacted tax rate. Where there is unabsorbed depreciation or carry forward losses, deferred tax assets are recognized only if there is virtual certainty of realization of such assets. Other deferred tax assets are recognized only to the extent there is reasonable certainty of realization in future. Deferred tax assets/liabilities are reviewed as at each balance sheet date based on developments during the period and available case law to re-assess realization/ liabilities.

B. Notes to accounts

(1) Issued, Subscribed and Paid-up Capital includes :

a. 15,98,150 equity shares of Rs. 10 each allotted on conversion of debentures into fully paid equity shares.

b. 6,00,000 equity shares of Rs. 10 each allotted on conversion of term loans/ debentures into fully paid equity shares to financial institutions.

c. 80,84,910 equity shares of Rs. 10 each allotted as fully paid bonus shares by capitalization of reserves.

d. 43,04,727 equity shares of Rs. 10 each fully paid, allotted at a premium of Rs. 29.43 per share on conversion of warrants issued on preferential basis.

(2) In order to appropriately reflect the fair market value of companys land in its books, in July 2010, the Company has revalued its land located at Dombivali, outskirts of Mumbai and Chinchward, Pune. This revaluation has resulted in an increase in gross and net block of Freehold Land by Rs. 501 crores and creation of a revaluation reserve of Rs. 501 crores during the year. The valuation of the land has been done by the external approved valuer.

On the grounds of prudence and as per the legal opinion obtained, the surplus of Rs. 6057.31 lakhs arose upon re-conversion of stock-in trade into land in the financial year 2008-09 continues to be included in the General Reserve of the company and will not be considered for distribution till it is realized.

(3) Balances of Debtors & Creditors and advances/deposits received from dealers/ customers are as per books of account. Letters have been sent seeking confirmation of balances and replies in some cases are awaited. Adjustments, if any, will be made on receipt of such confirmations.


Mar 31, 2010

(i) Basis of Accounting:

The financial statements have been prepared and presented under the historical cost convention on accrual basis of accounting in accordance with the accounting principles generally accepted in India and in compliance with provisions of the Companies Act, 1956 and comply with the mandatory Accounting Standards (AS) specified in the Companies (Accounting Standard) Rules, 2006, prescribed by the Central Government.

(ii) Revenue Recognition:

a. Revenue from sales of goods is recognized when significant risk and rewards in respect of ownership of product is transferred to the customers, which is generally on dispatch of goods.

b. Domestic sales include excise duty and are net of sales returns, trade discounts and sales tax.

c. Export Sales are accounted on the basis of dates of Bill of Lading.

d. Revenue from services is recognized as and when services are rendered as per terms of contract.

e. Income from investments/other income is recognized on accrual basis.

(iii) Inventories are valued as under :

a. Raw materials, Components, Stores & Spares, Loose Tools & Finished Components: At moving weighted average cost or net realizable value which ever is lower.

b. Finished Goods: At lower of cost or net realizable value inclusive of excise duty thereon.

c. Work-in-Progress: At lower of estimated cost and net realizable value.

d. Goods in Transit and under clearance: At lower of actual cost till date (inclusive of customs duty payable thereon) or net realizable value.

e. Stock of Scrap: At estimated net realizable value.

(iv) Investments:

Long term investments are valued at cost less provision for diminution in value, other than temporary, if any.

(v) Employee Benefits:

1. Short Term Employee Benefits:

All employee benefits falling due wholly within twelve months of rendering service are classified as short term benefits. The benefits like salaries, wages etc. and the expected cost of bonus, ex-gratia, are recognized in the period in which the employee renders the related service.

2. Post Employment Benefits

a. Defined Contribution Plan: Defined contribution plan consists of Government Provident Fund Scheme and Employee State Insurance scheme. Company?s contribution paid/payable during the year under these schemes are charged to Profit and Loss Account. There are no other obligations other than the contribution made by the Company.

b. Defined Benefit Plan: The employees? gratuity fund schemes and long term compensated absences are the defined benefit plans. Company?s liabilities towards gratuity and leave encashment are determined using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Actuarial gain and losses are recognized immediately in the statement of Profit and Loss account as income or expense. Obligation is measured at the present value of estimated future cash flow using a discount rate that is determined by the reference to market yields at the Balance Sheet date on Government bonds.

c. Provision towards liability in respect of early retirement benefit scheme as on 01-04-2007 is charged over a period of 3 years but not later than accounting period commencing on or after 1st April, 2010 as per AS 15 (Revised) – “Employee Benefits.”

(vi) Fixed Assets:

a. Tan gi bles: Fixed assets (except free hold land) are stated at cost of acquisition or construction including installation cost, attributable interest and financial cost till such time assets are ready for its intended use, less accumulated depreciation, impairment losses and specific grants received if any. Free hold land is stated at cost except land at Kalyan which is stated at book value on the date of re-conversion.

b. Intangibles: Product Development Expenditure and Licence/Technical know-how fees: Product Development expenditure of capital nature are added to fixed assets. Expenditure on licence and technical know-how fees and other related expenditure towards technological improvement of the products and/or components for captive use are treated as intangible assets. Expenditure of these nature are initially recognized as capital work in progress and eventually transferred to fixed assets block as appropriate on the commencement of the commercial production after the viability of the product is proven.

(vii) Depreciation and amortization:

a. Depreciation on fixed assets except free hold land is calculated on straight line basis at the rates specified in accordance with the Schedule XIV of the Companies Act, 1956.

b. Depreciation on fixed assets sold or scrapped during the year is provided up to the month in which such fixed assets are sold or scrapped. Depreciation on additions to fixed assets is calculated on pro-rata basis from the month of addition.

c. Product Development expenditure and Licence/Technical know-how fees are amortized over a period of 10 years from the accounting year in which the commercial production of such improved product commences.

(viii) Impairment of Assets:

In accordance with Accounting Standard 28 (AS 28) on “Impairment of Assets”, where there is an indication of impairment of the Company?s assets, the carrying amounts of the Company?s assets are reviewed at each balance sheet date to determine whether there is any impairment based on internal/external factors. An impairment loss, if any, is recognized in the Profit & Loss account, wherever the carrying amount of an asset exceeds its estimated recoverable amount. The recoverable amount of the assets is estimated at the higher of its net selling price and its value in use. In assessing the value in use, the estimated future cash flows are discounted to the present value at the weighted average cost of capital. After impairment, depreciation is

provided on the revised carrying amount of the assets over its remaining useful life. Previously recognized impairment loss is further provided or reversed depending on changes in circumstances.

(ix) Foreign Currency Transactions:

a. Foreign Currency transactions are recorded on the basis of exchange rates prevailing on the date of their occurrence.

b. Foreign currency monetary assets and liabilities as on the Balance Sheet date are revalued in the accounts on the basis of exchange rates prevailing at the close of the year and exchange difference arising there-from is charged / credited to the Profit & Loss Account.

c. Exchange fluctuation gain is accounted as “Other Income” and loss is accounted as “Miscellaneous Expenses”.

(x) Leases

Leases are classified as finance or operating leases depending upon the terms of the lease agreements. Assets held under finance leases are recognized as assets of the Company on the date of acquisition and depreciated over their estimated useful lives. Initial direct costs under the finance lease are included as part of the amount recognized as asset under the finance lease. Rentals payable under operating leases are treated as expenses as and when they are incurred.

(xi) Customs Duty:

Customs duty is accounted as and when paid/provided.

(xii) Borrowing Cost:

As per Accounting Standard 16 on “Borrowing Costs” borrowing costs that are : (a) directly attributable to the acquisition, construction, production of a qualifying asset are capitalized as a part of cost of such asset till the time the asset is ready for its intended use and (b) not directly attributable to qualifying assets are determined by applying a weighted average rate and are capitalized as a part of the cost of such qualifying asset till the time the asset is ready for its intended use. Remaining borrowing costs are recognized as an expense in the period in which they are incurred.

(xiii) Contingencies and Provisions:

A provision is recognized when the Company has a present obligation as a result of past event. It is probable that an outflow of resources embodying economic benefit will be required to settle the obligationin respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on the best estimate of the expenditure required to settle the obligation at the balance sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimate. A contingent liability is disclosed, unless the possibility of an outflow of resources embodying the economic benefit is remote.

(xiv) Taxation:

Tax expense comprises of current tax and deferred tax charge or credit. Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. The deferred tax charge or credit is recognized using prevailing enacted or substantively enacted tax rate. Where there is unabsorbed depreciation or carry forward losses, deferred tax assets are recognized only if there is virtual certainty of realization of such assets. Other deferred tax assets are recognized only to the extent there is reasonable certainty of realization in future. Deferred tax assets/liabilities are reviewed as at each balance sheet date based on developments during the period and available case law to re-assess realization/ liabilities.

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