JK Tyre and Industries

1.  The Company has changed its accounting year ending 30th September
 to 31st March and accordingly the accounts of the current period have
 been prepared for eighteen months from 1 st October, 2007 to 31 st
 March, 2009. Therefore, the figures of current period are not
 comparable with the figures of previous year.
 
 2.  The proceeds of the Rights Issue are being used for the objects
 stated in the Letter of Offer dated July 18, 2008.  Pending
 utilization, balance funds are retained in working capital.
 
 3.  Estimated amount of contracts remaining to Pe executed on capital
 account Rs. 51.65 crs. (Previous year: Rs. 21.91 crs.).
 
 4.  Contingent liabilities in respect of claims not accepted and not
 provided for Rs. 34.86 crs. (Previous year: Rs. 25.48 crs.). Details
 thereof are, Excise duty matters in appeal Rs. 2.63 crs., Service tax
 matters Rs. 2.01 crs., Sales Tax matters in appeal Rs. 1.76 crs.,
 Income tax matters in appeal Rs. 6.99 crs. & other matters Rs. 21.47
 crs.  (Previous year: Rs. 3.52 crs., Rs. 1.47 crs., Rs. 1.78 crs., Rs.
 1.04 crs. & Rs. 1 7.67 crs. respectively).
 
 5.  Bills discounted with Banks outstanding Rs, 30.90 crs. (Previous
 year: Rs. 31.55 crs.).
 
 6.  Excise Duty liability on account of valuation of Finished Goods is
 disputed and is yet to be determined. Without prejudice to the
 Companys stand in this behalf, as per Governments desire an adhoc
 amount of Rs. 5.45 crs, was paid under protest in earlier years and
 debited to Advances Recoverable and an eauivalent amount was provided
 in Profit and Loss Account. On Writ Petition filed by the Company in
 the Honble Delhi High Court, the said Court directed the Excise
 Authorities to determine the valuation of finished goods in accordance
 with law and observations made in the order.
 
 7.  The Company has given guarantee to a bank in respect of loan
 outstanding as at 31.03.2009 of Rs. 2.29 crs.  (Previous year: Rs. 4.80
 crs.) in respect of a body corporate against counter indemnity.
 
 8.  Miscellaneous expenditure to the extent not written off comprises
 of expenditure relating to Compensation paid under VRS, Share Issue
 expenses etc. Rs. 5.21 crs. (Previous year: Rs. 8.22 crs.) amortised
 over expected duration of benefit i.e. 5 years.
 
 9.  Factory & Service buildings and Plant and Machinery of Companys
 Plant at Jaykaygram were revalued as at 1 st January, 1985 & 1st April,
 1991, On 1st April, 1997 the revaluation of such assets was updated
 along with similar assets of Banmore plant, The revaluation of said
 assets of Jaykaygram and Banmore was further updated alongwith Factory
 Land and Township building as at 1 st April 2002 based on current
 replacement cost by a Valuer, The Gross Block as at 31.03.2009 as well
 as Previous Year include cumulative surplus of Rs. 667.78 crs. arising
 on revaluation.
 
 10.  a) Debts over six months and Advances are net of provisions made
 for Doubtful Debts Rs. 3.13 crs, and Advances Rs. 0.32 cr. (Previous
 year: Rs. 2.92 crs. and Rs. 0.32 cr. respectively).
 
 b) Debts over six months / Advances include Rs. 4,22 crs. (Previous
 year: Rs. 4.20 crs.) for which legal and other necessary action has
 been taken. In the opinion of the Management, these debts are
 recoverable and the same have been classified as good.
 
 11.  In respect of certain disallowances and additions made by the
 Income Tax Authorities, appeals are pending before the Appellate
 Authorities and adjustment, if any, will be made after the same are
 finally determined.
 
 12.  Raw materials consumed has been determined after adjusting Rs.
 40.81 crs. (Previous year: Rs. 36.95 crs.) accounted for on accrual
 basis in respect of import entitlements against exports made under Duly
 Exemption Scheme.
 
 13.  The Company has worked out reversal of Modvat Credit availed on
 exports under Value Based Advance Licence in earlier years and had
 reversed the same in accounts. Pursuant to special scheme announced by
 the Government, the Company has also paid interest on such reversals.
 Further, the Excise department has issued certain basis for reversal of
 Modvat, which is disputed and has been contested by the Company in a
 Writ Petition Pefore the HonPle Delhi High Court and directions have
 been issued to treat the reversal already made by the Company as
 provisional.
 
 14.  a) Exchange difference on loans / liability in respect of fixed
 assets acquired from outside India, which hitherto was adjusted to the
 carrying cost of fixed assets, is now being charged to Profit & Loss
 Account. This has no material impact on the profits for the period.  P)
 Exchange difference (net) amounting Rs. 31.50 crs.  (Previous year: Rs.
 17.48 crs. - credited) has Peen debited in respective heads of account
 in Profit and Loss account.
 
 c) Forward Contracts: for hedging Creditors - Rs. 8,54 crs, - US $ 1,75
 Million and Rs. 15.39 crs. - Yen 292.46 Million (Previous Year: Rs. 8
 crs. - US $ 2 Million) and for hedging Debtors - Nil (Previous Year:
 Rs. 56.03 crs. - US $ 14 Million) are outstanding as at 31.03.2009,
 
 d) Foreign currency exposure unhedged net payable is Rs. 51.13 crs. -
 US $ 10,04 Million (Previous Year: Rs. 142.35 crs. - US $ 35.57
 Million) as at 31.03.2009.
 
 15.  Based on the information available with the Company upto 31 st
 March, 2009 in respect of MSME (as defined in The Micro, Small & Medium
 Enterprises Development Act 2006) the Company is generally regular in
 making payments of dues to such enterprises and there are no such dues
 payable as at 31,03.2009.
 
 16. The Company has not provided diminution in the value of certain
 unquoted long term strategic investments, since in the opinion of the
 Board, such diminution in their value is temporary in nature,
 considering the inherent value, nature of investments, the investees
 assets and expected future cash flow from such investments.
 
 17. Research and Development expenses amounting to Rs. 18.21 crs.
 (Previous year: Rs. 12.83 crs.) have been included in respective
 revenue accounts.
 
 18. Investor Education and Protection Fund includes Rs. 0.43 cr. for
 unclaimed dividend (Previous year: Rs. 0.37 cr.), Rs. 1.38 crs. for
 unclaimed fixed deposits (Previous year: Rs. 1.48 crs.) and Rs. 0.08
 cr. for unclaimed amount on debentures (Previous year: Rs. 0.12 cr.),
 which shall be deposited on respective due dates.
 
 19. The disclosures required under Accounting Standard (AS-15)
 Employee Benefits notified in the Companies (Accounting Standards)
 Rules, 2006 are as given below:
 
 (ii) The expected return on plan assets is determined considering
 several applicable factors mainly the composition of the plan assets
 held, assessed risks of assets management, historical results of return
 on plan assets and the policy for plan assets management.
 
 (iii) The estimates of future salary increase, considered in actuarial
 valuation, take account of inflation, seniority, promotion and other
 relevant factors, such as supply and demand in the employment market.
 
 (iv) Contributions to PF (Trust) during the eighteen months ended 31st
 March, 2009 of Rs. 3.45 crs, has been included under the head Staff
 Cost. (Refer Schedule 11)
 
 Pending the issuance of the Guidance Note from the institute of
 Actuaries of India, the Companys actuary has expressed his inability
 to reliably measure the provident fund liability.
 
 (b) Defined Contribution Plans -
 
 Employers Contributions to Provident and other Funds charged off
 during the 18 months ended 31 st March, 2009 of Rs. 19.66 crs. has been
 included under the head Staff Cost. (Refer Schedule 11)
 
 (c) The Company has made provision for the employee benefits in
 accordance with the Accounting Standard (AS-15) (revised 2005)
 Employee Benefits which has become applicable to the company and
 there is no material impact on the financial results of the Company for
 transitional period and 18 months period ended 31st March, 2009.
 
 20.  Related Party: 
 
 a) Subsidiaries:
 
 J. K. International Ltd,
 J. K. Asia Pacific Ltd.
 J, K. Asia Pacific (S) Pte. Ltd. (Subs, of J. K. Asia Pacific Ltd.)
 Lankros Holdings Ltd. (w.e.f. 10.06.2008)
 Sarvi Holdings Switzerland AG. (Subs, of Lankros Holdings Ltd.) (w.e.f.
 0.06.2008)
 
 Sunrise Hold Co. S.A. De C.V. (Subs, of Sarvi Holdings Switzerland AG,)
 (w.e.f. 10.06.2008)
 
 Empresas Tornel, S.A. De C.V. (ETSA) (Subs, of Sunrise Hold Co. S.A. De
 C.V. )
 
 Comercializadora America Universal, S.A. De C.V. (Subs, of ETSA)
 Compahia Hulera Tacuba, S.A, De C.V. (Subs, of ETSA)
 Compahia Hulera Tornel, S.A. De C.V. (Subs, of ETSA)
 Compahia Inmobiliaria Norida, S.A. De C.V. (Subs, of ETSA)
 General de Inmuebles Industrials, S.A. De C.V. (Subs, of ETSA)
 
 Gintor Administracion, S.A. De C.V. (Subs, of ETSA)
 Hules y Procesos Tornel, S.A. De C.V. (Subs, of ETSA)
 (became subsidiary on 13.06.2008)
 
 b) Associates:
 
 JK Lakshmi Cement Ltd.
 
 Hari Shankar Singhania Elastomer and Tyre Research Institute
 
 Valiant Pacific LLC.
 
 c) Key Management Personnel:
 
 Shri Raghupati Singhania Vice Chairman & Managing Director
 
 Shri Bharat Hari Singhania Managing Director
 
 Shri Vikrampati Singhania Dy. Managing Director
 
 Shri Swaroop Chand Sethi Whole Time Director
 
 21.  Figures less than Rs. 50000 have been shown at actual in bracket,
 
 22.  Figures for the previous year have been regrouped / rearranged /
 recast, wherever necessary.