Greaves Cotton

2008-09            2007-08
                                         Rupees            Rupees
                                          Crore            Crore
 
 1 Contingent Liabilities :
 
 1 Sales Tax liability that may arise in 
 respect of matters in appeal
                                          5.67             7.74
 
 2 Excise Duty liability that may arise 
  in respect of matters in appeal         0.94             0.91
 
 3 Income Tax liability that may arise 
 in respect of matters in appeal          3.48             3.48
 
 4 Claims made against the Company, 
 not acknowledged as debt                13.88            13.70
 
 5 Bonds executed in favour of Collector 
 of Customs / Central Excise              9.08             7.75
 
 6 Guarantees given on behalf of a 
 subsidiary company                      16.78            18.59
 
 Note:
 
 1 The Company does not expect any reimbursement in respect of the above
 contingent liabilities.
 
 2 It is not practical to estimate the timing of cash outflows, if any,
 in respect of matters at (1) to (4) above pending resolution of the
 appeallate procedings.
 
 2 Exceptional Item :
 
 Profit on sale of land / development rights of Rs. 1.45 crore (Previous
 Year Rs. 10.79 crore).
 
 3 (i) The Company has taken on non-cancellable operating lease plant
 and machinery, computers and vehicles having an
 
 aggregate cost of Rs. 8.15 crore (Previous Year Rs. 8.14 crore). These
 lease agreements are normally renewed on expiry.
 
 (ii) Rental expenses in respect of operating lease was Rs. 1.92 crore
 (Previous Year Rs. 1.38 crore). Contingent rent recognised in profit
 and loss account is Rs. Nil (Previous Year Rs. Nil).
 
 (iii) The lease agreements provide for an option to the Company to
 renew the lease at the end of the non-cancellable period. There are no
 exceptional / restrictive covenants in the lease agreements.
 
 (ii) Derivative Instruments
 
 The Company uses foreign currency forward contracts to hedge its risks
 associated with foreign currency fluctuations relating to certain firm
 commitments and forecasted transactions. The use of foreign currency
 forward contracts is governed by the Companys strategy approved by the
 Board of Directors, which provide principles on the use of such forward
 contracts consistent with the Companys Risk Management Policy. The
 Company does not use forward contracts for speculative purposes.
 
 4 (a) The tax year for the Company being year ending 31st March, the
 provision for taxation for the financial year is aggregate of the
 provision made for nine months ended 31st March, 2009 and the provision
 based on the figures for the remaining three months upto 30th June,
 2009, the ultimate Liability of which will be determined on the basis
 of figures for the period 1st April, 2009 to 31st March, 2010.
 
 (b) Fringe benefit tax has been provided for the period upto March, 09.
 The Finance (No. 2) Bill, 2009 as introduced in the Lok Sabha has
 proposed to abolish the Fringe benefit tax for assessment year
 commencing from April, 2010 or any susequent year. Hence no provision
 is made for fringe benefit tax for the period 1st April, 2009 to 30th
 June, 2009.
 
 5 Employee Benefit :
 
 Disclosure pursuant to Accounting Standards (AS) 15 (Revised) Defined
 Benefit Plans Gratuity :
 
 The Company provides for gratuity, a defined benefit plan (the Gratuity
 Plan), to its employees. The Gratuity Plan ¦ provides for a lump sum
 payment to vested employees at retirement or termination of employment,
 whichever is earlier, based on the respective employees last drawn
 salary and years of employment with the Company. The benefits vests
 after five years of continued service.
 
 6 Disclosures as required by Accounting Standard (AS)-18 Related
 Party Disclosures for the year as under: I Relationships:
 
 A) List of related parties over which control exists:
 
 SI. No.  Name of the Related Party Relationship
 
 1 Greaves Leasing Finance Limited Wholly Owned Subsidiary
 
 2 Dee Greaves Limited Subsidiary of Greaves Leasing Finance Limited
 
 3 Greaves Cotton Netherlands B.V.  Wholly Owned Subsidiary
 
 4 Greaves Farymann Diesel GmbH Subsidiary of Greaves Cotton Netherlands
 B.V.
 
 5 Greaves Auto Limited Wholly Owned Subsidiary
 
 B) Key Management Personnel:
 
 1 Mr. P. Sachdev - Managing Director and CEO upto 3rd May, 2009
 
 2 Mr. Prabhakar Dev - Deputy Managing Director from 23rd January, 2009
 to 3rd May, 2009
 
 - Managing Director and CEO from 4th May, 2009
 
 C) List of related parties with whom transactions were carried out
 during the year and description of relationship : Subsidiaries:
 
 1 Greaves Leasing Finance Limited
 
 2 Dee Greaves Limited
 
 3 Greaves Cotton Netherlands B.V.
 
 4 Greaves Farymann Diesel GmbH
 
 5 Greaves Auto Limited Key Management Personnel:
 
 1 Mr. P. Sachdev - Managing Director and CEO upto 3rd May, 2009
 
 2 Mr. Prabhakar Dev - Deputy Managing Director from 23rd January, 2009
 to 3rd May, 2009
 
 - Managing Director and CEO from 4th May, 2009 Other Related Parties :
 
 1 Crompton Greaves Limited 2 Premium Energy Transmission Limited
 
 3 Mr. Karan Thapar
 
 Segment Identification, Reportable Segments and definition of each
 reportable segment:
 
 The expenses and incomes which are not directly attributable to the
 business segments are shown as unallocated corporate cost which also
 includes exceptional items.
 
 Unallocated assets mainly comprises of trade investments in
 subsidiaries and mutual funds that constitute or relate to the
 portfolio of the Companys core / thrust areas of business, and
 unallocated liabilities include mainly loan funds, tax provisions and
 provision for employee retirement benefits.
 
 Primary / secondary segment reporting format:
 
 1 The risk-return profile of the Companys business is determined
 predominantly by the nature of its products and services.  Accordingly,
 the business segments constitute the primary segments for disclosure of
 segment information.
 
 2 In respect of secondary segment information, the Company has
 identified its geographical segments as (i) Domestic and (ii) Overseas.
 The secondary segment information has been disclosed accordingly.
 
 Segment Identification:
 
 Business segments have been identified on the basis of the nature of
 products / services, the risk-return profile of individual businesses,
 the organisational structure and the internal reporting system of the
 Company.
 
 Reportable Segments:
 
 Reportable segments have been identified as per the quantitative
 criteria specified in Accounting Standard -17: Segment Reporting as
 specified in the Companies (Accounting Standards) Rules, 2006.
 
 Segment Composition:
 
 1 Engines comprises of single and multi cylinder engines.
 
 2 Infrastructure Equipments comprises of equipments used in road
 construction, bridges, dams, mining, etc.
 
 3 Others includes traded products and services.
 
 24 Management has evaluated impairment of assets as required by
 Accounting Standard-28-lmpairment of Assets and on the basis of
 evaluation, management is of the opinion that there is no impairment of
 the Companies assets as at 30th June, 2009.
 
 7 No borrowing costs have been capitalised during the year.
 
 8 Sales is net of discount and includes direct sales compensation of
 Rs. 1.48 crore (Previous Year Rs. 5.97 crore).
 
 9 Figures for the previous year have been regrouped / reclassified,
 wherever necessary.