Notes to Accounts of Lumax Automotive Systems Ltd.

Mar 31, 2015

1. Terms and rights attached to equity shares

The company has only one class of equity share having a par value of Rs.10/- per share. Each holder of equity share is entitled to one vote per equity share.

2. The company has not bought back any share during the last five years preceding the date of balance sheet.

3. Nature of Operations

Lumax Automotive Systems Ltd is engaged in the business of manufacturing and supply of Oil/air filters, cleaners, mirrors and their components and plastic moulded auto components.

4. Contingent liabilities and Commitments : (to the extent not provided for)

(a.) Contingent Liabilities

S Particulars As at AS At no. 31.03.2015 31.03.2014 (Amount in (Amount in lacks) lacks)

i. Bank Guarantees given in favour of Government Agencies 18.12 20.62

ii. Letter of Credit outstanding 35.20 496.29

iii. Income Tax Demand on account of MAT Credit, Application is pending 1.89 1.89 for review with A.O relating to A.Y 2007-08

iv. Income Tax Disputed Demand on 111.06 107.36 disallowances in respect of A.Y 2009-10 and appeal is pending before the ITAT (The company had deposited Rs.54,98,565/- against the disputed demand) v Haryana Value added tax (Local) on account of non submission of statutory forms Financial year

2008- 09 25.78 25.78

2009- 10 12.90 12.90

2010- 11 1067.00 -

2011- 12 830.00 -

vi. Haryana Value added tax (Central) on account of non submission of statutory forms Financial Year

2008- 09 67.09 67.09

2009- 10 95.04 95.04

2010- 11 83.77 -

2011- 12 243.00 -

vii. Maharashtra State Value added tax (Local) on account of non submission of statutory forms Financial year 2010-11 116.86 -

viii Maharashtra State Value added tax (Central) on account of non submission of statutory forms Financial year 2010-11 89.55 -

ix. Disputed Service compensation Amount not Amount not liability of two worker pending ascertainable ascertainable in the labour court

x. Creditors liabilities pending in 115.66 27.40 dispute in courts to the extent not provided in the books

xi. Creditor M/s Singhal Industrial 4.19 - Screws Pvt Ltd has also filed a suit for winding up in Honorable Delhi High Court.

(b.)Capital Commitments : The Company has decided to postponed its capital Commitment expenditure in respect of Capital Work in Progress '2,46,22,558/-(' 26,357,993/-) on account of inadequacy of liquid funds.

5. Segment Information

The business of the company falls within one primary business segment, namely automotive components, therefore, the requirement of disclosure as per AS-17 regarding "Segment Reporting" does not apply. The Company is primarily engaged in the business of Auto Components which are governed by the same set of risk & returns and hence there is only one segment. The said treatment is in accordance with the guiding principle enunciated in the Accounting Standard on segment reporting .

6. Related party disclosure

Name of related parties with whom transactions have taken place during the year

A) Key Management personnel

a) Mr. U.K.Jain Chairman

b) Mr. Nitin Jain MG. Director

c) Mr. Milan Jain Executive Director

B) Relative of Key Management Personnel

a) Mrs. Kamlesh Jain Spouse of Chairman sh. U.K.JAIN and mother of Sh. Nitin Jain and Sh. Milan Jain(directors)

b) Mrs. Tushina Bhal Daughter of chairman Sh. U.K.Jain and sister of Sh. Nitin Jain and Sh. Milan Jain (directors)

C) Enterprises Owned or Significantly influenced by Key Management Personnel or their relatives

a) Lumax Industries Limited

b) Nytex Auto Industries

c) Toray Auto Industries Private Limited

d) Lumax Automotive components Systems Pvt. Ltd.

e) Lumax Anciallary Limited

f) Lumax Automotive care Ltd

g) Lukcy Capital Private Limited

h) Lumax Indrani Developers Ltd

7. The company has taken deposits of Rs.2,69,96,237/- from directors and relatives of directors prior to 1sl April, 2014 which are exempt from the term of deposit U/s 73 of the Companies Act, 2013. The increase in unsecured loans during the year are on account of fresh deposits secured from the directors of the company and unpaid interest on unsecured loans. The same has been shown under the head long term borrowings- unsecured loans from directors and related parties.

8. Expenditure incurred towards compensation payments to employees on retirement / resignation upto F.Y 2011-12 were amortized in equal installment over five years as VRS scheme and in subsequent financial years, the same have been charged as revenue expenditure.

9. Under the scheme of demerger with Lumax Industries Ltd. Sale-tax deferment loan liability in respect of rear view mirror division was transferred to the Company. The approval and the certificate for transfer of deferment of sale tax liability in the name of the Company from State Authority have been received. The deferment is interest free and relates to financial year 1999-2000 to 2004-05. The amount is repayable in five equal yearly installments commencing from the end of the tenth financial year i.e.2009-10. The sale-tax deferred liability amounting to Rs 8,959,858/- (Rs. 8,959,858/-) have been included in unsecured loans. The overdue installments repayable amount as on 31/03/2015 is Rs.37,34,255/- (Rs.2,284,637/-)

10. Sundry creditors, sundry debtors and loans and advances, price variance claims and rebates claimed from suppliers include certain Items for which confirmations are yet to be received and include certain long outstanding balances which are considered payable/ realisable as the case may be.

11. Previous year figures have been regrouped wherever necessary to conform to this year's classification.

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Mar 31, 2014

1) i) Contingent liabilities and commitments: (to the extent not provided for)

Amount (Rs. In Lacs)

a) Contingent Liabilities 2013-14 2012-13

(i) Bank Guarantees given in favour of Government Agencies 20.62 20.62

(ii) Letter of Credit outstanding 496.29 374.76

(iii) Income Tax Disputed Demand on disallowances in respect of A.Y 2009-10 and appeal is pending before the CIT (Appeals) NIL 107.36

(iv) Income Tax Demand on account of MAT Credit, Application is pending for review with A.O relating to A.Y 2007-08 5.49 5.49

(v) Haryana Value added tax (Local) F.Y. 2009-10 on account of non submission of statutory 25.78 25.78 forms (including Interest)

(vi) Haryana Value added tax (Central)F.Y. 2009-10 on account of non submission of statutory forms 73.65 121.78 (including Interest)

(vii) Haryana Value added tax (Central) F.Y. 2008-09 on account of non submission of statutory forms 67.09 213.48 (including Interest)

(viii) Disputed Service compensation liability of two worker pending Amount not Amount not in the labour court ascertainable ascertainable

(ix) Creditors liabilities pending in dispute in court to the extent not provided in the books 27.40 NIL

b) Capital Commitments : The Company has decided to postponed its capital Commitment expenditure in respect of Capital Work in Progress Rs. 26,357,993(25,801,292) on account of inadequacy of liquid funds.

2) Remuneration to Directors :

During the year the company has paid managerial remuneration to its two directors amounting to Rs. 96,53,113/-(93,50,208/-) ( including P.F. Contribution Rs. 5,76,000/-(5,76,028/-) as per the approval of the Central Government.

3) Earning in Foreign Currency:

Export Sale- Rs. Nil (Nil)

4) Based on the information available with the company, no suppliers/ service providers have informed/ confirmed of being registered as Micro, Small or Medium enterprises as at 31st March 2014 in terms of the provisions of "The Micro, Small, and Medium enterprises Development Act, 2006.

5) The business of the company falls within one primary business segment, namely automotive components, therefore, the requirement of disclosure as per AS- 17 regarding "Segment Reporting" does not apply. The Company is primarily engaged in the business of Auto Components which are governed by the same set of risk & returns and hence there is only one segment. The said treatment is in accordance with the guiding principle enunciated in the Accounting Standard on segment reporting (AS-17).

6) Particulars of Companies/firms disclosed to comply with AS-18 on "Related Party Disclosure" in which the directors of the company exercise control over the composition of the board of the directors/governing body are given here below. However, these do not have a potential conflict with the interest of the Company at large nor do they control or exercise significant influence over the interest of Lumax Automotive Systems Limited.

(i) Related party Disclosures:

A) Key Management personnel

a) Mr. U.K. Jain Chairman

b) Mr. Nitin Jain Managing Director

c) Mr. Milan Jain Executive Director

B) Relative of Key Management Personnel

a) Mrs. Kamlesh Jain Spouse of Mr. U.K. Jain

C) Enterprises owned or significantly influenced over the company by Key Management Personal or their relatives.

a) Nytex Auto Industries

b) Lumax Industries Ltd.

c) Lumax Ancillary Ltd.

d) Toray Auto Industries Pvt. Ltd.

e) Lumax Automotive Components Systems Pvt Ltd

f) Lucky Capital Pvt. Ltd.

g) Lumax Automotive Care Ltd.

h) Lumax Indrani Developer Pvt. Ltd.

7) Impairment of Assets

As stipulated in AS-28, the company assessed potential generation of economic benefits from its business units and is of the view that assets employed in continuing businesses are capable of generating adequate returns over their useful lives in the usual course of business. There is no indication to the contrary and accordingly the management is of the view that no impairment provision is called for in these accounts.

8) i) Taxation

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing difference of earlier year.

Deferred tax is measured base on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred tax assets are recognized on expenses debited to profit & loss account but allowable for tax purposes in succeeding years and there is virtual certainty supported by convincing evidence that such deferred tax assets can be realized against future taxable profits.

9) i) Expenditure incurred towards compensation payments to employees on retirement / resignation upto FY 2011-12 in were amortized in equal installment over five years as VRS scheme and in respect of the subsequent financial years i.e. FY2012-13 & 2013-14 same has been charged as revenue expenditure to the profit and loss statement.

ii) Expenditure incurred on new project (Bike) in earlier years which was capitalized in earlier years has been written off, during the current accounting year.

iii) Public issue expenses incurred in earlier years were written off in the current accounting year .

10) Miscellaneous

Sundry creditors, sundry debtors and loans and advances, price variance claims and rebates claimed include certain Items for which confirmations are yet to be received and include certain long outstanding balances which are considered payable/ realisable as the case may be.

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Mar 31, 2013

1) General

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The financial statements have been prepared to comply in all material respect in accordance with the notified Accounting Standards issued under companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis except in case of assets for which revaluation is carried out.

The accounting policies have been consistently applied by the Company and are consistent with those applied in the previous year, except for the change in accounting policy explained below.

2) Change in accounting policy Presentation and disclosure of financial statements

The accounts have been prepared in accordance with the revised schedule-IV notified under the Companies Act 1956.

3) i) The Company has set-up its own gratuity fund which is covered under the group gratuity scheme with Life Insurance Corporation of India. Liability in respect of gratuity due to the employees as on 31/03/2013 as per actuarial valuation amount to Rs. 237.16 Lacs (Rs. 200.69 Lacs), which has been duly provided in the current financial year.

ii) Liability in respect of earned leave due to the employees as on 31/03/2013 as per actuarial valuation amounts to Rs. 67.78 Lacs (Rs.66.01 Lacs), which has been duly provided in the current financial year.

iii) Under the scheme of demerger with Lumax Industries Ltd. sale-tax deferment liability in respect of rear view mirror division was transferred to the Company. The approval and the certificate for transfer of deferment of sale tax liability in the name of the Company from State Authority have been received. The deferment is interest free and relates to financial year 1999-2000 to 2004-05. The amount is repayable in five equal yearly installments commencing from the end of the tenth financial year I,e 2009-10. The sale-tax deferred liability amounting to Rs 8,959,858/- (Rs. 8,959,858/-) have been included in unsecured loans

4) Remuneration to Directors :

During the year the company has paid managerial remuneration to its two directors amounting to Rs. 93,50,208.00 including P.F. Contribution Rs. 5,76,028.00. Out of the said payments 15,74,180.00 is in excess of the limits specified under the relevant provision and Schedule XIII of the Companies Act 1956. The company has already made an application to the Company Law Board for sanction and approval of payment of managerial remuneration. The directors have already submitted undertaking that they will comply with orders of the government authorities and will refund the excess amount of remuneration paid to them over and the above of the remuneration to be sanction by the Govt. authorities. The company has decided that no commission shall be paid to the two directors of the company for the financial year 2012-13 to which proposal the concerned directors have agreed.

5) Value and percentage of Raw Materials and Stores Consumed :

6) Earning in Foreign Currency: Export Sale- Rs. Nil (Rs. 334,251/-)

7) Based on the information available with the company, no suppliers/ service providers have informed/ confirmed of being registered as Micro, Small or Medium enterprises as at 31st March 2013 in terms of the provisions of "The Micro, Small, and Medium enterprises Development Act, 2006.

8) The business of the company falls within one primary business segment, namely automotive components, therefore, the requirement of disclosure as per AS- 17 regarding "Segment Reporting" does not apply. The Company is primarily engaged in the business of Auto Components which are governed by the same set of risk & returns and hence there is only one segment. The said treatment is in accordance with the guiding principle enunciated in the Accounting Standard on segment reporting (AS-17).

9) 3Particulars of Companies/firms disclosed to comply with AS-18 on "Related Party Disclosure" in which the directors of the company exercise control over the composition of the board of the directors/governing body are given here below. However, these do not have a potential conflict with the interest of the Company at large nor do they control or exercise significant influence over the interest of Lumax Automotive Systems Limited.

(i) Related party Disclosures:

A) Key Management personnel

a) Mr. U.K. Jain Chairman

b) Mr. Nitin Jain Managing Director

c) Mr. Milan Jain Executive Director

B) Relative of Key Management Personnel

a) Mrs. Kamlesh Jain Spouse of Mr. U.K. Jain

C) Enterprises owned or significantly influenced over the company by Key Management Personal or their relatives.

a) Nytex Auto Industries

b) Lumax Industries Ltd.

c) Lumax Ancillary Ltd.

d) Toray Auto Industries Pvt. Ltd.

e) Lumax Automotive Component Systems Pvt Ltd

f) Lucky Capital Pvt. Ltd.

g) Lumax Automotive Care Ltd.

h) Lumax Indrani Developer Pvt. Ltd.

10) Impairment of Assets

As stipulated in AS-28, the company assessed potential generation of economic benefits from its business units and is of the view that assets employed in continuing businesses are capable of generating adequate returns over their useful lives in the usual course of business. There is no indication to the contrary and accordingly the management is of the view that no impairment provision is called for in these accounts.

11) i) Taxation

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing difference of earlier year.

Deferred tax is measured base on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred tax assets are recognized on expenses debited to profit & loss account but allowable for tax purposes in succeeding years and there is virtual certainty supported by convincing evidence that such deferred tax assets can be realized against future taxable profits.

12) i) Expenditure incurred towards compensation payments to employees on retirement / resignation in earlier years were amortized in equal installment over five years as VRS scheme and in respect of the current financial year, the same has been charged to profit and loss statement.

ii) Expenditure incurred on new project (Bike) in earlier years has been capitalized, no expenditure has been incurred during the current financial year and will be amortised in the year of the implementation of the project/production.

iii) Public issue expenses incurred in earlier years will be written off in five equal installments from the financial year in which new shares will be issued.

13) Miscellaneous

Sundry creditors, sundry debtors and loans and advances and rebates claimed include certain items for which confirmation are yet to be received and include certain long outstanding balances which are considered payable/ realisable as the case may be.

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Mar 31, 2012

1) General

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The financial statements have been prepared to comply in all material respect in accordance with the notified Accounting Standards issued under companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis except in case of assets for which revaluation is carried out.

The accounting policies have been consistently applied by the Company and are consistent with those applied in the previous year, except for the change in accounting policy explained below.

2) Change in accounting policy

Presentation and disclosure of financial statements

During the year ended 31 March 2012, the revised schedule vi notified under the Companies Act 1956, has become applicable to the company, for preparation and presentation of financial statements. The adoption of revised schedule vi does not impact recognition and measurement principles followed for preparation of financial statements. However, it has significant impact on presentations and disclosures made in financial statements. The company has also reclassified the previous year figures in accordance with the requirements applicable in the current year.

3) i) The Company has set-up its own gratuity fund which is covered under the group gratuity scheme with Life Insurance Corporation of India. Liability in respect of gratuity due to the employees as on 31/03/2012 as per actuarial valuation amount to Rs. 200.69 Lacs (Rs. 344.53 Lacs), which has been duly provided in the current financial year.

ii) Liability in respect of earned leave due to the employees as on 31/03/2012 as per actuarial valuation amounts to Rs. 66.01 Lacs (Rs.50.79 Lacs), which has been duly provided in the current financial year.

iii) Under the scheme of demerger with Lumax Industries Ltd. sale-tax deferment liability in respect of rear view mirror division was transferred to the Company. The approval and the certificate for transfer of deferment of sale tax liability in the name of the Company from State Authority has been received. The deferment is interest free and relates to financial year 1999-2000 to 2004- 05. The amount is repayable in five equal yearly installments commencing from the end of the tenth financial year i.e. 2009-10. The sale-tax deferred liability amounting to Rs 8,959,858/- (Rs. 8,959,858/-) have been included in unsecured loans.

4) Contingent liabilities and commitments: (to the extent not provided for) Amount (Rs. In Lacs)

a) Contingent Liabilities 2011-12 2010-11

(i) Bank Guarantees given in favour of Government Agencies 20.62 20.62

(ii) Letter of Credit outstanding 325.89 477.30

(iii) Income Tax Demand on disallowances in respect of A.Y 2009-10 and appeal is pending before the CIT (Appeals) 52.37 -

(iv) Income Tax Demand on account of MAT Credit, Application is pending for review with A.O relating to A.Y 2007-08 5.49 -

b) Capital Commitments 19.28 8.22

5) Remuneration to Directors' has been paid within the limit prescribed under the provisions of Schedule XIII read with section 269, of the Companies Act, 1956.

6) Earning in Foreign Currency:

Export Sale- Rs. 334,251/- (Rs. 1,014,792/-)

7) Based on the information available with the company, no suppliers/ service providers have informed/ confirmed of being registered as Micro, Small or Medium enterprises as at 31st March 2012 in terms of the provisions of "The Micro, Small, and Medium enterprises Development Act, 2006.

8) The business of the company falls within one primary business segment, namely automotive components, therefore, the requirement of disclosure as per AS-17 regarding "Segment Reporting" does not apply. The Company is primarily engaged in the business of Auto Components which are governed by the same set of risk & returns and hence there is only one segment. The said treatment is in accordance with the guiding principle enunciated in the Accounting Standard on segment reporting (AS-17).

9) Particulars of Companies/firms disclosed to comply with AS-18 on "Related Party Disclosure" in which the directors of the company exercise control over the composition of the board of the directors/governing body are given here below. However, these do not have a potential conflict with the interest of the Company at large nor do they control or exercise significant influence over the interest of Lumax Automotive Systems Limited.

10) Impairment of Assets

As stipulated in AS-28, the company assessed potential generation of economic benefits from its business units and is of the view that assets employed in continuing businesses are capable of generating adequate returns over their useful lives in the usual course of business. There is no indication to the contrary and accordingly the management is of the view that no impairment provision is called for in these accounts.

11) Taxation

The company is liable to pay the income tax for the year u/s 115JB (Book Profit) of the Income Tax Act and necessary provision for the same has been made.

12) i) Expenditure incurred towards compensation payments to employees on retirement / resignation in earlier years were amortized in equal installment over five years as VRS scheme and in respect of the current financial year, the same has been charged to profit and loss statement.

ii) Expenditure incurred on new project (Bike) in earlier years has been capitalized, no expenditure has been incurred during the current financial year and will be amortised in the year of the implementation of the project/production.

iii) Public issue expenses incurred in earlier years will be written off in five equal installments from the financial year in which new shares will be issued.

13) Miscellaneous

Sundry creditors, sundry debtors and loans and advances and rebates claimed include certain items for which confirmation are yet to be received and include certain long outstanding balances which are considered payable/ realisable as the case may be.

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Mar 31, 2010

1) General

The financial statements have been prepared to comply in all material respects in accordance with the notified Accounting Standards issued under Companies Accounting Standard Rules, 2006 and the relevant provisions of the Companies Act, 1956.

2) i) The Company has set-up its own gratuity fund which is covered under the group gratuity scheme with Life Insurance Corporation of India. Liability in respect of gratuity for the two financial years ended on 31-03-09 and 31-03-10 has not been provided in books of the company and no actuarial valuation has been obtained by the company.

ii) Liability in respect of earned leave due to the employees as on 31/03/2010 as per actuarial valuation amounts to Rs.72.90 Lacs (Rs.71.85 Lacs) and out of which Rs 63.07 Lacs (Rs.58.58 Lacs) has not been provided in the books of the company.

iii) Under the scheme of demerger with Lumax Industries Ltd. sale-tax deferment liability in respect of rear view mirror division was transferred to the Company. However the approval and certificate for transfer of deferment of sale tax liability in the name of the Company from State Authority is awaited. The sale-tax deferred liability amounting to Rs 9257295/- (Rs. 9257295/-) have been included in unsecured loans.

3) i) Other contingent liabilities not provided for :

a) Bonds given to Government Agencies & Counter Guarantees given to banks on behalf of the company Rs.12.40Lacs (Rs.15.85 Lacs)

b) Letter of credit outstanding Rs.266.20 Lacs (Rs.432.73 Lacs).

c) Bank guarantees given in favour of Government agencies Rs.8.22 Lacs(Rs.9.13 Lacs)

d) Liabilities towards disputed ESI Rs. Nil (Rs. 1.05 Lacs).

e) Liabilities towards disputed Labour cases not ascertained

ii) Outstanding capital commitments.

Estimated amount of contracts remaining to be executed on capital accounts Rs. 8.22 Lacs (Rs.4.45 Lacs)

Notes:

1. Comprise of large number of items such as components and parts of Air Cleaners/Filters, thereof such quantitative details have not been shown.

2. Total Turnover includes Job Work amounting to Rs.256, 440/- (Rs.193,027)

3. Plastic moulded auto components used in house 3,062,733 (3,895,153) are excluded from production figure.

4. As compiled and certified by the Management.

10) Earning in Foreign Currency:

a) Advance received for moulds - Rs. NIL (Rs. 1,723,528)

b) Amount received against Export Sale - Rs. 4,290,632 (Rs. 14,644,556)

5) Based on the information available with the company, no suppliers/ service providers have informed/ confirmed of being registered as Micro, Small or Medium enterprises as at 31st March 2010 in terms of the provisions of "The Micro, Small, and Medium enterprises Development Act, 2006".

6) In terms of Note to Part II of Schedule VI of the Companies Act, 1956 quantity- wise disclosure have been only/ restricted to those items/ articles, which individually account for 10% or more of the total raw materials consumed/ turnover.

7) The business of the company falls within one primary business segment, namely automotive components, therefore, the requirement of disclosure as per AS-17 regarding "Segment Reporting" does not apply. The Company is primarily engaged in the business of Auto Components which are governed by the same set of risk & returns and hence there is only one segment. The said treatment is in accordance with the guiding principle enunciated in the Accounting Standard on segment reporting (AS-17).

8) Particulars of Companies/firms disclosed to comply with AS-18 on "Related Party Disclosure" in which the directors of the company exercise control over the composition of the Board of the directors/governing body are given here below. However, these do not have a potential conflict with the interest of the Company at large nor do they control or exercise significant influence over the interest of Lumax Automotive Systems Limited.

9) 1) Lumax Magna Donnelly Automotive Mirrors Private Limited is subsidiary company of our company on account of holding of 73.78% Equity Shares in that company. Pursuant to Accounting Standard -21(Consolidated Financial Statements), the consolidated financial statements are not required to be prepared as the subsidiary company operates under severe long term restrictions which significantly impair its ability to transfer funds to the parent company i.e. LASL .

10) Impairment of Assets

As stipulated in AS-28, the company assessed potential generation of economic benefits from its business units and is of the view that assets employed in continuing businesses are capable of generating adequate returns over their useful lives in the usual course of business. There is no indication to the contrary and accordingly the management is of the view that no impairment provision is called for in these accounts.

11) i) Taxation

The company is not liable to pay the income tax for the year as the company has taxable loss , under the provisions of the Income Tax Act. ii) Deferred Tax liabilities/ Assets

The major components of Deferred Tax Assets and liabilities are given below:

Deferred Tax Assets: (Amount in Rs)

-Expenses deductible on payment basis

and unabsorbed business losses

and 20,017,000

Depreciation

20,017,000

Deferred Tax Liabilities :

-Difference between book and

tax depreciation 37,349,107

Deferred VRS Expenditure

claimed as

Revenue expenditure under

Income Tax Act 8,089,070 45,438,177

Deferred tax liability as on

31/03/2010 25,421,177

Less: Deferred tax liability

as on 31/03/2009 30,985,507

Deferred Tax assets for the current year (5,564,330)

12) i) Expenditure incurred towards compensation payments to employees on retirement / resignation are amortized in equal installment over five years as VRS scheme ii) Expenditure incurred on new project (Bike) has been capitalized and will be amortised in the year of the implementation of the project/production. iii) Preliminary and amalgamation expenses up to last year were written off in equal installment over five financial years except public issue expenses which shall be written off in five equal installments from the financial year in which shares will be issued.

13) Miscellaneous

Sundry creditors, sundry debtors and loans and advances and rebates claimed include certain items for which confirmations are yet to be received and include certain long outstanding balances which are considered payable/ realisable as the case may be.

2009-10 2008-09

14) Earning Per Share (EPS):

Net (loss)/profit as per Profit & Loss

A/c after taxation (34,992,591) 11,212,046

Number of Equity Shares of

Rs.10/- each at the beginning

of the year

7,404,106 7,404,106

Total no. of Equity Shares 7,404,106 7,404,106

Weighted average number of Equity

shares of Rs.10/- each at the end of

the year

for Calculation of basic and diluted

EPS 7,404,106 7,404,106

Face value of equity share (Rs. Per share) 10 10

Basic & Diluted Earnings (in Rupees per Share) (4.73) 1.51