Kinetic Motor Company

1.  CONTINGENT LIABILITIES:
 
 i) Income Tax matters under appeal Rs. 475.56 lacs (Previous period Rs.
 651.23 Lacs)
 
 ii) Counter Guarantees given to bankers on behalf of directors and
 foreign technicians Rs.  35.02 lacs (Previous period Rs. 35.02 Lacs)
 
 iii) Sales Tax disputed by the Company Rs. 68.02 lacs (Previous period
 Rs.28.14 lacs) 
 
 iv) Entry Tax disputed by the Company Rs.0.72 lacs (Previous period Rs.
 0.72 lacs)
 
 v) Excise Duty claims in dispute Rs.  95.49 lacs (Previous period Rs.
 63.98 lacs)
 
 vi) Labour matters Rs.  37.24 lacs (Previous period Rs. 54.72 lacs)
 
 2.  Estimated amount of contracts remaining to be executed on Capital
 Account not provided for Rs. 71.55 lacs (Previous period Rs. 617.87
 lacs).
 
 3.  Loans and Advances include:
 
 i) Rs. 0.58 lacs; (Previous period - Rs.1.01 lacs), due from Athena
 Financial Services Ltd. a company covered under clause (iii) of
 sub-section (1B) of Section 370 of the Companies Act, 1956, maximum
 balance outstanding during the year Rs. 1.01 lacs (Previous period Rs.
 1.01 lacs);
 
 4.  Research and Development expenses aggregating Rs. 432.69 lacs
 (including Rs.11.06 lacs on capital account) have been incurred by the
 Company which are disclosed under appropriate account heads. (Previous
 period Rs.542.47 lacs including Rs.58.08 lacs on capital account)
 
 5.  a) The net exchange difference arising during the period
 recognised appropriately in the profit and loss account - net loss -
 Rs. 36.41 lacs; (Previous period net loss Rs.  17.93 lacs)
 
 b) The net exchange difference arising during the period adjusted in
 carrying amount of fixed assets Rs.Nil (Previous period gain Rs.4.88
 lacs).
 
 6.  The deferred tax liability of Rs. 688 lacs (Previous period Rs.
 880 lacs) is in respect of provision for Depreciation.
 
 The deferred tax asset of Rs.688 Lacs (Previous period Rs. 880 lacs) is
 in respect of carried forward tax losses.
 
 7. (a) Amount payable to Micro and Small Enterprises (to the extent
 identified by the Company from available information) as at 30th
 September, 2008 is Rs.11.45 lacs (including unpaid amounts- principal
 amounts-Rs.10.03 lacs and interest accrued and remaining unpaid -
 Rs.1.42 lacs), Previous period Rs.7.11 lacs (including unpaid
 amounts-principal amount-Rs.6.85 lacs and interest accrued and
 remaining unpaid Rs.0.26 lacs).
 
 (b) Amount of payments made to suppliers registered under the Micro,
 Small and Medium Enterprise Development Act, 2006 beyond 45 days during
 the period 1st April, 2007 to 30th September, 2008 is Rs. 17.50 lacs.
 (Excluding interest due and payable for the period of delay in making
 payment- Rs.1.02 lacs), Previous period Rs.1.35 lacs (Excluding
 interest due and payable for the period of delay in making payment are
 Rs.0.06 lacs)
 
 8.  As the Companys business activity falls within a single primary
 business segment viz., Two wheelers and its parts and is a single
 geographical segment, the disclosure requirements of Accounting
 Standard (AS-17) Segment Reporting issued by The Institute of
 Chartered Accountants of India are not applicable.
 
 9.  Subsequent to the financial year end, the Company has sold its two
 wheeler business (including the facilities at Pithampur) to Mahindra
 Two Wheelers Private Limited for a total cash consideration of Rs.110
 Crores and a consideration in the form of 20% equity shares of that
 company valued at Rs.29.50 crores. The sale transaction, profit on sale
 and other consequential effects will be accounted for in the books in
 the following financial year.
 
 Having regard to the above and the financial support from the promoters
 of the Company, the accounts of the Company have been prepared on a
 Going Concern basis.
 
 10.  The Company purchases components, in the ordinary course of
 business, from JHS Taigene Electrical Co. Pvt. Ltd. (JHST), Ducati
 Energia India Private Limited (Ducati) and Champ Engineering Private
 Limited (Champ), private limited companies in which a director of the
 Company is a director.  During the previous/ current period, due to
 paucity of funds, credit terms of suppliers in general had been
 extended. As such, the Company has purchased components worth Rs.1176
 lacs (including Rs.362 lacs in the current period ) from JHST, Ducati
 and Champ on credit basis, i.e. on the terms which are more favourable
 to the Company. As per the provision of section 297 of the Companies
 Act, 1956, if approval of the Central Government is not obtained for
 such contract, the same is voidable at the option of the Board of the
 Directors of the Company. However, as JHST, Ducati and Champ has agreed
 to these revised terms and the same are in the interest of the Company,
 the Board has not treated the contracts as void.
 
 11.  The Debenture Redemption Reserve has not been created in the
 absence of profits.
 
 12.  Previous years figures have been regrouped/recast wherever
 necessary to conform to this periods classification.