(Rs in Million)
 
                                      As at 31st          As at 31st
 
                                     March, 2011         March, 2010
 
 A.  Contingent Liabilities not provided for in respect of:
 
 (a) Sales Bills Discounted            4,911.08           3,799.81 
 of which:
 
 Bills since realised                  1,739.26             904.16
 
 Matured, Overdue & outstanding 
 since close of the period                  -                  -
 
 (b) Guarantees given by the Company 
 on behalf of other companies:
 
 Balance Outstanding                   1,845.43             570.09
 
 (Maximum Amount)                    (2,025.61)           (830.94)
 
 (c) Claims against the Company not 
 acknowledged as Debts - to the
 extent ascertained                      142.00             147.49
 
 (d) Disputed Income Tax matters            -               104.32
 
 (e) Excise/Service Tax Demands - 
 matters under dispute                   184.65             281.85
 
 (f) Customs Demands - matters under 
 dispute                                  50.97             322.15
 
 B. The Company has imported Capital Goods under the Export Promotion
 Capital Goods Scheme, of the Government of India, at concessional rates
 of Duty on an understanding to fulfill quantified exports against which
 remaining future obligation aggregates USD 147.02 million, over a
 period of next five years, while maintaining average export of USD
 159.54 million per annum. Minimum Export obligation to be fulfilled by
 the Company under the said scheme by 31st March, 2011, has been
 fulfilled. Non fulfillment of the balance of such future obligations,
 in the manner required, if any, entails options/ rights to the
 Government to confiscate Capital Goods imported under the said Licences
 and other penalties under the above referred scheme.
 
 ii) On 5th August, 2009, the Company has entered into a Cross Currency
 Swap (CCS) for a period of five years by converting a Long Term Rupee
 NCD liability of Rs 250 million (out of 10.75% XVth Series NCDs of Rs
 2,500 million) into an equivalent USD liability at the prevailing spot
 rate. Under this structure, the Company will receive a fixed interest
 coupon on a quarterly basis on the rupee amount swapped and will pay
 floating rate interest (which is subject to a cap) on the USD notional
 amount. On maturity of the swap, the Company will pay the contracted
 USD loan liability at prevailing rate and receive the original rupee
 amount swapped.
 
 10.  The Equity Shares allotted on exercise of option to convert to
 FCCBs by the Bondholders, and the 10,000,000 equity shares of Rs 2/-
 each allotted as detailed in footnote B(iii) to schedule ‘A’ and equity
 shares issued and allotted on conversion of warrants, if any, before
 the record date/book closure for dividend, would rank pari passu with
 the existing share capital reflected in Schedule ‘A’ in all respect
 including dividend declared for the year. Accordingly, Dividend has
 been provided for on 232,794,316 equity shares of Rs 2/- each at the
 rate recommended by the Board of Directors on the basis of equity
 shares issued and allotted up to 23rd May, 2011.
 
 However, as the Company is unable to estimate further conversions upto
 the record date set for determining the said eligibility, any further
 amounts required to be distributed as dividend will be adjusted against
 the balance in the Profit and Loss Account carried forward to the
 subsequent financial year.
 
 11.  Sales tax deferral incentives attached to the erstwhile windmill
 division, which was demerged to BF Utilities Ltd. under section 392 and
 394 of the Companies Act, 1956 sanctioned by the High Court of the
 Judicature at Mumbai, have been passed on thereafter from year to year
 by the Company to the latter, under an arrangement, with all
 liabilities and obligations attached thereto. Consequently, sales tax
 deferral liability represents net liability to the Company after such
 pass on aggregating to Rs 845 million (Previous year Rs 851 million).
 
 12.  (a) Non Convertible Debentures (NCDs):
 
 (i) 11.95 % Secured Redeemable Non-Convertible Debentures (NCDs) of
 face value of Rs 1,000,000 each, aggregating Rs 2,500,000,000/- (Rupees
 Two thousand five hundred million) were issued on private placement
 basis to Life Insurance Corporation of India. In terms of Debenture
 Trust-cum-Mortgage Deed dated April 30, 2009, NCDs are to be redeemed
 in three Annual installments starting at the end of sixth year from the
 date of allotment (viz. 5th January, 2009) i.e. @ 33.33% on 5th
 January, 2015, @ 33.33% on 5th January, 2016, and @ 33.34% on 5th
 January, 2017.  Above Debentures are secured by a (i) First pari passu
 Mortgage in favour of the Trustees, of all rights and interest on the
 Company’s immovable properties situated at Mundhwa, Satara, Jalgaon and
 Chakan with negative lien on properties situated at Jejuri and
 Baramati; and (ii) First pari passu charge in favour of the Trustees by
 way of hypothecation of movable properties, both present and future,
 such as all plant and machinery, equipments, tools, furniture &
 fixtures etc. as described in Debenture Trust-cum-Mortgage Deed dated
 April 30, 2009.
 
 (ii) 10.75 % Secured Redeemable Non Convertible Debentures (NCDs) of
 face value of Rs 1,000,000/- each, aggregating Rs 3,500,000,000/- (Rupees
 Three thousand five hundred million) were issued on private placement
 basis to various debentureholders. In terms of Debenture
 Trust-cum-Mortgage Deed dated December 14, 2009, NCDs are to be
 redeemed in three installments starting at the end of 54th month i.e.
 on 22nd March, 2014, @ 25%, at the end of 60th month i.e.  on 22nd
 September, 2014 @ 50% and at the end of 66th month i.e. 22nd March,
 2015 @ 25%.  Above Debentures are secured by a (i) First pari passu
 Mortgage in favour of the Trustees, of all rights and interest on the
 Company’s immovable properties situated at Mundhwa, Satara, Jalgaon and
 Chakan with negative lien on properties situated at Jejuri and
 Baramati; and (ii) First pari passu charge in favour of the Trustees by
 way of hypothecation of movable properties, both present and future,
 such as all plant and machinery, equipments, tools, furniture &
 fixtures etc, as described in Debenture Trust-cum-Mortgage Deed dated
 December 14, 2009.
 
 (iii) 10.75 % Secured Redeemable Non Convertible Debentures (NCDs) of
 face value of Rs 1,000,000/- each, aggregating Rs 1,760,000,000/- (Rupees
 One thousand seven hundred sixty million) were issued on private
 placement basis to Qualified Institutional Buyers, under QIP issue. In
 terms of Debenture Trust-cum-Mortgage Deed dated 28th June, 2010, NCDs
 are to be redeemed in three annual installments starting at the end of
 fourth year from the date of allotment (viz.28th April, 2010) i.e. @
 35% on 28th April, 2014, @ 35% on 28th April, 2015, and @ 30% on 28th
 April, 2016.  
 
 Above Debentures are secured by a (i) First pari-passu Mortgage in
 favour of Trustees, of all rights and interest on the Company’s
 immovable properties, present and future situated at Mundhwa, Chakan,
 Satara and Jalgaon with negative lien on properties situated at Jejuri
 and Baramati as described in Schedule-I as per Debenture
 Trust-cum-Mortgage Deed dated 28th June, 2010 and (ii) First pari-passu
 Charge in favour of the Trustees on moveable properties, both present
 and future, as described in Schedule-II as per Debenture
 Trust-cum-Mortgage Deed dated 28th June, 2010.
 
 (b) Foreign Currency Loans:
 
 (i) Bank of India, London, Foreign Currency Term Loan; Balance
 outstanding USD 5.00 million (Previous year USD 7.50 million).
 
 (ii) Credit Agricole Corporate & Investment Bank, Singapore, Foreign
 Currency Term Loan; Balance outstanding USD 50 million (Previous year
 USD 50 million).
 
 The loans at Sr. No (i) above is secured by:
 
 1.  First charge by way of Hypothecation of the whole of the movable
 properties including its movable plant and machinery, machinery spares,
 tools and accessories and other movables, both present and future,
 whether installed or not and whether now lying loose or in cases or now
 lying or stored in or about or shall from time to time during the
 continuance of the security be brought into or upon or be stored or be
 in or about all the factories, premises and godowns situated at
 Mundhwa, District Pune; Chakan, District Pune; Vaduth, District Satara;
 Village Kusumbe, District Jalgaon, all in the state of Maharashtra or
 wherever else the same may be or be held by any party to the order of
 disposition or in the course of transit or on high seas or on order, or
 delivery, howsoever and wheresoever in the possession and either by way
 of substitution or addition except specific movable plant and machinery
 consisting of Wind Energy Converter of 600 K.V. 7 Nos. at Village
 Boposhi, District Satara, exclusively hypothecated to Standard
 Chartered Bank, as described under the Deed of Hypothecation dated 17th
 March, 2005 and;
 
 2.  Equitable Mortgage by deposit of title deeds of immovable
 properties situated at Village Mundhwa, Pune; Village Vaduth, Tal. and
 Dist. Satara; Village Kusumbe Khurd, Tal. and District Jalgaon and
 Village Chakan, Pune all in the state of Maharashtra, together with all
 buildings and structures thereon and all Plant and Machinery attached
 to the earth or permanently fastened to anything attached to the earth,
 as described under Memorandum of Entry dated 17th March, 2005.
 
 The loan at Sr. No. (ii) above is secured by:
 
 First Pari passu charge over present and future movable fixed assets
 viz. Plant and Machinery, Computers, Furnitures and Fixtures, whether
 installed or not and whether now lying loose or in cases or otherwise
 or being on or upon or at any time, hereafter being on or upon about
 the premises and godowns at Mundhwa, Pune; Village Kuruli, Chakan;
 Taluka Khed, Dist. Pune; Village Vaduth, Taluka & District Satara and
 at Baramati, Pune or anywhere else.
 
 (c) Rupee Loans:
 
 Axis Bank, Pune, Long Term Rupee Term Loan; Balance outstanding Rs 225
 million (Previous year Rs Nil).  Above loan is to be secured against (i)
 First pari-passu charge on the Company’s immovable properties, both
 present and future situated at Mundhwa, Chakan, Satara and Jalgaon with
 negative lien on properties situated at Jejuri and Baramati and (ii)
 First pari-passu Charge on moveable properties, both present & future
 including Land & Building.
 
 (d) Guarantees given by Company’s Bankers on behalf of the Company,
 against sanctioned guarantee limit aggregating to Rs 3,250 million
 (Previous Year Rs 3,250 million) for contracts undertaken by the Company
 and other matters are secured by extension of charge by way of joint
 hypothecation of stock-in-trade, stores and spares etc., book debts,
 subject to prior charge in their favour. Amount outstanding Rs 856.83
 million (Previous Year Rs 635.43 million).
 
 13.  The company has recognised Deferred Taxes, which result from
 timing difference between the Book Profits and Tax Profits for the year
 aggregating Rs 491.20 million in the Profit and Loss Account, the
 details of which are as under:
 
 14.  Capital Work-in-Progress includes advances for supply of Capital
 Goods aggregating Rs 826.57 million (Previous Year Rs 345.94 million).
 
 15.  Advances recoverable in cash or in kind or for value to be
 received in schedule G includes: Loans aggregating Rs 0.59 million
 (Previous year Rs 0.77 million) granted to one executive who
 subsequently was, appointed as Whole Time Director of the Company.
 Maximum balance outstanding during the year Rs 0.79 million (previous
 year Rs 0.79 million).
 
 16.  Interest free loan of Rs 309.09 million given to a Company which
 has given an undertaking to hold the shares solely for the purpose and
 obligations of the BFL Executives Welfare and Share Option Trust in
 terms of clause (b) of the proviso to Section 77(2) of the Companies
 Act, 1956, which in the opinion of an eminent Counsel, obtained by a
 Group Company, falls within the purview of the said proviso to the
 above mentioned section.
 
 
 Note: The information has been given in respect of such vendors to the
 extent they could be identified as Micro and Small enterprises on the
 basis of information available with the Company.
 
 18. The Company had issued Foreign Currency Convertible Bonds (FCCBs)
 in two tranches aggregating USD 79.90 million, detailed in the table
 below, to finance Capital Expenditure and Global Acquisitions. The said
 bonds are optionally convertible into GDRs/ Equity Shares to be
 exercised at any time during the exercise period at a pre determined
 initial price subject to adjustments upon occurrence of certain events.
 
 However, the Company has option to redeem the balance of the above
 Bonds, if such balance is less than 10% in aggregate of principal
 amount of such tranch of bonds originally issued in respect of each
 tranch, during the redemption exercise period in the manner specified
 in the offering circular, at a premium, so as to provide a
 predetermined yield to the Bondholders.
 
 The Company also has the option to call the Bondholders of Tranche A &
 Tranche B to mandatorily convert the Bonds into Equity Shares, if the
 Market Price on the specified date, provided the holder a gain of
 atleast a 30% over the Early Redemption amount.
 
 Due to variables currently indeterminate, the premium on actual
 redemption for Tranche A & B is not computable and hence, will be
 recognised if and as and when the redemption option is exercised, as a
 charge to the securities premium account in terms of Section 78(2)(d)
 of the Companies Act,1956.
 
 The Company has been legally advised by an eminent law firm that, the
 above mentioned Convertible Bonds issued upon terms and conditions set
 out in the offering circular dated 19th April, 2005, would be outside
 the purview of Section 117(C) of the Companies Act, 1956 as regards
 creation of Debenture Redemption Reserve. The Auditors have relied upon
 the said legal opinion.  The unutilised amounts of money raised, as at
 31st March, 2011 is Rs Nil.
 
 19. Debenture Redemption Reserve has been created in accordance with
 circular No. 9/2002 dated 18th April, 2002 issued by Department of
 Company Affairs, Ministry of Law, Justice and Company Affairs,
 Government of India and Section 117(C) of the Companies Act,1956 at 25%
 of the maturity amount equally over the terms of the Debentures
 Privately placed. Amount set aside for the year represents for full
 year in respect of Debentures issued in earlier year and proportionate
 amount for a period of 11 months for Debentures issued during the year.
 
 21.  The Accounting Standard (AS-11) The effects of changes in Foreign
 Exchange Rates prescribed by Companies (Accounting Standards) Rules,
 2006 was amended on 31st March, 2009, vide a notification dated 31st
 March, 2009, by the Ministry of Corporate Affairs. The said amendment
 offered an option to Companies to recognise Foreign Exchange Gains and
 Losses arising on translation of all long term monetary assets and
 liabilities acquired upto 31st March, 2009, retrospectively from
 accounting periods commencing after 7th December, 2006 (i.e. from 1st
 April, 2007 for the Company) upto 31st March, 2011, as capital cost of
 acquisition of assets where they relate to acquisition of assets or to
 a Translation Reserve viz. Foreign Currency Monetary Item Translation
 Difference Account (FCMITDA) in other cases. The amount so recognised
 as capital cost of acquisition of assets is to be depreciated over the
 balance life of the relevant assets and in case of the amount
 recognised in the FCMITDA is to be amortised, over the balance term of
 the monetary assets or liability, but not beyond 31st March, 2011.
 
 The Company had chosen to exercise this option in preparation of its
 financial statements from the year ended 31st March, 2009.
 Accordingly, Foreign exchange differences adjusted against the cost of
 the assets/ CWIP aggregates Rs 34.88 million (gain), amount in Foreign
 Currency Monetary Item Translation Difference Account  (FCMITDA)
 aggregates Rs 4.44 million (gain) and amortised in the current year
 amounts to Rs 39.20 million.
 
 22.  Bharat Forge America Inc. (BFA), a wholly owned subsidiary, has
 registered losses which have substantially eroded its Net worth. The
 Auditors of the Company have, given current adverse conditions
 prevailing in the American auto industry, disclaimed expression of any
 opinion on the validity of the assumption of going concern, the basis
 on which the financial statements have been prepared. In November 2010,
 the Management of BFA has successfully negotiated union contract
 resulting in considerable wage decrease for each of the next 3 years.
 This will help BFA in correcting the cost structure and targeting new
 business. Also, the Management of BFA, as at 31st December, 2010, has
 tested the assets for impairment, the results of which do not indicate
 any impairment losses and hence, the dimunition in the value of the
 Company’s investment in this subsidiary is not considered to be of
 permanent nature.
 
 23.  In order to recognise the impact of fluctuation in foreign
 currency rates arising out of instruments acquired to hedge highly
 probable forecast transactions, in appropriate accounting periods, the
 Company applies the principles of recognition set out in the Accounting
 Standard-30 - Financial Instruments - Recognition and Measurement
 (AS-30) as suggested by the Institute of Chartered Accountants of
 India. Accordingly, the unrealised gain/(loss) (net) consequent to
 foreign currency fluctuations, in respect of effective hedging
 instruments, represented by simpleforward covers, to hedge future
 exports, are carried as a Hedging Reserve and ultimately set off in the
 Profit and Loss Account when the underlying transaction arises.
 
 The amount outstanding in the Hedge Reserve at the close of the year is
 Rs 13.98 million.
 
 30.  Significant accounting policies followed by the Company are as
 stated in the statement annexed to this schedule.
 
 31.  Figures less than Rs 5,000/- have been shown at actuals in bracket
 as the figures have been rounded off to the nearest second decimal to
 millions.
 
 32.  Previous financial year’s figures have been regrouped wherever
 necessary to make them comparable with those of the current year.