Castrol India

1.  The Company had entered into transactions for rendering of services
 and secondment of personnel with two private limited companies
 incorporated in India which are a part of the BP group of companies
 worldwide. The said agreements attracted the provisions of Section 297
 of the Companies Act, 1956 as there were common Directors between the
 Company and the two private limited companies. The Company made
 applications to the Regional Director for necessary approvals. The
 Regional Director has sought clarifications and requested the Company
 to make fresh applications with additional information. The Company is
 in the process of making fresh applications in relation to both the
 private limited companies to the Regional Director.
 
 2.  Estimated amount of contracts (net of advances) remaining to be
 executed on capital account and not provided for Rs. 2.08 Crores (2007
 : Rs. 5.16 Crores).
 
                                          31st December,  31st December,
                                                   2008            2007
                                                 Rupees          Rupees
                                              in Crores       in Crores
 
 3.  Contingent liabilities not provided for in the accounts :
 
 (a) Counter Guarantees given to Banks            5.67            5.41
 (b) Excise/Sales Tax Demands made by the 
 Authorities, in respect of which appeals 
 have been filed                                 10.46            7.58
 (c) Claims against the Company not 
 acknowledged as debts estimated at :
 In respect of Third Parties - 
 Miscellaneous                                    1.23            2.00
 
 4.  (a) The Company had received in prior years, show cause notices
 from Excise Authorities in respect of input and finished goods stock
 differences at some of its plants aggregating to Rs. 18.30 Crores (2007
 : Rs. 18.30 Crores). There have been three orders in favour of the
 Company though department has filed appeals against two of them. The
 orders were passed upholding the Companys contention that the stock
 differences have been almost fully reconciled/explained. The pending
 demands on account of stock differences aggregate to Rs. 7.87 Crores
 (2007 : Rs. 7.87 Crores) including the amounts involved in the cases
 where department has filed appeals. Considering that favourable orders
 have been received setting out a ratio that minor differences are
 condonable, the demands at other plants are also likely to be
 eventually dropped.  The Company has also obtained legal opinions which
 concur with this view. However, as a matter of abundant caution, the
 Company has upto date made a provision of Rs. 0.57 Crore and payments
 of Rs. 1.40 Crores relating to excise cases of stock differences as on
 31st December, 2008.
 
 (b) Certain disputed demand notices relating to Indirect Taxes
 amounting to Rs. 95.32 Crores (2007 : Rs. 178.52 Crores) have neither
 been considered as contingent liabilities nor acknowledged as claims,
 based on expert legal opinions obtained/internal assessment. Further,
 the Company has been consistent in adopting the policy of assessing
 risks as set out in their health check report from reputed Tax
 Advisors. The Company is of the view that the possibility of the
 demands materialising is remote.
 
 5.  A shareholder of the Company had filed a Public Interest Petition
 in the Delhi High Court interalia challenging the allotment of
 3,537,862 equity shares on Preferential basis to Castrol Ltd., UK. The
 said Petition has been dismissed by the Delhi High Court on 11th
 January 2005. However, the Shareholder has gone to appeal by way of a
 Special Leave Petition to the Supreme Court of India. The Appeal has
 been admitted but no interim relief has been granted.
 
 6.  Segment Information :
 
 The business segment has been considered as the primary segment. The
 Company is organised into two business segments, Automotive & Non
 Automotive.
 
 The above business segments have been identified considering :
 
 - The customers
 
 - The differing risks and returns
 
 - The organisation structure
 
 - The internal financial reporting system
 
 7.  Employee Benefits :
 
 General Description of defined benefit plan
 
 Gratuity
 
 The Company operates gratuity plan wherein every employee is entitled
 to the benefit equivalent to fifteen days/one month salary last drawn
 for each completed year of service depending on the date of joining.
 The same is payable on termination of service, or retirement, whichever
 is earlier. The benefit vests after five years of continuous service.
 
 Provident Fund
 
 The Company manages Provident Fund plan through a Provident Fund Trust
 for its employees which is permitted under The Employees Provident
 Fund and Miscellaneous Provisions Act, 1952. The plan envisages
 contribution by employer and employees and guarantees interest at the
 rate notified by the Provident Fund Authority. The contribution by
 employer and employee, together with interest, are payable at the time
 of separation from service or retirement, whichever is earlier.
 
 The benefit under this plan vests immediately on rendering of service.
 
 Survivor Protection Scheme
 
 The Company provides an exgratia payment to the employees
 family/survivors over and above any survivor benefits payable to the
 employee under the retirement schemes, in the unfortunate event of an
 employee dying whilst in service.
 
 8.  Research and Development expenses amounting to Rs. 7.03 Crores
 (Net) (2007 : Rs. 6.70 Crores) are included under relevant heads of
 expense.
 
 9.  Previous years figures have been regrouped wherever necessary.