Electrotherm (India)

1.  In the opinion of the Directors, the current assets, loans &
 advances are realizable at the values stated, if realized in the
 ordinary course of business and the provisions for all known
 liabilities are adequate.
 
 The account of debtors, creditors and loans & advances are subject to
 confirmation / reconciliation and the amounts of Sundry Debtors &
 Creditors are stated on net basis, on the basis of control account and
 accordingly the same are subject to necessary adjustments or
 re-grouping /classification.
 
 2.  Hitherto, the Company was recognizing the exchange rate difference
 on settlement or restatement of foreign currency monetary assets and
 liabilities in the profit & loss account as per the pre-revised
 Accounting Standard -11 Accounting for effects of changes in foreign
 exchange rates issued by Chartered Accountants of India. During the
 year, the Company has changed the accounting policy by exercising the
 option related to amortization foreign exchange fluctuation differences
 as per the notification dated March 31, 2009 issued by the Ministry of
 Corporate Affairs. As a result, the exchange difference arising on
 restatement or settlement of long term foreign currency monetary items
 in so far as they relate to acquisition of a depreciable capital asset
 are adjusted to the cost of such asset and depreciated over the balance
 life of the asset. In view of the said changes of the method, Rs.
 264.75 Millions has been added to cost of fixed assets and Rs.1.01
 Millions of depreciation thereon has been charged to profit and loss
 account during the year.
 
 3.  Deferred Revenue expenditure includes research and development
 expenses of Rs. 44.10 Millions (Previous Year Rs. 80.23 Millions)
 incurred on development of Hybrid Bus/T-Cab/project which is still in
 progress and such expenses would be written off in five years from the
 year of completion.
 
 4.  SEGMENT REPORTING UNDER ACCOUNTING STANDARD 17 :-
 
 (A) Business Segment
 
 Based on the guiding principles given as per Accounting Standard on
 Segment Reporting (AS-17) issued by The Institute of Chartered
 Accountants of India, the Companys primary business is manufacturing
 and marketing of Induction Furnaces, Steel items and Battery Operated
 Vehicles.
 
 5.  RELATED PARTY (AS IDENTIFIED BY THE COMPANY) DISCLOSURES UNDER
 ACCOUNTING STANDARD 18:-
 
 (I) Subsidiary Companies
 
 1.  Jinhua Indus Enterprises Limited
 
 2.  Jinhua Jahari Enterprises Limited
 
 3.  Bhaskarpara Coal Company Limited
 
 4.  ET Elec-Trans Limited
 
 (II) Associates
 
 1.  Ahmedabad Aviation and Aeronautics Ltd.  
 
 2.  Crystal Real Estate Pvt. Ltd.  
 
 3.  Palace Tours and Air Charters Pvt. Ltd.  
 
 4.  Western India Specialty Hospital Ltd.  
 
 5.  Mangalam Information Technologies Ltd. 
 
 6.  Liberty Finance and Leasing Company Pvt. Ltd.  
 
 7.  E-Motion Power Ltd. 
 
 8.  Indus Elec-Trans Pvt. Ltd.  
 
 9.  Magnum Limited 
 
 10.  Alwar Trading and Investment Company 
 
 11.  Afghan Trading Pvt. Ltd.  
 
 12.  Bhandari Brothers Commercial Pvt. Ltd.  
 
 13.  Palanpur Reality Developers Pvt. Ltd. 
 
 14.  Jayshri Petro-Yarn Pvt. Ltd.  
 
 15.  Adroit Trading and Investment Company 
 
 16.  EIL Hospitality Pvt. Ltd. 
 
 17.  EIL Reality Pvt. Ltd.  
 
 18.  EIL Software Pvt. Ltd.  
 
 19.  EIL Software Services Offshore Pvt. Ltd.  
 
 20.  EIL Technology Pvt. Ltd.
 
 21.EIL Engineering & Projects Ltd.
 
 22.ET Elec-Trans Ltd.
 
 23.Electrotherm Engineering & Projects Ltd.
 
 24.Electrotherm Infrastructure Pvt. Ltd.
 
 25.Electrotherm Renewables Ltd.
 
 26.Electrotherm Foundation
 
 27.Global Avianautics Ltd.
 
 28.Gujarat Mint Alloys Ltd.
 
 29.Indus Real Estate Pvt. Ltd.
 
 30.ICS Commercial Pvt. Ltd.
 
 31.New Delhi Real Estate Pvt. Ltd.
 
 32.Palace Infrastructure Pvt. Ltd.
 
 33.S B Reality Developers Pvt. Ltd.
 
 34.Sun Infrapower Pvt. Ltd.
 
 35.Sun Residency Pvt. Ltd.
 
 36.Suraj Real Estate Pvt. Ltd.
 
 37.S N Advisory Pvt. Ltd.
 
 38.Suraj Advisory Services Pvt. Ltd.
 
 6.Bhandari Charitable Trust
 (III) Key Management Personnel (Other than Nominee & Independent
 Director)
 
 1.  Mr. Mukesh Bhandari (Chairman & Chief Technology Officer)
 
 2.  Mr. Shailesh Bhandari (Managing Director)
 
 3.  Mr. Narendra Dalai (Whole-time Director)
 
 4.  Mr. Avinash Bhandari (Joint Managing Director & CEO)
 
 5.  Mr. Harish Sharma (till June 18, 2008)
 
 (IV) Relatives of Key Management Personnel (With whom Transaction has
 taken Place)
 
 1.  Smt. Indubala Bhandari
 
 2.  Mrs. Jyoti Bhandari
 
 3.  Mrs. Ritu Bhandari
 
 4.  Mr. Siddharth Bhandari
 
 5.  Mrs. Siddhi Bhandari
 
 7.  The Company has determined Pre-Operative Expenditure (including
 borrowing cost) of Rs. 468.79 Millions (Previous year: Rs. 138.69
 Millions) and the same have been allocated towards the respective fixed
 assets.
 
 8.  In compliance of Accounting Standard 22 issued by Institute of
 Chartered Accountants of India, Deferred Tax liability mainly arising
 on account of difference between book and income tax written down value
 of fixed assets, after adjusting unabsorbed depreciation, during the
 year deferred tax liability of Rs. 172.56 Millions (Rs. 265.88
 Millions) has been provided.
 
 9.  CONTINGENT LIABILITIES:-
 
 The Company is liable for following contingent liabilities:-
 
 (i) Disputed Income Tax liability of Rs. 1.42 Millions (Previous Year
 Rs. Nil).
 
 (ii) Guarantees / Counter guarantees (including un-utilized Letters of
 Credit) issued Rs. 297.29 Millions (Rs. 488.29 Millions in Previous
 year).
 
 (iii) Estimated amount of contracts remaining to be executed on capital
 account and not provided for Rs. 100.13 Millions (Previous Year Rs.
 483.11 Millions).
 
 (iv) The company is contingently liable for the pending disputed labour
 and other matters, amount is Rs. 7.76 Millions (Previous Year Rs. 6.94
 Millions).
 
 (v) The company has executed Legal Undertaking Bond to pay Central
 Excise Duty (Terminal Excise Duty), levies and liquidated damages
 payable, if any, in respect of imported and indigenous capital goods
 and stores and spares consumed duty free, in the event that certain
 terms and conditions are not fulfilled. In this regard aggregate duty
 liability amount of Rs. 374.65 Millions as at March 31, 2009 (Previous
 Year: Rs. 286.54 Millions). Against these, exports amounting to Rs.
 2997.21 Millions (previous year Rs. 2292.32 Millions) will have to be
 made within next 8 years from the date of issue of license.
 
 10.  Under the Micro, Small and Medium Enterprises Development (MSMED)
 Act, 2006, certain disclosures are required to be made relating to
 Micro, Small and Medium Enterprises. The company has not received
 intimation from vendors regarding their status under MSMED Act, 2006
 and hence disclosures relating to amount unpaid as at the year end
 under this Act have not been given.
 
 11.  The company has filed a Scheme of Arrangement with Honble High
 Court of Gujarat envisaging the utilization of share premium account
 against the expenses as provided for in the scheme and transfer to a
 Business Development Reserve Account as on March 31, 2009. The scheme
 also provide for recording of immovable assets at their respective fair
 value as on March 31, 2009. The Honble High Court of Gujarat has
 directed to convene a meeting of Equity Shareholders on June 16, 2009
 for approval of Scheme of Arrangement. On approval of the scheme by the
 Honble High Court of Gujarat, the effect of the same will be given and
 accordingly accounts as on March 31, 2009 will be restated / re-casted
 thereafter.
 
 12.  Previous years figures have been re-arranged/ regrouped
 /reclassified/re-casted wherever necessary.
 
 13.  Signed Schedule No.1 to 21 forms part of the Annexed account of
 the Company.