a. Rights, preferences and restrictions attached to equity shares

The Company has a single class of equity shares having a face value of Rs 10 each. Accordingly, all equity shares rank equally with regard to dividend and share in the company's residual assets. The equity shares are entitled to receive dividend as declared from time to time. The voting rights of an equity share holder on a poll (not on show of hands) are in proportion to its share of the paid-up capital of the company. Voting rights cannot be exercised in respect of shares on which any call or other sum presently payable have not been paid.

On Winding up of the company, the holders of equity shares will be entitled to receive the residual assets of the company, remaining after distribution of all preferential amounts in proportion to the number of equity shares held.

2. Reserves and surplus

Capital reserve

Note: The Company had received cash subsidy from State Industrial and Investment Corporation of Maharashtra Limited (SICOM) under the 1988 package scheme of incentives in the nature of promoters' contribution.

3. Long- team borrowing

* Amount disclosed under "other current liabilities" (Refer note 9)

a) Outstanding external commercial borrowing of USD 3,500,000 (previous year: USD 4,000,000) from T-H Licensing Inc.,U.S.A. is secured by creation of hypothecation charge on all the fixed and current assets, excluding land and building. The entire Loan was originally repayable on 28 February 2011. On 21 January 2011, the Company received letter of Intent from T-H Licensing Inc., U. S. A. for extension of period of repayment of said loan by another 60 months, with all other terms and conditions remaining unchanged. Based on the letter of Intent, the Company has filed an application with Reserve Bank of India (RBI) through an Authorised Dealer(AD). During the previous years, RBI through the AD has provided the requisite approvals thereby confirming the terms and conditions as per the agreement between the Company and TH Licensing with regards to the said loan.

The loan is repayable in minimum equated annual instalments of USD 500,000 from the date of letter of extension and then balance left over, if any will be paid in single bullet on due date. The interest on the said loan is 400 basis points over six months LIBOR payable at monthly intervals. During current year, one installment of USD 500,000 has been paid on 28 February 2014.

b) Fairfield Manufacturing Company Inc., U.S.A. (FMC) had paid a sum of USD 1 1,967,023 (equivalent Rs. 543,792,583) to GE Capita! Services India (GECSI) in fulfillment of its obligation under the corporate guarantee executed to secure the loan availed by the Company from GECSI. FMC had agreed to treat the said sum as External commercial loan to the Company, subject to the terms and conditions set forth in the letter of intent date January 15, 2004. Reserve Bank of India (RBI) and Ministry of Finance had not approved the application made by the Company to treat the payment as external commercial loan. Further, RBI has not approved the payment of interest on the amount paid by FMC and repayment of principal amount exceeding Rs. 543,792,583. As at 31 March 2014 the Company has repaid USD 9,467,023 (Rs 438,308,720) [as at 31 March 2013 USD 8,967,023 (Rs 407,077,811)] to FMC.

As at the year end, the Company owes USD 2,500,000 (previous year: USD 3,000,000) equivalent Rs 105,484,772 (previous year: Rs 136,714,772) (maximum liability restricted by RBI to Rs. 105,484,772 (previous year: Rs 136,714,772) to FMC towards the said loan.

The entire Loan was originally repayable on 31 March 2011. On 21 January 2011, the Company received letter of Intent from FMC for extension of period of repayment of said loan by another 60 months, with all other terms and conditions remaining unchanged. The said loan is secured by creation of hypothecation charge on all the fixed and current assets, excluding land and building.As per the revised agreement, the loan is now repayable in minimum equated annual instalments of USD 500,000 from the date of letter of extension and then balance left over, if any will be paid in single bullet on due date. Accordingly, the current payout portion computed above has been computed at the applicable conversion rate considered at the balance sheet date for the said loan.

4. Fixed Assets

a) Vehicles cosiing Rs 8,653,070 (previous year Rs 1 1,493,753) are under lien with banks towards the vehicle loans,

b) Figures in brackets and italics pertain to the previous year.

5. Other non-current assets

Bank deposit of Rs. 2,400,000 (previous year: Rs.2,000,000) is lying under lien with Bank towards Maharashtra Pollution Control Board.

6. Inventories

a) Includes stock in transit amounting to Rs 75,469 previous year: Rs 426,670)

b) In the year ended 31 March 2014 the write - down of inventories to net realisable value amounted to Rs 2,006,388 (previous year: Rs 2,761,393)

7. Cash and bank balances

a) Fixed Deposit of Rs. 26,712 (Previous year: Rs. 22,306) is lying under lien with Bank towards Maharashtra Polution Control Board.

8. A) Contingent liabilities not provided for:

(a) Bills discounted with banks and remaining outstanding which are yet to mature Rs 39,239,015 (previous year Rs. Nil).

(b) Demands raised by sales tax authorities against the Company not acknowledged as debts and not provided for Rs 7,811,284 (previous year Rs 7,811,284), in respect of which the Company has preferred an appeal.

(c) Demands raised by service tax authorities against the Company not acknowledged as debts and not provided for on technical know how in respect of which the Company is in appeal aggregating Rs. Nil (previous year Rs. 2,479,821).

(d) Show cause notice issued by Excise and service tax department against the Company not acknowl- edged as debt, demanding amount of Rs 348,726 for late payment of service tax on IT fees and GTA on transport.

B) Capital commitments

Estimated amount of contracts, net of capital advances of Rs 17,103,943 (previous year Rs. 45,260,060), remaining to be executed on capital account and not provided for Rs. 100,778,991 (previous year Rs. 25,236,409).

9. Dues to micro, small and medium enterprise suppliers

On the basis of information and records available with the Company, the above disclosures are made in respect of amounts due to the micro, small and medium enterprises, who have registered with the relevant competent authorities. This has been relied upon by the auditors.

10. Un hedged foreign currency exposure

The Company uses forward exchange contracts to hedge against its foreign currency exposures relating to movement in foreign exchange rate in accounts receivables. The Company does not enter into any for- ward contracts for trading or speculation purposes.

11. Transfer pricing

The Company's management is of the opinion that its international transactions are at arm's length as per the independent accountants report for the year ended 31 March 2013. Further, the Indian Finance Bill, 2012 head sought to bring in certain class of domestic transactions in the ambit of the transfer pricing regulations with effect from 1 April 2012.

The management is yet to carry out a detailed domestic transfer pricing a study/analysis for the year ending 31 March 2014 in accordance with these regulations and expects to commission and complete the same by the specified due date. Management continues to believe that its international transactions post March 2013 and the specified domestic transactions covered by the new regulations are at arms length and that the transfer pricing legislation will not have any impact on these financial statements, particularly on amount of tax expense and that of provision for taxation.

12. Details of lease as lessee:

Operating lease

The Company leases office, guest house and warehouse facilities under cancellable operating lease agreements that are renewable on a periodic basis at the option of both the lessor and the lessee. Rental payments under such leases are Rs 1,108,180 (Previous year Rs. 1,040,718).

13 Segment reporting:

a) Primary segment:

In accordance with the requirements of Accounting Standard 11, segmental reporting, the Company has determined its business segment i.e., automotive transmission gears as its primary segment and geographical segment as its secondary segment. Since 100% of the Company's business is from automotive transmission gears, there are no other primary reportable segments. Thus, the segment revenue, segment result, total carrying amount of segment assets, total carrying amount of segment liabilities, total cost incurred to acquire segment assets, the total amount of charge for depreciation during the year are all as reflected in the financial statements as of and for the year ended 31 March 2014.

14. Related Party Transaction

Figures in italics and brackets pertain to the previous year.

* The above remuneration does not include contribution to Gratuity fund and leave encashment /entitlement as this contribution is a lump sum amount based on actuarial valuation.

# Includes Goods in transit Rs. 75,469 (previous year Rs 443,642)

@ Includes Goods in transit Rs. Nil (previous year Rs 1,238,625)

15. The Company has disclosed the turnover as net of total excise duty (excluding difference of excise duty on closing stock and opening stock). The excise duty related to the difference between the closing stock and opening stock is recognised separately in Note 26 to the Statement of profit and loss.

16. The Company has adopted Accounting Standard 15 on 'Employee Benefits' with effect from 1 April 2007. Pursuant to the adoption, the company has classified various benefits provided to employees as under

I. Defined contribution plans

The company makes contribution, determined as a specified percentage of employees salaries, in respect of qualifying employees towards Provident fund, Labour Welfare fund and Employee's Pension Scheme 1995. The company has no obligation other than to make a specified contribution. The contributions are charged to the Statement of Profit and Loss as they accrue. During the year, the Company has recognised the following amounts in the Statement of Profit and Loss:

II. Defined benefit plan

The company operates two post-employment defined benefit plans that provide gratuity and Compen-sated absences. The gratuity plan entitles an employee, who has rendered at least five years of continuous service, to receive one-half month's salary for each year of completed service at the time of retirement/exit. Compensated absence entitles an employee, who has a leave balance at the time of retirement/exit, to receive proportionate gross salary per day for the leave balance.

A. Gratuity (Continued)

(i) Broad category of plan assets relating to Gratuity as a percentage of total plan assets

The Company's gratuity fund is managed by its insurer, Life Insurance Corporation of India (LIC). The plan assets under the fund are deposited under approved securities.

(ii) Compensated absenses

The liability for leave encashment and compensated absences as at year end is Rs 16,440,884 (Previous year Rs. 12,259,291).

(iii) As at 31 March 2014, the plan assets have primarily been invested in government securities. The estimates of future salary increases, considered in actuarial valuation, take in to account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. The Company expects to contribute approximately Rs. 7,357,645 to the gratuity trust during fiscal 2014-15.

(iv) The discount rate is based on prevailing market yields of Indian Government Securities as at the Balance Sheet date from the estimated term of obligation.

17. Delisting of equity

The Company has received letter Reference DCS/COMP/AT/200/2013-14 dated 17 October 2013 from BSE enclosing Notice No.20131015-21 dated 15 October 2013 pertaining to discontinuation of trading in the equity shares of the company with effect from 22 October 2013 and delisting of the Company's Scrip from the Exchange records with effect from 29 October 2013. The scrip has been delisted from 29 October 2013.